EXHIBIT 10.1
 
TRANSITION SERVICES AGREEMENT
 
1.   Recitals.
 
(a)           Harbinger Group Inc. (the “Company”) and Francis T. McCarron
(“Employee”) are parties to an employment agreement dated as of December 24,
2009 (the “Employment Agreement”);
 
(b)           Employee has advised the Company that he intends to resign from
employment as permitted by the Employment Agreement;
 
(c)           The Company has responded (i) by requesting that Employee continue
to perform his current Chief Financial Officer (“CFO”) responsibilities as a
full time employee through April 30, 2012 in exchange for certain compensation
and other covenants, as set forth in this Transition Services Agreement (the
“Agreement”) and the Second Release Agreement (the “Second Agreement”, in the
form annexed hereto as Appendix A) (together, the “Agreements”);
 
(d)           Employee has agreed to the Company’s requests and offer as
described herein;
 
(e)           Employee and the Company agree that any provisions in the
Employment Agreement requiring advance notice of resignation from employment
have been satisfied in full; and
 
(f)           In consideration of the Company’s providing certain payments and
benefits, as explained herein, Employee has agreed to continue in employment and
to release all claims against the Company and other specified persons, other
than any claims that survive under the Employment Agreement with respect to any
rights by Employee to indemnification or for insurance coverage, including
without limitation, under applicable Directors and Officers Liability Policies,
and to the other promises contained  in this Agreement and in the Second
Agreement.
 
 
 
2.
Resignation Date

 
Employee and the Company acknowledge and agree that the Recitals set forth in
Paragraph 1 are accurate.  Employee and the Company agree that Employee will
continue to perform his current CFO duties and responsibilities on a full time
basis through April 30, 2012 pursuant to the terms of the Employment
Agreement.  Employee’s last day of employment (April 30, 2012) is referred to
herein as the “Termination Date.”  As of the Termination Date, Employee will
resign and be relieved of the duties and responsibilities of his position, and
will have no authority to and may not represent himself as an employee or agent
of the Company for any purpose.  Notwithstanding the foregoing, (a) Employee
will immediately relinquish his title and responsibilities as Chief Financial
Officer, but not his title as Executive Vice President, at such time as the
Company appoints a new Chief Financial Officer or another person is designated
by the Company to act as the Company’s Principal Financial Officer, but will
continue to provide full time transition services as requested by the Company
through April 30, 2012, and (b) the Company may elect to instruct Employee to
cease performing services on
 
 
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behalf of the Company before April 30, 2012, in which case the Company will
continue to pay Employee Base Salary (as defined in the Employment Agreement)
and provide benefits pursuant to Section 5D of the Employment Agreement through
April 30, 2012.
 
 
3.
Payments to Employee

 
Provided that Employee performs his CFO duties consistent with past practice and
does not resign for any reason before April 30, 2012, and Employee delivers to
the Company signed originals of both this Agreement and the Second Agreement (as
and when each such Agreement is to be executed in accordance with their
respective terms) and does not timely revoke either this Agreement or the Second
Agreement, and subject to Employee’s compliance with Paragraphs 9G, 9H and 18 of
the Employment Agreement and Paragraph 9 of this Agreement, the Company will pay
and provide Employee, subject to the terms and conditions of the Agreements, and
Employee will accept, as and on behalf of Releasor from the Company on behalf of
each Releasee, the payments and benefits stated in Paragraphs 3(a) and 3(b)
below (the “Transition Agreement Payments”), in consideration for Employee’s
services under Paragraph 2 of this Agreement, his release of claims against the
Company as set forth in the Agreements, and the other promises and obligations
set forth in the Agreements.
 
(a)             Cash Payments.  The Company agrees to make a payment of
$250,000, less all deductions and withholdings required by applicable law,
within five (5) business days after the Effective Date of the Second Agreement
(as defined in Paragraph 8 of the Second Agreement), and to make an additional
payment of $250,000, less all deductions and withholdings required by applicable
law within ninety (90) calendar days after the Effective Date of the Second
Agreement.
 
(b)             COBRA and Medical Premium Payments.  Pursuant to the provisions
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”), the Company will provide the required COBRA notification after the
Termination Date and the COBRA benefit entitlement period of eighteen months
shall commence beginning in the first month following the Termination
Date.  Employee, and Employee’s spouse and dependents, as applicable, may elect
COBRA coverage under the provisions of COBRA.  If Employee (including Employee’s
spouse and dependents) elects COBRA coverage, the Company will pay the full cost
of COBRA premiums, on an after-tax basis, for a period of twelve (12) months or
until Employee obtains through another employer individual or family coverage
that covers all of Employee’s pre-existing conditions (including pre-existing
conditions of Employee’s spouse and dependents), whichever comes
first.  Employee will be responsible for immediately notifying the Company if
Employee obtains alternative insurance.  Employee will be responsible for the
entire premium amount after the twelve (12) month period.  If Employee declines
COBRA coverage, the Company will not make any alternative payment to Employee in
lieu of paying for COBRA premiums.
 
(c)             Employee’s right to exercise the vested portion of the Initial
Option (as defined in the Employment Agreement) (the “Vested Option”), which
gives Employee the right to purchase 83,333 shares of the Company’s common
stock, shall be governed by the Stock Option Agreement (as defined in the
Employment Agreement).  The unvested portion of the Initial Option shall not
vest or be exercisable.  Employee’s rights to receive benefits after the
 
 
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Termination Date from employee benefit plans in which he was a participant while
employed by the Company shall be governed by the terms of such employee benefit
plans.
 
(d)             Employee acknowledges and agrees that: (i) the Transition
Agreement Payments set forth above are adequate consideration for all of the
terms of the Agreements; (ii) the Transition Agreement Payments set forth above
do not include any benefit, monetary or otherwise, that was earned or accrued or
to which Employee was already entitled on the date this Agreement was executed
by Employee and the Company; and (iii) any monetary or other benefits which,
prior to the execution of this Agreement, Employee may have earned or accrued or
to which Employee may have been entitled, have been paid, or such payments or
benefits are expressly addressed in this Agreement or have been released, waived
or settled by Releasor pursuant to the Agreements.
 
(e)             Employee shall be entitled, to the extent permitted under
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit hereunder following Employee’s death by giving
written notice thereof. In the event of Employee’s death or a judicial
determination of his incompetence, references in the Agreements to the Employee
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
 
(f)             Employee shall be under no obligation to seek other employment
after the Termination Date, and any amounts payable under this Agreement shall
not be reduced by any amounts earned by Employee from employment with or
providing services to any company after the Termination Date.
 
 
4.
Release and Waiver of Claims by Employee

 
THIS PARAGRAPH PROVIDES A COMPLETE RELEASE AND WAIVER OF ALL EXISTING AND
POTENTIAL CLAIMS EMPLOYEE MAY HAVE AGAINST EVERY PERSON AND ENTITY INCLUDED
WITHIN THE DESCRIPTION BELOW OF “RELEASEE.” BEFORE EMPLOYEE SIGNS THIS RELEASE,
EMPLOYEE MUST READ THIS PARAGRAPH 4 CAREFULLY, AND MAKE SURE THAT EMPLOYEE
UNDERSTANDS IT FULLY.
 
(a)   In consideration of Employee’s receipt and acceptance of the consideration
contained in the Agreements from and/or on behalf of Releasees, Employee, on his
own behalf and on behalf of his heirs, executors, administrators, successors and
assigns, (collectively, “Releasor”) hereby irrevocably, unconditionally and
generally releases:
 
(i)           the Company;
 
(ii)          the Company’s parents, affiliates, direct and indirect
subsidiaries, divisions, and other related entities (“Affiliates”);
 
(iii)         all funds managed by the Company and its Affiliates (“Funds”)
(collectively, the Company, its Affiliates and Funds are referred to as the “HGI
Entities”); and
 
 
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(iv)           the current and former shareholders, directors, officers,
partners, members, agents, attorneys and employees, of the HGI Entities,
including without limitation Philip A. Falcone (“Affiliated Persons”) (the
persons described in Paragraphs 4(a)(i) - (iv) are collectively referred to as
“Releasees”, and each, as “Releasee”)
 
from or in connection with, and Releasor hereby waives and/or settles, with
prejudice, any and all actions, causes of action, suits, debts, dues, sums of
money, accounts, controversies, agreements, promises, damages, judgments,
executions, or any liability, claims or demands, known or unknown and of any
nature whatsoever and which Releasor ever had, now has or hereafter can, shall
or may have as of the date of this Agreement, including, without limitation,
arising directly or indirectly pursuant to or out of any aspect of Employee’s
employment with the Company or any relationship with any other Releasee, the
payment or nonpayment of any wages or compensation, the performance of services
for the Company or any Releasee or the termination of such employment or
services.  Notwithstanding anything in this paragraph to the contrary, this
release shall not include or apply to any rights and/or claims that survive
under the Employment Agreement with respect to any rights by Employee to
indemnification or for insurance coverage, including without limitation, under
applicable Directors and Officers Liability Policies, and to the other promises
contained in the Agreements.
 
(b)           Specifically, without limitation, this release shall include and
apply   to any rights and/or claims
 
(i)           arising under any contract or employment arrangement, express or
implied, written or oral;
 
(ii)         for constructive termination, unfair dismissal and/or wrongful
dismissal or termination of employment;
 
(iii)        arising under any applicable federal, state, local or other
statutes, orders, laws, ordinances, regulations or the like, or case law, that
relate to employment or employment practices and/or, specifically, that prohibit
discrimination based upon age, race, religion, sex, national origin, pregnancy,
disability or any other unlawful bases, including without limitation, the United
States Constitution, the Civil Rights Act of 1964, as amended, the Civil Rights
Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the
Americans with Disabilities Act of 1990, as amended, the Age Discrimination in
Employment Act, as amended, the Family Medical Leave Act of 1993, as amended,
the Pregnancy Discrimination Act of 1978, as amended, Employee Retirement Income
Security Act of 1990, as amended, the Workers Adjustment and Relocation Notice
Act, as amended, the Fair Labor Standards Act, as amended, the Equal Pay Act, as
amended, and any similar applicable statutes, orders, laws, ordinances,
regulations or the like, or case law, of the State of New York or any state in
which any Releasee is subject to jurisdiction, and/or any political subdivision
thereof, including without limitation, the New York State Human Rights Law
(including its prohibitions of age discrimination), as amended, the New York
City Human Rights Law (including its prohibitions of age discrimination), as
amended, the New York Labor Law, as amended, and the New York Civil Rights Law,
as amended; or based upon any
 
 
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other federal, state or local statutes, orders, laws, ordinances, regulations or
the like, to the fullest extent permitted by such law;
 
(iv)         for tortious or harassing conduct, infliction of mental distress,
interference with contract, fraud, libel or slander, or on any other common law
basis; and
 
(v)          for damages, including without limitation, punitive or compensatory
damages, or for attorneys’ fees, expenses, costs, wages, injunctive or equitable
relief.
 
(c)           The Company and its representatives, successors and assigns
(“Company Releasor”) irrevocably, unconditionally release Employee from or in
connection with, and Company Releasor hereby waives and/or settles, with
prejudice, any and all actions, causes of action, suits, debts, dues, sums of
money, accounts, controversies, agreements, promises, damages, judgments,
executions, or any liability, claims or demands whatsoever, in law or in equity,
which the Company Releasor ever had, now has, or which hereafter can, shall or
may have, against her for, upon or by reason of any matter, cause or thing
whatsoever as of the Effective Date of this Agreement, except any claims,
demands or liabilities whatsoever, in law or in equity, which the Company
Releasor ever had, now has, or hereafter can, shall or may have that arise out
of or are related to: (i) any conduct by Employee during the period of his
employment with the Company that constitutes fraud, embezzlement, any other
criminal act, including without limitation, a conversion of any assets of the
Company; (ii) any act or omission by Employee during his employment with the
Company that may subject the Company or any Releasee to any criminal, civil or
regulatory proceeding or liability brought by or on behalf of any Federal, State
or Local governmental body or other administrative or arbitral body; (iii) any
instance of gross negligence, and/or breach by Employee of his fiduciary duty or
duty of loyalty to the Company; or (iv) any act or omission by Employee that was
beyond the scope of his  authority or duties for and on behalf of the Company,
and arising out of, relating to or upon which any person or entity not a party
to this Agreement asserts any claim or claims against any Releasee; provided,
however, that this clause 4(c) shall not release any claims for indemnification
that Employee has or may have against the Company.
 
 
5.
Employee Acknowledgments

 
By executing this Agreement, Employee agrees and acknowledges that:
 
(a)   Employee understands all of the terms of this Agreement, and such terms
are fair and reasonable, and are not the result of any fraud, duress, coercion,
pressure or undue influence exercised by or on behalf of any Releasee;
 
(b)   Employee is not relying on any representation or statement made or
contained outside of those set forth in the Agreements and Employee expressly
disclaims reliance on any such representation or statement; and
 
(c)    Employee has agreed to and entered into this Agreement and all of the
terms hereof, knowingly, freely and voluntarily.
 
 
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6.
Continued Effect of Employment Agreement

 
The Employment Agreement shall remain in full force and effect through the
Termination Date, provided, however, Employee shall not be eligible to receive
an Annual Bonus or any stock option award for 2012.  Employee acknowledges and
agrees that his employment by the Company will end pursuant to Paragraph 2 of
this Agreement and Paragraph 7C of the Employment Agreement as a result of a
termination by Employee for a reason other than a reason set forth in Paragraph
7E of the Employment Agreement.  Employee and the Company acknowledge and agree
that all of the provisions of the Employment Agreement shall cease to be in
effect as of the Termination Date, except that Paragraphs 9G, 9H, 10, 18, 21 and
22 of the Employment Agreement and the Indemnification Agreement (as described
in Paragraph 9N of the Employment Agreement) shall survive the cessation of
Employee’s employment by the Company.
 
 
7.
Covenant Not to Sue

 
Employee represents and warrants that Employee has not filed or commenced any
complaints, claims, actions or proceedings of any kind against any Releasee with
any federal, state or local court or any administrative, regulatory or
arbitration agency or body.  Employee agrees not to commence, maintain,
prosecute or participate as a party in any action or proceeding in any court or
arbitration forum against the Company or any other Releasee with respect to any
claim arising from any act, omission, transaction or occurrence up to and
including the Effective Date of the execution of this Agreement which is
released and waived by Paragraph 4 of this  Agreement.  Employee further agrees
not to instigate, encourage, assist or participate in any court action or
arbitration proceeding commenced by any other person (except a government agency
or as required by subpoena or court order) against the Company or any other
Releasee.  In the event any government agency seeks to obtain any relief on
behalf of Employee with regard to any claim released and waived by Paragraph 4
of this Agreement, Employee covenants not to accept, recover or receive any
monetary relief or award that may arise out of or in connection with any such
proceeding.
 
 
8.
Company Non-Admission

 
The Agreements and the Transition Agreement Payments made under this Agreement
are not intended to be, shall not be construed as and are not an admission or
concession by any Releasee of any wrongdoing or illegal or actionable acts or
omissions, and each Releasee expressly denies that any of them engaged in any
wrongdoing or illegal or actionable acts or omissions.
 
 
9.
Employee Assistance

 
Employee will comply with all reasonable requests from the Company or its
attorneys for assistance, information or consulting in connection with: (i) the
transition to other Company employees of on-going matters on which Employee
worked prior to the Termination Date or with respect to which Employee otherwise
has relevant knowledge, or (ii) any dispute, controversy, action or proceeding
of any kind (including without limitation the Delaware Court of Chancery
derivative action captioned Kahn v. Falcone, et al.), including appearing as a
witness in
 
 
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such action or proceeding.  The Company shall reimburse Employee for reasonable
out-of-pocket expenses incurred by Employee in connection with such assistance,
subject to Company documentation policies.  Employee’s services under this
paragraph shall not exceed a total of twenty-five (25) hours during the twelve
(12) month period commencing upon May 1, 2012.
 
 
10.
Company Remedies

 
The covenants, representations and acknowledgments made by Releasor in
this  Agreement shall survive the execution of this Agreement and the delivery
of the Transition Agreement Payments to be made hereunder.  Except as may be
prohibited by law, Releasees shall be excused and released from any obligation
to make the Transition Agreement Payments contemplated by this Agreement, and
any installment thereof, and Releasor shall be obligated to return to the
Company any such payment that has been paid pursuant to Paragraph 3(a), in the
event that Employee has committed or commits a breach of any term, condition or
covenant in the Agreements or Paragraph 18 of the Employment Agreement, in any
of which events Releasor shall also be liable for any damages suffered or
incurred by any Releasee by reason of such misstatement or breach.
Notwithstanding anything to the contrary in this Paragraph 10, under no
circumstances will the Company be excused from paying, nor shall Employee be
obligated to return, the amount of $1,000 paid to Employee under Paragraph 3(a)
of this Agreement.
 
 
11.
Entire Agreement; amendment; and severability

 
The Agreements, the Employment Agreement to the extent applicable as described
in Paragraph 6 of this Agreement, the Indemnification Agreement and the Stock
Option Agreement together constitute the sole and complete understanding and
agreement between the parties with respect to the matters set forth herein, and
there are no other agreements or understandings, whether written or oral and
whether made contemporaneously or otherwise. No term, condition, covenant,
representation or acknowledgment contained in this Agreement may be amended
unless in a writing signed by the Company and Employee.  If any section of this
Agreement is determined to be void, voidable or unenforceable, it shall have no
effect on the remainder of this Agreement, which shall remain in full force and
effect.
 
 
12.
Arbitration

 
Any controversy, claim or dispute between Employee and any Releasee relating to
(i) Employee’s employment or termination of employment, whether or not the
controversy, claim or dispute arises under the Employment Agreement, and (ii)
relating to or arising from the Agreements or the Employment Agreement 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
 
 
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hearing), (b) to change or modify any provision of the Employment Agreement or
the Agreements, (c) to base any part of his or her decision on the common law
principle of constructive termination, or (d) 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 provision. 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 (1/2)
of the costs of the arbitrator.
 
 
13.
Choice of Law and Venue

 
The Agreements, and any arbitration thereunder, shall in all respects be subject
to, governed by and enforced and construed pursuant to and in accordance with
the laws of the State of New York, without regard to and excluding the choice of
law rules of any applicable jurisdiction.  Furthermore, Employee agrees and
consents to submit to personal jurisdiction in the State of New York in any
state or federal court of competent subject matter jurisdiction situated in New
York County, New York.  In addition, Employee waives 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, Employee
waives any right he may otherwise have to a trial by jury in any action to
enforce the terms of this Agreement.
 
 
14.
Effective Date; Right of Review and Revocation

 
Employee acknowledges that the Company has advised him to consult with an
attorney regarding this Agreement.  Employee represents and agrees that he fully
understands his right to discuss all aspects of this Agreement with his attorney
and that he has carefully read, fully understands and voluntarily enters into
this Agreement.  Employee understands that he will have twenty-one (21) days
from receipt of this Agreement to sign this Agreement and accept the terms set
forth herein.  Employee further agrees that any changes to this Agreement,
whether material or immaterial, do not restart the running of the 21 day
period.  Employee may, if he so desires, accept the Company’s offer and return a
fully executed copy of this Agreement prior to the expiration of the 21 day
period should he choose to do so.  Such executed copy of this Agreement shall be
sent to Harbinger Group Inc., 450 Park Avenue, 30th Floor, New York, NY 10022,
Attention: President.  Employee acknowledges that: (a) if he signs this
Agreement after the 21 day period has expired, then this Agreement will be
voidable in the sole discretion of the Company, upon written notice to Employee,
and (b) Employee shall not be paid any portion of the Transition Agreement
Payments if this Agreement does not become effective within 60 days after such
21 day period has expired.  Employee further understands that he has seven (7)
days after his execution of this Agreement to revoke his acceptance of it by
delivering to Harbinger Group Inc., 450 Park Avenue, 30th Floor, New York, NY
10022, Attention: President, written notification of such revocation.  So long
as Employee has not effectively revoked this Agreement as set forth herein, this
Agreement will become effective and irrevocable on the eighth day after Employee
signs it (the “Effective Date”).
 
In compliance with the Older Workers Benefit Protection Act (P.L. 101-433), the
Company and Employee do hereby acknowledge and agree as follows:
 
 
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(a)             That this Agreement specifically applies to any rights or claims
Employee may have against the Company or any party released herein under the
ADEA;
 
(b)             That this Agreement does not purport to waive rights or claims
that may arise from acts or events occurring after the date that this Agreement
is executed by the parties;
 
(c)             That this Agreement shall be revocable for a seven (7) day
period following execution of this Agreement by Employee, and accordingly, this
Agreement shall not become effective or enforceable until the expiration of this
seven (7) day revocation period; and
 
(d)             That Employee has been advised by the Company to consult with an
attorney prior to signing this Agreement, has consulted with an attorney, and
has been given a period of twenty-one (21) days within which to consider whether
to sign this Agreement and that, if Employee executes this Agreement prior to
such twenty-first (21st) day, he acknowledges that he has waived his right to
consider this Agreement for the remainder of such period.
 
 
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have
hereunto set their hands.
 

    /s/ Francis T. McCarron
    Francis T. McCarron
 
 
      Date: February 15, 2012

 

Harbinger Group Inc.
 
/s/ Omar Asali
Name: Omar Asali
Title: President
 
 
Date: February 15, 2012

 
 
 
 
 
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APPENDIX A
 
SECOND RELEASE AGREEMENT
 
 
1.
Recitals.

 
(a)   The parties to this Second Release Agreement (“Second Agreement”) are
Harbinger Group Inc. (the “Company”) and Francis T. McCarron (“Employee”).
 
(b)   The Company and Employee are parties to a Transition Services Agreement,
effective as of February __, 2012 (the “First Agreement”).  All capitalized
terms in this Second Agreement which are not defined herein have the meaning
defined in the First Agreement.
 
(c)   The First Agreement sets forth payments and benefits that the Company will
provide to Employee (the “Transition Agreement Payments”) subject to conditions
set forth in the First Agreement, including without limitation Employee’s
executing, delivering to the Company, and not revoking, this Second Agreement.
 
(d)   Pursuant to the First Agreement, Employee’s resignation from employment
with the Company was effective on April 30, 2012 (the “Termination Date”).
 
(e)   Employee and the Company desire to fully and finally resolve and settle
any and all issues between them, actual or potential, whether or not relating to
Employee’s employment with the Company.
 
(f)   In exchange for the Transition Agreement Payments, Employee has agreed to
a release of all claims and the other promises contained herein.
 
 
2.
Release and Waiver of Claims by Employee

 
THIS PARAGRAPH PROVIDES A COMPLETE RELEASE AND WAIVER OF ALL EXISTING AND
POTENTIAL CLAIMS EMPLOYEE MAY HAVE AGAINST EVERY PERSON AND ENTITY INCLUDED
WITHIN THE DESCRIPTION BELOW OF “RELEASEE.” BEFORE EMPLOYEE SIGNS THIS RELEASE,
EMPLOYEE MUST READ THIS PARAGRAPH 2 CAREFULLY, AND MAKE SURE THAT EMPLOYEE
UNDERSTANDS IT FULLY.
 
(a)             In consideration of Employee’s receipt and acceptance of the
consideration contained in the Agreements from and/or on behalf of Releasees,
Employee, on his own behalf and on behalf of his heirs, executors,
administrators, successors and assigns, (collectively, “Releasor”) hereby
irrevocably, unconditionally and generally releases:
 
(i)           the Company;
 
(ii)          the Company’s parents, affiliates, direct and indirect
subsidiaries, divisions, and other related entities (“Affiliates”);
 
 
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(iii)         all funds managed by the Company and its Affiliates (“Funds”)
(collectively, the Company, its Affiliates and Funds are referred to as the “HGI
Entities”); and
 
(iv)          the current and former shareholders, directors, officers,
partners, members, agents, attorneys and employees, of the HGI Entities,
including without limitation Philip A. Falcone (“Affiliated Persons”) (the
persons described in Paragraphs 2(a)(i) - (iv) are collectively referred to as
“Releasees”, and each, as “Releasee”)
 
from or in connection with, and Releasor hereby waives and/or settles, with
prejudice, any and all actions, causes of action, suits, debts, dues, sums of
money, accounts, controversies, agreements, promises, damages, judgments,
executions, or any liability, claims or demands, known or unknown and of any
nature whatsoever and which Releasor ever had, now has or hereafter can, shall
or may have as of the date of this Second Agreement, including, without
limitation, arising directly or indirectly pursuant to or out of any aspect of
Employee’s employment with the Company or any relationship with any other
Releasee, the payment or nonpayment of any wages or compensation (including
vacation pay), the performance of services for the Company or any Releasee or
the termination of such employment or services.
 
(b)             Specifically, without limitation, this release shall include and
apply to any rights and/or claims
 
(i)           arising under any contract or employment arrangement, express or
implied, written or oral, entered into between Employee and the Company;
 
(ii)         for constructive termination, unfair dismissal and/or wrongful
dismissal or termination of employment;
 
(iii)        arising under any applicable federal, state, local or other
statutes, orders, laws, ordinances, regulations or the like, or case law, that
relate to employment or employment practices and/or, specifically, that prohibit
discrimination based upon age, race, religion, sex, national origin, pregnancy,
disability or any other unlawful bases, including without limitation, the United
States Constitution, the Civil Rights Act of 1964, as amended, the Civil Rights
Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the
Americans with Disabilities Act of 1990, as amended, the Age Discrimination in
Employment Act, as amended, the Family Medical Leave Act of 1993, as amended,
the Pregnancy Discrimination Act of 1978, as amended, Employee Retirement Income
Security Act of 1990, as amended, the Workers Adjustment and Relocation Notice
Act, as amended, the Fair Labor Standards Act, as amended, the Equal Pay Act, as
amended, and any similar applicable statutes, orders, laws, ordinances,
regulations or the like, or case law, of the State of New York or any state in
which any Releasee is subject to jurisdiction, and/or any political subdivision
thereof, including without limitation, the New York State Human Rights Law
(including its prohibitions of age discrimination), as amended, the New York
City Human Rights Law (including its prohibitions of age discrimination), as
amended, the New York Labor Law, as amended, and the New York Civil Rights Law,
as amended; or based upon any
 
 
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other federal, state or local statutes, orders, laws, ordinances, regulations or
the like, to the fullest extent permitted by such law;
 
(iv)         for tortious or harassing conduct, infliction of mental distress,
interference with contract, fraud, libel or slander, or on any other common law
basis; and
 
(v)          for damages, including without limitation, punitive or compensatory
damages, or for attorneys’ fees, expenses, costs, wages, injunctive or equitable
relief.
 
(c)           The Company and its representatives, successors and assigns
(“Company Releasor”) irrevocably, unconditionally release Employee from or in
connection with, and Company Releasor hereby waives and/or settles, with
prejudice, any and all actions, causes of action, suits, debts, dues, sums of
money, accounts, controversies, agreements, promises, damages, judgments,
executions, or any liability, claims or demands whatsoever, in law or in equity,
which the Company Releasor ever had, now has, or which hereafter can, shall or
may have, against her for, upon or by reason of any matter, cause or thing
whatsoever as of the Effective Date of this Agreement, except any claims,
demands or liabilities whatsoever, in law or in equity, which the Company
Releasor ever had, now has, or hereafter can, shall or may have that arise out
of or are related to: (i) any conduct by Employee during the period of his
employment with the Company that constitutes fraud, embezzlement, any other
criminal act, including without limitation, a conversion of any assets of the
Company; (ii) any act or omission by Employee during his employment with the
Company that may subject the Company or any Releasee to any criminal, civil or
regulatory proceeding or liability brought by or on behalf of any Federal, State
or Local governmental body or other administrative or arbitral body; (iii) any
instance of gross negligence, and/or breach by Employee of his fiduciary duty or
duty of loyalty to the Company; or (iv) any act or omission by Employee that was
beyond the scope of his  authority or duties for and on behalf of the Company,
and arising out of, relating to or upon which any person or entity not a party
to this Agreement asserts any claim or claims against any Releasee; provided,
however, that this clause 2(c) shall not release any claims for indemnification
that Employee has or may have against the Company.
 
 
3.
Employee Acknowledgments

 
By executing this Second Agreement, Employee agrees and acknowledges that:
 
(a)    Employee understands all of the terms of this Second Agreement, and such
terms are fair and reasonable, and are not the result of any fraud, duress,
coercion, pressure or undue influence exercised by or on behalf of any Releasee;
 
(b)   Employee is not relying on any representation or statement made or
contained outside of those set forth in the Agreements and Employee expressly
disclaims reliance on any such representation or statement;
 
(c)   Employee has agreed to and entered into this Second Agreement and all of
the terms hereof, knowingly, freely and voluntarily;
 
 
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(d)   Effective as of the Termination Date, Employee resigned any
directorship(s), officership(s), or other relationships with the Company or any
of its Affiliates; and
 
(e)   Any monetary or other benefits which, prior to the execution of this
Second Agreement, Employee may have earned or accrued or to which Employee may
have been entitled, have been paid, or such payments or benefits are expressly
addressed in Paragraph 3 of the First Agreement or have been released, waived or
settled by Releasor pursuant to the Agreements.  Employee also acknowledges that
prior to his execution of this Second Agreement, he received all wages and other
payments that may be due to him from the Company or any other Releasee through
the date of his execution of this Second Agreement, other than the payments
specifically addressed in Paragraph 3 of the First Agreement and payment for any
unused vacation days accrued through the Termination Date pursuant to the
Employment Agreement and Company policies.
 
 
4.
Covenant Not to Sue

 
Employee represents and warrants that Employee has not filed or commenced any
complaints, claims, actions or proceedings of any kind against any Releasee with
any federal, state or local court or any administrative, regulatory or
arbitration agency or body.  Employee agrees not to commence, maintain,
prosecute or participate as a party in any action or proceeding in any court or
arbitration forum against the Company or any other Releasee with respect to any
claim arising from any act, omission, transaction or occurrence up to and
including the Effective Date of the execution of this Second Agreement which is
released and waived by Paragraph 2 of this Second Agreement.  Employee further
agrees not to instigate, encourage, assist or participate in any court action or
arbitration proceeding commenced by any other person (except a government agency
or as required by subpoena or court order) against the Company or any other
Releasee.  In the event any government agency seeks to obtain any relief on
behalf of Employee with regard to any claim released and waived by Paragraph 2
of this Second Agreement, Employee covenants not to accept, recover or receive
any monetary relief or award that may arise out of or in connection with any
such proceeding.
 
 
5.
Effective Date; Right of Review and Revocation

 
Employee acknowledges that the Company has advised him to consult with an
attorney regarding this Second Agreement.  Employee represents and agrees that
he fully understands his right to discuss all aspects of this Second Agreement
with his attorney and that he has carefully read, fully understands and
voluntarily enters into this Second Agreement.  Employee understands that he
should not sign this Second Agreement until after the Termination Date, and that
he will have twenty-one (21) days after the Termination Date to sign this Second
Agreement and accept the terms set forth herein.  Employee further agrees that
any changes to this Second Agreement, whether material or immaterial, do not
restart the running of the 21 day period.  Employee may, if he so desires,
accept the Company’s offer and return a fully executed copy of this Second
Agreement prior to the expiration of the 21 day period should he choose to do
so.  Such executed copy of this Second Agreement shall be sent to Harbinger
Group Inc., 450 Park Avenue, 30th Floor, New York, NY 10022, Attention:
President.  Employee acknowledges that: (i) if he signs this Second Agreement
after the 21 day period has expired, then this Second Agreement will be voidable
in the sole discretion of the Company, upon written notice to
 
 
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Employee, and (ii) Employee shall not be paid any portion of the Transition
Agreement  Payments if the Second Agreement does not become effective within 60
days after such 21 day period has expired.  Employee further understands that he
has seven (7) days after his execution of this Second Agreement to revoke his
acceptance of it by delivering to Harbinger Group Inc., 450 Park Avenue, 30th
Floor, New York, NY 10022, Attention: President, written notification of such
revocation.  So long as Employee has not effectively revoked this Second
Agreement as set forth herein, this Second Agreement will become effective and
irrevocable on the eighth day after Employee signs it (the “Effective Date”).
 
In compliance with the Older Workers Benefit Protection Act (P.L. 101-433), the
Company and Employee do hereby acknowledge and agree as follows:
 
(a)             That this Second Agreement specifically applies to any rights or
claims Employee may have against the Company or any party released herein under
the ADEA;
 
(b)             That this Second Agreement does not purport to waive rights or
claims that may arise from acts or events occurring after the date that this
Second Agreement is executed by the parties;
 
(c)             That this Second Agreement shall be revocable for a seven (7)
day period following execution of this Second Agreement by Employee, and
accordingly, this Second Agreement shall not become effective or enforceable
until the expiration of this seven (7) day revocation period; and
 
(d)             That Employee has been advised by the Company to consult with an
attorney prior to signing this Second Agreement, has consulted with an attorney,
and has been given a period of at least twenty-one (21) days within which to
consider whether to sign this Second Agreement and that, if Employee executes
this Second Agreement prior to such twenty-first (21st) day, he acknowledges
that he has waived his right to consider the Second Agreement for the remainder
of such period.
 
 
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have
hereunto set their hands.
 
 

 
    Francis T. McCarron
 
 
      Date:

 

Harbinger Group Inc.
 
 
Name:
Authorized Signatory
 
 
Date:

 
 
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