Document:

Ex10.1_BurnsEmploymentAgreementFINAL

Exhibit 10.1
EMPLOYMENT AGREEMENT

This employment agreement (this “Agreement”) by and between Lions Gate Entertainment Corp. (“Lions Gate”) and Michael Burns (“Burns”) is entered into as of October 30, 2012 (the “Effective Date”).  Lions Gate and Burns agree that as of the Effective Date, the terms of this Agreement shall replace and supersede the employment agreement entered into as of September 1, 2006, as subsequently amended, between Burns and Lions Gate (the “Prior Agreement”), with the sole exception of Section 6 of the Prior Agreement which shall remain in full force and effect.

This Agreement relates to the terms and conditions of Burns' employment with Lions Gate for the term specified herein.

The parties hereby agree as follows:

1.    Employment. Lions Gate hereby employs Burns to serve in the capacity of Vice Chairman of Lions Gate on the terms and conditions set forth herein. Burns shall render such services as are customarily provided by persons in the capacity of Vice Chairman in the entertainment industry and as may be reasonably requested by Lions Gate. Burns hereby agrees to comply with all reasonable requirements, directions and requests, and with all reasonable rules and regulations made by Lions Gate in connection with the regular conduct of its business; to render services during Burns' employment hereunder whenever and wherever and as often as Lions Gate may reasonably require in a competent, conscientious and professional manner, and as instructed by Lions Gate in all matters, including those involving artistic taste and judgment, but there shall be no obligation on Lions Gate to cause or allow Burns to render any services, or to include all or any of Burns' work or services in any motion picture or other property or production. Notwithstanding the foregoing, Lions Gate acknowledges that Burns is a shareholder of Ignite Entertainment and Cerulean, LLC and the parties agree to negotiate at arms-length any matters concerning Lions Gate and Ignite or Cerulean.

2.    Term. Burns' employment term under this Agreement shall commence on the Effective Date and continue through and including the fifth (5th) anniversary of the Effective Date (the “Expiration Date”), subject to early termination as provided in this Agreement (the “Term”).

3.    Base Salary. Lions Gate shall pay Burns an annual fixed salary of US$1,000,000 from the Effective Date through the end of the Term (“Base Salary”) payable in equal installments in accordance with Lions Gate's standard payroll practices.

4.    Discretionary Annual Bonus.

(a)    Bonus Opportunity.  During the Term, Burns shall be eligible to receive a discretionary annual bonus (the “Discretionary Bonus”) based on Lions Gate's fiscal year. The Discretionary Bonus shall have a target of fifty percent (50%) of Burns' Base Salary.  Lions Gate's Compensation Committee (“Compensation Committee”) shall establish performance 

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criteria upon which the determination of the Discretionary Bonus amount, if any, shall be made, such criteria to be established at the beginning of the applicable fiscal year.  For Lions Gate's 2013 fiscal year, the Compensation Committee has previously determined that Burns' entitlement to a Discretionary Bonus and/or the amount of any such bonus shall be based upon the following criteria (with no emphasis to be derived from the order in which they appear):  Lions Gate's EBITDA, revenue and bottom line performance, earnings, free cash flow levels, debt reduction and interest cost savings (such financial metrics of Lions Gate to be measured on a consolidated basis), Lions Gate's share price, and growth of Lions Gate's core library asset, as well as Lions Gate's ability to pay such bonus and the Compensation Committee's consideration of such other criteria as it may determine (such as transformative transactions and initiatives completed by Lions Gate which may result in general long-term growth of the business).  For any fiscal year in which Burns is employed for only a portion of that fiscal year, Burns shall be eligible for consideration by the Compensation Committee for a pro-rata Discretionary Bonus following the end of and with respect to that fiscal year.  The Discretionary Bonus (or portion thereof if either Section 4(b) or 4(c) below applies), if any, that is payable in cash shall be payable in a timely manner, but in any event when bonuses, if any, are generally given to Lions Gate's other senior-level employees and in all events within the “short-term deferral” period provided under Treasury Regulation Section 1.409A-1(a)(4).  

(b)    Election to Receive Portion of Bonus in Equity.  In his sole discretion, Burns may elect to receive fifty percent (50%) of his earned Discretionary Bonus for a particular fiscal year in the form of equity in lieu of a cash payment; provided, however, that any such election must be made prior to the date on which the Compensation Committee determines whether any such Discretionary Bonus will be paid to Burns for such fiscal year (the date of any such determination by the Compensation Committee, the “Bonus Determination Date”).  Lions Gate shall provide notice to Burns in advance of the Bonus Determination Date such that he has a reasonable opportunity to timely make such election.  In the event that Burns elects to receive 50% of his Discretionary Bonus in this manner, the Compensation Committee will determine in its sole discretion on or before the Bonus Determination Date whether the portion of the Discretionary Bonus subject to such election will be paid in the form of an option to acquire Lions Gate common shares, an award of Lions Gate common shares, or a combination thereof as determined by the Compensation Committee (with the number of shares subject to any such option or award to be determined as provided in Section 4(d) below).  Any such option or shares awarded to Burns pursuant to such election shall be fully vested on the Bonus Determination Date, and the per share exercise price of any such option shall be equal to the closing price of a Lions Gate common share on the Bonus Determination Date.

(c)    Equity Payment of Bonus Above $1.5 Million.  In the event that the total Discretionary Bonus awarded to Burns for a given fiscal year is greater than one million five hundred thousand dollars (US$1,500,000) and without regard to whether Burns has elected to receive a portion of such Discretionary Bonus in the form of equity, the total amount of such Discretionary Bonus that is greater than one million five hundred thousand dollars (US$1,500,000) will be paid in the form of an option to acquire Lions Gate common shares, an award of Lions Gate common shares, or a combination thereof as determined by the Compensation Committee in its sole discretion (with the number of shares subject to any such option or award to be determined as provided in Section 4(d) below).  Any such option or shares 

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awarded to Burns pursuant to this Section 4(c) shall be fully vested on the Bonus Determination Date, and the per share exercise price of any such option shall be equal to the closing price of a Lions Gate common share on the Bonus Determination Date.

(d)    Determination of Equity Awarded for Bonus.  If any portion of a Discretionary Bonus is to be paid to Burns in the form of an option to acquire Lions Gate common shares pursuant to this Section 4, such option shall be evidenced by and subject to the terms of an option agreement in the form generally then used by Lions Gate to evidence grants of stock options under Lions Gate's stock incentive plan as then in effect (such form to be modified as appropriate to reflect that the option will be fully vested on the Bonus Determination Date), and the number of shares subject to such option shall be determined by the Compensation Committee on the applicable Bonus Determination Date, with the intent being that such option shall have a grant date fair value equal to the amount of the Discretionary Bonus to be so paid based on the assumptions used to value stock options for purposes of Lions Gate's financial reporting as of such date.  If any portion of a Discretionary Bonus is to be paid to Burns in the form of an award of fully vested Lions Gate common shares pursuant to this Section 4, the number of shares subject to such award shall be determined by the Compensation Committee on the applicable Bonus Determination Date based on the per-share closing price (in regular trading) of Lions Gate's common shares on that date, and such shares shall be paid to Burns at the same time cash bonuses for such fiscal year are paid as provided in Section 4(a). 
 
5.    Stock Price Bonus.  If, during the Term, the Average Stock Price of Lions Gate's common shares during a period of six (6) consecutive months is not less than US$17.00 per share, then Lions Gate shall pay Burns a one-time bonus (in addition to any other compensation payable pursuant to this Agreement) in the amount of US$700,000 (the “Stock Price Bonus”).  In addition, if during the Term the Average Stock Price of Lions Gate's common shares during a period of six (6) consecutive months is not less than US$20.00 per share, then Lions Gate shall pay Burns a one-time additional Stock Price Bonus of US$700,000.  In addition, if during the Term the Average Stock Price of Lions Gate's common shares during a period of six (6) consecutive months is not less than US$23.00 per share, then Lions Gate shall pay Burns a one-time additional Stock Price Bonus of US$700,000.  The stock price targets set forth above in this paragraph shall be subject to reasonable adjustments by the Compensation Committee for stock splits, stock dividends and similar events affecting the per-share value of Lions Gate common shares.  For purposes of the Stock Price Bonus, the “Average Stock Price” for a particular period will be the volume-weighted average of the Daily Stock Prices for each trading day during such period, and the “Daily Stock Price” for any particular trading day will be the average of the high and low trading prices for a Lions Gate common share on such day.

The Compensation Committee shall determine whether a stock price target has been achieved for purposes of the Stock Price Bonus (the date of such determination, the “Stock Price Bonus Determination Date”).  Any Stock Price Bonus, if earned, will be paid in the form of an option to acquire Lions Gate common shares, an award of Lions Gate common shares, or a combination thereof as determined by the Compensation Committee in its sole discretion (with the number of shares subject to any such option or award to be determined in the same manner as described in Section 4(d) above for Discretionary Bonuses payable in the form of equity awards).  Any such option or shares awarded to Burns pursuant to this Section 5 shall be fully vested on 

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the Stock Price Bonus Determination Date, and the per share exercise price of any such option shall be equal to the closing price of a Lions Gate common share on the Stock Price Bonus Determination Date.  Any such option shall be evidenced by and subject to the terms of an option agreement in the form generally then used by Lions Gate to evidence grants of stock options under Lions Gate's stock incentive plan as then in effect (such form to be modified as appropriate to reflect that the option will be fully vested on the Stock Price Bonus Determination Date).  Any Stock Price Bonus payable in the form of Lions Gate common shares shall be paid within five (5) business days after the Stock Price Bonus Determination Date.

For the avoidance of doubt, Burns shall not be entitled to receive the Stock Price Bonus at any specified target more than one time and the maximum aggregate bonus that could be payable to Burns in respect of the Stock Price Bonus opportunity under any scenario pursuant to this Section 5 (and any other provision of this Agreement applicable to the Stock Price Bonuses) is US$2,100,000 (or the value thereof in the form of Lions Gate options and/or common shares as provided herein); provided further that a single rise in stock price can trigger all three Stock Price Bonuses.

Notwithstanding the foregoing, if on or before the time the Stock Price Bonus becomes payable, Lions Gate's primary bank has declared Lions Gate to be in material default of any of its bank covenants, and such default is directly attributable to Burns' negligent disregard of any such covenants (of which he has received notice) or his negligent supervision of any of his direct reports, Burns shall not be entitled to the Stock Price Bonus; provided, however, the foregoing shall be subject to binding arbitration as set forth in Section 19(f) should Burns dispute Lions Gate's position with respect thereto.

6.    Quarterly Grant.  Subject to Burns' continued employment hereunder through the relevant grant date (and in each case subject to shareholder or regulatory approval, if required), on November 3, 2012 and on each three (3) month anniversary of November 3, 2012 that occurs during the Term (each, a “Quarterly Grant Date”), Burns shall be issued a number of Lions Gate common shares equivalent to US$187,500, calculated using the closing price (in regular trading) of Lions Gate's common shares on the last trading day immediately prior to the respective grant date (each a “Quarterly Grant”) and subject in each case to applicable tax withholding; provided, however, that if Burns' employment hereunder continues through the Expiration Date, he shall be entitled to receive a final Quarterly Grant under this Agreement on the Expiration Date (the “Final Quarterly Grant”).  Each Quarterly Grant shall be fully vested upon grant, and the shares subject to such Quarterly Grant shall be issued not more than five (5) business days after the applicable Quarterly Grant Date.  Notwithstanding the foregoing, in the event that Lions Gate terminates Burns' employment without Cause pursuant to Section 11(f) or Burns terminates his employment for Good Reason pursuant to Section 11(e)(iv), then, subject to Sections 12(d) and 13(b), the Quarterly Grants shall continue to be granted to Burns on each quarterly grant date through the Expiration Date (including the Final Quarterly Grant to be made on the Expiration Date), and no further Quarterly Grants shall be made after that date.  For the sake of clarity, any future Quarterly Grants shall be forfeited in the event that Burns' employment hereunder and the Term is terminated for any reason other than as contemplated by the preceding sentence prior to the Expiration Date.  If shareholder or regulatory approval of any Quarterly Grant is necessary and Lions Gate is unable to obtain such approval for all or any portion of a Quarterly Grant, then 

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Burns shall be entitled to alternative commensurate compensation, the details of which shall be negotiated in good faith.

7.    Equity Awards.
 
(a)    Grant of Options. Provided that Burns' employment hereunder has not been terminated for Cause (as defined herein), death, or Disability (as defined herein), or at his own election without Good Reason (as defined herein), and subject to regulatory approval if required, Burns shall be granted, as soon as practicable after the Effective Date, an option to purchase 1,857,143 common shares of Lions Gate (the “Option”) at a per-share exercise price equal to the closing price of a Lions Gate common share on the date the Option is granted.  The Option shall be evidenced by and subject to the terms of an option agreement in the form generally then used by Lions Gate to evidence grants of stock options under Lions Gate's stock incentive plan.

(b)    Grant of RSUs.  Provided that Burns' employment hereunder has not been terminated for Cause, death, or Disability, or at his own election other than for Good Reason, and subject to regulatory approval if required, Burns shall be granted, as soon as practicable after the Effective Date, an award of restricted stock units with respect to 130,000 common shares of Lions Gate (the “RSU Grant”).  The RSU Grant shall be evidenced by and subject to the terms of a restricted stock unit agreement in the form generally then used by Lions Gate to evidence grants of restricted stock units under Lions Gate's stock incentive plan.

(c)    Date of Vesting; Date Exercisable. Subject to Burns' continued employment hereunder, the Option and the RSU Grant shall each vest and, in the case of the Option, become exercisable as to twenty-five percent (25%) of the shares subject to the award on each of the first, second, third and fourth anniversaries of the Effective Date; provided, however, if the vesting of such awards is accelerated pursuant to Section 8(b), 12(b) or 12(c) below, then the foregoing requirement that Burns be an employee shall not apply with respect to any of the foregoing vesting dates.  If shareholder or regulatory approval of the Option or the RSU Grant is necessary and Lions Gate is unable to obtain such approval for all or any portion of either such award, then Burns shall be entitled to alternative commensurate compensation, the details of which shall be negotiated in good faith.

(d)    Pre-Existing and Other Equity.  The foregoing Option and RSU Grant shall be in addition to any equity awards granted to Burns by Lions Gate prior to the Effective Date (the “Pre-Existing Equity”) as well as the Quarterly Grants and any other equity awards provided for in this Agreement.

8.    Change of Control. In the event of a “Change of Control” as defined below, the following shall apply:

(a)    Change of Control definition. For purposes of this Agreement, the term “Change of Control” shall mean:

		
	(i)
	if any person, other than (A) any person who holds or controls entities that, in the aggregate (including the holdings of such 

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person), hold or control twenty-five percent (25%) or more of the outstanding shares of Lions Gate on the date of execution of this Agreement by each party hereto (collectively, a “Twenty-Five Percent Holder”) or (B) a trustee or other fiduciary holding securities of Lions Gate under an employee benefit plan of Lions Gate, becomes the beneficial owner, directly or indirectly, of securities of Lions Gate representing thirty-three percent (33%) or more of the outstanding shares as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, excluding any transactions or series of transactions involving a sale or other disposition of securities of Lions Gate by a Twenty-Five Percent Holder; 

		
	(ii)
	if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, there is a sale or disposition of thirty-three percent (33%) or more of Lions Gate's assets (or consummation of any transaction, or series of related transactions, having similar effect);

		
	(iii)
	if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, there occurs a change or series of changes in the composition of the Board as a result of which half or less than half of the directors are incumbent directors;

		
	(iv)
	if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate (excluding any sale or other disposition of securities of Lions Gate by a Twenty-Five Percent Holder in a single transaction or a series of transactions), a shareholder or group of shareholders acting in concert, other than a Twenty-Five Percent Holder in a single transaction or a series of transactions, obtain control of thirty-three percent (33%) or more of the outstanding shares of Lions Gate; 

		
	(v)
	if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, a shareholder or group of shareholders acting in concert obtain control of at least half of the Board, excluding any transactions or series of transactions involving a sale or other disposition of securities of Lions Gate by a Twenty-Five Percent Holder;

		
	(vi)
	if there is a dissolution or liquidation of Lions Gate; or

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	(vii)
	if there is any transaction or series of related transactions that has the substantial effect of any one or more of the foregoing, excluding any transaction or series of transactions involving a Twenty-Five Percent Holder.

(b)    Change in Control Severance.

(i)    If, upon or within twelve (12) months following a Change of Control, Lions Gate terminates Burns' employment without Cause pursuant to Section 11(f) or Burns terminates his employment for Good Reason pursuant to Section 11(e)(iv), then, subject to Sections 12(d) and 13(b), Burns shall be entitled, in addition to the Accrued Obligations (as defined below) and continued payment of the Quarterly Grants as provided in Section 6, to the payment of the greater of (1) the present value (using the then prevailing rate of interest charged to Lions Gate by its principal lender as the discount rate) of payment of Burns' Base Salary through the Expiration Date, or (2) US$2,500,000, such payment to be made in a lump sum as soon as practicable after (and in all events not more than sixty (60) days after) the date of Burns' Separation from Service; provided, however, that if the 60-day period following Burns' Separation From Service spans two calendar years, such payment shall be made within such 60-day period but in the second of the two calendar years.  If Burns timely elects continued health coverage for himself (and, if applicable his eligible dependents) under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), Lions Gate will pay or reimburse Burns' COBRA premiums for up to six (6) months following his Separation from Service (provided that Lions Gate's obligation to make any payment pursuant to this sentence shall cease upon the date Burns becomes eligible for substantially similar coverage under the health plan of a future employer).  In addition, the Option, the RSU Grant and any Pre-Existing Equity, to the extent then outstanding and unvested, will be fully vested and, in the case of stock options, exercisable upon the date of Burns' Separation from Service.

(ii)    As used herein, a “Separation from Service” occurs when Burns dies, retires, or otherwise has a termination of employment with Lions Gate that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.

(c)    Waiver of Stock Price Bonus Condition Precedent. If at the effective time of a Change of Control, Lions Gate's share price is US$17.00, $20.00 or $23.00 per share or greater than any of the foregoing, then Lions Gate shall pay Burns any applicable Stock Price Bonus (to the extent not previously paid), without regard to the six-month requirement set forth in Section 5 above, such bonus to be paid in cash (as opposed to equity awards) within five (5) business days following such Change of Control.

(d)    Definition of Accrued Obligations.  As used in this Agreement, “Accrued Obligations” means accrued but unpaid (A) Base Salary, (B) Stock Price Bonus (to the extent that the applicable stock price goal has been achieved as of Burns' termination date but such 

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Stock Price Bonus has not yet been paid), (C) expense reimbursement, (D) vacation pay, if any, (E) vested equity awards, and (F) pro rata Discretionary Bonus for the year in which Burns' termination of employment occurs, if any (with any election by Burns to receive a portion of such Discretionary Bonus in the form of a stock option to be disregarded). 

9.    Benefits/Expenses. 

(a)During the Term, Burns shall be eligible for all employee benefits (including health insurance and 401(k) or other retirement plans) per Lions Gate's standard benefit program for an employee employed by Lions Gate at Burns' level. Burns shall be entitled to take paid time off without a reduction in salary, subject to the demands and requirements of Burns' duties and responsibilities under this Agreement. Burns shall not accrue any vacation.
(b)During the Term, Lions Gate shall, consistent with its normal practice, promptly reimburse Burns for all travel, entertainment and other reasonable business expenses incurred by him in promoting the business of Lions Gate.  In addition, Burns shall be entitled to (i) business class travel for flights in excess of four (4) hours, (ii) all customary perquisites provided to senior executives of Lions Gate generally, (iii) a cell phone, which may be expensed, and (iv) a reserved parking space.  Without limiting the foregoing, Burns shall be permitted to use Lions Gate's private plane for twenty (20) hours per year at the same rate as negotiated by Lions Gate's Chief Executive Officer, reimbursing Lions Gate for the total number of hours used in the same manner as Lions Gate's Chief Executive Officer.  In addition, Burns shall be entitled to a car allowance of US$1,111 per month.
(c)During the Term, Lions Gate shall provide Burns with life and disability insurance policies providing Burns (or his estate, as applicable) with US$2,000,000 in benefits.  Burns shall reasonably cooperate with Lions Gate in fulfilling its obligations to provide such policies. 
(d)Notwithstanding the foregoing, nothing contained in this Agreement shall obligate Lions Gate to adopt or implement any benefits, or prevent or limit Lions Gate from making any blanket amendments, changes, or modifications of the eligibility requirements or any other provisions of, or terminating, in its entirety, any benefit at any time, and Burns' participation in or entitlement under any such benefit shall at all times be subject in all respects thereto; provided, however, that Burns shall be treated no less favorably than other senior executives of Lions Gate generally.
10.    Devotion of Time/Services. Burns recognizes that consistent with his position as Vice Chairman he is required to devote substantially all of his business time and services to the business and interests of Lions Gate and, due to Burns' high level position, failure to do so would cause a material and substantial disruption to Lions Gate's operations. Consistent with the foregoing, Burns agrees that he shall not undertake any activity that is in direct conflict with the essential enterprise related interests of Lions Gate.  As long as Burns' meaningful business time is devoted to Lions Gate, Burns may devote a reasonable amount of time to management of personal investments and charitable, political and civic activities, so long as these activities do not conflict with Lions Gate's interests or otherwise interfere with Burns' performance under this Agreement.

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11.    Termination.

Burns' employment and the Term shall terminate upon the happening of any one or more of the following events:

(a)    upon mutual written agreement between Lions Gate and Burns;

(b)    upon the death of Burns;

(c)    by Lions Gate giving written notice of termination to Burns during the continuance of any Disability (as defined below) at any time after he has been unable to perform the material services or material duties required of him in connection with his employment by Lions Gate as a result of physical or mental Disability (or disabilities) which has (or have) continued for a period of twelve (12) consecutive weeks, or for a period of sixteen (16) weeks in the aggregate, during any twelve (12) consecutive month period.   Notwithstanding any other provision herein, during any period of Disability hereunder which lasts for more than two (2) consecutive weeks, in its exercise of good faith business judgment, and in consultation with Burns (if practical), the Board may appoint an interim Vice Chairman to fulfill the duties and responsibilities of Burns and such appointment shall not be deemed a breach of this Agreement; provided, however, that upon the termination of Burns' Disability, Burns shall immediately resume the position of sole Vice Chairman and his duties and responsibilities in accordance with the terms of this Agreement and the interim Vice Chairman shall cease serving in such capacity.  For purposes of this Agreement, “Disability” shall mean a physical or mental impairment which renders Burns unable to perform the essential functions of his position, with even reasonable accommodation, which does not impose an undue hardship on Lions Gate. Lions Gate reserves the right, acting reasonably and in good faith, to make the determination of Disability under this Agreement based upon information supplied by Burns and/or his medical personnel, as well as information from medical personnel (or others) selected by Lions Gate or its insurers. Burns shall have ten (10) days following written notice by Lions Gate to cure the Disability, if such Disability is capable of cure;

(d)    by giving written notice of termination for Cause. “Cause,” as used herein, means that Burns has engaged in or committed any of the following: (A) conviction of a felony, except a felony relating to a traffic accident or traffic violation; (B) gross negligence or willful misconduct with respect to Lions Gate, which shall include, but is not limited to theft, fraud or other illegal conduct, refusal or unwillingness to perform employment duties, sexual harassment, any willful (and not legally protected act) that is likely to and which does in fact have the effect of injuring the reputation, business or a business relationship of Lions Gate, violation of any fiduciary duty, and violation of any duty of loyalty; or (C) any material breach of this Agreement by Burns; provided, however, Lions Gate shall not terminate Burns' employment hereunder pursuant to this Section 11(d) unless it shall first give Burns written notice of the alleged defect and the same is not cured within fifteen (15) business days of such written notice;

(e)    by Burns giving notice of his intention to terminate for one of the following reasons:

(i) Burns accepts a full time position with the federal or state government,

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(ii) Burns accepts a full time position with a philanthropic or non-profit organization,

(iii) Burns moves his permanent residence from the U.S. to another country, or

(iv) Burns' terminates his employment with Lions Gate for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean (in each case without the written consent of Burns):  
		
	(A)
	a material diminution in Burns' position, authorities, duties or responsibilities from the level in effect on the Effective Date; 

		
	(B)
	a material reduction of Burns' Base Salary or target Discretionary Bonus as in effect on the commencement of the Term or as the same may be increased from time to time;

		
	(C)
	a requirement by Lions Gate that Burns report to anyone other than Lions Gate's Board of Directors or Chief Executive Officer; or

		
	(D)
	any material breach by Lions Gate of this Agreement or any other compensatory arrangement between Lions Gate and Burns.

Good Reason shall not include death or Disability. Burns' continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder; provided, however, that a termination of employment by Burns shall not be considered a termination for Good Reason unless it occurs within eighteen (18) months following the event claimed to constitute Good Reason. Burns shall provide Lions Gate written notice of any event claimed to constitute Good Reason within ninety (90) days after the occurrence of the event, and Lions Gate shall have an opportunity to cure any claimed event of Good Reason within thirty (30) days after its receipt of such notice from Burns. Lions Gate shall notify Burns of the timely cure of any claimed event of Good Reason and the manner in which such cure was effected, and upon receipt of written notice from Burns of his concurrence that a cure has been effectuated, any notice of termination delivered by Burns based on such claimed Good Reason shall be deemed withdrawn and shall not be effective to terminate this Agreement.
(f)    by Lions Gate giving notice to Burns of termination without Cause.

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12.    Effect of Termination.

(a)    With Cause. If Lions Gate terminates this Agreement pursuant to Section 11(d) above, Lions Gate shall have no further obligation to pay Burns any compensation of any kind other than the Accrued Obligations.  Notwithstanding the foregoing, Lions Gate shall have no obligation to pay any Stock Price Bonus otherwise payable to Burns under this Agreement if such a termination of his employment is based on Burns' commission of a material fraud against Lions Gate; provided, however, any such material fraud shall have been determined by binding arbitration as set forth in Section 19(f) below.

(a)Death or Disability.  In the event of the termination of this Agreement pursuant to Section 11(b) or (c) above, Lions Gate shall have the obligation to pay Burns' estate or Burns, as applicable, any Accrued Obligations.  If on the date of death or termination for Disability, the volume-weighted average of the closing prices of Lions Gate's common shares for the immediately prior four (4) month (or longer) period is US$17.00, $20.00, or $23.00 per share or greater, then the applicable Stock Price Bonus(es) shall be paid in full if it otherwise becomes payable in accordance with the conditions set forth in Section 5 above applied without regard to the early termination of this Agreement. If on the date of death or termination for Disability, the volume-weighted average of the closing prices of Lions Gate's common shares for the immediately prior period of less than four (4) months is US$17.00, $20.00, or $23.00 per share or greater, then a pro-rated share of the applicable Stock Price Bonus(es) shall be paid if the Stock Price Bonus(es) otherwise becomes payable in accordance with the conditions set forth in Section 5 above applied without regard to the early termination of this Agreement (i.e., if the target was achieved over the two (2) month period immediately prior to termination for death or Disability and four (4) months later the target was achieved for the whole six (6) month period, then Burns (or his estate, if applicable) would receive one third (1/3) of the applicable Stock Price Bonus).  Any Stock Price Bonus or portion thereof that becomes payable pursuant to this paragraph shall be paid in cash (as opposed to equity awards) within five (5) business days following the completion of the applicable six-month period.  In addition, in the event of the termination of this Agreement due to Burns' death (but not Disability), the Option, the RSU Grant and any Pre-Existing Equity, to the extent then outstanding and unvested, will be fully vested and, in the case of stock options, exercisable upon the date of death.
(c)    Termination Without Cause or by Burns for Good Reason. If Lions Gate terminates Burns' employment without Cause pursuant to Section 11(f) or Burns terminates his employment with Lions Gate for Good Reason pursuant to Section 11(e)(iv) above and, in either case, the release requirement under Section 12(d) is met, then Lions Gate shall pay Burns, subject to Section 13(b) and in addition to the Accrued Obligations and continued payment of the Quarterly Grants as provided in Section 6, a severance payment equal to the present value (using the then prevailing rate of interest charged to Lions Gate by its principal lender as the discount rate) of payment of Burns' Base Salary through the Expiration Date, such payment to be made in a lump sum as soon as practicable after (and in all events not more than sixty (60) days after) the date of Burns' Separation from Service; provided, however, that if the 60-day period following Burns' Separation From Service spans two calendar years, such payment shall be made within such 60-day period but in the second of the two calendar years.  If Burns timely elects continued 

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health coverage for himself (and, if applicable his eligible dependents) under COBRA, Lions Gate will pay or reimburse Burns' COBRA premiums for up to six (6) months following his Separation from Service (provided that Lions Gate's obligation to make any payment pursuant to this sentence shall cease upon the date Burns becomes eligible for substantially similar coverage under the health plan of a future employer).  In addition, the Option, the RSU Grant and any Pre-Existing Equity, to the extent then outstanding and unvested, will be fully vested and, in the case of stock options, exercisable upon the date of Burns' Separation from Service.  Burns shall also continue to be eligible for Stock Price Bonus(es) without regard to the termination of his employment, through the Expiration Date, provided that any such Stock Price Bonus that becomes payable prior to such date shall be paid in cash (as opposed to equity awards) within five (5) business days following the completion of the applicable six-month period.  The foregoing amounts shall not be payable if Burns' termination is in connection with a Change of Control, but in such event Burns shall be paid in accordance with Section 8(b).
If Burns' employment with Lions Gate is terminated pursuant to Sections 8(b), 11(a) - (c) or 11(e) - (f) above, Burns shall have no obligation to mitigate and Lions Gate shall have no right to offset any income thereafter received by Burns against Lions Gate's payment obligations to him.
(d)    Release.  Notwithstanding any other provision herein, Burns' right to receive any severance benefits pursuant to Section 8(b) or Section 12(c) of this Agreement shall be subject to his execution and delivery to Lions Gate of a general release of claims in substantially the form attached hereto as Exhibit A (with such changes as may be reasonably required to such form to help ensure its enforceability in light of any changes in applicable law) not more than twenty-one (21) days (forty-five (45) days if required under applicable law) after the date Lions Gate provides the final form of release to Burns (and Burns' not revoking such release within any revocation period provided under applicable law).  Lions Gate shall provide the final form of release agreement to Burns not later than seven (7) days following the termination date. 
13.    Section 409A.

(a)    It is intended that any amounts payable under this Agreement and any exercise of authority or discretion hereunder by Lions Gate or Burns shall comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Section 409A”) so as not to subject Burns to payment of any interest or additional tax imposed under Section 409A. To the extent that any amount payable under this Agreement would trigger the additional tax imposed by Section 409A, this Agreement shall be construed and interpreted in a manner to avoid such additional tax yet preserve (to the nearest extent reasonably possible) the intended benefit payable to Burns.

(b)    Notwithstanding any other provision herein, if Burns is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Burns' Separation from Service, Burns shall not be entitled to any payment or benefit pursuant to Section 8(b) or 12(c) above until the earlier of (i) the date which is six (6) months after his Separation from Service for any reason other than death, or (ii) the date of Burns' death.  Any amounts otherwise payable to Burns upon or in the six (6) month period following Burns' 

12

Separation from Service that are not so paid by reason of this paragraph shall be paid as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Burns' Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of Burns' death) and any such payments shall be increased by an amount equal to interest on such payments for the period commencing with the date such payment would have otherwise been made but for this Section 13(b) (the “Original Payment Date”) and ending on the date such payment is actually made, at an interest rate equal to the prevailing rate of interest charged to Lions Gate by its principal lender in effect as of the Original Payment Date.  The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A of the Code.

(c)    To the extent that any benefits or reimbursements pursuant to Section 9 or Section 12(c) are taxable to Burns, any reimbursement payment due to Burns pursuant to any such provision shall be paid to Burns on or before the last day of Burns' taxable year following the taxable year in which the related expense was incurred.  The benefits and reimbursements pursuant to such provisions are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that Burns receives in one taxable year shall not affect the amount of such benefits or reimbursements that Burns receives in any other taxable year.

14.     Indemnification. Except with respect to claims resulting from Burns' willful misconduct or acts outside the scope of his employment hereunder, Burns shall be indemnified by Lions Gate (whether during or after the Term) in respect of all claims arising from or in connection with his position or services as an officer of Lions Gate to the maximum extent permitted in accordance with Lions Gate's Certificate of Incorporation, its By-Laws and under applicable law, and shall be covered by Lions Gate's applicable directors and officers insurance policy, which coverage shall be no less favorable than that accorded any other officer or director of Lions Gate.

15.     Company Policies. Burns shall abide by the provisions of all policy statements, including without limitation any conflict of interest policy statement, of Lions Gate or adopted by Lions Gate from time to time during the Term and furnished to Burns in writing or of which he has notice.

16.     Non-Solicitation. Burns shall not, during the Term and for a period of one (1) year thereafter, directly or indirectly, induce or attempt to induce any employee or contractor of Lions Gate or its affiliates, to leave Lions Gate or its affiliates or to render services for any other person, firm or corporation.

17.     Property of Lions Gate. Burns acknowledges that the relationship between the parties hereto is exclusively that of employer and employee and that Lions Gate's obligations to him are exclusively contractual in nature. Lions Gate and/or its affiliates shall be the sole owner or owners of all interests and proceeds of Burns' services hereunder, including without 
limitation, all ideas, concepts, formats, suggestions, developments, arrangements, designs, packages, programs, scripts, audio visual materials, promotional materials, photography and other intellectual properties and creative works which Burns may prepare, create, produce or 

13

otherwise develop in connection with and during his employment hereunder, including without limitation, all copyrights and all rights to reproduce, use, authorize others to use and sell such properties or works at any time or place for any purpose, free and clear of any claims by Burns (or anyone claiming under him) of any kind or character whatsoever (other than Burns' right to compensation hereunder). Burns shall have no right in or to such properties or works and shall not use such properties or works for his own benefit or the benefit of any other person. Burns shall, at the reasonable request of Lions Gate, execute such assignments, certificates, applications, filings, instruments or other documents consistent herewith as Lions Gate may from time to time reasonably deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend its right, title and interest in or to such properties or works. Notwithstanding anything to the contrary herein, Burns' personal rolodex shall remain his personal property during the Term of this Agreement and following its expiration or earlier termination.  Burns' assignment of rights in this paragraph does not apply to any invention which fully qualifies under Section 2870 of the California Labor Code. The parties further acknowledge that Burns is the author and owner of a screenplay currently entitled “Inside Information” and  Lions Gate agrees that it claims no ownership interest therein. Burns agrees that Lions Gate shall have the right of first negotiation and last refusal concerning “Inside Information.”

18.    Confidential Information. All memoranda, notes, records and other documents made or compiled by Burns, or made available to him during his employment with Lions Gate concerning the business or affairs of Lions Gate or its affiliates shall be Lions Gate's property and shall be delivered to Lions Gate on the termination of this Agreement or at any other time on request from Lions Gate. Burns shall keep in confidence and shall not use for himself or others, or divulge to others, any information concerning the business or affairs of Lions Gate or its affiliates which is not otherwise publicly available and which is obtained by Burns as a result of his employment, including without limitation, trade secrets or processes and information reasonably deemed by Lions Gate to be proprietary in nature, including without limitation, financial information, programming or plans of Lions Gate or its affiliates, unless disclosure is permitted by Lions Gate or required by law or legal process.

19.    Miscellaneous.

(a)    Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of California without regard to principles of conflict of laws.

(b)    Amendments. This Agreement may be amended or modified only by a written instrument executed by each of the parties hereto.

(c)    Titles and Headings. Section or other headings contained herein are for convenience of reference only and shall not affect in any way the meaning or interpretation of any of the terms or provisions hereof.

(d)    Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, negotiations and understandings of the parties in connection therewith (including, without 

14

limitation, the Prior Agreement, except as expressly provided herein). Notwithstanding the foregoing, except as expressly set forth herein, the terms and conditions of the agreements that evidence equity-based awards granted by Lions Gate to Burns that are outstanding as of the Effective Date are outside of the scope of the preceding provisions of this Section 19(d) and continue in effect.

(e)    Successors and Assigns. This Agreement is binding upon the parties hereto and their respective successors, assigns, heirs and personal representatives. Except as specifically provided herein, neither of the parties hereto may assign the rights and duties of this Agreement or any interest therein, by operation of law or otherwise, without the prior written consent of the other party, except that, without such consent, Lions Gate shall assign this Agreement provided that it secures the assumption thereof by any successor to all or substantially all of its stock, assets and business by dissolution, merger, consolidation, transfer of assets or otherwise.

(f)    Arbitration. In exchange for the benefits of the speedy, economical and impartial dispute resolution procedure of arbitration, Lions Gate and Burns, with the advice and consent of their selected counsel, choose to forego their right to resolution of their disputes in a court of law by a judge or jury, and instead elect to treat their disputes, if any, pursuant to the Federal Arbitration Act and/or California Civil Procedure Code §§ 1281 et seq.

(i)    Burns and Lions Gate agree that any and all claims or controversies whatsoever brought by Burns or Lions Gate, arising out of or relating to this Agreement, Burns' employment with Lions Gate, or otherwise arising between Burns and Lions Gate, will be settled by final and binding arbitration in accordance with the applicable rules and procedures of Judicial Arbitration and Mediation Services, Inc. (“JAMS”). This includes all claims whether arising in tort or contract and whether arising under statute or common law. Such claims may include, but are not limited to, those relating to this Agreement, wrongful termination, retaliation, harassment, or any statutory claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Fair Employment and Housing Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, or similar Federal or state statutes. In addition, any claims arising out of the public policy of California, any claims of wrongful termination, employment discrimination, retaliation, or harassment of any kind, as well as any claim related to the termination or non-renewal of this Agreement shall be arbitrated under the terms of this Agreement. The obligation to arbitrate such claims will survive the termination of this Agreement. Lions Gate shall be responsible for all costs of the arbitration services, including the fees and costs of the arbitrator and court reporter fees, unless Burns wishes to share such costs voluntarily. To the extent permitted by law, the hearing and all filings and other proceedings shall be treated in a private and confidential manner by the arbitrator and all parties and representatives, and shall not be disclosed except as necessary for any related judicial proceedings.

(ii)    The arbitration will be conducted before an arbitrator who is a member of JAMS and mutually selected by the parties from the JAMS Panel. In the event that the parties are unable to mutually agree upon an arbitrator, each party shall select an arbitrator from the JAMS Panel and the two selected arbitrators shall jointly select a 

15

third, and the arbitrators shall jointly preside over the arbitration. The arbitrator(s) will have jurisdiction to determine the arbitrability of any claim. The arbitrator(s) shall have a business office in or be a resident of Los Angeles County, California. The arbitrator(s) shall have the authority to grant all monetary or equitable relief (including, without limitation, injunctive relief, ancillary costs and fees, and punitive damages) available under state and Federal law. Either party shall have the right to appeal any adverse rulings or judgments to the JAMS Panel of Retired Appellate Court Justices. Judgment on any award rendered by the arbitrator(s) may be entered and enforced by any court having jurisdiction thereof. 

(iii)    Notwithstanding the foregoing, the parties agree to participate in non-binding mediation with a mutually selected mediator prior to initiation of any arbitration process, except that either party may file any formal arbitration demand as necessary to preserve their legal rights.

20.    Limit on Benefits.

(a)    Notwithstanding anything contained in this Agreement to the contrary, to the extent that the payments and benefits provided under this Agreement and benefits provided to, or for the benefit of, Burns under any other Lions Gate plan or agreement (such payments or benefits are collectively referred to as the “Payments” for purposes of this Section 20) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), the Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Payments would result in Burns retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if Burns received all of the Payments (such reduced amount is referred to hereinafter as the “Limited Benefit Amount”). In such case, the Payments shall be reduced or eliminated by first reducing or eliminating cash severance payments, then by reducing or eliminating other cash payments, then by reducing or eliminating those payments or benefits which are not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by Burns pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Burns' rights and entitlements to any benefits or compensation.

(b)    A determination as to whether the Payments shall be reduced to the Limited Benefit Amount pursuant to this Agreement and the amount of such Limited Benefit Amount shall be made by Lions Gate's independent public accountants or another certified public accounting firm of national reputation designated by Lions Gate (the “Accounting Firm”). Lions Gate and Burns shall use their reasonable efforts to cause the Accounting Firm to provide its determination (the “Determination”), together with detailed supporting calculations and documentation to Lions Gate and Burns within five (5) days of the date of termination of Burns' employment, if applicable, or such other time as requested by Lions Gate or Burns (provided Burns reasonably believes that any of the Payments may be subject to the Excise Tax), and if the Accounting Firm determines that no Excise Tax is payable by Burns with respect to any Payments, Lions Gate and Burns shall use their reasonable efforts to cause the Accounting Firm 

16

to furnish Burns with an opinion reasonably acceptable to Burns that no Excise Tax will be imposed with respect to any such Payments. Unless Burns provides written notice to Lions Gate within ten (10) days of the delivery of the Determination to Burns that he disputes such Determination, the Determination shall be binding, final and conclusive upon Lions Gate and Burns.

21.    Severability. Each section, subsection and lesser portion of this Agreement constitutes a separate and distinct undertaking, covenant and/or provision hereof. In the event that any provision of this Agreement shall finally be determined to be unlawful or unenforceable, such provision shall be deemed to be severed from this Agreement, but every other provision shall remain in full force and effect.

22.    Construction. Each party has cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter.

23.    Legal Counsel. In entering this Agreement, the parties represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have been completely read and explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them.

24.    Waiver. No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement. No waiver shall be binding unless in writing and signed by the party waiving the breach.

25.    Execution. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Photographic and facsimile copies of such signed counterparts may be used in lieu of the originals for any purpose.

26.    Notices. All notices to be given pursuant to this Agreement shall be effected either by mail or personal delivery in writing as follows:

Lions Gate:

Lions Gate Entertainment
2700 Colorado Avenue, Suite 200
Santa Monica, California 90404
Attention: General Counsel

Burns:

Michael Burns
c/o Lions Gate Entertainment
2700 Colorado Avenue, Suite 200
Santa Monica, California 90404

17

w/ copy to:

Ziffren Brittenham LLP
1801 Century Park West
Los Angeles, California 90067
Attention: Matt Johnson, Esq.

27.    Tax Withholding.  Notwithstanding anything else herein to the contrary, Lions Gate may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such federal, state and local income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.
[Remainder of page intentionally left blank]

18

In witness whereof, the parties hereto have executed this Agreement as of the date first above written.

                                         
“LIONS GATE”
LIONS GATE ENTERTAINMENT CORP.,
By: /s/ Wayne Levin 
Its:  EVP and General Counsel 

“BURNS”
/s/ Michael Burns
Michael Burns

19

EXHIBIT A

FORM OF GENERAL RELEASE AGREEMENT

1.    Release by Executive.  [____________] (“Executive”), on his own behalf and on behalf of his descendants, dependents, heirs, executors, administrators, assigns and successors, and each of them, hereby acknowledges full and complete satisfaction of and releases and discharges and covenants not to sue Lions Gate Entertainment Corp. (the “Company”), its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as its and their assignees, successors, directors, officers, stockholders, partners, representatives, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with Executive's employment or any other relationship with or interest in the Company or the termination thereof, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this General Release Agreement (this “Agreement”) set forth below, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act, the California Fair Employment and Housing Act, California Labor Code Section 132a, the California Family Rights Act, or any other federal, state or local law, regulation, ordinance, constitution or common law (collectively, the “Claims”); provided, however, that the foregoing release does not apply to any obligation of the Company to Executive pursuant to any of the following: (1) Section 8(b) or 12(c), as applicable (and including any related provisions referred to in the applicable section), of the Employment Agreement dated as of [__________, 2012] by and between the Company and Executive (the “Employment Agreement”); (2) any equity-based awards previously granted by the Company to Executive, to the extent that such awards continue after the termination of Executive's employment with the Company in accordance with the applicable terms of such awards; (3) any right to indemnification that Executive may have pursuant to the Company's bylaws, its corporate charter or under any written indemnification agreement with the Company (or any corresponding provision of any subsidiary or affiliate of the Company) with respect to any loss, damages or expenses (including but not limited to attorneys' fees to the extent otherwise provided) that Executive may in the future incur with respect to his service as an employee, officer or director of the Company or any of its subsidiaries or affiliates; (4) with respect to any rights that Executive may have to insurance coverage for such losses, damages or expenses under any Company (or subsidiary or affiliate) directors and officers liability insurance policy; (5) any rights to continued medical and dental coverage that Executive may have under COBRA; (6) any rights to payment of benefits that Executive may have under a retirement plan sponsored or maintained by the Company that is intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended; or (7) any deferred compensation or supplemental retirement benefits that Executive may be entitled to under a nonqualified deferred compensation or supplemental retirement plan of the Company.  In addition, this release does not cover any Claim that cannot be so released as a matter of applicable law.  Notwithstanding anything to the contrary herein, nothing in this Agreement prohibits Executive from filing a charge with or participating in an investigation 

Page 20 of 25

conducted by any state or federal government agencies.  Executive does waive, however, the right to receive any monetary or other recovery, should any agency or any other person pursue any claims on Executive's behalf arising out of any claim released pursuant to this Agreement.  Executive acknowledges and agrees that he has received any and all leave and other benefits that he has been and is entitled to pursuant to the Family and Medical Leave Act of 1993.  
2.    Acknowledgement of Payment of Wages.  Except for accrued vacation (which the parties agree totals approximately [____] days of pay) and salary for the current pay period, Executive acknowledges that he has received all amounts owed for his regular and usual salary (including, but not limited to, any bonus, severance, or other wages), and usual benefits through the date of this Agreement.
3.    Waiver of Civil Code Section 1542.  This Agreement is intended to be effective as a general release of and bar to each and every Claim hereinabove specified.  Accordingly, Executive hereby expressly waives any rights and benefits conferred by Section 1542 of the California Civil Code and any similar provision of any other applicable state law as to the Claims.  Section 1542 of the California Civil Code provides:  
“A GENERAL RELEASE DOES NOT EXTEND TO A CLAIM WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”  
Executive acknowledges that he later may discover claims, demands, causes of action or facts in addition to or different from those which Executive now knows or believes to exist with respect to the subject matter of this Agreement and which, if known or suspected at the time of executing this Agreement, may have materially affected its terms.  Nevertheless, Executive hereby waives, as to the Claims, any claims, demands, and causes of action that might arise as a result of such different or additional claims, demands, causes of action or facts.
4.    ADEA Waiver.  Executive expressly acknowledges and agrees that by entering into this Agreement, he is waiving any and all rights or claims that he may have arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), which have arisen on or before the date of execution of this Agreement.  Executive further expressly acknowledges and agrees that:
(i)In return for this Agreement, he will receive consideration beyond that which he was already entitled to receive before entering into this Agreement;
(ii)He is hereby advised in writing by this Agreement to consult with an attorney before signing this Agreement;
(iii)He was given a copy of this Agreement on [____________] and informed that he had twenty-one (21) days within which to consider this Agreement and that if he wished to execute this Agreement prior to expiration of such 21-day period, he should execute the Acknowledgement and Waiver attached hereto as Exhibit A-1; 
(iv)Nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the 

Page 21 of 25

ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law; and
(v)He was informed that he has seven (7) days following the date of execution of this Agreement in which to revoke this Agreement, and this Agreement will become null and void if Executive elects revocation during that time.  Any revocation must be in writing and must be received by the Company during the seven-day revocation period.  In the event that Executive exercises his right of revocation, neither the Company nor Executive will have any obligations under this Agreement.
5.    No Transferred Claims.  Executive represents and warrants to the Company that he has not heretofore assigned or transferred to any person not a party to this Agreement any released matter or any part or portion thereof.
6.    Miscellaneous.  The following provisions shall apply for purposes of this Agreement:
(a)    Number and Gender.  Where the context requires, the singular shall include the plural, the plural shall include the singular, and any gender shall include all other genders.
(b)    Section Headings.  The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof. 
(c)    Governing Law.  This Agreement, and all questions relating to its validity, interpretation, performance and enforcement, as well as the legal relations hereby created between the parties hereto, shall be governed by and construed under, and interpreted and enforced in accordance with, the laws of the State of California, notwithstanding any California or other conflict of law provision to the contrary.  
(d)    Severability.  If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.
(e)    Modifications.  This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
(f)    Waiver.  No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement.  No waiver shall be binding unless in writing and signed by the party waiving the breach.
(g)    Arbitration.  Any controversy arising out of or relating to this Agreement shall be submitted to arbitration in accordance with the arbitration provisions of the Employment Agreement. 

Page 22 of 25

(h)    Counterparts.  This Agreement may be executed in counterparts, and each counterpart, when executed, shall have the efficacy of a signed original.  Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
[Remainder of page intentionally left blank]

 

Page 23 of 25

The undersigned have read and understand the consequences of this Agreement and voluntarily sign it.  The undersigned declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
EXECUTED this ________ day of ________ 20___, at ______________________ County, __________.  
“EXECUTIVE”

                            
[Name]

EXECUTED this ________ day of ________ 20___, at ______________________ County, __________.  

“COMPANY”

Lions Gate Entertainment Corp.

By:      ____________________________________________                        
[Name]
[Title]

Page 24 of 25

EXHIBIT A-1

ACKNOWLEDGMENT AND WAIVER

I, _____________, hereby acknowledge that I was given 21 days to consider the foregoing General Release Agreement and voluntarily chose to sign the General Release Agreement prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
EXECUTED this ___ day of ____________ 20___, at ___________ County, _________.
__________________________________________________                            
[Name]

Page 25 of 25eh1201164_ex1001.htm

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 

 

 

  

 

  

 

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 

 

 

  

2

  

 

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 

 

 

  

3

  

 

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 

 

  

4

  

 

 

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 

 

 

  

5

  

 

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 

 

 

  

6

  

 

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 

 

 

  

7

  

 

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, 

 

 

  

8

  

 

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 

 

 

  

9

  

 

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, 

 

 

  

10

  

 

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 

 

 

  

11

  

 

 

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, 

 

 

  

12

  

 

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 

 

  

13

  

 

 

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, 

 

  

14

  

 

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.

 

 

  

15

  

 

 

	
  

	
(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.

 

 

  

16

  

 

	
  

	
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 (1⁄2) 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 

 

 

  

17

  

 

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 

 

 

  

18

  

 

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, 

 

 

  

19

  

 

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 

 

 

  

20

  

 

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.

 

 

  

21

  

 

 

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

	  

                               

 

  

22

  

 

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 

 

 

  

23

  

 

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.

 

 

 

 

24

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