EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (this “ Agreement ”) is made
March 3, 2009 by and between Arbitron Inc., a Delaware
corporation (the “ Company ”), and Taher
Behbehani, an individual (“ you ”) (and,
together, “ Parties ”).
NOW THEREFORE, in
consideration of your acceptance of employment, the Parties agree
to be bound by the terms contained in this Agreement as
follows:
1.
Engagement . Beginning on a mutually satisfactory date
no later than May 1, 2009 (the “ Effective
Date ”), the Company will employ you as Executive
Vice President, Chief Strategy and Business Development Officer.
You will report directly to the President and Chief Executive
Officer. You will be responsible for creating, communicating,
executing, and sustaining the Company’s strategic
initiatives. You will at all times comply with all policies of the
Company then in effect.
2.
Commitment. During and throughout the Employment Term
(as defined in Section 3 below), you must devote substantially
all of your full working time and attention to the Company. During
the Employment Term, you must not engage in any employment,
occupation, consulting or other activity for direct or indirect
financial remuneration unless approved by the President and Chief
Executive Officer and/or the Board of Directors of the Company (the
“ Board ”); provided ,
however , that you may, subject to compliance with the
notice and consent requirements set forth in the Company’s
Corporate Governance Policies and Guidelines, (i) serve in any
capacity with any professional, community, industry, civic
(including governmental boards), educational or charitable
organization, (ii) serve on for-profit entity board(s) having
obtained prior consent and written approval from the Board’s
Nominating and Corporate Governance Committee and
(iii) subject to the Company’s policies applicable to
all employees, make investments in other businesses and manage your
and your family’s personal investments and legal affairs;
provided that any such activities described in clauses
(i)-(iii) above do not materially interfere with the discharge of
your duties to the Company. You will perform your services under
this Agreement at the Company’s headquarters in Columbia,
Maryland.
3.
Employment Term . You are an at-will employee. Your
employment with the Company under this Agreement will begin on the
Effective Date and will continue until your employment terminates
(such employment period, the “ Employment Term
”).
4.
Cash and Stock Compensation .
(a)
Base Salary. During your employment hereunder, you
will receive a base salary at a monthly rate of $25,000,
annualizing to $300,000 (“ Base Salary
”). The Company will pay your Base Salary in accordance with
the Company’s regular payroll practices. The President and
Chief Executive Officer will review your Base Salary no less
frequently than annually. If increased, the increased Base Salary
will become the Base Salary for all purposes of this Agreement.
Your Base Salary will not be decreased without your written
consent.
(b)
Incentive Bonus. Upon meeting the applicable
performance criteria established by the Company’s
Compensation and Human Resources Committee of the Board (the
“ Compensation Committee ”) in its sole
discretion, you will be eligible to receive an annual incentive
bonus (the “ Annual Bonus ”) for a given
fiscal year of the Company targeted at an amount equal to 75% of
your Base Salary in effect at the beginning of such fiscal year
(“ Target Bonus ”). For performance
exceeding such applicable performance criteria in the sole judgment
of the Compensation Committee, the Annual Bonus will be increased
to an amount in excess of the Target Bonus up to a maximum of 150%
of your Base Salary in effect at the beginning of such fiscal year,
which additional bonus amount the Compensation Committee will
determine in its sole discretion. The Annual Bonus, if any, will be
paid when other executives receive their bonuses under comparable
arrangements but, in any event, between January 1 and April 30
of the year following the year with respect to which it is
earned.
(c)
Compensatory Stock Awards. Subject to the
Compensation Committee’s approval, on or as soon as
administratively practicable following the Effective Date, the
Company will grant you an equity award to be valued at $1,200,000
on the date of grant, with the award divided by value into
(i) 75% stock options, and (ii) 25% restricted stock
units, the latter two with respect to the Company’s common
stock, par value $0.50 (the “ Common Stock
”). The value for the options will be determined using the
Company’s standard Black-Scholes assumptions applied as of
the date of grant and the value for the restricted stock units will
be determined by dividing the target value for the restricted stock
units by the Common Stock’s fair market value on the date of
grant. The equity grants will either be under a Company equity plan
or under a special arrangement for you (in any case, referred to as
a “ Stock Plan ”). Assuming continued
employment, the options under the grant will vest in equal amounts
on an annual basis over a three year period following the date of
grant (beginning with one-third on the first anniversary), and
otherwise will contain the Company’s customary terms and
conditions for such grants, except as modified by this Agreement.
Assuming continued employment, the restricted stock units under the
grant will vest in equal amounts on an annual basis over a four
year period following the date of grant (beginning with 25% on the
first anniversary) and otherwise will contain the Company’s
customary terms and conditions for such grants, except as modified
by this Agreement. The Compensation Committee at its sole
discretion will consider the grant of additional compensatory stock
awards to you.
(a)
Employee Welfare and Retirement Plans. You will, to
the extent eligible, be entitled to participate at a level
commensurate with your position in all employee welfare benefit and
retirement plans and programs the Company provides to its
executives in accordance with Company policies. You will be covered
under the Company’s Director and Officer liability insurance
policy, to the same extent as other officers.
(b)
Business Expenses. Upon submission of appropriate
documentation in accordance with its policies, the Company will
promptly pay, or reimburse you for, all reasonable business
expenses that you incur in performing your duties under this
Agreement, including, but not limited to, travel, entertainment,
professional dues and subscriptions, as long as such expenses are
reimbursable under the Company’s policies. Any payments or
expenses provided in this Section 5(b) will be paid in accordance
with Section 7(c).
(c)
Paid Time Off. You will be entitled to paid time off
in accordance with the standard written policies of the Company
with regard to executives.
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6. Termination of At-Will Employment.
(a)
General . Subject in each case to the provisions of
this Section 6, nothing in this Agreement interferes with or
limits in any way the Company’s right to terminate your
employment at any time, for any reason or no reason, with or
without notice, and nothing in this Agreement confers on you any
right to continue in the Company’s employ. If your employment
ceases due to death or for any other reason or for no reason, you
will be entitled to receive (in addition to any compensation and
benefits you are entitled to receive under Section 6(b) or 6(c)
below): (i) any earned but unpaid Base Salary through and
including the date of termination of your employment, (ii) any
earned but unpaid Annual Bonus, (iii) unreimbursed business
expenses in accordance with the Company’s policies; and
(iv) any amounts or benefits to which you are then entitled
under the terms of the benefit plans then sponsored by the Company
in accordance with their terms (and not accelerated to the extent
acceleration does not satisfy Section 409A of the Internal
Revenue Code of 1986, as amended (“
Section 409A ” of the “
Code ”)). Notwithstanding any other provision
in this Agreement to the contrary, any severance benefits to which
you may be entitled will be provided exclusively through the terms
of this Section 6 of this Agreement.
(b)
Termination Without Cause; Resignation for Position
Diminishment. If, during the Employment Term, the Company
terminates your employment without Cause (defined below) or you
resign as a result of Position Diminishment (defined below), you
will be entitled to the following severance benefits:
(i)
Cash Severance . Except as provided in Section 6(c),
the Company will pay to you in cash (i) an amount equal to
1.75 times your Base Salary on an annualized basis, paid in equal
installments over a 12 month period following the Effective
Release Date (as defined below) in accordance with the
Company’s standard payroll policies and procedures and in a
manner not inconsistent with Section 7 hereof. Payment will
cease if subsequent full-time employment is obtained prior to the
end of the 12 month period.
(ii)
Benefits . The Company will also pay the full cost of the
health care premiums otherwise payable by you upon your election of
health care continuation coverage for yourself and your qualified
beneficiaries as provided under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“ COBRA ”)
until the earlier of 12 months or your ceasing to qualify for
COBRA coverage (such as by obtaining subsequent
coverage).
(iii)
Release . To receive any severance benefits provided for
under this Agreement or otherwise, you must deliver to the Company
of a general release of claims on the form the Company provides,
which must become irrevocable within 60 days following the
date of your termination of employment. Benefits will be paid or
commence no later than 30 days after such release becomes
effective; provided, however , that if the last day of the
60 day period for an effective release falls in the calendar
year following the year of your date of termination, the severance
payments will be paid or commence no earlier than January 1 of such
subsequent calendar year. The date on which your release of claims
becomes effective is the “ Effective Release
Date .” You must continue to comply with the
covenants under Sections 8 and 9 below to continue to receive
severance benefits.
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(iv)
“ Position Diminishment ” means (i) a
change in your reporting responsibilities, titles, duties, or
offices as in effect as of the Effective Date (or, for purposes of
Section 6(c), as in effect immediately before a Change of
Control), or any removal of you from, or any failure to re-elect
you to, any of such positions, that has the effect of materially
diminishing your responsibility, duties, or authority, (ii) a
relocation of your principal place of employment to a location more
than 25 miles from its then current location and that increases the
distance from your primary residence by more than 25 miles, or
(iii) a material reduction in your Base Salary. You may only
resign as a result of a Position Diminishment if you
(x) provide notice to the Company within 90 days
following the Date of Position Diminishment that you consider the
Position Diminishment to be grounds to resign; (y) provide the
Company a period of 30 days to cure the Position Diminishment,
and (z) actually cease employment, if the Position
Diminishment is not cured, by the six month anniversary following
the effective date of the Position Diminishment. For purposes of
this definition, any change in your reporting responsibilities such
that you no longer report directly to the Chief Executive Officer
of the Company shall be considered a Position
Diminishment.
(c)
Change of Control . If, within 12 months
following a Change of Control, your employment ends on a
termination without Cause or you resign for Position Diminishment,
in addition to the compensation and benefits described in
Section 6(b)(ii) above (but in lieu of the compensation under
Section 6(b)(i) and subject to the release required under
Section 6(b)(iii)), the Company will pay to you in cash an
amount equal to 2.625 times your Base Salary on an annualized
basis, paid in equal installments over a 12 month period
following the Effective Release Date in accordance with the
Company’s standard payroll policies and procedures and in a
manner not inconsistent with Section 7 hereof. Payment will
cease if subsequent full-time employment is obtained prior to the
end of the 12 month period In addition, any outstanding equity
compensation awards will fully and immediately vest and, as
applicable, become exercisable, provided that the Board will have
the right to suspend exercises or sales with respect to such equity
compensation pending satisfaction of the release requirement, and
provided that the vesting will not accelerate the distribution of
shares underlying equity awards if such acceleration would trigger
taxation under Section 409A(a)(1)(B). The treatment in this
Section 6(c) applies notwithstanding any contrary provisions in the
Stock Plan or any award agreement. For the purpose of this
Agreement, “ Change of Control ”
means:
(i)
consummation of a merger or consolidation to which the Company is a
party if the individuals and entities who were stockholders of the
Company immediately before the effective date of such merger or
consolidation have beneficial ownership (as defined in Rule 13d-3
under the Exchange Act) of less than 50% of the total combined
voting power for election of directors of the surviving Company
immediately following the effective date of such merger or
consolidation; or
(ii)
the direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) in the aggregate of
securities of the Company representing 51% or more of the total
combined voting power of the Company’s then issued and
outstanding securities by any person or entity, or group of
associated persons or entities acting in concert; provided,
however, that for purposes hereof, any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company will not
constitute a Change of Control; or
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(iii)
the direct or indirect beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) in the aggregate of
securities of the Company representing 25% or more of the total
combined voting power of the Company’s then issued and
outstanding securities by any person or entity, or group of
associated persons or entities acting in concert if such
acquisition is not approved by the Board before any such
acquisition; provided , however , that for purposes
hereof, any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company will not constitute a Change of Control;
or
(iv)
consummation of the sale of the properties and assets of the
Company, substantially as an entirety, to any person or entity
which is not a wholly-owned subsidiary of the Company;
or
(v)
the liquidation of the Company is consummated; or
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