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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") effective as of January 1, 2005
(the
"Effective Date") between HARRIS
INTERACTIVE INC., a Delaware corporation
("Company"), and FRANK J. CONNOLLY, JR.
("Executive").
1.
CAPACITY AND DUTIES
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 Executive Vice
President, Chief Financial Officer and
Treasurer of the Company. Executive shall
perform duties and shall have authority as
may from time to time be specified by
the Chief Executive Officer and the Board
of Directors of Company (the "Board").
Executive's title and duties may be changed
from time to time by the Chief
Executive Officer and the Board; provided,
however, that (i) Executive's
position, authority, duties, and
responsibilities shall be no less senior and
executive in nature than those of Chief
Financial Officer and shall be
consistent with those of a chief financial
officer of a public company of the
size and type similar to the Company, (ii)
the duties assigned to the Executive
shall be in all respects consistent with
all applicable laws and regulations,
and (iii) Executive's title shall include
at least "Chief Financial Officer".
Executive will report to the Chief
Executive Officer of the Company. Executive's
principal business location shall be
located within the City of New York,
Westchester County, New York, or Fairfield
County, Connecticut, but he
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; provided, however,
that nothing in this Section 1.2(b) shall
prevent or limit the Executive from
serving on boards of directors (or similar
governing bodies) of non-profit
corporations and other non-profit
entities.
(c) 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.
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2. TERM
OF EMPLOYMENT
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.
COMPENSATION
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 $315,000
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 $315,000.
3.2 Signing
and Performance Bonus.
(a) As
additional compensation for the services rendered
by Executive to Company, Executive shall be
paid a signing bonus of $67,500
payable on June 30, 2005 provided only that
a Termination Date has not yet
occurred caused by a termination by the
Company for Cause or a termination by
the Executive without Good Reason.
(b) For fiscal
years ending after June 30, 2005, as
additional compensation for the services
rendered by Executive to Company
Executive shall be paid 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 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 $135,000 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.
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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
all reasonable and documented expenses
incurred by him in connection with the
performance of Executive's duties
hereunder, including without limitation travel
cost and expense including to Company
offices other than his principal office,
in accordance with its regular
reimbursement policies as in effect from time to
time. In addition, the Company shall
reimburse the Executive for his reasonable
costs up to a maximum of $10,000 incurred
in the negotiation of this Employment
Agreement and the related agreements
related to stock options granted to
Executive on the Effective Date.
3.6 Stock
Options.
(a) On the
Effective Date, the Company shall grant
Executive options to purchase 300,000
shares of the Company's stock with an
exercise price equal to the fair market
value of the stock as of the close of
trading on the Effective Date.
(b) 65,000 of
the options described in Section 3.6(a)
shall be granted under and pursuant to the
terms of the Company's Long Term
Incentive Plan pursuant to the form of
Incentive Stock Option Agreement annexed
hereto as Exhibit A.
(c) 235,000 of
the options described in Section 3.6(a)
shall be granted under and pursuant to the
Non-Qualified Stock Option Agreement
annexed hereto as Exhibit B. The Company
agrees to file, as soon as practicable
after the Effective Date, to the extent it
is then eligible to do so, a Form S-8
registration statement covering the shares
of Company common stock underlying
the options. The Company is eligible to
file Form S-8 registration statements on
the date of this Agreement.
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.
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4.
TERMINATION OF EMPLOYMENT
4.1 Accrued
Obligations. For purposes of this Agreement, "Accrued
Base Obligations" shall mean amounts for
Base Compensation, expense
reimbursement, and employee benefits 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 on or after July
1, 2005 and before the Termination Date,
(ii) for the year in which the
Termination Date occurs if the Termination
Date is subsequent to June 30, 2005,
a prorated Performance Bonus for the
partial-year period ending before 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, and (iii) for the year in
which the Termination Date occurs, if and
only if the Termination Date is on or
prior to June 30, 2005, $67,500 if such
amount is otherwise payable pursuant to
Section 3.2(b). 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.
No Notice of Termination of Executive for Cause shall be given
by the Company unless and until (i)
adoption by the Board of Directors of Harris
of a resolution, finding that in the good
faith opinion of the Board of
Directors Executive is guilty of the
conduct described in the definition of
Cause, after at least five (5) business
days notice is provided to Executive,
such notice to include in reasonable
specificity the alleged conduct justifying
such termination for Cause, and (ii) an
opportunity is given to Executive,
together with counsel, to be heard by the
Board of Directors of Harris at a
meeting (which may be held by telephonic
conference call). This Section 4.2
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.
4.3 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 not
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be obligated to make any further payments
hereunder except for Accrued Base
Obligations and Accrued Bonus
Obligations.
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
subsection (i) of the definition of Good
Reason set forth in Section 4.7 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;
(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.
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,
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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, then Company shall have no
further obligations under this Agreement
except that Company shall pay to
Executive:
(i) the
Accrued Base Obligations through the
Termination Date, payable promptly after
the Termination Date,
(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 payable
when Performance Bonuses for the
applicable year are paid to all other
Company senior executives,
(iv)
Base Compensation through and including the
date one year after the Termination Date,
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 become secondary to primary
coverage 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 4.6
