RETENTION AND CONSULTING AGREEMENT
Exhibit 10.1
This Retention and Consulting Agreement (this “Agreement”) is made and entered into as of
January 22, 2010 (the “Effective Date”), by and between Harbinger Group Inc. (the “Company”) and
Xxxxxxx XxXxxxx (“Employee”).
Recitals
| A. | Employee is currently employed by the Company. | ||
| B. | Over the next several months, the Company will be making certain changes with respect to its business operations which ultimately will result in the termination of Employee’s employment with the Company. | ||
| C. | The Company wishes to continue to employ Employee and to obtain Employee’s assistance in connection with implementing its business changes. |
Agreement
NOW, THEREFORE, in consideration of the premises and of the mutual promises and covenants
contained herein, and of other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, Company and Employee agree as follows:
1. Employment; Consulting Services.
(a) Employment. Subject to the terms of this Agreement, Employee shall
continue to be employed by the Company from the Effective Date through May 31, 2010 (the
“Employment Period”) at the same annual salary rate and subject to the same benefit plans as
in effect on the Effective Date. In addition, for 2010, Employee shall receive a four
percent (4%) increase in the rate of his annual base salary, such increase to become
effective as of Employee’s normal salary review date. If Employee’s normal annual salary
review date has already occurred for 2010, but his salary has not yet been adjusted,
Employee’s annual salary shall be increased retroactively to the date of such annual review.
During the Employment Period, Employee shall continue to perform the same duties he
performed prior to the Effective Date, together with such other duties reasonably requested
by the Company in connection with the transition of the Company’s business. The Company
agrees that it will not terminate Employee’s employment prior to May 31, 2010, other than
for Cause. For purposes of this Agreement, the term “Cause” shall mean that Employee has
(A) engaged in conduct amounting to fraud or dishonesty against the Company; (B) engaged in
unethical conduct related to his work under this Agreement; (C) committed a violation of the
Company’s compliance policies and procedures; (D) acted in a negligent manner or committed
willful misconduct in the performance of his duties hereunder; (E) been under the influence
of illegal drugs or alcohol while on the premises of the Company or at any time while
providing the employment or Consulting Services (as hereinafter defined); or (F) committed a
breach or violation of the terms of this Agreement or otherwise failed to perform the
employment or Consulting Services in accordance with the terms of this Agreement.
Any options previously granted to Employee by the Company under the 1996 Long-Term
Incentive Plan or under the Xxx.Xxx 1999 Long-Term Incentive Plan and which are outstanding
on the date Employee’s employment terminates shall continue to be exercisable for the
periods and subject to the terms set forth in such plans and the applicable option
agreements. With respect to the foregoing, Employee’s termination of employment shall,
solely with respect to his options, be deemed to be effective August 31, 2010, unless
Employee voluntarily resigns or is
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terminated by the Company for Cause prior to May 31, 2010. A termination of employment
by the Company as of the end of the Employment Period shall be a termination without Cause
with respect to any outstanding options, and such termination shall, solely with respect to
Employee’s options, be deemed to be effective August 31, 2010. In addition, Employee shall
be entitled to receive his bonus earned for 2009, but not yet paid, under the Company’s
annual bonus plan, in an amount equal to $66,150 (the “2009 Bonus”). The 2009 Bonus shall
be paid on or before March 15, 2010; provided, however, that the 2009 Bonus shall be
forfeited if Employee voluntarily resigns or is terminated by the Company for Cause prior to
the date the 2009 Bonus is actually paid.
(b) Consulting Services.
(i) Beginning on June 1, 2010 and for a period of twelve (12) months thereafter
(the “Consulting Period”), the Company shall engage Employee to provide certain
consulting services in connection with the transition of the Company’s business (the
“Consulting Services”). Employee agrees that he shall be available to provide up to
40 hours per week of time towards providing the Consulting Services to the Company
during the Consulting Period and shall travel to New York City, New York as
reasonably deemed necessary by the Company to assist in the transition of the
Company’s business. The Company agrees that it shall not terminate this Agreement
prior to the expiration of the Consulting Period, other than for Cause. The
Employee may terminate the Consulting Period at anytime upon thirty (30) days prior
written notice. If Employee voluntarily resigns or is terminated by the Company for
Cause prior to the expiration of the Employment Period, there shall be no obligation
to engage Employee during the Consulting Period and he shall not be entitled to any
Consulting Fees or COBRA Payments (as hereinafter defined) nor to the extended
option period as described in Section 1(a) above.
(ii) Employee represents and warrants that he will be performing his
obligations during the Consulting Period as an independent contractor and not an
employee of the Company. During the Consulting Period, Employee shall not be
considered by reason of any of the provisions of this Agreement as having an
employee status or being entitled to participate in any employee benefits or benefit
plans provided to the regular employees of the Company. Employee shall control the
manner and means of his work. Employee acknowledges, understands and agrees that,
with respect to the Consulting Services, the Company shall not be required (A) to
withhold federal or state income taxes from any compensation paid to Employee,
hereunder, or to otherwise comply with any state or federal law concerning the
collection of income taxes at the source of the payment of wages; (B) under the
Federal Unemployment Tax Act and the Federal Insurance Contribution Act to withhold
payment for unemployment compensation or for social security on behalf of Employee;
or (C) under the laws of any state to obtain worker’s compensation insurance or to
make state unemployment compensation contributions on Employee’s behalf. Employee
expressly releases the Company from, and covenants not to xxx the Company for, any
liability arising from the Company not withholding such taxes or payments or not
providing such unemployment compensation, social security benefits and worker’s
compensation insurance. Employee assumes full responsibility for payment of all
federal, state and local taxes for contributions imposed or required under
unemployment insurance, social security and income tax laws with respect to his
performance of this Agreement during the Consulting Period agrees to timely file all
returns and make all payments associated with any such obligations and agrees to
indemnify the Company from all claims, costs, expenses or other liabilities arising
from Employee’s failure to comply with the terms of this Section 1(b)(ii).
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(iii) Provided Employee obtains advance, written approval for travel related to
the Consulting Services or is directed by the Company to travel to New York City,
New York, the Company will reimburse Employee for all actual, reasonable and direct
travel expenses which he incurs in the performance of his duties hereunder.
Employee shall provide the Company with written documentation of such expenses in a
form complying with the requirements of the Internal Revenue Service for tax
deductibility purposes, and reimbursement for each item of expense shall be made
within a reasonable time after receipt by the Company of the written documentation
thereof.
(iv) Employee recognizes and acknowledges that the Company and its affiliates
need to protect their legitimate business interests and, therefore, covenants and
agrees that Employee shall not, directly or indirectly, use or otherwise exploit for
his own benefit or for the benefit of any other person or entity, any Confidential
Information (defined below) disclosed to Employee or of which he became aware by
reason of Employee’s position as an employee or consultant to the Company. For
purposes of this Agreement, “Confidential Information” shall mean any and all data
and information, in whatever form or medium, relating to the Company or its
investment or portfolio companies, investors, prospective investors, shareholders,
members, employees, family members or partners (including but not limited to,
financial information, technical, commercial or intellectual property-related
information, data relating to legal analyses, policies and procedures, systems,
business methods, operations, techniques, business plans, accounts, employees and
advisors, and investment strategies and identities of actual and prospective
investors). Employee agrees that the terms of this Agreement constitute
“Confidential Information” and may not, except as may otherwise be required by law,
be disclosed by Employee to any third party other than Employee’s spouse, attorney
and/or accountant, without the express written consent of the Company. Employee
agrees that, upon termination of this Agreement, he shall immediately destroy or
return to the Company all records containing any Confidential Information
(including, without limitation, all electronic records containing any Confidential
Information).
(v) Employee may provide the Company with certain information or documents
regarding the services performed hereunder in writing or by electronic mail. The
Company may use such information as it deems desirable, and Employee hereby grants,
assigns and transfers all of Employee’s rights, title or interest in such
information and documents (both in printed and electronic form) to the Company and
agrees that such documents (both in printed and electronic form) are “work made for
hire” as that phrase is used in United States copyright laws.
(vi) Employee acknowledges that all equipment (including computers, PDAs,
mobile telephones and software), originals and copies of materials, records,
documents, files and memoranda (including materials maintained electronically),
generated by Employee or coming into Employee’s possession or under Employee’s
control in the course of his employment or providing the Consulting Services,
including but not limited to Confidential Information, are the sole property of the
Company (“Company Property”). Upon the termination of this Agreement for any
reason, or upon the request of the Company at any time, Employee will promptly
deliver all Company Property to the Company. At no time will Employee remove or
cause to be removed from the premises of the Company any Company Property, including
but not limited to any computer data related to the foregoing, except in furtherance
of Employee’s duties to the Company.
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2. Compensation.
(a) Retention Payments. So long as Employee continues to be actively employed
by the Company for the duration of the Employment Period, and expressly contingent thereon,
the Company shall provide Employee with the following one-time retention payments
(collectively, such retention payments shall be referred to herein as the “Retention
Payments”):
(i) An amount equal to $150,000 (One Hundred Fifty Thousand Dollars);
(ii) An amount equal to $34,453, which reflects one hundred twenty-five percent
(125%) of the 2009 Bonus multiplied by 5/12; and
(iii) Outplacement services at an outplacement firm selected by the Company for
a period of three (3) months beginning at the end of the Employment Period. It is
agreed that the Company’s sole obligation in this respect is to pay, directly to the
outplacement agency, for such outplacement services, as contracted with the
outplacement agency. Any dispute between Employee and the outplacement agency
shall be deemed a dispute solely between Employee and the outplacement agency and
shall not in any way be construed as a breach of this Agreement by the Company.
The Retention Payments shall be subject to any payroll or other deductions as may be
required to be made pursuant to law. Subject to the terms of Section 2(b)(ii), the
Retention Payments (excluding the outplacement services, which shall be payable to the
outplacement agency pursuant to its agreement with the Company) shall be paid to Employee no
later than thirty (30) days following the last day of the Employee’s employment or as soon
thereafter as the Release (defined below) becomes effective.
(b) Consulting Payments. For each full month of the Consulting Period, the
Company shall compensate Employee at the rate of one-twelfth (1/12) of Employee’s annual
base salary at the salary rate in effect as of the date his employment terminates (the
“Consulting Fee”). For any partial months worked (as determined in the Company’s sole
discretion), the Company shall pay Employee $1,000 (One Thousand Dollars) for each complete
day worked in such partial months; provided, however, that the total
Consulting Fee paid in any partial month worked shall not exceed one-twelfth (1/12) of
Employee’s annual base salary at the salary rate in effect as of the date his employment
terminates. The Consulting Fees shall be paid monthly in arrears during each month of the
Consulting Period.
(i) In addition to the Consulting Fee, during the Consulting Period, the
Company shall, if Employee elects health care continuation coverage under COBRA or
applicable state law, pay for such coverage (the “COBRA Payments”) through the
Consulting Period at the same rate it pays for health insurance coverage for its
active employees (with Employee required to pay for any employee paid portion of
such coverage). After termination of the Consulting Period, Employee shall be
responsible for the payment of all health care continuation premiums. Nothing
herein provided, however, shall be construed to extend the period of time over which
such continuation coverage otherwise may be provided to Employee and/or his
dependents. For the avoidance of doubt, the engagement of Employee as a consultant
of the Company during the Consulting Period does not (except as otherwise provided
above with respect to Employee’s options, for which employment shall be deemed to
continue until August 31, 2010) constitute continuation of employment for any
purpose, including, without limitation, bonuses or any other benefit plans of the
Company.
(ii) The Retention Payments and Consulting Fee shall be in consideration of
Employee’s continued employment with the Company through the duration of the
Employment Period and his execution of an agreement (the “Release”) reasonably
acceptable to the Company that (A) waives any rights Employee may otherwise have
against the Company (including each of their respective successors and assigns), (B)
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releases the Company from actions, suits, claims, proceedings and demands
related to the period of employment (including the Employment Period) and/or the
termination of employment, and (C) contains certain other reasonable obligations
which shall be set forth at the time of the termination. Employee must sign and
tender the Release not later than thirty (30) days following his last day of
employment, or such earlier date as required by the Company, and if Employee fails
to do so, he shall forfeit the right to the Retention Payments and the right to any
Consulting Fees.
(c) Section 409A Compliance. It is intended that any amount payable under this
Agreement will be exempt from Section 409A of the Internal Revenue Code of 1986, as amended
and regulations and guidance relating thereto (the “Code”), so as not to subject the
Employee to the payment of any interest or tax penalty which may be imposed under Section
409A of the Code, provided, however, that the Company shall not be
responsible for any such interest and tax penalties. If any provision of this Agreement
shall be invalid or unenforceable, in whole or in part, or as applied to any circumstance,
under the laws of any jurisdiction that may govern for such purpose, or any provision of
this Agreement needs to be interpreted to comply with the requirements of a short-term
deferral which is exempt from Section 409A of the Code, then such provision shall be deemed
to be modified or restricted, or so interpreted, to the extent and in the manner necessary
to render the same valid and enforceable, or to the extent and in the manner necessary to be
interpreted in compliance with such requirements of the Code, either generally or as applied
to such circumstance, or shall be deemed excised from this Agreement, as the case may
require, and this Agreement shall be construed and enforced to the maximum extent permitted
by law as if such provision had been originally incorporated herein as so modified or
restricted, or as if such provision had not been originally incorporated herein, as the case
may be.
3. Non-Disparagement; Non-Solicitation.
(a) Non-Disparagement. During the Employment Period and Consulting Period and
thereafter, Employee 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 or
its subsidiaries, any Disparaging (defined below) remarks, comments or statements concerning
the Company, its subsidiaries, or any of their respective present and former stockholders
(including Harbinger Capital Partners and its affiliates), members, partners, directors or
officers. For purposes of this Agreement, “Disparaging” remarks, comments or
statements are those that impugn the character, honesty, integrity, morality, business
acumen or abilities of the individual or entity being disparaged.
(b) Non-Solicitation. During the Employment Period and the Consulting Period
and for a period of six (6) months after the end of the Consulting Period (the “Non-Solicit
Period”), Employee shall not, either directly or indirectly, solicit for employment or cause
to be solicited for employment any officer, employee or consultant of the Company.
Furthermore, during the Non-Solicit Period, Employee shall not either directly or
indirectly, solicit or cause to be solicited any investor, potential investor or business
partner of the Company.
4. Remedy for Breach. Employee hereby acknowledges that the provisions of Sections
1(b)(iv) and 3 are reasonable and valid in geographical and temporal scope and in all other
respects and necessary for the protection of the Company. Employee further acknowledges that the
Company will be irreparably harmed if such covenants are not specifically enforced. Accordingly,
Employee agrees that, in addition to any other relief to which the Company may be entitled,
including claims for damages, the Company shall be entitled to seek injunctive relief (without the
requirement of any bond) from a court of competent jurisdiction for the purpose of restraining an
actual or threatened breach of such covenants.
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5. Assignment. Employee acknowledges that the services to be rendered by him
hereunder are based upon his specialized and personal skills and may not be delegated or assigned
by him without the prior written consent of the Company, and that his right to any monies due or to
become due as a consequence of the terms hereof is not assignable without the prior written consent
of the Company. The rights and obligations of the Company under this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of the Company.
6. Notice. Any notification required or permitted to be given by this Agreement shall
be properly given if in writing and sent by certified or registered mail addressed to the parties
as follows:
If to Employee:
Xxxxxxx XxXxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
00 Xxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
If to the Company:
Harbinger Group Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. XxXxxxxx
Voice: (000) 000-0000
E-mail: xxxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. XxXxxxxx
Voice: (000) 000-0000
E-mail: xxxxxxxxx@xxxxxxxxxxxxxxxxx.xxx
With a copy to:
Harbinger Capital Partners LLC
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 1022
Attention: Xxxxx Xxxxx
Voice: (000) 000-0000
E-mail: xxxxxx@xxxxxxxxxxxxxxxx.xxx
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 1022
Attention: Xxxxx Xxxxx
Voice: (000) 000-0000
E-mail: xxxxxx@xxxxxxxxxxxxxxxx.xxx
Either party by notice in writing given to the other as hereinabove provided may change the address
to which future notices to such party shall be given.
7. Arbitration. The parties hereto agree that any dispute, controversy or claim
between the parties arising out of, relating to or concerning this Agreement shall be finally
settled by arbitration in New York, New York before and in accordance with the Commercial
Arbitration Rules and Mediation Procedures of the American Arbitration Association (the “AAA”)
before a single arbitrator. The arbitrator’s award shall be final and binding upon all parties and
judgment upon the award may be entered in any court of competent jurisdiction in any state of the
United States. Each party shall bear its own costs and expenses incurred in connection with any
such arbitration proceeding. For purposes of any actions or proceedings ancillary to the
arbitration referenced above, the parties agree to submit to the exclusive jurisdiction of the
state courts of New York, New York County.
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8. Miscellaneous.
(a) Headings. Section headings are inserted for convenience only, are not part
of this Agreement and are not to be considered in the construction or interpretation of this
Agreement.
(b) Entire Agreement. This Agreement embodies the entire agreement of the
parties hereto relating to the subject matter hereof. This Agreement supersedes all prior
agreements and understandings, and all rights and obligations thereunder are hereby canceled
and terminated. In executing this Agreement, Employee represents that Employee has not
relied on any representation or statement not set forth herein, and Employee expressly
disavows any such representations or statements.
(c) Amendment. No amendment or modification of this Agreement shall be valid
or binding unless it is in writing and signed by the parties hereto.
(d) Enforceability. If any provision of this Agreement is determined to be
unenforceable, the remainder of this agreement shall not be adversely affected thereby.
(e) No Waiver. No failure or delay by the Company in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of
any right, power or privilege.
(f) Waiver of Jury Trial. The parties hereto knowingly and voluntarily waive
any right which either or both of them shall have to receive a trial by jury with respect to
any claims, controversies or disputes which shall arise out of or relate to this Agreement
or the subject matter hereof.
(g) Survival of Terms. Sections 1(b)(ii), (iv), 3, 4 and 7 of this Agreement
shall survive the termination of this Agreement.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made and/or to be
performed in that State, without regard to any choice of law provisions thereof.
(i) Counterparts. This Agreement may be signed in counterparts, which together
shall constitute one agreement. PDF or electronic signatures to this Agreement shall be of
the same force and effect as original signatures.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Company and Employee have caused this Agreement to be executed as of
the Effective Date.
| Harbinger Group Inc. | ||||||
| By: | /s/ Xxxxxxx X. XxXxxxxx | |||||
| Name: | Xxxxxxx X. XxXxxxxx | |||||
| Its: | Executive Vice President & Chief Financial Officer |
|||||
| /s/ Xxxxxxx XxXxxxx | ||||||
| Xxxxxxx XxXxxxx | ||||||
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