AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
THIS AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is dated as
of September 28, 2005, effective as of September 7, 2005
(the “Effective Date”) between HARRIS INTERACTIVE INC.,
a Delaware corporation (“Company”), and GREGORY T.
NOVAK (“Executive”).
This Agreement
amends, restates, and replaces in its entirety the Employment
Agreement between Company and Executive dated as of April 1,
2004 as amended (collectively, the “Prior Agreement”);
provided, however, that all rights of Executive to payments and
benefits under Sections 3.1 – 3.5, inclusive, of the
Prior Agreement accrued but unpaid as of the Effective Date shall
survive execution of this Agreement. This Agreement does not modify
the terms of any stock option agreements between the Company and
the Executive in effect on the Effective Date, which stock option
agreements shall remain unchanged and in full force according and
subject to the terms contained therein.
1.1 Employment;
Acceptance of Employment . Company hereby employs Executive and
Executive hereby accepts employment by Company for the period and
upon the terms and conditions hereinafter set forth.
1.2 Capacity
and Duties .
(a) Executive
shall serve as the President and Chief Executive Officer of the
Company. Executive shall perform duties and shall have authority as
may from time to time be specified by the Board of Directors of
Company (the “Board”), and shall report to the Board
(or a duly authorized committee thereof). Executive’s
position and duties may be changed from time to time by the Board;
provided, however, that Executive’s position, authority,
duties, and responsibilities shall be no less senior and executive
in nature than those customarily performed by a chief executive
officer. Executive shall perform his duties for Company principally
at Company’s executive offices, presently in Rochester, New
York, provided, however, that Executive acknowledges and agrees
that travel to Company’s and its affiliates’ various
offices, and to other locations in furtherance of Company’s
business, will be required in connection with the performance of
Executive’s duties hereunder.
(b) Executive
shall devote full time efforts to the performance of
Executive’s duties hereunder, in a manner that will
faithfully and diligently further the business and interests of
Company.
(c) Executive
shall be appointed as a member of the Board of Directors of Harris
as of the Effective Date. Prior to the Termination Date and prior
to any Change of Control, the Board of Directors shall nominate
Executive for re-election as a director at each annual meeting of
stockholders coinciding with the expiration of his term as a
director, and shall recommend him for re-election, but the failure
of the stockholders to elect Executive as a member of the Board of
Directors shall not constitute a breach of this Agreement.
Unless
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otherwise
requested by the Board of Directors, Executive will resign as a
director on the Termination Date and upon his failure to do so
hereby authorizes and grants full authority to the Chairman of the
Board of Directors to deliver Executive’s resignation on his
behalf.
(d) Executive
acknowledges that Company’s reputation is important in the
continued success of its business, and agrees that he will not
discuss or comment in such a manner as may adversely impact the
reputation or public perception, or otherwise disparage, Company or
its officers, employees, or directors in any manner; provided,
however, that Executive may make such disclosures as may be
required by law. Company acknowledges that Executive’s
reputation is important to his continued success. Company agrees
that it will not, and that it will use all reasonable efforts to
cause its officers, employees, and directors not to, defame,
disparage, or otherwise discuss or comment about Executive in such
a manner as may adversely impact his reputation or public
perception; provided, however, that Company may make such
disclosures as may be required by law.
2.1 Term .
The term of Executive’s employment hereunder, for all
purposes of this Agreement, shall commence on the Effective Date
(the “Commencement Date”) and continue through and
including the earliest to occur of (i) June 30, 2006, if
and as further extended to subsequent June 30ths as provided in
this Section 2.1, (ii) the date on which Executive dies,
and (iii) the date on which either the Company or Executive
terminates Executive’s employment for any reason (the
“Termination Date”). Except as hereinafter provided, on
June 30, 2006 this Agreement shall be automatically extended
for an additional one-year term, and if so extended shall be
automatically extended for successive additional one-year terms,
unless either the Executive or Company shall have given the other
written notice of nonrenewal of this Agreement at least three
(3) months prior to June 30, 2006, or if applicable any
one-year extension term then in effect. If written notice of
nonrenewal is given as provided above, Executive’s employment
under this Agreement shall terminate on June 30, 2006, or if
the term of this Agreement has automatically renewed, on the June
30 immediately following the date of the non-renewal
notice.
3.1 Base
Compensation . As compensation for Executive’s services,
Company shall pay to Executive base compensation in the form of
salary (“Base Compensation”) in the amount of $475,000
per annum. The salary shall be payable in periodic installments in
accordance with Company’s regular payroll practices for its
executive personnel at the time of payment, but in no event less
frequently than monthly. The Compensation Committee of the Board
shall review Base Compensation periodically for the purpose of
determining, in its sole discretion, whether Base Compensation
should be adjusted; provided, however, that Executive’s Base
Compensation shall not be less than $475,000.
3.2 Performance
Bonus . As additional compensation for the services rendered by
Executive to Company, Executive shall be eligible for a performance
bonus (“Performance Bonus”) payable in full at the same
time as payment of other executive bonuses by the Company
(generally targeted for payment within ninety (90) days after
the end of the relevant fiscal year of the Company). The
Performance Bonus award criteria and amounts shall be those
established on
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an annual basis
by the Compensation Committee of the Board of Directors of the
Company based upon performance guidelines established for executive
officers of the Company; provided, however, that the target bonus
for Executive for the fiscal year ending June 30, 2006 shall
be $250,000 provided that performance guidelines are met. No bonus
will be due in the event that award criteria established by the
Compensation Committee are not met.
3.3 Employee
Benefits . Executive shall be entitled to participate in such
of Company’s employee benefit plans and benefit programs,
including medical, hospitalization, dental, disability, accidental
death and dismemberment and travel accident plans and programs, as
may from time to time be provided by Company for its senior
executives generally. In addition, Executive shall be eligible to
participate in all pension, retirement, savings and other employee
benefit plans and programs maintained from time to time by Company
for the benefit of its senior executives generally. Company shall
have no obligation, however, to maintain any particular program or
level of benefits referred to in this Section 3.3.
3.4
Vacation . Executive shall be entitled to the normal and
customary amount of paid vacation provided to senior executive
officers of the Company, but in no event less than 20 days
during each 12 month period. Any vacation days that are not
taken in a given 12 month period shall accrue and carry over
from year to year up to a maximum aggregate of 5 days. The
Executive may be granted leaves of absence with or without pay for
such valid and legitimate reasons as the Board in its sole and
absolute discretion may determine, and is entitled to the same sick
leave and holidays provided to other executive officers of
Company.
3.5 Expense
Reimbursement . Company shall reimburse Executive for
(a) all reasonable and documented expenses incurred by him in
connection with the performance of Executive’s duties
hereunder in accordance with its regular reimbursement policies as
in effect from time to time, and (b) his reasonable attorney
fees in connection with negotiation of this Agreement up to a
maximum of $2,500.
3.6 Term Life
Insurance . In addition to the Company-paid life insurance made
available to senior executives of the Company generally, the
Company shall provide Executive with $600,000 face value of term
life insurance as soon as reasonably practical after the date of
this Agreement. Upon the request of the Executive made in
connection with a Termination Date, the Company shall take all
reasonable steps to provide Executive the right to continue such
life insurance at his own expense after the Termination
Date.
3.7
Withholding . All payments under this Agreement shall be
subject to any required withholding of Federal, state and local
taxes pursuant to any applicable law or regulation.
4.
TERMINATION OF EMPLOYMENT
4.1 Accrued
Obligations . For purposes of this Agreement, “Accrued
Base Obligations” shall mean amounts for Base Compensation,
expense reimbursement, employee benefits, and car allowance which
have accrued, vested, and are unpaid as of the Termination Date,
and (ii) “Accrued Bonus Obligations” shall mean
(i) any unpaid Performance Bonus earned for any fiscal year
ending before the Termination Date, and (ii) for the year in
which the Termination Date occurs, a prorated Performance Bonus for
the partial-year period ending before
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the Termination
Date if the Termination Date occurs in the last six months of the
applicable fiscal year calculated by annualizing the short period
before termination, and no prorated Performance Bonus if the
Termination Date occurs in the first six months of the applicable
fiscal year. Accrued Base Obligations shall be paid within thirty
(30) days after the Termination Date, and Accrued Bonus
Obligations shall be paid on the date on which they would have been
paid under this Agreement absent the occurrence of the Termination
Date.
4.2 Termination
Procedures . Except as otherwise provided in this Agreement,
any termination of Executive’s employment by the Company or
by Executive (other than termination pursuant to death) shall be
communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and,
if applicable, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so
indicated.
4.3 Death of
Executive . If Executive dies prior to a Termination Date that
otherwise occurs, Company shall not thereafter be obligated to make
any further payments hereunder other than amounts for Accrued Base
Obligations and Accrued Bonus Obligations.
4.4 Disability
of Executive . If Executive is permanently disabled (as defined
in Company’s long-term disability insurance policy then in
effect), then the Board shall have the right to terminate
Executive’s employment upon 30 days’ prior written
notice to Executive at any time during the continuation of such
disability (“Disability”). In the event
Executive’s employment is terminated for Disability in
accordance with this Section 4.4, Company shall be obligated
to make the payments required under Section 4.6(a)(i), (ii),
(iii), and (iv) and provide the benefits required by
Section 4.6(a)(v); provided, however, the Company’s
obligation to make such payments shall be reduced by an amount
equal to the amount which the Executive is entitled to receive
during the same period under the Company’s disability
insurance policies.
4.5 Termination
for Cause .
(a) Executive’s
employment hereunder shall terminate immediately upon a Notice of
Termination from the Company that Executive is being terminated for
Cause (as defined herein), in which event Company shall not
thereafter be obligated to make any further payments hereunder
other than Accrued Base Obligations and Accrued Bonus
Obligations.
(b)
“Cause” shall be limited to the following:
(i) willful
failure to substantially perform Executive’s duties as
described in Section 1.2 after demand for substantial
performance is delivered by Company in writing that specifically
identifies the manner in which Company believes Executive has not
substantially performed Executive’s duties and
Executive’s failure to cure such non-performance within ten
(10) days after receipt of the Company’s written demand;
provided, however, that a failure to perform such duties during the
remedy period set forth in Section 4.6(c)(i) hereof following
the issuance of a Notice of Termination (as herein defined) by
Executive for Good Reason shall not be Cause unless an arbitrator
acting pursuant to Section 6.1 hereof finds Executive to have
acted in bad faith in issuing such Notice of
Termination;
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(ii) willful
conduct that is materially and demonstrably injurious to Company or
any of its subsidiaries, but not including good faith conduct taken
without intention to injure the Company or its subsidiaries that,
at the time engaged in, could not reasonably be expected to be more
likely than not to be materially injurious to the Company;
or
(iii) conviction
or plea of guilty or nolo contendere to a felony or to any other
crime which involves moral turpitude or, if not including moral
turpitude, provided the act giving rise to such conviction or plea
is materially and demonstrably injurious to the Company or any of
its subsidiaries;
(iv) material
violation of Section 5 of this Agreement, or material
violation of Company polices set forth in Company manuals or
written statements of policy provided in the case of violation of
policy that such violation is either materially and demonstrably
injurious to Company or, if curable, continues for more then three
(3) days after written notice thereof is given to Executive by
the Company; and
(v) material
breach of any material provision of this Agreement by Executive,
which breach continues for more than ten days after written notice
thereof is given by the Company to Executive.
Cause shall not
exist under this Section 4.5 unless and until Company has
delivered to Executive a copy of a resolution duly adopted by a
majority of the members of the Board then in office finding that
Cause exists in the good faith opinion of the Board. This
Section 4.5 shall not prevent Executive from challenging,
pursuant to Section 6.1, the Board’s determination that
Cause exists, or that Executive has failed to cure any act (or
failure to act), to the extent permitted by this Agreement, that
purportedly formed the basis for the Board’s
determination.
4.6 Termination
without Cause or by Executive for Good Reason .
(a) The
Company reserves the right to terminate Executive’s
employment at any time. If, however, a Termination Date occurs (not
including termination in the ordinary course on any applicable
June 30 if the term of this Agreement is not automatically
renewed which circumstance is covered by Section 4.6(b)) for
any reason other than Cause under Section 4.5, termination by
Executive under Section 4.7, death, or Disability (which is
covered by Section 4.4), then Company shall have no further
obligations under this Agreement except that Company shall pay to
Executive:
(i) the
Accrued Base Obligations through the date of termination, payable
promptly after the date of termination,
(ii) any
unpaid Performance Bonus earned for any fiscal year ended before
the Termination Date payable the later of (A) the date on
which such Performance Bonus would be paid absent termination and
(B) a date no later than 30 days after the Termination
Date,
(iii) the
Performance Bonus, if any is earned, for the fiscal year in which
the Termination Date occurs, allocable to and prorated for the
period prior to termination, calculated by annualizing any short
period before termination, calculated and
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payable when
Performance Bonuses for the applicable year are paid to all other
Company senior executives,
(iv) Base
Compensation through and including: (A) the 12-month
anniversary of his termination if his termination occurs on or
before June 30, 2006, (B) the 15-month anniversary of his
termination if his termination occurs between July 1, 2006 and
June 30, 2007, (C) the 18-month anniversary of his
termination if his termination occurs between July 1, 2007 and
June 30, 2008, and (D) the 24-month anniversary of his
termination if his termination occurs on or after July 1,
2008, in each case payable at the same times as paid under
Section 3.1; and
(v) benefits
as required by Section 3.3 of this Agreement during the same
period that Base Compensation is due under Section 4.6(a)(iv);
provided, however, if Executive, Executive’s spouse or
Executive’s dependents are ineligible to participate in the
Company benefit programs under Section 3.3, the Company shall
arrange to provide Executive, Executive’s spouse and
Executive’s dependents with the economic equivalent of such
benefits which they otherwise would have been entitled to receive,
and further provided that such benefits shall terminate upon the
date or dates Executive receives coverage and benefits which are
substantially similar, taken as a whole, without waiting period or
pre-existing condition limitations, under the plans and programs of
a subsequent employer.
(b) If
this Agreement is terminated in the ordinary course on any
applicable June 30 because of a non-renewal notice given by
the Company under Section 2.1, then Company shall have no
further obligations under this Agreement except that Company shall
pay to Executive the payments to which the Executive would be
entitled under Section
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