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EXHIBIT 10.1
ESCROW AGREEMENT
THIS
ESCROW AGREEMENT ("Agreement"), dated as of September 8, 2004
(the
"Effective Date"), is by and among HARRIS
INTERACTIVE INC., a Delaware
corporation ("Harris"), MANUFACTURERS AND
TRADERS TRUST COMPANY, a New York
banking corporation ("Escrow Agent"), and
all of the stockholders of WIRTHLIN
WORLDWIDE, INC., a California corporation
("Wirthlin"), shown on the signature
pages to this Agreement
("Stockholders").
WHEREAS,
Stockholders own all of the issued and outstanding shares of
Wirthlin common stock, par value $1.00 (the
"Wirthlin Shares");
WHEREAS,
concurrently with the execution and delivery of this Agreement,
Harris will acquire all of the Wirthlin
Shares from Stockholders, pursuant to
the terms of that certain Agreement and
Plan of Merger, dated as of the date
hereof, by and among Harris, Capitol Merger
Sub, LLC, a Delaware limited
liability company of which Harris is the
sole member, Wirthlin, and Stockholders
(the "Merger Agreement"); and
WHEREAS,
the execution and delivery of this Agreement concurrently with
the Merger Agreement is required by
Sections 3.3.1(c) and 3.3.2(a) of the Merger
Agreement.
NOW,
THEREFORE, in consideration of the premises and the
representations,
warranties, covenants and agreements herein
contained, and intending to be
legally bound hereby, Harris, Stockholders
and Escrow Agent hereby agree as
follows:
SECTION 1. - DEFINITIONS
1.1 The
following terms shall have the following meanings when used in
this Agreement. Capitalized terms not
expressly defined in this Agreement shall
have the meanings ascribed to them in the
Merger Agreement.
1.1.1. "2005 Financial Statements" means Harris' audited
financial
statements for the fiscal year ended June
30, 2005.
1.1.2. "2006 Financial Statements" means Harris' audited
financial
statements for the fiscal year ended June
30, 2006.
1.1.3. "Agreement" has the meaning given to it in the first
paragraph of this Agreement.
1.1.4. "Claim" has the meaning given to it in Section 4.
1.1.5. "Counter Notice" has the meaning given to it in Section
5.1.
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1.1.6. "Counter Notice Period" has the meaning given to it in
Section 5.1.
1.1.7. "Effective Date" has the meaning given to it in the
first
paragraph of this Agreement.
1.1.8. "Escrow Agent" has the meaning given to it in the first
paragraph of this Agreement and shall
include all successor escrow agents
appointed in accordance with Section
6.8.
1.1.9. "Escrow Fund" has the meaning given to it in Section
2.1.
1.1.10. "First Release Date" means the earlier of (a) ninety
(90)
days after the first anniversary of the
Effective Date, or (b) the date that the
2005 Financial Statements are delivered to
Harris by Harris' independent
auditors.
1.1.11. "Harris" has the meaning given to it in the first
paragraph
of this Agreement.
1.1.12. "Merger Agreement" has the meaning given to it in the
second
whereas clause of this Agreement.
1.1.13. "Notice" has the meaning given to it in Section 4.
1.1.14. "Party" means any of Harris, Escrow Agent or any of
Stockholders and "Parties" means all of
Harris, Escrow Agent and Stockholders.
1.1.15. "Second Release Date" means the earlier of (a) ninety
(90)
days after the second anniversary of the
Effective Date, or (b) the date that
the 2006 Financial Statements are delivered
to Harris by Harris' independent
auditors.
1.1.16. "Stockholders" has the meaning given to it in the first
paragraph of this Agreement.
1.1.17. "Stockholder Representative" means Richard B. Wirthlin,
or
Dee Allsop has been appointed as successor
Stockholder Representative as
provided under the terms of the Merger
Agreement but only after written notice
of such succession has been provided either
by Harris or the Stockholders to the
Escrow Agent.
1.1.18. "Unrestricted Escrow Fund" has the meaning given to it
in
Section 5.3.
1.1.19. "Wirthlin" has the meaning given to it in the first
paragraph of this Agreement.
1.1.20. "Wirthlin Shares" has the meaning given to it in the
first
whereas clause of this Agreement.
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SECTION 2. - ESTABLISHMENT OF ESCROW
2.1 Harris
is depositing with Escrow Agent an amount equal to Five Million
Dollars ($5,000,000) in the form of
$3,500,000 of cash and $1,500,000 of short
term Treasury Notes, which amount shall be
increased by any earnings thereon and
reduced by any losses thereon,
disbursements thereof, and amounts withdrawn
therefrom under Section 5 (the "Escrow
Fund"). Escrow Agent acknowledges receipt
of the Escrow Fund.
2.2 Escrow
Agent hereby agrees to act as escrow agent and to hold,
safeguard and disburse the Escrow Fund
pursuant to the terms and conditions
hereof.
SECTION 3. - INVESTMENT OF FUNDS
The Escrow
Fund shall be held in the form in which it was initially
deposited (provided that upon maturity of
the Treasury Notes initially
deposited, such amount shall thereafter be
held in cash) until disbursement of
the entire Escrow Fund in accordance with
the terms of this Agreement; provided,
however, that Harris and the Stockholder
Representative may from time to time
jointly instruct Escrow Agent in writing to
invest amounts in the Escrow Fund as
so directed by them, but further provided
that all such investments must be in
deposits, instruments, funds, or other form
acceptable to the Escrow Agent in
its sole discretion. Escrow Agent is
authorized to liquidate, in accordance with
its customary procedures, any portion of
the Escrow Fund consisting of
investments to provide for payments
required to be made under this Agreement.
SECTION 4. - CLAIMS
From time
to time on or before the Second Release Date, Harris may assert
a claim that Harris may have under Section
8 of the Merger Agreement (a
"Claim"), in which case Harris shall give
concurrent notice of such Claim
assertion (a "Notice") to the Stockholder
Representative and the Escrow Agent
specifying in reasonable detail the
specific provisions of the Merger Agreement,
and if applicable related agreement, so
applicable, and the nature and dollar
amount of such Claim. Harris may make more
than one Claim with respect to any
underlying state of facts to the extent
permitted pursuant to the Merger
Agreement. Escrow Agent shall not inquire
into or consider whether a Claim
complies with the requirements of the
Merger Agreement.
SECTION 5. - RELEASE OF ESCROW FUNDS
5.1 If the
Stockholder Representative gives notice to Harris and Escrow
Agent that Stockholder Representative
disputes any Claim (a "Counter Notice")
within thirty (30) days following receipt
by Stockholder Representative and
Escrow Agent of the Notice regarding such
Claim (the "Counter Notice Period"),
then Escrow Agent shall pay the amount of
the disputed Claim from (and only to
the extent of) the then existing amount of
the Escrow Fund only upon the receipt
of, and in accordance with (a) the joint
written instructions of Harris and the
Stockholder Representative, or (b) the
final, nonappealable order of a court of
competent jurisdiction that is accompanied
by a legal opinion by counsel for
Harris to the effect that the order is
final and nonappealable. Escrow Agent
shall act on such court order and legal
opinion without further question.
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5.2 If no
Counter Notice is received by Escrow Agent within the Counter
Notice Period, then the dollar amount of a
Claim, as set forth in a Notice,
shall be deemed established for purposes of
this Agreement and the Merger
Agreement and, at the end of the Counter
Notice Period, Escrow Agent shall pay
to Harris the dollar amount of such Claim
from (and only to the extent of) the
then existing amount of the Escrow
Fund.
5.3 Escrow
Agent shall pay and distribute fifty percent (50%) of the then
existing principal amount of the Escrow
Fund less the amount of any Claims that
are then pending (the "Unrestricted Escrow
Fund") to the Stockholder
Representative on the First Release Date.
Escrow Agent shall pay and distribute
the remainder of the Unrestricted Escrow
Fund to the Stockholder Representative
on the Second Release Date.
5.4 Escrow
Agent shall pay and distribute all earnings and income from the
Escrow Fund to the Stockholder
Representative on the last day of each calendar
quarter, commencing on December 31,
2004.
5.5 Any
amounts payable to Stockholders under this Agreement, including
amounts payable under this Section 5, shall
be paid to the Stockholder
Representative.
SECTION 6. - DUTIES OF ESCROW AGENT
6.1 Escrow
Agent shall not be under any duty to give the Escrow Fund any
greater degree of care than it gives its
own similar property and shall not be
required to invest the Escrow Fund except
as directed in this Agreement.
6.2 Escrow
Agent shall not be liable for actions or omissions hereunder,
except for its own gross negligence or
willful misconduct and, except with
respect to claims based upon such gross
negligence or willful misconduct that
are successfully asserted against Escrow
Agent, Harris and Stockholders shall
jointly and severally indemnify and hold
harmless Escrow Agent (and any
successor escrow agent) from and against
any and all losses, liabilities,
claims, actions, damages and expenses
(including reasonable attorneys' fees and
disbursements) arising out of and in
connection with this Agreement. Without
limiting the foregoing, Escrow Agent shall
in no event be liable in connection
with its investment or reinvestment of the
Escrow Fund by Escrow Agent made in
good faith and in accordance with the terms
hereof, including, without
limitation, any liability for delays (not
resulting from Escrow Agent's gross
negligence or willful misconduct) in the
investment or reinvestment of the
Escrow Fund or any loss of interest
incident to any such delays.
6.3 Escrow
Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument
or other writing delivered to it
hereunder without being requi
