EXHIBIT 10.1
 
THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated this 1 day of November 2012,
is entered into by and between Harbinger Group Inc., a Delaware corporation (the
“Company”), and Michael Sena (“Executive”).
 
WHEREAS, Executive has offered to serve the Company, and the Company desires to
employ Executive, subject to the terms and conditions set forth herein.
 
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, and intending to be legally bound hereby, the
parties hereto agree as set forth below:
 
 
1.
Term; Effectiveness. Subject to the terms and conditions of this Agreement, the
Company agrees to employ Executive and Executive agrees to be employed by the
Company as an at-will employee as of November 19, 2012 (the “Effective
Date”).  As an at-will employee, the Company may terminate Executive’s
employment at any time, with or without reason, and Executive may resign at any
time, with or without reason, both subject to the notice provisions in Section
5.  The provisions of this Agreement will continue to apply unless and until
Executive is informed in writing that it is being prospectively modified by the
Company, or until it is superseded by a subsequent written agreement between
Executive and the Company.  The entire period during which Executive is employed
by the Company is at times referred to herein as the “Employment Period.”

 
 
2.
Definitions.  For purposes of this Agreement, the following terms, as used
herein, shall have the definitions set forth below.

 
 
(a)
“Affiliate” means, with respect to any specified Person, any other Person that
directly or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such specified Person, provided
that, in any event, any business in which the Company has a direct or indirect
ownership interest of more than five (5) percent shall be treated as an
Affiliate of the Company.

 
 
(b)
“Control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.

 
 
(c)
“Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, governmental or regulatory body or other entity.

 
 
(d)
“Subsidiary” means, with respect to any Person, (i) any corporation of which at
least a majority of the voting power with respect to the capital stock is owned,
directly or indirectly, by such Person, any of its other Subsidiaries or any
combination thereof or (ii) any Person other than a

 
 
 
 

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corporation in which such Person, any of its other Subsidiaries or any
combination thereof has, directly or indirectly, at least a majority of the
total equity or other ownership interest therein.
 
 
(e)
“Termination Date” means the last day that Executive is employed by the
Company.  For the avoidance of doubt, the Termination Date shall mean the last
date of employment, whether such day is selected by mutual agreement with
Executive or unilaterally by the Company or by Executive and whether with or
without advance notice.

 
 
3.
Duties and Responsibilities.

 
 
(a)
Executive agrees to be employed by the Company and be actively engaged on a
full-time basis in the business and activities of the Company and its Affiliates
during the Employment Period, and, subject to Section 3(c), to devote
substantially all of Executive’s working time and attention to the Company and
its Affiliates and the promotion of its business and interests and the
performance of Executive’s duties and responsibilities hereunder. During the
Employment Period, Executive agrees to use his reasonable best efforts to ensure
that the business and activities of the Company and its Subsidiaries are
conducted in compliance with all applicable laws, rules and regulations in all
material respects.  Executive shall be employed hereunder as Vice President and
Chief Accounting Officer of the Company with such duties and responsibilities as
directed from time to time by the Company. Executive shall report directly to
the Executive Vice President/Chief Financial Officer of the Company.  Executive
agrees to cooperate with reasonable requests of the Company to provide services
to its Affiliates (including Harbinger Capital Partners LLC) in accordance with
Company policies.

 
 
(b)
During the Employment Period, Executive will carry out his duties as Vice
President and Chief Accounting Officer in the Company’s headquarters in New York
City, or any future headquarters of the Company, subject to normal travel
requirements in connection with the performance of his duties.

 
 
(c)
During the Employment Period, Executive shall use Executive’s reasonable best
efforts to faithfully and diligently serve the Company and shall not act in any
capacity that is in conflict with Executive’s duties and responsibilities
hereunder. For the avoidance of doubt, during the Employment Period, Executive
shall not be permitted to become employed by, engaged in or to render services
for any Person other than the Company and its Affiliates, shall not be permitted
to be a member of the board of directors of any Person (other than charitable or
nonprofit organizations), in any case without the consent of the President of
the Company, and shall not be directly or indirectly materially engaged or
interested in any business activity, trade or occupation (other than

 
 
 
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employment with the Company and its Affiliates as contemplated by the
Agreement); provided that nothing herein shall preclude Executive from engaging
in charitable or community affairs and managing his personal investments to the
extent that such other activities do not, subject to Section 7, conflict in any
material way with the performance of Executive’s duties hereunder.
 
 
4.
Compensation and Related Matters.

 
 
(a)
Base Compensation.  During the Employment Period, for all services rendered
under this Agreement, Executive shall receive aggregate annual base salary
(“Base Salary”) at a rate of $250,000 per annum, payable in accordance with the
Company’s applicable payroll practices.

 
 
(b)
Annual Bonus.  For each fiscal year in which Executive remains employed by the
Company through the last business day of the fiscal year, Executive shall have
the opportunity to be awarded an annual bonus (“Annual Bonus”), which will have
two components: (i) an “Individual Bonus”, in an amount to be tied to
Executive’s achievement of performance goals, and (ii) a “Corporate Bonus,”
based on the growth of the Company’s Net Asset Value (“NAV”).

 
 
(i)
The performance goals for the Individual Bonus for each year will be determined
by the Company, in its sole discretion, after consultation with Executive.  The
determination whether Executive has achieved the performance goals for a fiscal
year, and the amount of the Individual Bonus to be awarded for such year, will
be determined by the Company in its sole discretion.  Notwithstanding the
foregoing, in any fiscal year in which the performance goals for Executive’s
Individual Bonus are objective goals based entirely on Executive’s performance,
as distinct from goals based in whole or part on the performance of the Company,
or any of its Affiliates, Subsidiaries, divisions, or departments, or a
specified group of employees (“Protected Individual Bonus”), if Executive’s
employment ends for any reason before the end of such fiscal year, then
Executive will be eligible to receive a Protected Individual Bonus to the extent
Executive has achieved the performance goals for such fiscal year as of the
Termination Date, and such Protected Individual Bonus will be pro rated based on
the period of the fiscal year worked by Executive.

 
 
(ii)
Executive’s Corporate Bonus will be based on Executive’s contribution to
increasing NAV, as determined by the President and/or Chief Executive Officer of
the Company (“CEO”) in their sole discretion.  Details regarding the
determination and payment of a Corporate Bonus are set forth in Appendix A
hereto.  Any cash bonus will be paid within seventy-four (74) days of the end of

 
 
 
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the fiscal year for which it is awarded, except as set forth in Appendix A.
 
 
(c)
Sign On Bonus.  The Company shall pay Executive a sign on bonus (“Sign On
Bonus”) of $100,000 within thirty (30) days of the Effective Date.  If Executive
resigns without Good Reason (as defined below) or is terminated by the Company
for Cause (as defined below) before the one year anniversary of the Effective
Date, then Executive shall repay the Sign On Bonus to the Company within thirty
(30) days after the Termination Date.

 
 
(d)
Benefits and Perquisites.  During the Employment Period, Executive shall be
entitled to participate in the benefit plans and programs commensurate with
Executive’s position that are provided by the Company from time to time for its
Vice Presidents generally, subject to the terms and conditions of such
plans.  The Company may alter, modify, add to or delete its employee benefit
plans at any time as it, in its sole judgment, determines to be appropriate,
without recourse by Executive, except that no such action shall adversely affect
any previously vested rights of Executive under such plans.

 
 
(e)
Business Expense Reimbursements.  The Company shall reimburse Executive for
reasonable and properly documented business expenses incurred during the
Employment Period in accordance with the Company’s then-prevailing policies and
procedures for expense reimbursement.

 
 
(f)
Vacation.  During the Employment Period, Executive shall be entitled to annual
paid vacation of no less than four (4) weeks and to reasonable sick leave as
determined by the Company.

 
 
(g)
Initial Equity Grant.  Within one hundred and fifty (150) days following the
Effective Date, Executive shall receive a one-time equity award of an option to
acquire 30,000 shares of the Company (“Options”) and 10,000 shares of restricted
stock (the “Restricted Stock”) (the “Initial Equity Grant”).  The Options have
an exercise price equal to the closing price of the Company’s common stock on
the date of grant and will vest in equal installments on each of the first four
anniversaries of the Effective Date, subject to Executive’s continued employment
on such dates, subject to accelerated vesting as set forth herein. The
Restricted Stock will vest and the restrictions shall lapse on the third
anniversary of the Effective Date, subject to Executive’s continued employment
on such date, subject to accelerated vesting as set forth herein. The Options
and Restricted Stock shall be subject to the terms of the underlying award
agreements and the Company’s equity plan in effect from time to time.
Notwithstanding the preceding two sentences, if Executive’s employment is
terminated by the Company Without Cause (defined below) or by Executive for Good

 
 
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Reason (defined below), or by reason of death or Disability (defined below),
then Executive’s then unvested Options and Restricted Stock granted pursuant to
this Section 4(f) shall vest (and the restrictions on such Restricted Stock
shall lapse) in the proportion to the number of years of service completed to
the total vesting period, calculated as though Executive continued to be
employed for six (6) months after the Termination Date, on the date the Release
Condition (as defined in the Company’s Severance Benefits Plan) is
satisfied.  Executive shall thereafter have six (6) months within which to
exercise any Options that have vested pursuant to such accelerated vesting.
 
 
5.
Termination of Employment.

 
 
(a)
Executive’s employment shall automatically and immediately terminate upon
Executive’s death.  Executive’s employment may be terminated by the Company at
any time because of Disability (defined below), or for Cause (defined below), or
for any reason other than Cause or Disability (“Without Cause”), by delivering
written notice that states the reason for termination, and may be terminated by
Executive at any time for Good Reason (defined below) or for any other reason,
provided, however, Executive shall be required to give the Company at least 30
days advance written notice of any resignation other than a resignation for Good
Reason, and the Company shall be required to give Executive at least 30 days
advance written notice of any termination Without Cause.  The Company may, in
its discretion, require Executive to cease performing services for the Company,
in whole or part, during any portion of such thirty day notice period, in which
event the Company will continue to pay Base Salary, provide benefits and
calculate bonuses through the end of such thirty day period.

 
 
(b)
Following any termination of Executive’s employment, notwithstanding any
provision to the contrary in this Agreement, the obligations of the Company to
pay or provide Executive with compensation and benefits under Section 4 shall
cease as of the Termination Date, except as otherwise provided herein, and the
Company shall have no further obligations to provide compensation or benefits to
Executive hereunder except (i) for payment of any accrued but unpaid Base Salary
and vacation time and for payment of any accrued obligations and unreimbursed
expenses under Section 4(d) accrued or incurred through the Termination Date,
(ii) for the payment of the non-deferred cash portion of any Annual Bonus earned
in respect of the fiscal year prior to the fiscal year in which termination of
employment occurs but unpaid as of the Termination Date (paid when such
non-deferred cash portion of the Annual Bonus would otherwise be payable), (iii)
as set forth in any other benefit plans, programs or arrangements applicable to
terminated employees in which Executive participates, and (iv) as otherwise
expressly required by applicable statute.  Notwithstanding any provision to the
contrary in this

 
 
 
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Agreement (including the above provisions of this paragraph), if Executive’s
employment is terminated for Cause or if Executive resigns without Good Reason,
Executive shall not be entitled to receive any previously unpaid portion of the
current or any prior fiscal year’s Corporate Bonus, nor any unpaid portion of
the current or any prior fiscal year’s Individual Bonus that is not a Protected
Individual Bonus.
 
 
(c)
If Executive’s employment is terminated by the Company Without Cause or by
Executive for Good Reason (defined below), then, in addition to the entitlements
described in Section 5(b), Executive shall be entitled to: (I) severance
payments in an amount equal to Executive’s Salary at the rate in effect
immediately preceding the Termination Date for a period of six (6) months,
subject to the terms of the Company’s Severance Plan in effect as of the
Termination Date, and(II) to accelerated vesting of the Initial Equity Grant in
accordance with, and subject to the terms of, Section 4(g) of this
Agreement.  For purposes of this Agreement:

 
 
(i)
“Cause” means: (A) Executive’s willful misconduct in the performance of his
duties for the Company which causes material injury to the Company, (B)
Executive’s conviction of, or plea of guilty or nolo contendere to, a felony (or
the equivalent of a felony in a jurisdiction other than the United States), or
conviction of, or plea of guilty or nolo contendere to, any other crime that
results in imprisonment for more than 30 days, (C) Executive’s material breach
of this Agreement, (D) Executive’s willful violation of the Company’s written
policies in a manner that is detrimental to the best interests of the Company;
(E) Executive’s fraud or misappropriation, embezzlement or misuse of funds or
property belonging to the Company, (F) Executive’s acts of personal dishonesty
which results in personal profit in connection with Executive’s employment with
the Company, (G) Executive’s breach of fiduciary duty owed to the Company, or
(H) Executive’s negligent actions which result in the loss of a material amount
of capital of the Company or its Affiliates (the Company shall make the
determination of materiality and shall promptly communicate such determination
to Executive); provided, however, that Executive shall be provided a ten
(10)-day period to cure any of the events or occurrences described in the
immediately preceding clauses (C) or (D) hereof, to the extent curable.  For
purposes hereof, no act, or failure to act, on the part of Executive shall be
considered “willful” unless it is done, or omitted to be done, by Executive in
bad faith or without reasonable belief that Executive’s action or omission was
in the best interests of the Company.  An act, or failure to act, based on
specific authority given pursuant to a resolution duly adopted by the Board of
Directors of the Company (“Board”) or based upon the advice of counsel for the
Company

 
 
 
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shall be presumed to be done, or omitted to be done, by Executive in good faith
and in the best interests of the Company.
 
 
(ii)
“Disability” means Executive’s incapacity, due to mental, physical or emotional
injury or illness, such that Executive is substantially unable to perform his
duties hereunder for a continuous period of ninety calendar days, or for more
than a total of 85 business days during any 12 month period, subject to
reasonable accommodation provisions of applicable laws.

 
 
(iii)
“Good Reason” means the occurrence, without Executive’s express written consent,
of any of the following events: (A) a material diminution in Executive’s
authority, duties or responsibilities; (B) a diminution of Base Salary; (C) a
change in the geographic location of Executive’s principal place of performance
of his services hereunder to a location more than thirty (30) miles outside of
New York City that is also more than thirty (30) miles from his primary
residence at the time of such change, except for travel consistent with the
terms of this Agreement; or (D) a material breach by the Company of this
Agreement. Executive shall give the Company a written notice (specifying in
detail the event or circumstances claimed to give rise to Good Reason) within 25
days after Executive has knowledge that an event or circumstances constituting
Good Reason has occurred, and if Executive fails to provide such timely notice,
then such event or circumstances will no longer constitute Good Reason.  The
Company shall have 30 days to cure the event or circumstances described in such
notice, and if such event or circumstances are not timely cured, then Executive
must actually terminate employment within 120 days following the specified event
or circumstances constituting Good Reason; otherwise, such event or
circumstances will no longer constitute Good Reason.

 
 
(d)
Upon termination of Executive’s employment for any reason, and regardless of
whether Executive continues as a consultant to the Company, upon the Company’s
request Executive agrees to resign, as of the date of such termination of
employment or such other date requested, from the Board and any committees
thereof (and, if applicable, from the board of directors (and any committees
thereof) of any Affiliate of the Company) to the extent Executive is then
serving thereon.

 
 
(e)
The payment of any amounts accrued under any benefit plan, program or
arrangement in which Executive participates shall be subject to the terms of the
applicable plan, program or arrangement, and any elections Executive has made
thereunder. Subject to Section 20 and applicable laws, the Company may offset
any amounts due and payable by Executive to the

 
 
 
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Company or its Subsidiaries against any amounts the Company owes Executive
hereunder.
 
 
6.
Acknowledgments.

 
 
(a)
Executive acknowledges that the Company has expended and shall continue to
expend substantial amounts of time, money and effort to develop business
strategies, employee and customer relationships and goodwill and build an
effective organization. Executive acknowledges that Executive is and shall
become familiar with the Company’s Confidential Information (as defined below),
including trade secrets.  Executive acknowledges that the Company has a
legitimate business interest and right in protecting its Confidential
Information, business strategies, and employee relationships, and that the
Company would be seriously damaged by the disclosure of Confidential Information
and the loss or deterioration of its business strategies and employee
relationships.

 
 
(b)
Executive acknowledges (i) that the business of the Company and its Affiliates
is global in scope, without geographical limitation, and capable of being
performed from anywhere in the world, and (ii) notwithstanding the jurisdiction
of formation or principal office of the Company, or the location of any of their
respective executives or employees (including, without limitation, Executive),
it is expected that the Company and its Affiliates will have business activities
and have valuable business relationships within their respective industries
throughout the world.

 
 
(c)
Executive acknowledges that Executive has carefully read this Agreement and has
given careful consideration to the restraints imposed upon Executive by this
Agreement, and is in full accord as to the necessity of such restraints for the
reasonable and proper protection of the Confidential Information, business
strategies, employee and customer relationships and goodwill of the Company and
its Affiliates now existing or to be developed in the future. Executive
expressly acknowledges and agrees that each and every commitment and restraint
imposed by this Agreement is reasonable with respect to subject matter, time
period and geographical area, in light of (i) the scope of the business of the
Company and its Affiliates, (ii) the importance of Executive to the business of
the Company and its Affiliates, (iii) Executive’s status as an officer of the
Company, and (iv) Executive’s knowledge of the business of the Company and its
Affiliates. Accordingly, Executive agrees (x) to be bound by the provisions of
Sections 7, 8, 9, 10 and 11, it being the intent and spirit that such provisions
be valid and enforceable in all respects and (y) acknowledges and agrees that
Executive shall not object to the Company, (or any other intended third-party
beneficiary of this Agreement) or any of their respective successors in interest
enforcing Sections 7, 8, 9,

 
 
 
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10 and 11 of this Agreement. Executive further acknowledges that although
Executive’s compliance with the covenants contained in Sections 7, 8, 9, 10, and
11 may prevent Executive from earning a livelihood in a business similar to the
business of the Company, Executive’s experience and capabilities are such that
Executive has other opportunities to earn a livelihood and adequate means of
support for Executive and Executive’s dependents.
 
 
7.
Noncompetition and Nonsolicitation.

 
 
(a)
Executive agrees that Executive shall not, directly or indirectly, whether by
Executive, through an Affiliate or in partnership or conjunction with, or as an
employee, officer, director, manager, member, owner, consultant or agent of, any
other Person:

 
 
(i)
while an employee of the Company and during the period ending on the six month
anniversary of Executive’s Termination Date, engage, directly or indirectly, in
activities or businesses (including without limitation by owning any interest
in, managing, controlling, participating in, consulting with, advising,
rendering services for, or in any manner engaging in the business of owning,
operating or managing any business) within the United States (including its
territories or possessions), and/or other territories (in which the Company, its
Affiliates or Subsidiaries conduct business as of the Termination Date) that
competes in the United States and/or such other territories with the Company,
its Subsidiaries or Affiliates (“Competitive Activities”) or any business that
acquires all or substantially all of the assets of, or is otherwise a successor
to, the Company (an “Other Employing Entity”);

 
 
(ii)
while an employee of the Company and during the period ending on the eighteen
(18) month anniversary of Executive’s Termination Date, solicit, entice,
encourage or intentionally influence, or attempt to solicit, entice, encourage
or influence, any employee of, or other Person who performs services for the
Company, any Other Employing Entity or any of their respective Affiliates or
Subsidiaries to resign or leave the employ or engagement of the Company or any
of their respective Affiliates or otherwise hire, employ, engage or contract any
such employee or Person, or any other Person who provided services to the
Company or any of their respective Affiliates during the six (6) months prior to
such hiring, employment, engagement or contracting, to perform services other
than for the benefit of the Company, any Other Employing Entity or any of their
respective Affiliates or Subsidiaries;

 
 
(iii)
while an employee of the Company and during the period ending on the 18 month
anniversary of Executive’s Termination Date, solicit any agents, advisors,
independent contractors or consultants of the Company, any Other Employing
Entity or any of their

 
 
 
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respective Affiliates or Subsidiaries who are under contract or doing business
with the Company, any Other Employing Entity or any of their respective
Affiliates or Subsidiaries to terminate, reduce or divert business with or from
the Company, any Other Employing Entity or any of their respective Affiliates or
Subsidiaries.
 
 
(b)
Notwithstanding Section 7(a), it shall not constitute a violation of Section
7(a) for Executive to hold not more than two percent (2%) of the outstanding
securities of any class of any publicly-traded securities of a company that is
engaged in Competitive Activities.

 
 
(c)
The restrictive periods set forth in the Section 7(a) shall be deemed
automatically extended by any period in which Executive is in violation of any
of the provisions of Section 7(a), to the extent permitted by law.

 
 
(d)
If a final and non-appealable judicial determination is made by a court of
competent jurisdiction that any of the provisions of this Section 7 constitutes
an unreasonable or otherwise unenforceable restriction against Executive, the
provisions of this Section 7 will not be rendered void but will be deemed to be
modified to the minimum extent necessary to remain in force and effect for the
longest period and largest geographic area that would not constitute such an
unreasonable or unenforceable restriction (and such court shall have the power
to reduce the duration or restrict or redefine the geographic scope of such
provision and to enforce such provision as so reduced, restricted or redefined).

 
 
(e)
Moreover, and without limiting the generality of Section 13, notwithstanding the
fact that any provision of this Section 7 is determined not to be specifically
enforceable, the Company will nevertheless be entitled to recover monetary
damages as a result of Executive’s breach of any such provision.

 
 
8.
Nondisclosure of Confidential Information.

 
 
(a)
Executive acknowledges that the Confidential Information obtained by Executive
while employed hereunder by the Company and its Affiliates is the property of
the Company or its Affiliates, as applicable. Therefore, Executive agrees that
Executive shall not, whether during or after the Employment Period, disclose,
share, transfer or provide access to any unauthorized Person or use for
Executive’s own purposes or any unauthorized Person any Confidential Information
without the prior written consent of the Company, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive’s acts or omissions in violation
of this Agreement; provided, however, that if Executive receives a request to
disclose Confidential Information pursuant to a deposition,

 
 
 
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interrogation, request for information or documents in legal proceedings,
subpoena, civil investigative demand, governmental or regulatory process or
similar process, (A) Executive shall, unless prohibited by law, promptly notify
in writing the Company, and consult with and assist the Company in seeking a
protective order or request for other appropriate remedy, (B) in the event that
such protective order or remedy is not obtained, or if the Company waives
compliance with the terms hereof, Executive shall disclose only that portion of
the Confidential Information which is legally required to be disclosed and shall
exercise reasonable efforts to provide that the receiving Person shall agree to
treat such Confidential Information as confidential to the extent possible (and
permitted under applicable law) in respect of the applicable proceeding or
process and (C) the Company shall be given an opportunity to review the
Confidential Information prior to disclosure thereof.
 
 
(b)
For purposes of this Agreement, “Confidential Information” means information,
observations and data concerning the business or affairs of the Company and its
Affiliates, or any funds or accounts managed by the foregoing, including,
without limitation, all business information (whether or not in written form)
which relates to the Company, its Affiliates, or any funds or accounts managed
by the foregoing, or their customers, suppliers or contractors or any other
third parties in respect of which the Company or any of its Affiliates has a
business relationship or owes a duty of confidentiality, or their respective
businesses or products, and which is not known to the public generally other
than as a result of Executive’s breach of this Agreement, including but not
limited to: investment methodologies, investment advisory contracts, fees and
fee schedules; investment performance of the accounts managed by the Company or
its respective Affiliates (“Track Records”); technical information or reports;
brand names, trademarks, formulas; trade secrets; unwritten knowledge and
“know-how”; operating instructions; training manuals; customer or investor
lists; customer buying records and habits; product sales records and documents,
and product development, marketing and sales strategies; market surveys;
marketing plans; profitability analyses; product cost; analyses or plans
relating to the acquisition or development of businesses, or relating to the
sale of Subsidiaries or Company assets; information relating to pricing,
competitive strategies and new product development; information relating to any
forms of compensation, employee evaluations, or other personnel-related
information; contracts; and supplier lists.  Without limiting the foregoing,
Executive agrees to keep confidential the existence of, and any information
concerning, any dispute between Executive and the Company or their respective
Subsidiaries and Affiliates, except that Executive may disclose information
concerning such dispute to the court or arbitrator that is considering such
dispute or to their respective legal counsel (provided that such counsel agrees
not to disclose any such information other than as necessary to the prosecution
or defense of such dispute). Executive acknowledges and agrees that the Track
Records were

 
 
 
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the work of teams of individuals and not any one individual and are the
exclusive property of the Company and its Affiliates, and agrees that he shall
in no event claim the Track Records as his own following termination of his
employment for the Company.
 
 
(c)
Except as set forth otherwise in this Agreement, Executive agrees that Executive
shall not disclose the terms of this Agreement, except to Executive’s immediate
family and Executive’s financial and legal advisors, or if previously disclosed
by the Company in any public filing, or as may be required by law or ordered by
a court or applicable under Section 12 of this Agreement. Executive further
agrees that any disclosure to Executive’s financial and legal advisors will only
be made after such advisors acknowledge and agree to maintain the
confidentiality of this Agreement and its terms.

 
 
(d)
Executive further agrees that Executive will not improperly use or disclose any
confidential information or trade secrets, if any, of any former employers or
any other Person to whom Executive has an obligation of confidentiality, and
will not bring onto the premises of the Company or its Affiliates any
unpublished documents or any property belonging to any former employer or any
other Person to whom Executive has an obligation of confidentiality unless
consented to in writing by the former employer or other Person.

 
 
9.
Return of Property.  Executive acknowledges that all notes, memoranda,
specifications, devices, formulas, records, files, lists, drawings, documents,
models, equipment, property, computer, software or intellectual property
relating to the businesses of the Company and its Subsidiaries and Affiliates,
in whatever form (including electronic), and all copies thereof, that are
received or created by Executive while employed hereunder by the Company or its
Subsidiaries or Affiliates (including but not limited to Confidential
Information and Inventions (as defined below)) are and shall remain the property
of the Company and its Subsidiaries and Affiliates, and Executive shall
immediately return such property to the Company upon the termination of
Executive’s employment hereunder and, in any event, at the Company’s request.
Executive further agrees that any property situated on the premises of, and
owned by, the Company or its Subsidiaries or Affiliates, including disks and
other storage media, filing cabinets or other work areas, is subject to
inspection by Company’s personnel at any time with or without notice.

 
 
10.
Intellectual Property Rights.

 
 
(a)
Executive agrees that the results and proceeds of Executive’s employment by the
Company or its Subsidiaries or Affiliates (including, but not limited to, any
trade secrets, products, services, processes, know-how, Track Record, designs,
developments, innovations, analyses, drawings, reports, techniques, formulas,
methods, developmental or experimental work,

 
 
 
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improvements, discoveries, inventions, ideas, source and object codes, programs,
matters of a literary, musical, dramatic or otherwise creative nature, writings
and other works of authorship) resulting from, or developed in the course of,
services performed by Executive for the Company while employed by the Company
and any works in progress, whether or not patentable or registrable under
copyright or similar statutes, that were made, developed, conceived or reduced
to practice or learned by Executive, either alone or jointly with others
(collectively, “Inventions”), shall be works-made-for-hire and the Company (or,
if applicable or as directed by the Company, any of its Subsidiaries or
Affiliates) shall be deemed the sole owner throughout the universe of any and
all trade secret, patent, copyright and other intellectual property rights
(collectively, “Proprietary Rights”) of whatsoever nature therein, whether or
not now or hereafter known, existing, contemplated, recognized or developed,
with the right to use the same in perpetuity in any manner the Company
determines in its sole discretion, without any further payment to Executive
whatsoever. If, for any reason, any of such results and proceeds shall not
legally be a work-made-for-hire and/or there are any Proprietary Rights which do
not accrue to the Company (or, as the case may be, any of its Subsidiaries or
Affiliates) under the immediately preceding sentence, then Executive hereby
irrevocably assigns and agrees to assign any and all of Executive’s right, title
and interest thereto, including any and all Proprietary Rights of whatsoever
nature therein, whether or not now or hereafter known, existing, contemplated,
recognized or developed, to the Company (or, if applicable or as directed by the
Company, any of its Subsidiaries or Affiliates), and the Company or such
Subsidiaries or Affiliates shall have the right to use the same in perpetuity
throughout the universe in any manner determined by the Company or such
Subsidiaries or Affiliates without any further payment to Executive
whatsoever.  As to any Invention that Executive is required to assign, Executive
shall promptly and fully disclose to the Company all information known to
Executive concerning such Invention.
 
 
(b)
Executive agrees that, from time to time, as may be requested by the Company and
at the Company’s sole cost and expense, Executive shall do any and all
reasonable and lawful things that the Company may reasonably deem useful or
desirable to establish or document the Company’s exclusive ownership throughout
the United States of America or any other country of any and all Proprietary
Rights in any such Inventions, including the execution of appropriate copyright
and/or patent applications or assignments.  To the extent Executive has any
Proprietary Rights in the Inventions that cannot be assigned in the manner
described above, Executive unconditionally and irrevocably waives the
enforcement of such Proprietary Rights. This Section 10(b) is subject to and
shall not be deemed to limit, restrict or constitute any waiver by the Company
of any Proprietary Rights of ownership to which the Company may be entitled by
operation of law by virtue of Executive’s employment by the

 
 
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Company. Executive further agrees that, from time to time, as may be requested
by the Company and at the Company’s sole cost and expense, Executive shall
assist the Company in every reasonable, proper and lawful way to obtain and from
time to time enforce Proprietary Rights relating to Inventions in any and all
countries.  To this end, Executive shall execute, verify and deliver such
documents and perform such other acts (including appearances as a witness) as
the Company may reasonably request for use in applying for, obtaining,
perfecting, evidencing, sustaining, and enforcing such Proprietary Rights and
the assignment thereof.  In addition, Executive shall execute, verify, and
deliver assignments of such Proprietary Rights to the Company or its designees.
Executive’s obligation to provide reasonable assistance to the Company with
respect to Proprietary Rights relating to such Inventions in any and all
countries shall continue beyond the termination of the Employment Period.
 
 
(c)
Executive hereby waives and quitclaims to the Company any and all claims, of any
nature whatsoever, that Executive now or may hereafter have for infringement of
any Proprietary Rights assigned hereunder to the Company.

 
 
11.
Nondisparagement.

 
 
(a)
During Executive’s employment with the Company and thereafter, Executive agrees
not to make, publish or communicate at any time to any person or entity,
including, but not limited to, customers, clients and investors of the Company,
its Affiliates, or any entity affiliated with Philip A. Falcone or any of his
family members, any Disparaging (defined below) remarks, comments or statements
concerning the Company its Affiliates, any entity affiliated with Philip A.
Falcone or any of his family members, or any of their respective present and
former members, partners, directors, officers, employees or agents.

 
 
(b)
In the event (i) Executive’s employment terminates for any reason and; and (ii)
Executive provides the Company with an irrevocable waiver and general release in
favor of the Released Parties in the Company’s customary form that has become
effective and irrevocable in accordance with its terms, the Company agrees that
the CEO and Board shall not make, publish, or communicate at any time to any
person or entity any Disparaging (defined below) remarks, comments or statements
concerning Executive, except nothing herein shall prevent the Company from
making truthful statements regarding Executive’s termination as required or, in
the discretion of the Board, deemed advisable to be made in the Company’s public
filings.

 
 
(c)
For the purposes of this Section 11, “Disparaging” remarks, comments or
statements are those that impugn the character, honesty, integrity,

 
 
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morality, business acumen or abilities of the individual or entity being
disparaged.
 
 
(d)
Notwithstanding the foregoing, this Section 11 does not apply to (i) any
truthful testimony, pleading, or sworn statements in any legal proceeding; (ii)
attorney-client communications; or (iii) any communications with a government or
regulatory agency, and further, it shall not be construed to prevent Executive
from filing a charge with the Equal Employment Opportunity Commission or a
comparable state or local agency.

 
 
12.
Notification of Employment or Service Provider Relationship.  Executive hereby
agrees that prior to accepting employment with, or agreeing to provide services
to, any other Person during any period during which Executive remains subject to
any of the covenants set forth in Section 7, Executive shall provide such
prospective employer with written notice of such provisions of this Agreement,
with a copy of such notice delivered to the Company not later than seven (7)
days prior to the date on which Executive is scheduled to commence such
employment or engagement.

 
 
13.
Remedies and Injunctive Relief.  Executive acknowledges that a violation by
Executive of any of the covenants contained in Section 7, 8, 9, 10 or 11 would
cause irreparable damage to the Company in an amount that would be material but
not readily ascertainable, and that any remedy at law (including the payment of
damages) would be inadequate. Accordingly, Executive agrees that,
notwithstanding any provision of this Agreement to the contrary, the Company may
be entitled (without the necessity of showing economic loss or other actual
damage and without the requirement to post a bond) to injunctive relief
(including temporary restraining orders, preliminary injunctions and/or
permanent injunctions) in any court of competent jurisdiction for any actual or
threatened breach of any of the covenants set forth in Section 7, 8, 9, 10 or 11
in addition to any other legal or equitable remedies it may have.  The preceding
sentence shall not be construed as a waiver of the rights that the Company may
have for damages under this Agreement or otherwise, and all of the Company’s
rights shall be unrestricted.

 
 
14.
Representations of Executive; Advice of Counsel.

 
 
(a)
Executive represents, warrants and covenants that as of the date hereof: (i)
Executive has the full right, authority and capacity to enter into this
Agreement and perform Executive’s obligations hereunder, (ii) Executive is not
bound by any agreement that conflicts with or prevents or restricts the full
performance of Executive’s duties and obligations to the Company hereunder
during or after the Employment Period and (iii) the execution and delivery of
this Agreement shall not result in any breach or violation of, or a default
under, any existing obligation, commitment or agreement to which Executive is
subject.

 
 
 
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(b)
Prior to execution of this Agreement, Executive was advised by the Company of
Executive’s right to seek independent advice from an attorney of Executive’s own
selection regarding this Agreement. Executive acknowledges that Executive has
entered into this Agreement knowingly and voluntarily and with full knowledge
and understanding of the provisions of this Agreement after being given the
opportunity to consult with counsel.  Executive further represents that in
entering into this Agreement, Executive is not relying on any statements or
representations made by any of the Company’s directors, officers, employees or
agents which are not expressly set forth herein, and that Executive is relying
only upon Executive’s own judgment and any advice provided by Executive’s
attorney.

 
 
15.
Cooperation.  Executive agrees that, upon reasonable notice and without the
necessity of the Company obtaining a subpoena or court order, Executive shall
provide reasonable cooperation in connection with any suit, action or proceeding
(or any appeal from any suit, action or proceeding), or the decision to commence
on behalf of the Company any suit, action or proceeding, and any investigation
and/or defense of any claims asserted against any of the Company’s or its
Affiliates’ current or former directors, officers, employees, shareholders,
partners, members, agents or representatives of any of the foregoing, which
relates to events occurring during Executive’s employment hereunder by the
Company as to which Executive may have relevant information (including but not
limited to furnishing relevant information and materials to the Company or its
designee and/or providing testimony at depositions and at trial), provided that
with respect to such cooperation occurring following termination of the
Employment Period, the Company shall reimburse Executive for expenses reasonably
incurred in connection therewith and shall schedule such cooperation to the
extent reasonably practicable so as not to unreasonably interfere with
Executive’s business or personal affairs.  Notwithstanding anything to the
contrary, in the event the Company requests cooperation from Executive after his
employment with the Company has terminated and at a time when Executive is not
receiving any severance pay from the Company, Executive shall not be required to
devote more than forty (40) hours of his time per year with respect to this
Section 15, except that such forty (40) hour cap shall not include or apply to
any time spent testifying at a deposition or at trial, or spent testifying
before or being interviewed by any administrative or regulatory agency.

 
 
16.
Withholding.  The Company may deduct and withhold from any amounts payable under
this Agreement such Federal, state, local, non-U.S. or other taxes as are
required or permitted to be withheld pursuant to any applicable law or
regulation.

 
 
 
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17.
Assignment.

 
 
(a)
This Agreement is personal to Executive and without the prior written consent of
the Company shall not be assignable by Executive, and any assignment in
violation of this Agreement shall be void.

 
 
(b)
This Agreement shall be binding on, and shall inure to the benefit of, the
parties to it and their respective heirs, legal representatives, successors and
permitted assigns (including, without limitation, successors by merger,
consolidation, sale or similar transaction and in the event of Executive’s
death, Executive’s estate and heirs in the case of any payments due to Executive
hereunder).

 
 
(c)
Executive acknowledges and agrees that all of Executive’s covenants and
obligations to the Company, as well as the rights of the Company hereunder,
shall run in favor of and shall be enforceable by the Company and any successor
or assign to all or substantially all of the Company’s business or assets.

 
 
18.
Arbitration.  Any controversy, claim or dispute between the parties relating to
Executive’s employment or termination of employment, whether or not the
controversy, claim or dispute arises under this Agreement (other than any
controversy or claim arising under Section 7 or Section 8), shall be resolved by
arbitration in accordance with the Employment Arbitration Rules and Mediation
Procedures (“Rules”) of the American Arbitration Association through a single
arbitrator selected in accordance with the Rules.  The decision of the
arbitrator shall be rendered within thirty (30) days of the close of the
arbitration hearing and shall include written findings of fact and conclusions
of law reflecting the appropriate substantive law. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof in the State of New York.  In reaching his or her decision, the
arbitrator shall have no authority (a) to authorize or require the parties to
engage in discovery (provided, however, that the arbitrator may schedule the
time by which the parties must exchange copies of the exhibits that, and the
names of the witnesses whom, the parties intend to present at the hearing), (b)
to interpret or enforce Section 7 or Section 8 of the Agreement (for which
Section 19 shall provide the sole and exclusive venue), (c) to change or modify
any provision of this Agreement, (d) to base any part of his or her decision on
the common law principle of constructive termination, or (e) to award punitive
damages or any other damages not measured by the prevailing party’s actual
damages and may not make any ruling, finding or award that does not conform to
this Agreement.  Each party shall bear all of his or its own legal fees, costs
and expenses of arbitration to the fullest extent permitted by applicable law,
and one-half (½) of the costs of the arbitrator.

 
 
19.
Governing Law.  This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without reference to its conflict of
law provisions.  Furthermore, as to Section 7 and Section 8, Executive and the
Company each agrees and consents to submit to personal jurisdiction in the state
of New York in any state or federal court of competent subject matter

 
 
 
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jurisdiction situated in New York County, New York. Executive and the Company
further agree that the sole and exclusive venue for any suit arising out of, or
seeking to enforce, the terms of Section 7 and Section 8 of this Agreement shall
be in a state or federal court of competent subject matter jurisdiction situated
in New York County, New York.  In addition, Executive and the Company waive any
right to challenge in another court any judgment entered by such New York County
court or to assert that any action instituted by the Company in any such court
is in the improper venue or should be transferred to a more convenient
forum.  Further, Executive and the Company waive any right he may otherwise have
to a trial by jury in any action to enforce the terms of this Agreement.  The
parties hereto irrevocably consent to the service of any and all process in any
suit, action or proceeding arising out of or relating to this Agreement by the
mailing of copies of such process to such party at such party’s address
specified in Section 24, or such other updated address as has been provided to
the other party from time to time in accordance with Section 24.  Each party
shall bear its own costs and expenses (including reasonable attorneys’ fees and
expenses) incurred in connection with any dispute arising out of or relating to
this Agreement.
 
 
20.
Amendment; No Waiver; 409A

 
 
(a)
No provisions of this Agreement may be amended, modified, waived or discharged
except by a written document signed by Executive and a duly authorized officer
of the Company (other than Executive).

 
 
(b)
The failure of a party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver of such party’s
rights or deprive such party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.  No failure or delay
by either party in exercising any right or power hereunder will operate as a
waiver thereof, nor will any single or partial exercise of any such right or
power, or any abandonment of any steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.

 
 
(c)
It is the intention of the Company and Executive that this Agreement comply with
the requirements of Section 409A, and this Agreement will be interpreted in a
manner intended to comply with or be exempt from Section 409A.  The Company and
Executive agree to negotiate in good faith to make amendments to this Agreement
as the parties mutually agree are necessary or desirable to avoid the imposition
of taxes or penalties under Section 409A. Notwithstanding the foregoing,
Executive shall be solely responsible and liable for the satisfaction of all
taxes and penalties that may be imposed on or for the account of Executive in
connection with this Agreement (including any taxes and penalties under Section
409A), and neither the Company nor any Affiliate shall have any obligation to

 
 
 
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indemnify or otherwise hold Executive (or any beneficiary) harmless from any or
all of such taxes or penalties.
 
 
(d)
Notwithstanding anything in this Agreement to the contrary, in the event that
Executive is deemed to be a “specified employee” within the meaning of Section
409A(a)(2)(B)(i), no payments hereunder that are “deferred compensation” subject
to Section 409A shall be made to Executive prior to the date that is six (6)
months after the date of Executive’s “separation from service” (as defined in
Section 409A) or, if earlier, Executive’s date of death.  Following any
applicable six (6) month delay, all such delayed payments will be paid in a
single lump sum on the earliest permissible payment date.  For purposes of
Section 409A, each of the payments that may be made under this Agreement are
designated as separate payments.

 
 
(e)
For purposes of this Agreement, with respect to payments of any amounts that are
considered to be “deferred compensation” subject to Section 409A, references to
“termination of employment” (and substantially similar phrases) shall be
interpreted and applied in a manner that is consistent with the requirements of
Section 409A relating to “separation from service”.

 
 
(f)
To the extent that any reimbursements pursuant to Section 4(e), 4(g) or 15 are
taxable to Executive, any such reimbursement payment due to Executive shall be
paid to Executive as promptly as practicable, and in all events on or before the
last day of Executive’s taxable year following the taxable year in which the
related expense was incurred.  The reimbursements pursuant to Section 4(e), 4(g)
and 15 are not subject to liquidation or exchange for another benefit and the
amount of such benefits and reimbursements that Executive receives in one
taxable year shall not affect the amount of such benefits or reimbursements that
Executive receives in any other taxable year.

 
 
21.
Indemnification.  To the extent permitted by law and the Company’s governing
documents and applicable insurance agreements, Company shall indemnify
Executive, hold Executive harmless, and make advances for expenses (including
attorneys and costs) to Executive (subject to Executive’s providing an
undertaking to repay Company that is acceptable to Company) with respect to any
and all losses, claims, demands, liabilities, costs, damages, expenses
(including, without limitation, reasonable attorneys’ fees and expenses) and
causes of action imposed on, incurred by, asserted against or to which Executive
may otherwise become subject by reason of or in connection with any act or
omission of Executive, including any negligent act or omission, for and on
behalf of Company that occurs during Executive’s employment with the Company or
in connection with Executive providing cooperation to the Company as set forth
in Section 15, that Executive reasonably and in good faith believes is in
furtherance of the interest of Company, unless such act or omission constitutes
gross negligence or intentional misconduct or is outside of the scope of
Executive’s authority, provided, however,

 
 
 
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that this Section 21 shall not be construed to grant Executive a right to be
indemnified by Company for actions or proceedings brought by Company for breach
or anticipated breach of this Agreement by Executive.
 
 
22.
Severability.  If any provision or any part thereof of this Agreement, including
Sections 7, 8, 9, 10 and 11 hereof, as applied to either party or to any
circumstances, shall be adjudged by a court of competent jurisdiction to be
invalid or unenforceable, the same shall in no way affect any other provision or
remaining part thereof of this Agreement, which shall be given full effect
without regard to the invalid or unenforceable provision or part thereof, or the
validity or enforceability of this Agreement.  Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.

 
 
23.
Entire Agreement.  This Agreement constitutes the entire agreement and
understanding between the Company and Executive with respect to the subject
matter hereof and supersedes all prior agreements and understandings (whether
written or oral), between Executive and the Company, relating to such subject
matter.  None of the parties shall be liable or bound to any other party in any
manner by any representations and warranties or covenants relating to such
subject matter except as specifically set forth herein.

 
 
24.
Survival.  The rights and obligations of the parties under the provisions of
this Agreement (including without limitation, Sections 7 through 13 and Section
15) shall survive, and remain binding and enforceable, notwithstanding
the termination of this Agreement, the termination of Executive’s employment
hereunder or any settlement of the financial rights and obligations arising from
Executive’s employment hereunder, to the extent necessary to preserve the
intended benefits of such provisions.

 
 
25.
No Construction against Drafter.  No provision of this Agreement or any related
document will be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or drafted such
provision.

 
 
26.
Clawback.  Executive acknowledges that to the extent required by applicable law
or written company policy adopted to implement the requirements of such law
(including without limitation Section 304 of the Sarbanes Oxley Act and Section
954 of the Dodd Frank Act), the Annual Bonus, signing bonus (if any) and other
incentive compensation shall be subject to any required clawback, forfeiture,
recoupment or similar requirement.

 
 
27.
Notices.  All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent by
facsimile

 
 
 
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or sent, postage prepaid, by registered, certified or express mail or overnight
courier service and shall be deemed given when so delivered by hand or
facsimile, or if mailed, three days after mailing (one business day in the case
of express mail or overnight courier service) to Executive at the most recent
address listed in Company records and to the Company at the following address
(or at such other address for a party as shall be specified by like notice):
 
If to the Company:                       Harbinger Group Inc.
Attn:  General Counsel
450 Park Avenue
30th Floor
New York, NY, 10222

With a copy to:                             Bryan Cave LLP
1290 Avenue of the Americas
New York, NY  10104-3300
(212) 541-2000
Attn:  Vincent Alfieri, Esq.
 
 
28.
Headings and References.  The headings of this Agreement are inserted for
convenience only and neither constitute a part of this Agreement nor affect in
any way the meaning or interpretation of this Agreement.  When a reference in
this Agreement is made to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated.

 
 
29.
Counterparts.  This Agreement may be executed in one or more counterparts
(including via facsimile and electronic image scan (PDF), each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same instrument and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.

 
 
30.
Conditions to Employment. This Agreement and the commencement of your employment
are contingent upon the completion of a background check and drug screening test
acceptable to the Company, and on your providing statutorily required
documentation of your eligibility to work in the United States.

 
 
 
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties as of
the date first written above.
 
HARBINGER GROUP INC.
             
By:
/s/ Thomas A. Williams
 
Name:
Thomas A. Williams
 
Title:
Executive Vice President & Chief Financial Officer
             
Michael Sena
     
/s/ Michael Sena
 

                               

 
 
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Appendix A – Corporate Bonus
 
Your Corporate Bonus will be determined as follows.  At the beginning of the
year, the Company will establish a target bonus pool for all plan participants
(“Target Pool”).  Promptly following the end of the fiscal year, the Company
will fund a bonus pool (“Corporate Bonus Pool”) equal to 12% of the excess, if
any, of (A) adjusted net asset value of the Company (“NAV”) at the end of the
year over (B) NAV at the beginning of the year plus a required threshold return
of  7% (the “Threshold Return”).  If the Threshold Return is not achieved for
the year, then no Corporate Bonus shall be paid for the year.  In addition, if
the Threshold Return is not achieved for a year, then the Corporate Bonus Pool
for the next year shall be based on growth as compared to the highest NAV for
the preceding two years (and still subject to the Threshold Return).
 
If amounts in excess of the Threshold Return are achieved, then the Corporate
Bonus Pool will be funded and paid out up to the maximum amount in the Corporate
Bonus Pool.  Your portion of the Corporate Bonus Pool for each fiscal year in
which you are eligible for a Corporate Bonus will be calculated as follows: (a)
the Compensation Committee will determine, in its sole discretion, the portion
of the overall Corporate Pool for such fiscal year allocable to bonus eligible
employees that are comparable to you, based, among other considerations, on the
contribution of such employees to increasing the NAV for such fiscal year; and
(b) the President and/or Chief Executive Officer of the Company will determine,
in their sole discretion, your allocation of such portion of the overall
Corporate Pool, based on your contribution to increasing the NAV for such fiscal
year.
 
If the Bonus Pool is less than or equal to two times the Target Pool, then the
Bonus Pool (and each Corporate Bonus) will be paid out currently within 74 days
after the end of the applicable fiscal year.  All payments and immediately
vested grants are subject to withholding and deductions as required by
applicable laws.
 
If the Bonus Pool is in excess of two times the Target Pool and you are awarded
a Corporate Bonus in addition to the payments set forth in the preceding
paragraph, then, subject to adjustment as set forth below, such excess amounts
(the “Deferred Amounts”) will be paid as follows: (W) 20% of the Deferred
Amounts shall be paid out in cash on the first anniversary of the original
payment date, (X) 20% of the Deferred Amounts shall be paid out in cash on the
second anniversary of the original payment date (together, the amounts described
in clauses (W) and (X), “Deferred Cash”), (Y) 51% of the Deferred Amounts will
be granted as restricted stock (which restrictions will lapse in substantially
equal installments based on continued service with the Company on each of the
second and third anniversary of the Grant Date) and (Z) 9% of the Deferred
Amounts will consist of stock options which will vest in substantially equal
installments on the second and third anniversary of the Grant Date, in each case
subject to continued employment on the relevant anniversary, subject to any
exception set forth in the Company’s Severance Benefits Plan.
 
If there are Deferred Amounts payable for a year, and the increase in NAV in
either of the next two years does not exceed the Threshold Return for each of
such years (or there is a decline in NAV in either of the next two years), then
a portion of the Deferred Cash which would otherwise be paid for the year shall
be reduced (and not paid), corresponding to the
 
 
 
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decrease (expressed in percentage) in NAV below the Threshold Return.  For
illustrative purposes only, if the NAV in the first year increases by only 1%
over the NAV for the prior year, then the portion of the Deferred Cash that
would otherwise be payable on the first anniversary of the original payment date
will be reduced by 6% (7% Threshold Return minus 1% NAV growth achieved); but if
the NAV in the first year decreases by 10% from the NAV for the prior year, then
the portion of the Deferred Cash that would otherwise be payable on the first
anniversary of the original payment date will be reduced by 17% (7% Threshold
Return minus a negative 10% NAV growth achieved).  Deferred equity is not
subject to reduction pursuant to this paragraph.
 
The Board or the Compensation Committee may alter the method for allocating the
Corporate Bonus Pool, and the mix of cash and equity that is distributed in
payment of bonuses, for fiscal year 2013 and future years. The Board (and
Compensation Committee) currently intends to continue the bonus plan (for fiscal
2013 and future years) but retains the power to amend, modify or terminate the
Bonus Plan.
 
 
 
 
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