Document:

HRG-6.30.2014-10-Q Ex 10.2

Exhibit 10.2

EXECUTION COPY

HARBINGER GROUP INC.
2014 Warrant Plan
Common Stock Purchase Warrant Agreement
This agreement, dated March 10, 2014, certifies that, for value received, Philip A. Falcone (the “Executive”) is entitled to subscribe for and purchase from Harbinger Group Inc. (the “Company”), at the price of $13.125 per share (the “Exercise Price”), three million (3,000,000) fully paid and nonassessable shares of Common Stock, $0.01 par value, of the Company (“Common Stock”), subject, however, to the provisions and upon the terms and conditions hereinafter set forth.  The Exercise Price and the number and character of the shares with respect to which this Warrant is exercisable are subject to adjustment as hereinafter provided.  Except as otherwise expressly set forth herein, this Warrant shall be construed in accordance with the provisions of the Harbinger Group Inc. 2014 Warrant Plan, as amended from time to time (the “Plan”), which provisions shall be incorporated herein by reference. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.  In the event of a conflict between the Plan and this Warrant, the terms and conditions of the Plan shall govern.  The Committee shall have final authority to interpret and construe the Plan and this Warrant and to make any and all determinations under them, in each case in good faith and such decision shall be binding and conclusive upon the Executive and his representatives in respect of any questions arising under the Plan or this Warrant. Notwithstanding anything in this Warrant or the Plan to the contrary, the Board may, in its sole discretion, at any time and from time to time, administer the Plan and this Warrant as set forth in Section 4(f) of the Plan.  In any such case, the Board shall have all the authority granted to the Committee under the Plan and if such power is exercised all references to the Committee shall refer to the Board.
1.Exercise; Issuance of Certificates; Payment for Shares.
AThis Warrant shall expire at the Expiration Time and shall vest in five equal tranches over the term of the Warrant, with twenty percent (20%) vesting on the date stockholder approval is received as set forth in Section 16 below (“Initial Tranche”), and an additional twenty percent (20%) vesting on each of March 10, 2015, 2016, 2017 and 2018; provided that, subject to Section 7(c) of the Plan, (i) if the Executive has been terminated for Cause (as defined below) all vested and unvested Warrants shall terminate and may not be exercised; (ii) if the Executive has voluntarily terminated his employment with the Company (other than for Good Reason (as defined below) or as a result of death or Disability (as defined below)), then no further vesting of the Warrant shall occur from and after such termination date and the Executive shall have 90 days to exercise the vested Warrants after such termination date; (iii) if the Executive’s employment with the Company is terminated by the Executive with Good Reason or by the Company without Cause then, subject to the Release Condition, the Warrant shall continue to vest on the dates that the Warrant would otherwise have vested had the Executive continued to remain employed by the Company and the Executive shall have 90 days from the date of 

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Exhibit 10.2

such termination of employment to exercise any portion of the Warrant that shall have become vested prior to the date thereof, and six months after the date of vesting of any portion of the Warrant that vests on or after the date of such termination in accordance with this Section 1A(iii) but in no event shall such exercise period be beyond the Expiration Time (or such earlier date as provided under Sections 8 or 9 of the Plan); and (iv) if the Executive’s employment with the Company is terminated as a result of the Executive’s death or Disability, then the Warrant shall continue to vest on the dates that the Warrant would otherwise have vested had the Executive continued to remain employed by the Company and the Executive or his representatives shall have twelve months after the date of vesting of such Warrants with respect to any portion of the Warrant that vest in accordance with this Section 1A(iv). The terms “Cause”, “Disability” and “Good Reason” shall have the meaning set forth in the Plan, provided that if the Executive and the Company enter into an employment agreement, then Cause, Disability and Good Reason shall have the meaning set forth in such employment agreement, and in the absence of a definition contained therein, Cause, Disability and Good Reason shall have the meaning set forth in the Plan.  For purposes of clause (iii), any unvested Warrants shall not expire or be forfeited before satisfaction of the Release Condition but shall expire or be forfeited promptly if and when the Release Condition is not satisfied.  The “Release Condition” shall mean (x) if the Executive and the Company have entered into an employment agreement, then the “Release Condition” shall have the meaning set forth in such employment agreement or (y) in an absence of an employment agreement or a definition of Release Condition therein, the Release Condition shall mean the obligation of the Executive to provide, an irrevocable waiver and general release of claims, at the request of the Committee and in connection with a cessation of employment as described in clause (iii), to provide an irrevocable waiver and general release of claims in favor of the Company and its respective Affiliates, their respective predecessors and successors, and all of the respective current or former directors, officers, employees, shareholders, partners, members, agents or representatives of any of the foregoing, in the Company’s customary form (subject to modification by the Company to comply with changes in applicable laws) that has become effective and irrevocable in accordance with its terms within fifty-five (55) days after such termination of employment.
BThe rights may be so exercised by such holder hereof by the surrender of this Warrant (with the Subscription Agreement annexed hereto appropriately completed) to the Company at its offices at 450 Park Avenue, 30th Floor, New York, New York (or such other office or agency of the Company in New York, New York, as it may designate by notice in writing to the holder hereof at the address of such holder appearing on the books of the Company at any time while this Warrant remains outstanding) and by payment of the Exercise Price, at the election of the Executive in one or a combination of the following manners (i) by tendering in cash, by certified or cashier’s check or by wire transfer payable to the order of the Company, (ii) by having the Company withhold shares of Common Stock issuable upon exercise of this Warrant equal in value to the aggregate Exercise Price (as such Exercise Price may be adjusted under this Warrant) as to which this Warrant is so exercised based on the Fair Market Value of the Common Stock, subject to any limitations that the Board or the Committee may impose in order for the Company to remain in compliance with any debt or indenture covenants or similar undertakings or (iii) such other method of paying the Exercise Price (as such Exercise 

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Exhibit 10.2

Price may be adjusted under this Warrant) as the Committee determines to be consistent with applicable law and the terms of the Warrant.
CSubject to the provisions of the next succeeding paragraph, certificates or book entry recordations for the shares so purchased shall be delivered to the holder hereof or his designee promptly after such surrender and delivery, and, unless this Warrant shall have expired, a new Warrant representing the number of shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the holder hereof.
2.Agreement of Holder.  The holder of this Warrant, by his acceptance hereof, represents that he is acquiring this Warrant, and will acquire the Common Stock issuable upon any exercise of this Warrant by such holder, for his own account for investment and not with a view to the distribution thereof or with any present intention of selling any thereof, except for a sale of such Common Stock in compliance with the provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, state securities or corporation laws, rules and regulations under any of the foregoing and applicable requirements of any securities exchange upon which the Company’s securities shall be listed and the rules and the regulations thereunder.
3.Shares to be Fully Paid; Reservation of Shares.  All shares issued upon the exercise of the rights represented by this Warrant shall be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof (other than income and employment taxes incurred on exercise or in respect of any transfer occurring contemporaneously with such issue).  During the period within which the rights represented by this Warrant may be exercised, the Company shall at all times have authorized, and reserved for the purpose of issuance or transfer upon exercise of the rights evidenced by this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant.  The Company shall take all such action as may be necessary to assure that such Common Stock may be so issued without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Common Stock of the Company may be listed.  The Company shall not take any action which would result in any adjustment of the Exercise Price if the total number of Common Stock issuable after such action upon exercise of the Warrant then outstanding would exceed the total number of then authorized but unissued Common Stock.
4.Adjustments.  Upon the occurrence of any event described in Section 8 or 9 of the Plan, the Warrants may be adjusted in accordance with Section 8 and/or Section 9 of the Plan; provided that, to the extent that the Company accelerates or makes any anti-dilutive or similar adjustments to substantially all of the outstanding stock options issued to the Company’s senior executives, then the Company shall make substantially similar acceleration and/or adjustments to the Warrants, in each case to the extent permitted by applicable law and the rules and regulations of the applicable stock exchange.
5.Record of Ownership; Issue Tax.  The Company may elect to evidence ownership of the Common Stock issued upon the exercise of the Warrants through book entry recordation or the issuance of stock certificates, which in each case shall be made without charge to the holders hereof for any issuance tax in respect thereof, and all such issuance taxes, if any, shall be paid or provided for by the Company prior to the issuance of such recordation or certificates.
6.No Voting Rights.  This Warrant shall not entitle the holder hereof to any voting rights or other rights as a shareholder of the Company.

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Exhibit 10.2

7.Listing of Shares.  The Company agrees to secure the listing of the Common Stock issuable upon the exercise of this Warrant, subject to official notice of issuance, on the New York Stock Exchange, as soon as reasonably practicable but in any event subject to and in accordance with all applicable stock exchange rules.
8.Registration Books.  The Company shall keep or cause to be kept, at its principal offices (or the office of its agents), proper books in which the name and address of the holder of this Warrant shall be registered.
9.Warrant Exchangeable; Loss, Theft, Destruction, Etc.  This Warrant is exchangeable, upon the surrender hereof by the holder hereof at the office of the Company, for a new Warrant or new Warrants of like tenor representing in the aggregate the right to subscribe for and purchase the number of Common Stock which may be subscribed for and purchased hereunder as adjusted to date, each such new Warrant to represent the right to subscribe for and purchase such number of Common Stock as shall be designated by such holder hereof at the time of such surrender.  Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon delivery of a bond or indemnity satisfactory to the Company, or, in the case of any such mutilation, upon surrender or cancellation of this Warrant, the Company will issue to the holder hereof a new Warrant of like tenor, in lieu of this Warrant, representing the right to subscribe for and purchase the number of Common Stock which may be subscribed for and purchased hereunder.
10.Limitations on Transferability; Securities Act Compliance, Registration.  The Warrants may not be assigned, alienated, pledged, attached, sold, gifted, loaned or otherwise transferred or encumbered by the Executive (“Transfer”) other than by will or by the laws of descent and distribution, pursuant to a qualified domestic relations order or as otherwise permitted under of the Plan. In the event of the Executive's death, the Warrants shall thereafter be exercisable (to the extent otherwise exercisable hereunder) only by the Executive's executors or administrators. The Common Stock acquired following the exercise of the Warrants may be transferred at any time subject to compliance with applicable law, Sections 10(C) below and compliance with any written holding requirement policy adopted by the Company for senior executives.  On or prior to the time at which this Warrant shall become vested in whole or in part or as reasonably promptly practicable thereafter, the Company shall register the shares of Common Stock issued or issuable upon exercise of this Warrant pursuant to a Registration Statement (as defined below); provided that, at the Executive’s written election, the vesting of Initial Tranche may be delayed until the Company files a Registration Statement and such Registration Statement is declared effective by the Commission. 
ADefinitions.  As used in this Section 10, the following definitions shall be applicable:
“Commission” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the federal securities laws.
“Prospectus” shall mean any preliminary prospectus and final prospectus (as such may be amended or supplemented) which constitutes Part I of a Registration Statement filed with the Commission.
“Registration Statement” shall mean the form and documents required to be filed by an issuer in connection with the registration of securities of such issuer under 

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Exhibit 10.2

the Securities Act, including a registration statement on Form S-8 or other form as the Company determines appropriate.
“Restricted Securities” shall mean (i) this Warrant and any warrant or warrants issued in exchange therefor or in replacement thereof and (ii) the Common Stock issued or issuable upon exercise of this Warrant or such other warrants; the certificates for all of which bear the legend referred to in Section 10B; provided, however, that, to the extent permitted by applicable law, any Common Stock issued or issuable upon exercise of this Warrant shall not be treated as Restricted Securities to the extent registered pursuant to a Registration Statement.
“Securities Act” shall mean the Securities Act of 1933, as amended from time to time.
BLegends.
(1)Unless and until removed as provided in the next paragraph, this Warrant (and any Warrant or Warrants issued in exchange herefor or replacement hereof) and each certificate or recordation evidencing Common Stock issued upon exercise of this Warrant shall bear a legend in substantially the following form:
In the case of this Warrant: “THE TRANSFER OF THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF IS SUBJECT TO CERTAIN RESTRICTIONS CONTAINED IN SECTION 10 HEREOF, AND THE HOLDER OF THIS WARRANT BY ACCEPTANCE HEREOF AGREES TO BE BOUND BY SUCH RESTRICTIONS.”
In the case of Common Stock: “THE TRANSFER OF THIS CERTIFICATE AND THE SHARES EVIDENCED HEREBY IS SUBJECT TO CERTAIN RESTRICTIONS CONTAINED IN SECTION 10 OF A COMMON STOCK PURCHASE WARRANT AGREEMENT, DATED MARCH 10, 2014, AND THE HOLDER OF THIS CERTIFICATE OR RECORDATION BY ACCEPTANCE HEREOF AGREES TO BE BOUND BY SUCH RESTRICTIONS.  A COPY OF SUCH WARRANT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY WITH THE CORPORATE SECRETARY OF THE COMPANY.”
The Company may issue such “stop transfer” instructions to its transfer agent with respect to all or any of the Restricted Securities as it deems appropriate to prevent any violation of the provisions of this Section 10 or of the Securities Act.
(2)The Company shall issue a new Warrant or certificate or recordation which does not contain the legend set forth in Section 10B(1) if (i) the shares represented thereby are sold pursuant to a Registration Statement (including a current Prospectus) which has become and is effective under the Securities Act or (ii) the staff of the Commission shall have issued a “no action” letter to the effect that, or counsel acceptable to the Company shall have rendered 

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Exhibit 10.2

its opinion (which opinion shall be acceptable to the Company) that, such securities may be sold without registration under the Securities Act.
(3)At the time of any exercise of this Warrant, if believed in good faith to be reasonably necessary or appropriate to assure compliance with the requirements of the applicable law, the Company may require, as a condition of allowing such exercise, that the holder of this Warrant furnish to the Company such information as, in the opinion of the Company, is reasonably necessary in order to establish that such exercise is made in compliance with the registration requirements of the Securities Act or may be made without registration under the Securities Act, including without limitation a written statement that such holder is acquiring the security receivable upon such exercise for its own account for investment and not with a view to the distribution thereof or with any present intention of selling any thereof.
CNotice of Transfer; Opinion of Counsel.  If a holder of Restricted Securities proposes to transfer all or a portion of such securities, such holder shall give the Company written notice specifying the securities involved and describing the manner in which the proposed transfer is to be made, together with either (i) at the Company’s request, an opinion of counsel satisfactory to the Company stating in substance that registration under the Securities Act is not required with respect to such transfer (the reasonable fees and expenses of such opinion of counsel to be paid by the Company) or (ii) a “no action” letter from the staff of the Commission with respect to such transfer.  Following delivery of a notice accompanied by an opinion of counsel to the effect set forth above or by such a “no action” letter, such holder shall have the right to transfer, in a manner consistent with its notice to the Company, the Restricted Securities proposed to be transferred, unless the Company determines within 20 days following such delivery that registration under the Securities Act is required with respect to such proposed transfer.  Such holder shall cooperate with the Company for the purpose of permitting such determination to be made, including, to the extent deemed necessary by the Company, procuring and delivering to the Company an investment letter signed by the proposed transferee and subject to statutory minimum tax withholding liability requirements.
11.Taxes and Withholding.  The Executive shall be responsible for all income taxes payable in respect of the exercise of the Warrant and the acquisition of Common Stock issuable upon exercise of the Warrant.  The Executive shall be required to pay to the Company, and the Company shall have the right and is hereby authorized to withhold any cash, Common Stock, other securities or other property or from any compensation or other amounts owing to the Executive, the amount of any required withholding taxes in respect of the Common Stock, and to take such other action as may be necessary in the opinion of the Committee to satisfy all obligations for the payment of such withholding taxes, if applicable. In addition, the Executive shall be permitted to satisfy this obligation pursuant to Section 11(c)(ii) of the Plan, without requiring the Committee’s consent, subject to any limitations that the Board or Committee may impose in order for the Company to remain in compliance with any debt or indenture covenants or similar undertakings.
12.Section 409A.  It is intended that the Shares be exempt from or comply with Section 409A of the Code and this Warrant shall be interpreted consistent therewith.  This Warrant is subject to Section 11(q) of the Plan. 

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Exhibit 10.2

13.Electronic Delivery.  By executing this Warrant, the Executive hereby consents to the electronic delivery of prospectuses, annual reports and other information required to be delivered by the Commission’s rules.  This consent may be revoked in writing by the Executive at any time upon three business days’ notice to the Company, in which case subsequent prospectuses, annual reports and other information will be delivered in hard copy to the Executive. 
14.Entire Agreement.  This Warrant and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations in respect thereto.  No change, modification or waiver of any provision of this Warrant shall be valid unless the same be in writing and signed by the parties hereto. 
15.Descriptive Headings and Governing Law.  The descriptive headings of the several paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.  This Warrant shall be construed and interpreted in accordance with the laws of the State of Delaware without regard to principles of conflicts of law thereof, or principals of conflicts of laws of any other jurisdiction which could cause the application of the laws of any jurisdiction other than the State of Delaware.
16.Shareholder Approval.  This Warrant and the Plan are subject to shareholder approval, and if such approval is not obtained prior to December 31, 2014, then this Warrant shall be cancelled in its entirety without any payment to the Executive.
17.Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, courier service or personal delivery (i) if to the Company: Harbinger Group Inc., 450 Park Avenue, 30th Floor, New York, NY, 10022, Facsimile: (212) 906-8559, Attention: Legal Department, and (ii) if to the Executive, at the Executive’s last known address on file with the Company. All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; and five business days after being deposited in the mail, postage prepaid if mailed.
[The remainder of this page is intentionally left blank.]

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Exhibit 10.2

IN WITNESS WHEREOF, the Company and the Executive have executed this Warrant on this March 10, 2014.
HARBINGER GROUP INC. 

By:  /s/ Thomas A. Williams             
Name: Thomas A. Williams 
Title:   Executive Vice President & Chief Financial Officer

ATTEST: /s/ Ehsan Zargar        
    Name: Ehsan Zargar
    Title: Corporate Secretary
Agreed to by:

/s/ Philip A. Falcone            
Philip A. Falcone

 

 

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Exhibit 10.2

SUBSCRIPTION AGREEMENT
Date: ____________________ 
To:    Harbinger Group Inc.
The undersigned, pursuant to the provisions set forth in the within Warrant, hereby agrees to subscribe for and purchase ___________Common Stock covered by such Warrant, and makes payment herewith in full therefor at the price per share provided by such Warrant, and (check the applicable boxes).
	
		
	 
	Tenders herewith payment of the Exercise Price (as such Exercise Price may be adjusted under this Warrant) in full in the form of cash, certified check, official bank check or by wire transfer, for account of the Company, in the amount of $ for of such Common Stock.

	 
	Elects to receive that number of Common Stock equal to the quotient of (i) (x) the Per Share Value, multiplied by ____ shares of Common Stock as to which the Warrant is being exercised minus (y) the aggregate Exercise Price (as such Exercise Price may be adjusted under this Warrant) with respect to such Common Stock, divided by (ii) the Per Share Value.  “Per Share Value” means the Fair Market Value of the Common Stock.

	Signature
	

	Name:  
	 

	Address 
	 

9HRG-6.30.2014-10-Q Ex 10.3

Exhibit 10.3

SEVERANCE AGREEMENT AND RELEASE
This Severance Agreement and Release (“Agreement”) is entered into between Michael Kuritzkes (“Employee”) and Harbinger Group Inc. (the “Company”).
1.Recitals
(a)Employee and the Company are parties to an employment agreement dated as of June 17, 2013 (the “Employment Agreement”);
(b)The Employment Agreement requires that Employee execute a release as a condition to receiving severance payments and benefit; and
(c)Employee and the Company desire to fully and finally resolve and settle any and all issues between them, actual or potential, whether or not relating to Employee’s employment with the Company and the termination of such employment as set forth in this Agreement.
		
	2.
	Last Day of Employment

Employee and the Company acknowledge and agree that the Recitals set forth in Paragraph 1 of this Agreement are accurate.  Employee’s last day of employment is June 13, 2014 (the “Termination Date”).  As of the Termination Date, Employee will be relieved of the duties and responsibilities of Employee’s position, and will have no authority to and may not represent himself as an employee or agent of the Company for any purpose.  
		
	3.
	Payments to Employee

(a)Separation Payments.  Provided that Employee delivers to the Company a signed original of this Agreement after the Termination Date and within the time period described in Paragraph 6(b) of this Agreement and does not revoke this Agreement, and subject to Employee’s compliance with the Non-Disclosure of Confidential Information, Return of Property, Non-Disparagement, Intellectual Property Rights and Non-Solicitation provisions of the Employment Agreement and Paragraph 9 (Confidentiality and Non-Disclosure of Company Information) of this Agreement, the Company will pay and provide Employee, and Employee will accept, as and on behalf of Releasor from the Company on behalf of each Releasee, the following payments and benefits (“Separation Payments”) in consideration for Employee’s release of claims against the Company and Releasees as set forth in this Agreement, Employee’s agreeing to the covenants set forth in Paragraph 9 of this Agreement, and the other promises and obligations set forth in this Agreement:
(i)severance pay in the amount of $500,000, payable in substantially equal monthly installments consistent with the Company’s payroll practices;
(ii)vesting of options to purchase 12,500 shares of Company stock that were awarded to Employee pursuant to the Employee Nonqualified Option Award Agreement between Employee and the Company dated as of August 16, 2013 (the “August Stock Option Agreement”);
(iii)vesting of 8,333 shares of Restricted Stock that were awarded to Employee pursuant to the Restricted Stock Award Agreement between Employee and the Company dated as of August 16, 2013 (the “August Restricted Stock Agreement”);
(iv)payment of $62,000, which is 50% of the unpaid deferred cash portion of Employee’s 2013 Annual Bonus;
(v)vesting of options to purchase 7,773 shares of Company stock that were awarded to Employee pursuant to the Employee Nonqualified Option Award Agreement between Employee and the Company dated as of December 2, 2013 (the 

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Exhibit 10.3

(vi)“December Stock Option Agreement,” and together with the August Stock Option Agreement, the “Stock Option Agreements”); 
(vii)vesting of 19,360 shares of Restricted Stock that were awarded to Employee pursuant to the Restricted Stock Award Agreement between Employee and the Company dated as of December 2, 2013 (the “December Restricted Stock Agreement,” and together with the August Restricted Stock Agreement, the “Restricted Stock Agreements”); 
(viii)eligibility for an Annual Bonus for the fiscal year ending September 30, 2014, which shall be paid (for the cash portion of any such bonus) or granted (for the equity portion of any such bonus) on the same terms and at the same time as other executives, except that (A) Employee shall only be entitled to 50% of any deferred cash component of the Annual Bonus, if any, which shall be paid as a lump sum payment made within seventy-four (74) days of the end of the fiscal year for which it is awarded (notwithstanding any provision of Section 5(c)(ii) of the Employment Agreement, or Section 3(b) of this Agreement, providing for earlier payment), (B) only 50% of the equity grant (restricted stock and options) otherwise calculated pursuant to Appendix A of the Employment Agreement will be awarded, and (C) such equity grant shall be granted, and will be vested, as of the date the Annual Bonus is awarded; and 
(ix)if Employee elects health insurance continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), then the Company will reimburse Employee for the cost of COBRA premiums in excess of the cost of such benefits that active employees of the Company are required to pay for a period of twelve (12) months or until Employee obtains individual or family coverage through another employer, whichever comes first (the “COBRA Period”), subject to the conditions that: (A) Employee is responsible for immediately notifying the Company if Employee obtains alternative insurance coverage, (B) Employee will be responsible for the entire COBRA premium amount after the end of the COBRA Period; (C) if Employee declines COBRA coverage, then the Company will not make any alternative payment to Employee in lieu of paying for COBRA premiums, and (D) such COBRA reimbursement payments shall be paid on an after tax basis as additional taxable compensation to the Employee.
  
(b)Deductions; Time of Payments; Forfeiture of Unvested Awards.  All Separation Payments and vested equity grants are subject to withholding and deductions as required by applicable laws. Separation Payments which do not constitute nonqualified deferred compensation and are not subject to Section 409A (as defined in the Employment Agreement) shall commence five (5) days after the Release Condition (as defined in the Employment Agreement) is satisfied and payments and benefits which are subject to Section 409A shall commence on the 60th day after the Termination Date (subject to further delay, if required pursuant to Section 20(d) of the Employment Agreement) provided that the Release Condition is satisfied. All of Employee’s unvested restricted stock and option awards, and deferred cash compensation awards, that did not vest as of the Termination Date shall be forfeited as of the Termination Date.
(c)Other Payments.  The Company shall pay Employee’s accrued but unpaid Base Salary (as defined in the Employment Agreement) through the Termination Date, unused vacation time accrued through the Termination Date, and unreimbursed business expenses (pursuant to the Employment Agreement) incurred through the Termination Date.  Employee’s rights to receive benefits after the Termination Date from employee benefit plans (other than the 

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Exhibit 10.3

Harbinger Group Inc. Severance Plan) in which Employee was a participant while employed by the Company shall be governed by the terms of such employee benefit plans.
(d)Consideration.  Employee acknowledges and agrees that: (i) the Separation Payments set forth above are adequate consideration for all of the terms of this Agreement; (ii) the Separation Payments set forth above do not include any benefit, monetary or otherwise, that was earned or accrued or to which Employee was already entitled without signing this Agreement on the date this Agreement was executed by Employee; and (iii) any monetary or other benefits which, prior to the execution of this Agreement, Employee may have earned or accrued or to which Employee may have been entitled (other than the payments described in Paragraph 3(c) above) have been paid, or such payments or benefits are expressly described in this Agreement or have been released, waived or settled by Releasor pursuant to this Agreement.  
(e)Repayment.  Employee acknowledges that notwithstanding any provision of this Paragraph 3 to the contrary, to the extent that any portion of the Severance Payments is determined to be incentive compensation that is 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) to be subject to any required clawback, forfeiture, recoupment or similar requirement, then such amount shall be subject to any required clawback, forfeiture, recoupment or similar requirement. 
		
	4.
	Release and Waiver of Claims by Employee

THIS PARAGRAPH PROVIDES A COMPLETE RELEASE AND WAIVER OF ALL EXISTING AND POTENTIAL CLAIMS EMPLOYEE MAY HAVE AGAINST EVERY PERSON AND ENTITY INCLUDED WITHIN THE DESCRIPTION BELOW OF “RELEASEE.” BEFORE EMPLOYEE SIGNS THIS RELEASE, EMPLOYEE MUST READ THIS PARAGRAPH 4 CAREFULLY, AND MAKE SURE THAT EMPLOYEE UNDERSTANDS IT FULLY.
(a)In consideration of Employee’s receipt and acceptance of the consideration contained in this Agreement from and/or on behalf of Releasees, Employee, on Employee’s own behalf and on behalf of Employee’s heirs, executors, administrators, successors and assigns, (collectively, “Releasor”) hereby irrevocably, unconditionally and generally releases:
(i)the Company; 
(ii)the Company’s parents, and direct and indirect affiliates, subsidiaries, divisions, and other related entities (“Affiliates”), including without limitation Harbinger Capital Partners, LLC;
(iii)all funds managed by the Company and its Affiliates (“Funds”) (collectively, the Company, its Affiliates and Funds are referred to as the “HGI Entities”); and
(iv)the current and former shareholders, directors, officers, partners, members, agents, attorneys and employees, of the HGI Entities, including without limitation Philip A. Falcone (“Affiliated Persons”) (the persons described in Paragraphs 4(a)(i) - (iv) are collectively referred to as “Releasees”, and each, as “Releasee”)
from or in connection with, and Releasor hereby waives and/or settles, with prejudice, any and all actions, causes of action, suits, debts, dues, sums of money, accounts, controversies, agreements, promises, damages, judgments, executions, or any liability, claims or demands, known or unknown and of any nature whatsoever and which Releasor ever had, now has or hereafter can, shall or may have as of the Effective Date of this Agreement, including, without limitation, arising directly or indirectly pursuant to or out of any aspect of Employee’s employment with the Company or any relationship with any other Releasee, the payment or nonpayment of any compensation by any of 

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Exhibit 10.3

the HGI Entities, the performance of services for the Company or any Releasee or the termination of such employment or services.
(b)Specifically, without limitation, this release shall include and apply to any rights and/or claims 
(i)arising under any contract or employment arrangement between Employee and the Company, express or implied, written or oral, including without limitation the Employment Agreement and any bonus agreement or equity award agreement;
(ii)for payment of any bonuses, except for the bonus payments expressly set forth in Section 3(a) of this Agreement;
(iii)for constructive termination, unfair dismissal and/or wrongful dismissal or termination of employment; 
(iv)arising under any applicable federal, state, local or other statutes, orders, laws, ordinances, regulations or the like, or case law, that relate to employment or employment practices and/or, specifically, that prohibit discrimination based upon age, race, religion, sex, national origin, pregnancy, disability or any other unlawful bases, including without limitation, the United States Constitution, the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as amended, the Americans with Disabilities Act of 1990, as amended, the Age Discrimination in Employment Act, as amended, the Family Medical Leave Act of 1993, as amended, the Pregnancy Discrimination Act of 1978, as amended, Employee Retirement Income Security Act of 1990, as amended, the Workers Adjustment and Relocation Notice Act, as amended, the Equal Pay Act, as amended, the Sarbanes Oxley Act, as amended, and the Dodd Frank Act, and any similar applicable statutes, orders, laws, ordinances, regulations or the like, or case law, of the State of New York or any state in which any Releasee is subject to jurisdiction, and/or any political subdivision thereof, including without limitation, the New York State Human Rights Law (including its prohibitions of age discrimination), as amended, the New York City Human Rights Law (including its prohibitions of age discrimination), as amended, the New York Labor Law, as amended, and the New York Civil Rights Law, as amended; or based upon any other federal, state or local statutes, orders, laws, ordinances, regulations or the like, to the fullest extent permitted by such law; 
(v)for tortious or harassing conduct, infliction of mental distress, interference with contract, fraud, libel or slander, or on any other common law basis; and 
(vi)for damages, including without limitation, punitive or compensatory damages, or for attorneys’ fees, expenses, costs, wages, injunctive or equitable relief.
(c)Notwithstanding any provision of the foregoing to the contrary, Employee is not waiving or releasing:
(i)any claims for indemnification pursuant to the Employment Agreement or any applicable law;
(ii)any claims for vested benefits pursuant to the terms of the employee benefit plans in which Employee was a participant before the Termination Date;
(iii)any claims relating to Employer’s ownership of (A) 22,927 shares of Company stock granted to Employee on November 29, 2013, or (B) vested options to purchase 9,205 shares of Company stock that were awarded to Employee pursuant to the December Stock Option Agreement;

4

Exhibit 10.3

(iv)any claims which arise after the Effective Date; and
(v)any claims to enforce this Agreement.
		
	5.
	Release of Unknown Claims

Releasor expressly understands and acknowledges that it is possible that unknown losses or claims exist or that present losses may have been underestimated in amount or severity, and Releasor explicitly took that into account in determining the amount of consideration to be paid for the giving of the releases described in Paragraph 4 of this Agreement, and a portion of said consideration and the mutual covenants contained herein, having been bargained for between the parties with the knowledge of the possibility of such unknown claims, were given in exchange for a full satisfaction and discharge of all such claims.
		
	6.
	Employee Acknowledgments

By executing this Agreement, Employee agrees and acknowledges that:
(a)Employee understands all of the terms of this Agreement, and such terms are fair and reasonable, and are not the result of any fraud, duress, coercion, pressure or undue influence exercised by or on behalf of any Releasee;
(b)Employee has been provided a reasonable period of time (e.g., at least twenty one (21) days) to review and consider signing this Agreement; 
(c)Employee has been informed that Employee has a period of seven (7) calendar days after the date of delivery of a signed Agreement the President of the Company at 450 Park Avenue, 30th Floor, New York, NY 10022 in which Employee may revoke this Agreement (the “Revocation Period”), and that revocation must be made by delivery of written notice of revocation to the President of the Company at 450 Park Avenue, 30th Floor, New York, NY 10022 prior to the end of the Revocation Period.
(d)Employee has been directed by the Company to consult with an attorney of Employee’s choice before signing this Agreement;
(e)Employee is not relying on any representation or statement made or contained outside of those set forth in this Agreement and Employee expressly disclaims reliance on any such representation or statement; and
(f)Employee has agreed to and entered into this Agreement and all of the terms hereof, knowingly, freely and voluntarily.
		
	7.
	Effect of This Agreement on the Employment Agreement

Employee and the Company acknowledge and agree that any Nondisclosure of Confidential Information, Non-Solicitation, Return of Property, Intellectual Property Rights, Non-Disparagement, Remedies and Injunctive Relief, Cooperation, Arbitration, Governing Law and Venue, Amendment, Waiver, 409A, Indemnification, Severability, No Construction Against Drafter, Notices, and Headings and References provisions of the Employment Agreement shall survive the cessation of Employee’s employment by the Company, and that all of the other provisions of the Employment Agreement shall cease to be in effect as of the Termination Date.  Employee and the Company further acknowledge and agree that if there is any conflict between the Nondisclosure of Confidential Information, Return of Property, or Non-Disparagement provisions of the Employment Agreement and similar provisions of this Agreement, then the provisions of this Agreement will be controlling.
		
	8.
	Covenant Not to Sue

Employee represents and warrants that Employee has not filed or commenced any complaints, claims, actions or proceedings of any kind against any Releasee with any federal, state or local court or any administrative, regulatory or arbitration agency or body.  Employee agrees not 

5

Exhibit 10.3

to commence, maintain, prosecute or participate as a party in any action or proceeding in any court or arbitration forum against the Company or any other Releasee with respect to any claim arising from any act, omission, transaction or occurrence up to and including the Effective Date of the execution of this Agreement which is released and waived by Paragraph 4 of this Agreement.  Employee further agrees not to instigate, encourage, assist or participate in any court action or arbitration proceeding commenced by any other person (except a government agency or as required by subpoena or court order) against the Company or any other Releasee.  In the event any government agency seeks to obtain any relief on behalf of Employee with regard to any claim released and waived by Paragraph 4 of this Agreement, Employee covenants not to accept, recover or receive any monetary relief or award that may arise out of or in connection with any such proceeding. 
		
	9.
	Company Non-Admission

This Agreement and the Separation Payments made under this Agreement are not intended to be, shall not be construed as and are not an admission or concession by any Releasee of any wrongdoing or illegal or actionable acts or omissions, and each Releasee expressly denies that any of them engaged in any wrongdoing or illegal or actionable acts or omissions.  Employee, as and on behalf of Releasor, hereby represents and agrees that no written or oral statements, suggestions or representations that any Releasee has made or implied any such admission or concession have been or shall be made directly or indirectly by or on behalf of Employee.
		
	10.
	Confidentiality and Non-Disclosure of Company Information

Employee hereby acknowledges that during Employee’s employment Employee had access to, and may have acquired, proprietary, private and/or otherwise confidential information (“Confidential Information,” as defined and described in this paragraph).  Confidential Information shall mean all non-public information, whether or not created or maintained in written or electronic form, which constitutes, relates to or refers to, among other things not numerated: 
(i)The Company and/or any other Releasee, and/or any aspect of any Releasee’s business or activities, including without limitation their trade secrets; their business and product development plans; their marketing strategies and plans; their financial information; their investment performance and investment performance data; their manner and method of conducting business; customers and potential customers; and investors and prospective investors; 
(ii)any natural person or entity (“Person”) identified as a potential investor in or customer of or who Employee knows to be a potential investor in or customer of any of the HGI Entities; 
(iii)any Person with which any Releasee transacted business during Employee’s employment; 
(iv)any non-public information obtained from any Person other than a Releasee which is protected and/or governed by a confidentiality agreement or other understanding that the information be treated as confidential; 
(v)any information or documents provided or produced in any litigation involving any Releasee, or that are protected and/or governed by a confidentiality agreement or stipulation;
(vi)any information protected and/or governed by the attorney-client privilege, work product immunity or any similar privilege or immunity; and

6

Exhibit 10.3

(vii)any personal information, including without limitation any information involving the personal lives or habits, of any Releasee who is a natural person or any immediate relative of any Releasee who is a natural person.
All of the foregoing are illustrative, and Confidential Information shall not be limited to those illustrations.  
(a)Employee and/or any Releasor agree not to use any Confidential Information or Confidential Materials, in any manner, directly or indirectly, and agree not to disclose, orally or in writing or by any other means, directly or indirectly, to any person (other than to Employee’s attorney and accountant, each of whom shall be directed by Employee not to disclose such information), any Confidential Information or Confidential Materials, including without limitation the information described in Paragraphs 10(a)(i)-(vi), and further agree not to disclose to any other person:
(i)information concerning any aspect of Employee’s employment with the Company or relationship with any other Releasee, the payment or nonpayment of any wages or compensation, the performance of services for the Company or any Releasee, or the termination of such employment or services;
(ii)any facts, claims or assertions relating or referring to any conduct or practices by or on behalf of any Releasee; 
(iii)any facts, claims or assertions relating or referring to any experiences of Employee or treatment Employee received by or on behalf of any Releasee during Employee’s employment through the date of this Agreement, which experiences or treatment could have provided a factual or legal basis for any claim of any kind in any action or proceeding before any court or administrative or arbitral body; 
(iv)the existence or terms of this Agreement; and 
(v)the amount of any payment made hereunder.  
(b)Notwithstanding the foregoing, 
(i)the provisions of this Paragraph 10 do not apply to Employee’s truthful testimony in court or an administrative or arbitration tribunal, and do not restrict Employee in providing information in response to a subpoena or court order, provided, however, that this clause (i) does not waive any attorney-client privilege or work product immunity with respect to any communication between Employee and the Company and/or its employees and agents that is subject to such privilege or immunity; 
(ii)in response to any inquiry concerning any of the foregoing or otherwise, Employee may describe the positions and salaries Employee held, the job duties and functions Employee performed, and the dates of commencement and termination of Employee’s employment; and
(c)In the event that Employee and/or any Releasor receives a subpoena or any other written or oral request for any Confidential Information, Confidential Materials or any other information concerning any Releasee, including without limitation, such information governed by Paragraph 10 of this Agreement, Employee shall, to the extent permissible by law, within two (2) business days of the service or receipt of such subpoena or other request:
(i)notify the Company in writing, by email to Omar Asali (or his successor) with a copy to the Legal Department of the Company; and 
(ii)provide a copy of such subpoena or other request, if in writing, and/or disclose the nature of the request for information, if oral, to Omar Asali (or his successor) and a copy of any such document to the Legal Department of the Company.
(d)Employee acknowledges that this Paragraph 10 constitutes a material term in this Agreement, without which the Company would not enter into this Agreement.  

7

Exhibit 10.3

		
	11.
	Company Remedies

The covenants, representations and acknowledgments made by Releasor in this Agreement shall survive the execution of this Agreement and the delivery of the Separation Payments to be made hereunder.  Except as may be prohibited by law, in the event that Employee has committed or commits a breach of any term, condition or covenant in Paragraph 9 of this Agreement or in any of the Non-Disparagement, Non-Solicitation, or Return of Property provisions of the Employment Agreement, Releasees shall be excused and released from any obligation to make the Separation Payments contemplated by this Agreement and any installment thereof; Releasor shall be obligated to return to the Company any such payment that has been paid pursuant to Paragraph 3(a); and Releasor shall also be liable for any damages suffered or incurred by any Releasee by reason of such misstatement or breach.  Notwithstanding anything to the contrary in this Paragraph 11, under no circumstances will the Company be excused from paying, nor shall Employee be obligated to return, an amount of $50,000 of the total consideration paid to Employee under Paragraph 3(a) of this Agreement.
		
	12.
	Entire Agreement; Severability

This Agreement, the Employment Agreement (to the extent applicable as described in Paragraph 7 of this Agreement), the Stock Option Agreements and the Restricted Stock Agreements together constitute the sole and complete understanding and agreement between the parties with respect to the matters set forth herein, and there are no other agreements or understandings, whether written or oral and whether made contemporaneously or otherwise.  If any provision of this Agreement is determined to be void, voidable or unenforceable, it shall have no effect on the remainder of this Agreement, which shall remain in full force and effect.
		
	13.
	Choice of Law and Venue

This Agreement shall in all respects be subject to, governed by and enforced and construed pursuant to and in accordance with the laws of the State of New York, without regard to and excluding the choice of law rules of any applicable jurisdiction.  Any dispute arising under this Agreement shall be subject to arbitration pursuant to Article VIII of the Plan.  Furthermore, with respect to any controversy, claim or dispute between Employee and any Releasee that is not subject to arbitration and with respect to any proceeding in aid of or in connection with arbitration or to enforce, modify or vacate an arbitration award, Employee agrees and consents to submit to personal jurisdiction in the State of New York in any state or federal court of competent subject matter jurisdiction situated in New York County, New York.  In addition, Employee waives any right to challenge in another court any judgment entered by such New York County court or to assert that any action instituted by the Company in any such court is in the improper venue or should be transferred to a more convenient forum.  Further, Employee and the Company waive any right Employee or it may otherwise have to a trial by jury in any action to enforce the terms, or for breach, of this Agreement.
		
	14.
	Amendment; No Waiver; Section 409A  

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

8

Exhibit 10.3

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 Employee 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 Employee 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, Employee shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or for the account of Employee 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 indemnify or otherwise hold Employee (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 Employee 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 Employee prior to the date that is six (6) months after the date of  Employee’s “separation from service” (as defined in Section 409A) or, if earlier, Employee’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)Employee acknowledges that the Company has advised Employee to consult with an attorney regarding this Agreement, and how Section 409A applies to the Separation Payments.  
		
	15.
	Effective Date

Employee shall deliver the executed copy of this Agreement after the Termination Date and within twenty one (21) days of the Termination Date to Harbinger Group Inc., 450 Park Avenue, 30th Floor, New York, NY 10022, Attention: President.  This Agreement will become final and binding upon expiration of the seven (7) day Revocation Period described in Paragraph 6(c) without timely revocation by Employee (the “Effective Date”). 
[Remainder of the page intentionally left blank]

9

Exhibit 10.3

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have hereunto set their hands.

/s/ Michael Kuritzkes             
Michael Kuritzkes    
Date: June 18, 2014

Harbinger Group Inc.
/s/ Philip A. Falcone              
Name: Chief Executive Officer

Date: June 11, 2014 

10

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