EMPLOYMENT
AGREEMENT (“ Agreement ”), effective as of
June 1, 2009 (the “ Effective Date ”), by
and between HARRIS INTERACTIVE INC., a Delaware corporation
(“ Company ”), and ROBERT COX (“
Executive ”).
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 Company, and shall have the duties,
authority, and responsibilities commensurate with the position of
Chief Financial Officer and Treasurer and such other duties and
responsibilities appropriate for such position as may from time to
time be specified by the Chief Executive Officer. Executive will be
based in Manhattan, New York; provided, however, he acknowledges
and agrees that he will spend such time as reasonably necessary at
Company’s headquarters in Rochester, New York. In addition,
the parties recognize 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. Executive will report to the Chief Executive
Officer.
(b) Executive
shall faithfully and diligently devote full time work efforts to
the performance of Executive’s duties hereunder, in
furtherance of the business and interests of Company.
(c) Executive
acknowledges that Company’s reputation is important in the
continued success of its business that he will not directly or
indirectly defame Company or its officers 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 directly or indirectly defame
Executive in any manner; 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) the date on which
Executive dies, and (ii) the date on which either Company or
Executive terminates Executive’s employment for any reason
(collectively, the “ Termination Date
”).
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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
$305,000 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.
3.2 Performance
Bonus . As additional cash compensation for the services
rendered by Executive to Company, Executive shall be eligible to
receive an annual performance bonus as part of the Corporate Bonus
Plan (“ Performance Bonus ”) payable in full at
the same time as payment of other executive bonuses by Company in
accordance with the terms of the Corporate Bonus Plan. For fiscal
year 2009, Executive shall receive a guaranteed Performance Bonus
equal to $152,500, pro-rated for the portion of the year between
the Effective Date and June 30, 2009, under the condition that
Executive is employed by Company at the time annual performance
bonuses are paid to senior executives generally. For fiscal year
2010, Executive shall be eligible to receive a target Performance
Bonus of up to 50% of Executive’s fiscal year 2010 starting
salary. The Performance Bonus award criteria and amount shall be
those established on an annual basis by the Compensation Committee
of the Board of Directors of Company (the “ Board
”) based upon (i) Company achievement of financial
targets established annually by the Compensation Committee, which
financial targets shall be no less favorable than the financial
targets applicable to the Chief Executive Officer, and (ii)
achievement of individual management objectives established
annually by the Compensation Committee (failure to achieve which
may result in cutbacks). No Performance 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 as
may from time to time be provided by Company for 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 for its senior executives
generally.
3.4
Vacation . Executive shall be entitled to the normal and
customary amount of paid vacation provided to senior executive
officers of Company, but in no event less than 20 days during
each calendar year. Any vacation days that are not taken in a given
calendar year shall accrue and carry over from year to year, or be
paid or lost, according to Company’s standard vacation
policies. Executive may be granted leaves of absence with or
without pay for such valid and legitimate reasons as the Chief
Executive Officer in his or her sole and absolute discretion may
determine, and is entitled to the same personal days and holidays
provided to other senior executives the of Company.
3.5 Expense
Reimbursement . Company shall reimburse Executive for all
reasonable and documented expenses incurred by Executive in
connection with the performance of
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Executive’s duties hereunder in accordance
with its regular reimbursement policies as in effect from time to
time.
3.6
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.
3.7 Accounting
Restatement .
(a) In
the event that Company is required to prepare an accounting
restatement due to material non-compliance of Company with any
financial reporting requirement related to a period during the term
of this Agreement under the securities laws ( Restatement
”), for any reason including without limitation as a result
of fraud, negligence, or intentional misconduct, whether by
Executive or any other person(s), subject to Section 3.7(b)
hereof, Executive shall reimburse Company for any Excess Payment
(as defined below) received for the first annual accounting period
covered by any individual Restatement and related later
Restatements due to non-compliance with the same financial
reporting requirement. Executive shall not be responsible for
reimbursement for any Restatements that result from or are a
continuation of practices and policies prior to the date of this
Agreement unless (i) during the first year after the date of
this Agreement Executive has actual knowledge of the practices and
policies including actual knowledge that such policies and
practices involve material non-compliance with any financial
reporting requirement, and (ii) thereafter Executive has
actual knowledge of the practices and policies, and in the case of
both (i) and (ii) has not reported such matter to the Audit
Committee of the Board within a reasonable period after acquiring
such knowledge. For purposes of this Section 3.7(a), “
Excess Payment ” shall mean the positive difference,
if any, between any Performance Bonus payment made to Executive and
the payment that would have been made had the Performance Bonus
been calculated based upon Company’s financial statements as
restated. The portion of any Excess Payment retained by Executive
net after taxes shall be repaid within ninety (90) days after
Executive has been notified in writing of a Board determination
described below, and the remainder of such Excess Payment, if any,
shall be repaid within thirty (30) days of the date on which
Executive is entitled to receive the benefit of a refund
claim.
(b) Executive
shall have no reimbursement obligation under this Section 3.7
unless the Board has considered the matter in a meeting (which may
be telephonic) at which Executive (with counsel) is given the
opportunity to appear and discuss the matter, and in its good faith
discretion has made a determination that reimbursement is
appropriate under the circumstances. The rights under this
Agreement are in addition to, and do not replace, the rights of
Company, if any, under Section 304 of the Sarbanes-Oxley
Act.
3.8 Stock
Options . Subject to approval by the Compensation Committee,
Executive shall have the option to purchase 400,000 shares of the
common stock of Company under the terms and conditions more fully
described in the form stock option agreement attached hereto as
Exhibit A . The option price will be the fair market price
of the common stock of Company on the grant date. Company’s
regular quarterly grants are made at the close of trading on the
later of (i) the 15 th day of the second month of the fiscal quarter
and (ii) one week after Company’s
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quarterly
earnings release. If the day falls on a non business day, the fair
market price will be the next business day.
4. TERMINATION
OF EMPLOYMENT
4.1
Obligations . Accrued Base Obligations (as defined below)
other than employee benefits shall be paid within thirty
(30) days after the Termination Date. Employee benefits shall
be paid as provided under the applicable plan or program. Accrued
Bonus Obligations (as defined below) and Partial Period Bonus
Obligations (as defined below) shall be paid on the date on which
they would have been paid under this Agreement absent the
occurrence of the Termination Date. For purposes of this
Agreement:
(a) “
Accrued Base Obligations ” shall mean amounts for Base
Compensation, expense reimbursement, vacation, and employee
benefits that have accrued, vested, and are unpaid as of the
Termination Date.
(b) “
Accrued Bonus Obligations ” shall mean earned but
unpaid Performance Bonus as of the Termination Date for fiscal
years already ended.
(c)
“Partial Period Bonus Obligations ” shall mean,
for the year in which the Termination Date occurs, a prorated
Performance Bonus for the partial-year period ending on the
Termination Date (the “ Partial Period ”). The
prorated Performance Bonus shall be based on achievement of the
annual financial metrics as then in effect for calculation of
Executive’s Performance Bonus (for example, net earnings,
revenues, or other metrics as applicable, but not including
individual management objectives), multiplied by a fraction, the
numerator of which is the number of days elapsed in the fiscal year
prior to the Termination Date and the denominator of which is
365.
4.2 Death of
Executive . If Executive dies, Company shall not be obligated
to make any further payments under this Agreement except amounts
for:
(a) the
Accrued Base Obligations;
(b) the
Accrued Bonus Obligations; and
(c) the
Partial Period Bonus Obligations.
4.3 Disability
of Executive . If Executive is permanently disabled (as defined
in Company’s long-term disability insurance policy then in
effect), then Company shall have the right to terminate
Executive’s employment upon fifteen (15) days’
prior written notice to Executive (“ Disability
”) provided that Executive’s employment shall
immediately terminate for disability if, as of an earlier date, he
incurs a Separation from Service (as defined herein) as a result of
physical or mental incapacity. In the event Executive’s
employment is terminated for Disability in accordance with this
Section 4.3, Company shall not be obligated to make any
further payments under this Agreement except for:
(a) the
Accrued Base Obligations;
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(b) the
Accrued Bonus Obligations; and
(c) the
Partial Period Bonus Obligations.
4.4 Termination
for Cause .
(a) Executive’s
employment shall terminate immediately upon written notice from
Company that Executive is being terminated for Cause (as defined
herein), which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination for Cause,
in which event Company shall not thereafter be obligated to make
any further payments under this Agreement except for:
(i) the
Accrued Base Obligations; and
(ii) the
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 hereof 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 failure within thirty
(30) days after receipt of Company’s written
demand;
(ii) willful
conduct with regard to Company or Executive’s duties that is
materially and demonstrably injurious to Company or its
subsidiaries;
(iii) conviction
or plea of guilty or nolo contendere to a crime which involves
moral turpitude or, if not including moral turpitude, arises from
an act that is materially and demonstrably injurious to Company or
any of its subsidiaries, or conviction or plea of guilty or nolo
contendere to a felony;
(iv) material
violation of Section 5 hereof;
(v) material
violation of Company polices set forth in Company manuals or
written statements of policy, provided that such violation is
materially and demonstrably injurious to Company or its
subsidiaries (it being understood that among others any violation
of Company’s Insider Trading Policy as applicable to
executive officers shall be deemed to be material) and, if curable,
continues for more than five (5) days after written notice
thereof is given to Executive by Company; and
(vi) material
breach of any material provision of this Agreement by Executive
(not including those covered by subclauses (i) and
(iv) above), which breach continues for more than seven (7)
business days after written notice thereof is given by Company to
Executive.
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(c) No
notice of termination of Executive for Cause shall be given by the
Company unless and until (i) adoption by the Board of a
resolution, finding that in the good faith opinion of the Board
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 at a meeting (which may be
held by telephonic conference call). This Section 4.4(c) 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.
4.5 Termination
Without Cause or by Executive for Good Reason .
(a) Company
and Executive each reserve the right to terminate Executive’s
employment at any time. If a Termination Date occurs due to Company
terminating Executive without Cause or Executive terminating for
Good Reason (as defined herein), then Company or its successor
shall have no further obligations under this Agreement except that
Company or its successor shall pay to Executive the amounts shown
in Section 4.5(c) hereof.
(b) For
the avoidance of doubt, Section 4.5(c) hereof shall not apply
to (i) termination for Cause which circumstance is covered by
Section 4.4 hereof, (ii) termination by Executive without
Good Reason which circumstance is covered by Section 4.6,
(iii) termination by reason of death which circumstance is
covered by Section 4.2 hereof, or (iv) termination by
reason of Disability which circumstance is covered by
Section 4.3 hereof.
(c) If
Executive is terminated without Cause or Executive terminates his
employment for Good Reason, then Executive shall
receive:
(i) the
Accrued Base Obligations;
(ii) the
Accrued Bonus Obligations;
(iii) the
Partial Period Bonus Obligations;
(iv) severance
payments equal to twelve (12) months of Executive’s
then-current Base Compensation; provided, however, if Executive is
terminated without Cause or Executive terminates his employment for
Good Reason, in each such case in contemplation of, or during the
twelve (12) month period following, a Change of Control, then the
period shall be eighteen (18) months), payable in periodic
installments in accordance with Company’s or the
successor’s regular payroll practices for its executive
personnel at the time of payment, but in no event less frequently
than monthly; and
(v) continued
participation in Company’s employee health benefit programs
at his then-current level (or the economic equivalent, if such
benefits are not available) for the same period in which severance
payments are made pursuant to Section 4.5(c)(iv).
(d) “
Good Reason ” shall mean the following:
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(i) a
change in Executive’s reporting line such that he no longer
reports directly to the Chief Executive Officer of the Company or
successor to the Company;
(ii) material
diminution in Executive’s duties, authority, and
responsibilities commensurate with the position of Chief Financial
Officer and Treasurer, unless previously agreed to by Executive;
or
(iii) the
failure of Company to cover Executive with directors and officers
insurance.
Executive must
provide a notice of termination to Company that he is intending to
terminate his employment for Good Reason, specifying in reasonable
detail the facts and circumstances claimed to provide the basis for
Good Reason, within ninety (90) days after the occurrence of
the event he believes constitutes Good Reason, which termination
notice shall specify that a Termination Date will occur thirty
(30) days after the date of such notice unless the
circumstances constituting Good Reason and identified by Executive
in the notice of termination are remedied prior to such Termination
Date. In the event Executive delivers to Company a notice of
termination for Good Reason, upon request of the Board, Executive
agrees to appear, accompanied by his legal counsel, before a
meeting of the Board, called and held for such purpose (after at
least three business days notice), and specify to the Board the
particulars as to why Executive believes adequate grounds for
termination for Good Reason exist. No action by the Board, other
than the remedy of the circumstances within the thirty
(30) day period after the date of the notice of termination
for Good Reason, shall be binding on Executive.
(e) “Change
of Control” shall be deemed to have occurred if:
(i) a
change in control has occurred of a nature that would be required
to be reported in a proxy statement with respect to Company (even
if Company is not actually subject to said reporting requirements)
in response to Item 6(e) (or any comparable or successor Item) of
Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), except that any merger, consolidation or corporate
reorganization in which the owners of Company’s capital stock
entitled to vote in the election of directors (the “Voting
Stock”) prior to said combination receive 75% or more of the
resulting entity’s Voting Stock shall not be considered a
change in control for the purposes of this Plan;
(ii) any
“person” (as that term is used in Sections 13(d) and
14(d)(2) of the Exchange Act, excluding any stock purchase or
employee stock ownership plan maintained by Company or a Related
Company) becomes the “beneficial owner” (as that term
is defined by the Securities and Exchange Commission for purposes
of Section 13(d) of the Exchange Act), directly or indirectly, of
more than 15% of the outstanding voting stock of Company or its
successors (not including a person that acquired less than 15% of
the then outstanding stock but became the holder of more than 15%
of such stock by reason of acquisition by Company of shares of its
stock or forfeitures of restricted stock previously granted to
employees); or
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(iii) the
sale or other transfer of all or substantially all of the assets of
Company.
(f) Executive
shall not be required to mitigate amounts payable under
Section 4.5(c) by seeking other employment or otherwise, and
there shall be no offset against amounts due Executive under this
Agreement on account of subsequent employment except as
specifically provided herein
4.6 Termination
by Executive without Good Reason . Executive may terminate this
Agreement upon thirty (30) days’ prior written notice to
Company. In the event Executive’s employment is voluntarily
terminated by Executive, Company shall not be obligated to make any
further payments to Executive hereunder other than:
(a) the
Accrued Base Obligations; and
(b) the
Accrued Bonus Obligations.
4.7 Effect of
Section 409A .
(a)
Section 409A . It is intended that the provisions of
this Agreement comply with Code Section 409A or be exempt
therefrom, and this Agreement shall be administered, and all
provisions of this Agreement shall be construed, in a manner
consistent with the requirements for avoiding taxes or penalties
under Code Section 409A.
(b)
Installments . If under this Agreement, an amount is to be
paid in two or more installments, for purposes of Code
Section 409A, each installment shall be treated as a separate
payment.
(c)
Separation From Service . A termination of employment shall
not be deemed to have occurred for purposes of any provision of
this Agreement providing for the payment of amounts or benefits
subject to Code Section 409A upon or following a termination
of employment unless such termination is also a “
Separation from Service ” within the meaning of Code
Section 409A and, for purposes of any such provision of this
Agreement, references to a “resignation,”
“termination,” “termination of employment”
or like terms shall mean Separation from Service.
(d)
Specified Employee . If Executive is deemed on the date of
termination of his employment to be a “ specified
employee ”, within the meaning of that term under Section
409A(a)(2)(B) of the Code and using the identification methodology
selected by Company from time to time, or if none, the default
methodology, then:
(i) With
regard to any payment, the providing of any benefit or any
distribution of equity that constitutes “deferred
compensation” subject to Code Section 409A, payable upon
separation from service, such payment, benefit or distribution
shall not be made or provided prior to the earlier of (i) the
expiration of the six-month period measured from the date of
Executive’s Separation from Service or (ii) the date of
Executive’s death; and
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(ii) On
the first day of the seventh month following the date of
Executive’s Separation from Service or, if earlier, on the
date of his death, (x) all payments delayed pursuant to this
Section 4.7, with interest at the prime rate as published in the
Wall Street Journal on the first business day of the delay period
(whether they would otherwise have been payable in a single sum or
in installments in the absence of such delay), shall be paid or
reimbursed to Executive in a lump sum, and any remaining payments
and benefits due under this Agreement shall be paid or provided in
accordance with the normal dates specified from them herein and
(y) all distributions of equity delayed pursuant to this
Section 4.7(d) shall be made to Executive.
(e)
Reimbursement . With regard to any provision herein that
provides for reimbursement of costs and expenses or in-kind
benefits, except as permitted by Code Section 409A,
(i) the right to reimbursement or in-kind benefits shall not
be subject to liquidation or exchange for another benefit,
(ii) the amount of expenses eligible for reimbursement, of
in-kind benefits, provided during any taxable year shall not affect
the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year, provided that the foregoing
clause (ii) shall not be violated without regard to expenses
reimbursed under any arrangement covered by Section 105(b) of the
Code solely because such expenses are subject to a limit related to
the period the arrangement is in effect and (iii) such
payments shall be made on or before the last day of
Executive’s taxable year following the taxable year in which
the expense occurred.
(f)
Payment Period . Whenever a payment under this Agreement
specifies a payment period with reference to a number of days
(e.g., “payment shall be made within forty (40) days
following the date of termination), the actual date of payment
within the specified period shall be within the sole discretion of
Company.
(g)
Compliance . If any provision of this Agreement (or of any
award of compensation, including equity compensation or benefits)
would cause Executive to incur any additional tax or interest under
Code Section 409A, Company shall, after consulting with
Executive, reform such provision to comply with Code
Section 409A; provided that Company agrees to maintain, to the
maximum extent practicable, the original intent and economic
benefit to Executive of the applicable provision without violating
the provisions of Code Section 409A.
4.8
Precondition to Post-Termination Payments . As a condition
for the payment of any post-Termination Date benefits to be
provided hereunder except for Accrued Base Obligations and Accrued
Bonus Obligations, prior to the date of any such payment Executive
shall deliver to Company a release in favor of Company in the form
attached hereto as Exhibit B prior to the 52
nd day after the Termination Date (the “
Release ”). The amounts due prior to the expiration of
the revocation period following delivery of the Release that are
conditioned on the delivery of the Release shall be paid in a lump
sum promptly following the expiration of such revocation
period.
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5.
NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY
(a)
Consideration for this Section . Executive acknowledges and
agrees that:
(i) the
advance commitment of Company to provide the benefits, including in
particular and without limitation those obligations under
Sections 4.5(c)(iii), (iv) and (v) hereof, afforded
by this Agreement are over and above those otherwise afforded by
Company policy, and in making its decision to offer Executive the
benefits afforded by this Agreement and bind itself in advance to
the obligations hereunder Company relied upon and was induced by
the covenants made by Executive in this Section 5;
(ii) in
accepting the benefits evidenced by this Agreement Executive is
receiving an asset of significant value, and Company’s entry
into this Agreement and its incurrence of the related payment and
other obligations hereunder are fair and adequate consideration for
Executive’s obligations under this Section 5;
(iii) Executive’s
position with Company places Executive in a position of confidence
and trust with the clients and employees of Company;
(iv) Company’s
business (including its acquisitive activity) is carried on
throughout the world and accordingly, it is reasonable that the
restrictive covenants set forth below are not limited by specific
geographic area;
(v) the
course of Executive’s employment with Company necessarily
requires the disclosure of confidential information and trade
secrets related to Company’s relationships with clients (such
as, without limitation, pricing information, marketing plans,
budgets, designs, methodologies, products, client preferences and
policies, and identity of appropriate personnel of clients with
sufficient authority to influence a shift in suppliers) as well as
other confidential and proprietary information, (such as databases,
methodologies, and technologies);
(vi) Executive’s
employment affords Executive the opportunity to develop a personal
acquaintanceship and relationship with Company’s employees
and clients, which in some cases may constitute Company’s
primary or only contact with such employees and clients, and to
develop a knowledge of those clients’ and employees’
affairs and requirements;
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