ARBITRON INC. EXECUTIVE TRANSITION AGREEMENT PARTIES: ARBITRON INC. (A DELAWARE CORPORATION) 142 W. 57TH STREET NEW YORK, NY 10019-3300 AND STEPHEN B. MORRIS (“You”)
EXHIBIT
10.12
PARTIES:
AND
XXXXXXX X. XXXXXX (“You”)
DATE: December 30, 2008
RECITALS
Arbitron wishes to obtain your assistance for an orderly management transition during 2009, and you
have agreed to assist with the transition as Chief Executive Officer, or as Adviser to the Board of
Directors after you cease to be Chief Executive Officer, and as Chairman of the Board. The parties
wish to replace any and all prior agreements and undertakings with respect to your employment,
except as specified in this agreement (the “Agreement”).
NOW, THEREFORE, in consideration of your acceptance of and continuance in your service-providing
relationship as described above and the parties’ agreement to be bound by the terms contained
herein, the parties agree as follows:
ARTICLE
1
DEFINITIONS
1
DEFINITIONS
1.01 “Arbitron” means ARBITRON INC., any Subsidiary; and any successor in interest by way of
consolidation, operation of law, merger or otherwise.
1.02 “Base Salary” means regular cash compensation paid on a periodic basis exclusive of benefits,
bonuses or incentive payments.
1.03 “Board” means the Board of Directors of Parent Corporation.
1.04 “Disability” means either (i) that you are unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than 12 months,
or (ii) that you are by reason of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period of not less than three months under
the Company’s accident and health plan. You will be deemed disabled if either determined to be
totally disabled by the Social Security Administration, or if determined to be disabled by the
Company or under the Company’s disability insurance program provided that such determination
complies with the above definition.
1.05 “Parent Corporation” means ARBITRON INC., any successor in interest by way of consolidation,
operation of law, merger or otherwise. “Parent Corporation” shall not include any Subsidiary.
1.06 “Separation from Service” means a cessation of service-providing relationship as defined in
Treas. Reg. Section 1.409A-1(h).
1.07 “Subsidiary” means (a) any corporation at least a majority of whose securities having ordinary
voting power for the election of directors (other than securities having such power only by reason
of the occurrence of a contingency) is at the time owned by Parent Corporation and/or one or more
Subsidiaries; and (b) any division or business unit (or portion thereof) of Parent Corporation or a
corporation described in clause (a).
ARTICLE
2
EMPLOYMENT, DUTIES AND TERM
2
EMPLOYMENT, DUTIES AND TERM
2.01 EMPLOYMENT. Upon the terms and conditions set forth in this Agreement, Arbitron hereby
continues to employ you, and you accept such continued employment.
2.02 DUTIES. You shall devote your full-time and best efforts to Arbitron and to fulfilling the
duties of your position as President and Chief Executive Officer, and member of the Board. You
shall comply with Arbitron’s policies and procedures to the extent they are not inconsistent with
this Agreement, in which case the provisions of this Agreement prevail. During 2009, you will
transition from the position of President and Chief Executive Officer into an advisory role.
2.03 TERM. Subject to the provisions of Article 4, this Agreement and your employment shall
continue until December 31, 2009; provided that the Board reserves the right to approve and appoint
your successor as President and Chief Executive Officer with the duties attendant to such office
and after such appointment you shall remain an employee (and, for such time as the Board chooses,
Chairman) and be available to provide transition assistance, consultation, and advice through
December 31, 2009.
ARTICLE
3
COMPENSATION AND EXPENSES
3
COMPENSATION AND EXPENSES
3.01 BASE SALARY. Arbitron shall pay you a Base Salary at the rate of $57,240 per month for each
month of calendar year 2009 prior to and including the month in which Arbitron appoints your
successor as President and Chief Executive Officer (or, if earlier, the month in which you
transition to an advisory role). Beginning with the month following the appointment of your
successor as President and Chief Executive Officer or your transition to an advisory role, Arbitron
shall pay you a Base Salary at the rate of $11,250 per month through December 31, 2009. (“Blended
Base Salary” for purposes of other provisions of this Agreement will be at the blended rate from
the two preceding sentences, based on the portion of 2009 as President and Chief Executive Officer
and treating the rest of 2009 as being at the lower rate.) Arbitron will make the payments
specified pursuant to this Section 3.01 as long as your employment has not previously ended as a
result of a termination of employment under Section 4.01, 4.02(a), or 4.03.
3.02 BONUS AND INCENTIVE. Bonus or incentive compensation shall be at the sole discretion of
Arbitron, but Arbitron anticipates that you will be eligible for a bonus of 75% of your Blended
Base Salary for 2009.
3.02A GRANT OF RESTRICTED STOCK AWARDS. In consideration of your service as Chief Executive
Officer and as an inducement for you to execute this Agreement, subject to approval by the
Compensation Committee, Arbitron agrees to grant you in February 2009 a Restricted Stock Award for
43,333 shares of common stock, $0.50 par value per share, of the Company (“Common Stock”), which
award shall vest in full on December 31, 2009, provided that you remain on the Board or in the
continuous employ or service of the Company as of such date. The grant shall be subject to
appropriate adjustment pursuant to Section 9 of the Arbitron Inc. 2008 Equity Compensation Plan
(the “Equity Plan”) as a result of any of the events described in Section 9 of the Equity Plan that
occur after the date hereof. You confirm
your prior (i) waiver of any rights that you have or may
have to accelerate the vesting of any Restricted
Stock Awards or any stock option upon your retirement and (ii) agreement that you will not sell,
transfer or otherwise dispose of shares of Common Stock covered by the Restricted Stock Award
during any consecutive 12 month period that exceed an amount equal to 25% of the aggregate number
of shares of Common Stock represented by the Restricted Stock Award; provided that the restriction
in clause (ii) shall terminate upon your death or a Change of Control. In the event the term of
this Agreement is terminated due to your death or Disability or upon a Change of Control (as
defined in the Equity Plan), the Restricted Stock Award, if granted under this Paragraph prior to
such termination, shall be vested in full in accordance with the provisions of the Equity Plan but
no further grant under this paragraph will be made thereafter. The Company will issue the
Restricted Stock Award in the form of a restricted stock grant as to 50% of the shares and a
deferred stock unit with respect to the other 50% of the shares.
3.03 VACATION. You shall be entitled to vacation at a rate consistent with past practices while
you remain President and Chief Executive Officer but will cease to accrue vacation after leaving
those positions.
3.04 BENEFITS. You shall be entitled to participate during 2009 in any benefit plans of Arbitron
that cover you and that provide for participation based on your level of continuing services. If
your medical coverage ceases under the terms of Arbitron’s plan, you will be able to obtain
continuation coverage (“COBRA Coverage”) for the lesser of the period for which you are entitled to
such coverage and 18 months. You will be responsible for any premiums owed for such coverage. In
addition, Arbitron will provide you and your spouse with the 2009 annual physical in March 2009, at
the same facility and on the same basis as in prior years, even if your services as President and
Chief Executive Officer have already then ceased.
3.05 BUSINESS EXPENSES. Arbitron shall, consistent with its policies in effect from time to time,
bear all ordinary and necessary business expenses incurred by you in performing your duties as an
employee of Arbitron, provided that you account promptly for such expenses to Arbitron in the
manner prescribed from time to time by Arbitron. Notwithstanding the foregoing, (i) the expenses
eligible for reimbursement may not affect the expenses eligible for reimbursement in any other
taxable year, (ii) such reimbursement must be made on or before the last day of the year following
the year in which the expenses were incurred, and (iii) the right to reimbursement is not subject
to liquidation or exchange for another benefit.
3.06 SUPPLEMENTAL RETIREMENT BENEFIT.
(a) ENTITLEMENT.
(1) SEPARATION FROM SERVICE. Subject to Sections 3.06(a)(2), 3.06(a)(3) and
3.06(a)(4), you shall be entitled to a supplemental retirement benefit pursuant to
this Section 3.06 following your Separation from Service with Arbitron at any time
for any reason, except as specified in Section 3.06(a)(2).
(2) FORFEITURE. You or your surviving spouse, as the case may be, shall not be
entitled to receive or retain a supplemental retirement benefit pursuant to this
Section 3.06 if you breached or breach any of your obligations arising under
Article 5 of this Agreement or if Arbitron terminates your employment for Cause.
If, after you or your surviving spouse, as the case may be, has received a benefit
pursuant to this Section 3.06, Arbitron determines that you are not entitled to the
benefit, you or your surviving spouse, as the case may be, shall promptly repay to
Arbitron the benefit payment previously received pursuant to this Section 3.06
together with interest on such payment for the period beginning on the date on
which it was paid and ending on the date on which it is repaid to Arbitron, at the
prime rate of interest (or such comparable index as may be adopted) established
from time to time by the Bank of America National Trust and Savings Association,
New York, New York, or its successor in interest, as in effect from time to time
during the period in question.
(3) DEATH. Except as provided in Section 3.06(d), no benefit shall be paid
pursuant to this Section 3.06 to you or any other person if your employment with
Arbitron terminates because of your death or if you die after your termination of
employment with Arbitron but before your supplemental retirement benefit pursuant
to this Section 3.06 is paid to you.
(4) OTHER CONDITIONS. As a condition to receiving any benefit pursuant to this
Section 3.06, you or your surviving spouse, as the case may be, agrees to provide
to Arbitron on a timely basis any such information as Arbitron may reasonably
request to determine the entitlement of you or your surviving spouse, as the case
may be, to a benefit pursuant to this Section 3.06 or the amount or timing of the
benefit payment or to resolve any other issue or assist Arbitron in making any
determination regarding the benefit.
(b) COMMENCEMENT AND FORM. Subject to compliance with Section 3.08, the benefit pursuant
to this Section 3.06 shall be paid on July 1, 2010 (or such later date as is required by
Section 6.09 below) in the form of a lump sum cash payment.
(c) AMOUNT.
(1) DETERMINATION DATE. The amount of your benefit pursuant to this Section 3.06
shall be a lump sum amount that is actuarially equivalent to a monthly benefit,
paid in the Normal Form and calculated as though commencing as of the Determination
Date, equal to one-twelfth of the excess of:
(A) the sum of:
| (i) | the product of your Final Average Pay multiplied by your Years of Service through the calendar year during which you attained age 62 multiplied by ..025 plus | ||
| (ii) | the product of your Final Average Pay multiplied by your Years of Service following the calendar year during which you attained age 62 multiplied by ..0167; over |
(B) the Offset Amount.
(2) ACTUARIAL EQUIVALENCE. For the purpose of this Section 3.06(c), actuarial
equivalence for a given Determination Date shall be based on the annual interest
rate on 30-year Treasury securities for the month of November of the calendar year
immediately preceding the calendar year that includes the Determination Date, as
determined in accordance with published guidance from the Internal Revenue Service
pursuant to Section 417(e)(3) of the Code and mortality rates per the “applicable
mortality table” published in Revenue Ruling 2001-62, as modified or replaced
before the Determination Date to provide guidance from the Internal Revenue Service
pursuant to Section 417(e)(3) of the Code as of the Determination Date.
(d) DEATH BENEFITS.
(1) DEATH BEFORE DETERMINATION DATE. If you die before the Determination Date,
your surviving spouse, if any, shall, subject to Sections 3.06(a)(2) and
3.06(a)(4), be entitled to a surviving spouse benefit. The benefit shall be paid
to your surviving spouse on or as soon as administratively practicable after the
Determination Date in the form of a lump sum cash payment. The amount of the
surviving spouse benefit pursuant to this Section 3.06(d)(1) shall be equal to
fifty percent (50%) of the
amount of the supplemental retirement benefit that would
have been paid to you pursuant
to this Section 3.06 had you terminated employment on the date of your death (or,
if earlier, on the actual date on which you terminated employment) and lived until
you received your supplemental retirement benefit. If your surviving spouse dies
after becoming entitled to a surviving spouse benefit pursuant to this Section
3.06(d)(1) but before the benefit is paid to the surviving spouse, the benefit
shall be paid to the surviving spouse’s estate at the same time the benefit would
have been paid to the surviving spouse had she lived.
(2) DEATH ON OR AFTER DETERMINATION DATE. If you die on or after the Determination
Date but before payment of your supplemental retirement benefit pursuant to this
Section 3.06, the benefit that would have been paid to you had you lived shall,
subject to Sections 3.06(a)(2) and 3.06(a)(4), be paid to your estate at the same
time the benefit would have been paid to you had you lived.
(e) NONASSIGNABILITY. The benefit pursuant to this Section 3.06 and the right to receive a
future benefit pursuant to this Section 3.06 may not be anticipated, alienated, sold,
transferred, assigned, pledged, encumbered or subjected to any charge or legal process.
(f) NATURE OF INTEREST. Nothing contained in this Section 3.06 is to be construed as
providing for assets to be held for the benefit of you or your surviving spouse. If you or
your surviving spouse acquires a right to receive benefit payments pursuant to this Section
3.06, that right is no greater than the right of any unsecured general creditor of
Arbitron.
(g) DETERMINATIONS. Arbitron shall make all determinations as to entitlement and amount of
any benefit payment pursuant to this Section 3.06. Arbitron shall have discretionary power
and authority to interpret, construe, apply, enforce and otherwise administer the terms of
this Section 3.06 and any reasonable determination made by Arbitron in good faith shall be
binding and conclusive on you and your surviving spouse. Any determination by Arbitron
denying a claim by you or your surviving spouse shall be stated in writing and shall set
forth the specific reason for the denial. Arbitron shall afford a reasonable opportunity
to the claimant for a full and fair review of the determination denying the claim. A
claimant must exhaust the procedure described in this Section 3.06(g) before pursuing the
claim in any other proceeding.
(h) SPECIAL DEFINITIONS. The definitions set forth in this Section 3.06(h) apply in
construing this Section 3.06 unless the context otherwise indicates. Other terms used in
this Section 3.06 have the meanings ascribed to them in Article 1 of this Agreement. In
addition, the general provisions of Article 5 of this Agreement apply to this Section 3.06
unless the context otherwise indicates.
(1) “Arbitron” means, for purposes of Sections 3.06(a)(4), 3.06(f), 3.06(g) and
3.06(h), Arbitron Inc. and any successor in interest by way of consolidation,
operation of law, merger or otherwise, but not any Subsidiary.
(2) “Determination Date” means the first day of the fourth calendar month following
your Separation from Service with Arbitron.
(3) “Final Average Pay” means your “final average pay” as defined in the Retirement
Plan but determined by disregarding any part of the definition of final average pay
in the Retirement Plan that is included in compensation for purposes of that or
similar plans under Section 401(a)(17) of the Code. If the Retirement Plan is
terminated effective as of a date that is before the date on which you terminate
employment with Arbitron, the previous sentence shall be applied after the
effective date of the termination of the Retirement Plan based on the definition of
final average pay in effect under the Retirement Plan on the effective date of the
termination of the Retirement Plan as if the Retirement Plan had continued in
effect.
(4) “Normal Form” means monthly payments to you for your life with the last payment
made for the month during which you die and with no death benefits payable to any
person.
(5) “Offset Amount” means the annual benefit to which you would be entitled under
the “offset plans” if your benefit under the offset plans commenced as of the
Determination Date and was paid in the Normal Form, based on the terms of the
offset plans in effect and applicable to you on the Determination Date or, if
earlier, as of the effective date of the termination of an offset plan. If the
Determination Date is before the earliest date on which your benefit could commence
under an offset plan, the Offset Amount with respect to that offset plan shall be
determined by calculating the Offset Amount as of the earliest date on which your
benefit could commence under the offset plan and then reducing that benefit by one
fourth of one percent for each month by which the offset date precedes the earliest
date on which your benefit could commence under the offset plan. The Offset Amount
shall be determined without regard to the actual timing of commencement and form of
your benefit pursuant to the offset plans. For the purpose of this Section
3.06(h)(5), the offset plans are the Retirement Plan, the Arbitron Inc. Benefit
Equalization Plan, and any defined benefit pension plan maintained by any previous
employer of you which was or is operated by such previous employer as a qualified
plan pursuant to Section 401(a) of the Code, or any successor to any such plans.
(6) “Retirement Plan” means the Arbitron Inc. Retirement Plan as from time to time
amended.
(7) “Years of Service” means (A) each calendar year from and including 1994 through
and including 2000 and (B) each calendar year after 2000 and before 2010 during any
part of which you are an employee of Arbitron (as classified by Arbitron at the
time without regard to any subsequent retroactive reclassification). You will not
be credited with any Years of Service for any period of employment with Arbitron
after 2009.
3.07 TRANSITIONAL COMPENSATION. Subject to compliance with Section 3.08, in consideration of your
service as required in the transition to a new Chief Executive Officer and as Chairman of the Board
during part or all of 2009 and assuming your employment ends other than under Section 4.01,
Arbitron shall pay you or your estate, on July 1, 2010 (or such later date as is required by
Section 409A), $1,018,888.67, reduced by any required tax withholdings. Arbitron waives any
requirement that you provide consulting services under your employment agreement with Arbitron,
most recently amended as of July 3, 2006 (the “Predecessor Agreement”).
3.08 RELEASE. Payments under Sections 3.06 and 3.07 are conditioned upon your providing a release
of claims in favor of Arbitron on or after December 31, 2009 and before February 1, 2010 on a form
to be provided by Arbitron, substantially in the form attached as Exhibit A hereto, which release
becomes binding on you.
ARTICLE
4
EARLY TERMINATION
4
EARLY TERMINATION
4.01 TERMINATION FOR CAUSE. Arbitron may terminate this Agreement and your employment immediately
for cause. For the purpose hereof “cause” means:
(a) fraud;
(b) misrepresentation;
(c) theft or embezzlement of Arbitron assets;
(d) intentional violations of law involving moral turpitude;
(e) failure to follow Arbitron’s conduct and ethics policies; and/or
(f) your continued failure to attempt in good faith to perform your duties as reasonably
assigned to you pursuant to Section 2.02 for a period of 60 days after a written demand for
such performance which specifically identifies the manner in which it is alleged you have
not attempted in good faith to perform such duties.
In the event of termination for cause pursuant to this Section 4.01, you shall be paid at the usual
rate of your Base Salary as then in effect through the date of termination specified in any written
notice of termination.
4.02 TERMINATION WITHOUT CAUSE. Either you or Arbitron may terminate this Agreement and your
employment without cause on at least 20 days’ written notice. In the event of termination of this
Agreement and of your employment pursuant to this Section 4.02, compensation shall be paid as
follows:
(a) if the notice of termination is given by you, you shall be paid at the usual rate of
your Base Salary as then in effect through the 20 day notice period in accordance with the
regular payroll schedule, provided that Arbitron may shorten the period and pay you the
remainder of the 20 days’ worth of Base Salary as then in effect;
(b) if the notice of termination is given by Arbitron, (i) you shall be paid at the usual
rate of your Base Salary as then in effect through the 20-day notice period, however,
Arbitron shall have the option of making termination of the Agreement and your employment
effective immediately upon notice in which case you shall be paid a lump sum representing
the value of 20 days’ worth of Base Salary as then in effect, subject to any delay required
by Section 6.09, and (ii) you shall receive payment, starting on the 60th day after the
date employment ends (assuming prior compliance with this Section 4.02(b) and delayed if
required by Section 6.09), equal to the sum of the Base Salary scheduled to be paid for the
remainder of 2009 and 75% of the Blended Base Salary. This payment shall be made ratably
over the remainder of 2009 (or, if the payment must be delayed, over the time left in 2009
when this provision is triggered) on a regular payroll period basis. To receive the
payments in clause (ii), you must execute a release in a form provided by Arbitron of all
legally-releasable claims against Arbitron and its affiliates and their directors,
officers, employees, and agents, which release must become binding and irrevocable during
the 60 days. If the 60 day period ends in 2010, payments subject to this release will be
paid between January 1, 2010 and March 15, 2010, subject to any delay required by Section
6.09.
4.03 TERMINATION IN THE EVENT OF DEATH OR DISABILITY. This Agreement shall terminate in the event
of your death or disability.
(a) In the event of your death during 2009, Arbitron shall pay an amount equal to 175% of
your Blended Base Salary. Such amount shall be paid (1) to the beneficiary or
beneficiaries you designated in writing to Arbitron, (2) in the absence of such
designation, to the surviving spouse, or (3) if there is no surviving spouse, or such
surviving spouse disclaims all or any part, then the full amount, or such disclaimed
portion, shall be paid to the executor, administrator or other personal representative of
your estate. The amount shall be paid as a lump sum as soon as practicable following
Arbitron’s receipt of notice of your death but, in any event within 30 days thereafter.
(b) In the event of your Disability during 2009, Base Salary shall be terminated as of the
date such Disability is determined.
(c) In the event of termination by reason of your death or Disability during 2009, Arbitron
will pay to your or your heirs an amount, if any, equal to (1) the amount you would have
received
in annual incentive plan bonus for the year in which termination occurs had “target” goals
been achieved, multiplied by (2) a fraction, the numerator of which shall be the number of
whole months you were employed in 2009 and the denominator of which is 12. The amount
payable pursuant to this Section 4.03(c) shall be paid within 15 days after the date such
bonus would have been paid had you remained employed for the full fiscal year.
4.04 ENTIRE TERMINATION PAYMENT. The compensation provided for in this Article 4 for early
termination of this Agreement and termination pursuant to this Article 4 shall constitute your sole
remedy for such termination. You shall not be entitled to any other termination or severance
payment that may be payable to you under any other agreement between you and Arbitron.
ARTICLE
5
NON-COMPETITION, NON-RECRUITMENT, AND NON-DISPARAGEMENT
5
NON-COMPETITION, NON-RECRUITMENT, AND NON-DISPARAGEMENT
5.01 GENERAL. The parties hereto recognize and agree that (a) you are a senior executive of
Arbitron and a key executive of Arbitron, (b) you have received, and will in the future receive,
substantial amounts of Confidential Information (as defined in the Predecessor Agreement), (c)
Arbitron’s business is conducted on a worldwide basis, and (d) provision for non-competition,
non-recruitment and non-disparagement obligations by you is critical to Arbitron’s continued
economic well-being and protection of Arbitron’s Confidential Information. In light of these
considerations, this Article 5 sets forth the terms and conditions of your obligations of
non-competition, non-recruitment and non-disparagement during and subsequent to the termination of
this Agreement and/or your employment for any reason.
5.02 NON-COMPETITION.
(a) Unless the obligation is waived or limited by Arbitron in accordance with Section
5.02(b), you agree that while employed or a member of the Board and for a period of 12
months following your ceasing to be a member of the Board or, if later, of your termination
of employment for any reason (the “Restrictive Period”), you will not directly or
indirectly, alone or as a partner, officer, director, shareholder or employee of any other
firm or entity, engage in any commercial activity in competition with any part of
Arbitron’s business as conducted as of the date of such termination of employment or with
any part of Arbitron’s contemplated business with respect to which you have Confidential
Information. For purposes of this subsection (a), “shareholder” shall not include
beneficial ownership of less than five percent (5%) of the combined voting power of all
issued and outstanding voting securities of a publicly held corporation whose stock is
traded on a major stock exchange. Also for purposes of this subsection (a), “Arbitron’s
business” shall include business conducted by Arbitron or its affiliates and any
partnership or joint venture in which Arbitron or its affiliates is a partner or joint
venturer; provided that, “affiliate” as used in this sentence shall not include any
corporation in which Arbitron has ownership of less than 15% of the voting stock.
(b) At its sole option Arbitron may, by written notice to you at any time within the
Restrictive Period, waive or limit the time and/or geographic area in which you cannot
engage in competitive activity.
(c) During the Restrictive Period, prior to accepting employment with or agreeing to
provide consulting services to, any firm or entity which offers competitive products or
services, you shall give 30 days’ prior written notice to Arbitron. Such written notice
shall describe the firm and the employment or consulting services to be rendered to the
firm or entity, and shall include a copy of the written offer of employment or engagement
of consulting services. Arbitron’s failure to respond or object to such notice shall not in
any way constitute acquiescence or waiver of Arbitron’s rights under this Article 5.
(d) If you fail to provide notice to Arbitron pursuant to Section 5.02(c) and/or in any way
violates its non-competition obligation pursuant to Section 5.02, Arbitron may enforce all
of its rights and remedies provided to it under this Agreement, in law and in equity.
5.03 NON-RECRUITMENT. For a period of 12 months following your ceasing to be a member of the Board
or, if later, following your termination of employment for any reason, you will not initiate or
actively participate in any other employer’s recruitment or hiring of Arbitron employees. This
provision shall not preclude you from responding to a request (other than by your employer) for a
reference with respect to an individual’s employment qualifications.
5.04 NON-DISPARAGEMENT. You will not, during the term or after the termination or expiration of
this Agreement or your employment, make disparaging statements, in any form, about Arbitron, its
officers, directors, agents, employees, products or services which you know, or have reason to
believe, are false or misleading.
5.05 SURVIVAL. The obligations of this Article 5 shall survive the expiration or termination of
this Agreement and your employment.
ARTICLE
6
GENERAL PROVISIONS
6
GENERAL PROVISIONS
6.01 NO ADEQUATE REMEDY. The parties declare that it is impossible to measure in money the damages
that will accrue to either party by reason of a failure to perform any of the obligations under
this Agreement and therefore injunctive relief is appropriate. Therefore, if either party shall
institute any action or proceeding to enforce the provisions hereof, such party against whom such
action or proceeding is brought hereby waives the claim or defense that such party has an adequate
remedy at law, and such party shall not urge in any such action or proceeding the claim or defense
that such party has an adequate remedy at law.
6.02 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of Parent Corporation and each Subsidiary, whether by way of merger,
consolidation, operation of law, assignment, purchase or other acquisition of substantially all of
the assets or business of Arbitron, and any such successor or assign shall absolutely and
unconditionally assume all of Arbitron’s obligations hereunder.
6.03 NOTICES. All notices, requests and demands given to or made pursuant hereto shall, except as
otherwise specified herein, be in writing and be delivered or mailed to any such party at its
address:
| (a) | ARBITRON INC. 0000 Xxxxxxxx Xxxxx Xxxxx Xxxxxxxx, Xxxxxxxx 00000 Attention: Chief Legal Officer |
||
| (b) | To you: | ||
| At your last address on the records of Arbitron |
Either party may, by notice hereunder, designate a changed address. Any notice, if mailed properly
addressed, postage prepaid, registered or certified mail, shall be deemed dispatched on the
registered date or that stamped on the certified mail receipt, and shall be deemed received within
the second business day thereafter or when it is actually received, whichever is sooner.
6.04 CAPTIONS. The various headings or captions in this Agreement are for convenience only and
shall not affect the meaning or interpretation of this Agreement.
6.05 GOVERNING LAW; JURY TRIAL WAIVER. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of New York and any and every legal proceeding
arising out of or in connection with this Agreement shall be brought exclusively in the appropriate
courts of the State of New York, each of the parties hereby consenting to the exclusive
jurisdiction of such courts for this purpose. Arbitron and you each hereby irrevocably waive any
right to a trial by jury in any action, suit or other legal proceeding arising under or relating to
any provision of this Agreement.
6.06 CONSTRUCTION. Wherever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
6.07 WAIVERS. No failure on the part of either party to exercise, and no delay in exercising, any
right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right or remedy granted hereby or by any related document or by law.
6.08 MODIFICATION. Any changes or amendments to this Agreement must be in writing and signed by
both parties.
6.09 TAX WITHHOLDING; SECTION 409A COMPLIANCE. All payments under this Agreement are subject to
any required tax or other withholdings. If and to the extent any portion of any payment,
compensation or other benefit provided to you in connection with your employment termination is
determined to constitute nonqualified deferred compensation within the meaning of Code Section 409A
(“Section 409A”) and you are a specified employee as defined in Section 409A(a)(2)(B)(i), as
determined by the Company in accordance with its procedures, by which determination you hereby
agree that you are bound, such portion of the payment, compensation or other benefit shall not be
paid before the earlier of (i) the first day following the expiration of the six month period
measured from the date of your Separation from Service or (ii) the date of your death following
such separation from service (the “New Payment Date”). The aggregate of any payments that
otherwise would have been paid to you during the period between the date of separation from service
and the New Payment Date shall be paid to you in a lump sum on such New Payment Date, and any
remaining payments will be paid on their original schedule. For purposes of this Agreement, each
amount to be paid or benefit to be provided shall be construed as a separate identified payment for
purposes of Section 409A, and any payments that are due within the “short term deferral period” as
defined in Section 409A shall not be treated as deferred compensation unless applicable law
requires otherwise. Neither the Company nor you shall have the right to accelerate or defer the
delivery of any such payments or benefits except to the extent specifically permitted or required
by Section 409A. This Agreement is intended to comply with the provisions of Section 409A and the
Agreement shall, to the extent practicable, be construed in accordance therewith. Terms defined in
the Agreement shall have the meanings given such terms under Section 409A if and to the extent
required to comply with Section 409A. In any event, the Company makes no representations or
warranty and shall have no liability to you or any other person, other than with respect to
payments made by the Company in violation of the provisions of this Agreement, if any provisions of
or payments under this Agreement are determined to constitute deferred compensation subject to Code
Section 409A but not to satisfy the conditions of that section.
6.10 TAX REIMBURSEMENT.
(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payments or distributions by Arbitron to or for your benefit (whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any payments required under this Section 6.10)
(collectively, the “Payments”) would be subject to the excise tax imposed by Section 4999
of the Code or any
interest or penalties are incurred by you with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively referred to as
the “Excise Tax”), then you shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that, after payment by you of all taxes (and any interest or
penalties imposed with respect to such taxes), including any income taxes and Excise Tax
imposed upon the Gross-Up Payment, you retain an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 6.10(d), all determinations required to be made
under this Section 6.10, including whether and when a Gross-Up Payment is required and the
amount such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arbitron’s external auditors (the “Accounting Firm”), which
shall provide detailed supporting calculations both to Arbitron and you within 15 business
days of the receipt of notice from you that there has been a Payment, or such earlier time
as is requested by Arbitron. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change of Control,
you shall appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the “Accounting
Firm” hereunder). All fees and expenses of the Accounting Firm shall be borne solely by
Arbitron. Any Gross-Up Payment, as determined pursuant to this Section 6.10, shall be paid
by Arbitron to you within five days of the receipt of the Accounting Firm’s determination.
Any determination by the Accounting Firm shall be binding upon Arbitron and you.
(c) As a result of uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which should have been made by Arbitron will not have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event that Arbitron
exhausts its remedies pursuant to Section 6.10(d) and you thereafter are required to make a
payment of any additional Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by Arbitron
to or for the benefit of you.
(d) You shall notify Arbitron in writing of any claim by the Internal Revenue Service or
any other taxing authority that, if successful, would require the payment by Arbitron of
any Gross-Up Payment. Such notification shall be given as soon as practicable but no later
than ten business days after you know of such claim and shall apprise Arbitron of the
nature of such claim and the date on which such claim is requested to be paid. You shall
not pay such claim prior to the expiration of the thirty-day period following the date on
which it gives such notice to Arbitron (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If Arbitron notifies you in writing
prior to the expiration of such period that it desires to contest such claim, you shall:
| (i) | give Arbitron any information reasonably requested by Arbitron relating to such claim; | ||
| (ii) | take such action in connection with contesting such claim as Arbitron shall reasonably request in writing from time to time, including accepting legal representation with respect to such claim by an attorney reasonably selected by Arbitron; | ||
| (iii) | cooperate with Arbitron in good faith in order to effectively contest such claim; and | ||
| (iv) | permit Arbitron to participate in any proceedings relating to such claim; |
provided, however, that Arbitron shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and
shall indemnify and
hold you harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of this
Section 6.10(d), Arbitron shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct you to pay the tax claimed and xxx for a refund
or contest the claim in any permissible manner, and you agree to prosecute such contest to
a determination before any administrative tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as Arbitron shall determine; provided further, however,
that if Arbitron directs you to pay such claim and xxx for a refund, Arbitron shall advance
the amount of such payment to you on an interest-free basis and shall indemnify and hold
you harmless, on an after-tax basis, from any Excise Tax or income tax (including interest
or penalties with respect thereto) imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and provided further that any extension of
the statute of limitations relating to payment of taxes for your taxable year with respect
to which such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, Arbitron’s control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and you shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(e) If, after the receipt by you of an amount advanced by Arbitron pursuant to Section
6.10(d), you become entitled to receive any refund with respect to such claim, you shall
(subject to Arbitron’s complying with the requirements of Section 6.10 promptly pay to
Arbitron the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by you of an amount advanced by
Arbitron pursuant to Section 6.10(d), a determination is made that you shall not be
entitled to any refund with respect to such claim and Arbitron does not notify you in
writing of its intent to contest such denial of refund prior to the expiration of thirty
days after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
Any Gross-Up Payment shall be paid not later than the end of the tax year following the tax
year in which the determination under this Section 6.10 was made.
6.11 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding between
the parties hereto in reference to all the matters herein agreed upon. This Agreement replaces in
full all prior employment agreements or understandings of the parties hereto, and any and all such
prior agreements or understandings are hereby rescinded by mutual agreement; provided, however,
that you agree that Article V of the Predecessor Agreement (relating to confidentiality,
disclosure, and assignment of intellectual property) remains in full force and effect).
Signatures on Page Following
IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be duly executed and delivered
as of the day and year first above written.
| EXECUTIVE | ARBITRON INC. | |||||||
/s/ Xxxxxxx X. Xxxxxx
|
By: | /s/ Xxxxxxx X. Xxxx | ||||||
| Xxxxxxx X. Xxxxxx | Xxxxxxx X. Xxxx | |||||||
| Title: Chair, Compensation and Human | ||||||||
| Resources Committee | ||||||||
