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Exhibit 4.2
HARRIS INTERACTIVE INC.
LONG-TERM INCENTIVE PLAN
SECTION 1 GENERAL
1.1 PURPOSE. This Harris Interactive Inc. Long-Term Incentive Plan (the
"Plan") has been established by Harris Interactive Inc. (the "Company") (a) to
attract and retain persons eligible to participate in the Plan; (b) motivate
Participants, by means of appropriate incentives, to achieve long-range goals;
(c) provide incentive compensation opportunities that are competitive with those
of other similar companies; and (d) further identify Participants' interests
with those of the Company's other stockholders through compensation that is
based on the Company's common stock; and thereby promote the long-term financial
interest of the Company and the Related Companies, including the growth in value
of the Company's equity and enhancement of long-term stockholder return.
1.2 PARTICIPATION. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Eligible Individuals, those persons who will be granted one or more Awards under
the Plan, and thereby become "Participants" in the Plan. In the discretion of
the Committee, a Participant may be granted any Award permitted under the
provisions of the Plan, and more than one Award may be granted to a Participant.
Awards may be granted as alternatives to or replacements of awards outstanding
under the Plan, or any other plan or arrangement of the Company or a Related
Company (including a plan or arrangement of a business or entity, all or a
portion of which is acquired by the Company or a Related Company).
1.3 OPERATION, ADMINISTRATION AND DEFINITIONS. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to Operation and
Administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 1.4 of the Plan).
1.4 DEFINED TERMS. For purposes of the Plan, the terms listed below shall
be defined as follows:
(a) AWARD. The term "Award" shall mean any award or benefit granted to
any Participant under the Plan, including, without limitation, the grant of
Options, SARs, Stock Awards and Cash Awards.
(b) BOARD. The term "Board" shall mean the Board of Directors of the
Company.
(c) CHANGE IN CONTROL. The term "Change in Control" means a change in
control occurring after the Effective Date of this Plan of a nature that
would be required to be reported in a proxy statement with respect to the
Company (even if the 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 the
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; and provided that, without limitation of the
foregoing, such change in control shall be deemed to have occurred if
(i) 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 the 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 the Company or its
successors; or (ii) during any period of two consecutive years a majority of
the Board of Directors no longer consists of individuals who were members of
the Board of Directors at the beginning of such period, unless the election
of each director who was not a director at the beginning
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of the period was approved by a vote of at least 75% of the directors still
in office who were directors at the beginning of the period.
(d) CODE. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference to
any successor provision of the Code.
(e) The term "COMMITTEE" is as defined in Section 5.
(f) The term "ELIGIBLE INDIVIDUAL" shall mean any employee, officer or
non-employee director of the Company or a Related Company.
(g) FAIR MARKET VALUE. For purposes of determining the "FAIR MARKET
VALUE" of a share of Stock, the following rules shall apply:
(i) If the Stock is at the time listed or admitted to trading on any
stock exchange or a national market system, including without limitation
the Nasdaq National Market, then the "Fair Market Value" shall be the
mean between the lowest and highest reported sale prices of the Stock on
the date in question on the principal exchange on which the Stock is then
listed or admitted to trading. If no reported sale of Stock takes place
on the date in question on the principal exchange, then the reported
closing asked price of the Stock on such date on the principal exchange
shall be determinative of "Fair Market Value."
(ii) If the Stock is not at the time listed or admitted to trading on
a stock exchange, the "Fair Market Value" shall be the mean between the
lowest reported bid price and highest reported asked price of the Stock
on the date in question in the over-the-counter market, as such prices
are reported in a publication of general circulation selected by the
Committee and regularly reporting the market price of Stock in such
market.
(iii) If the Stock is not listed or admitted to trading on any stock
exchange or traded in the over-the-counter market, the "Fair Market
Value" shall be as determined in good faith by the Committee.
(h) RELATED COMPANIES. The term "Related Company" means (i) any
corporation, partnership, joint venture or other entity during any period in
which it owns, directly or indirectly, at least 50% of the voting power of
all classes of stock of the Company (or successor to the Company) entitled
to vote; and (ii) any corporation, partnership, joint venture or other
entity during any period in which at least 50% voting or profits interest is
owned, directly or indirectly, by the Company, by any entity that is a
successor to the Company, or by any entity that is a Related Company by
reason of clause (i) next above.
(i) STOCK. The term "Stock" shall mean shares of common stock of the
Company.
SECTION 2. OPTIONS AND SARS
2.1 DESCRIPTIONS.
(a) The grant of an "Option" entitles the Participant to purchase shares
of Stock at an Exercise Price established by the Committee. Options granted
under this Section 2 may be either Incentive Stock Options or Non-Qualified
Stock Options, as determined in the discretion of the Committee. An
"Incentive Stock Option" is an Option that is intended to satisfy the
requirements applicable to an "incentive stock option" described in
Section 422(b) of the Code. A "Non-Qualified Option" is an Option that is
not intended to be an "incentive stock option" as that term is described in
Section 422(b) of the Code.
(b) A stock appreciation right (a "SAR") entitles the Participant to
receive, in cash or Stock (as determined in accordance with subsection 2.5),
value equal to all or a portion of the excess of:
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(a) the Fair Market Value of a specified number of shares of Stock at
the time of exercise; over
(b) an Exercise Price established by the Committee pursuant to
Section 2.2 of the Plan.
2.2 EXERCISE PRICE. The "Exercise Price" of each Option and SAR granted
under this Section 2 shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option or
SAR is granted; except that the Exercise Price for Incentive Stock Options shall
not be less than 100% of the Fair Market Value of a share of Stock as of the
Pricing Date (or less than 110% of the Fair Market Value of a share of Stock as
of the Pricing Date in the case of Participants owning 10% of the voting stock
of the Company). For purposes of the preceding sentence, the "Pricing Date"
shall be the date on which the Option is granted.
2.3 EXERCISE. An Option and SAR shall be exercisable in accordance with
such terms and conditions and during such periods as may be established by the
Committee.
2.4 PAYMENT OF OPTION EXERCISE PRICE. The payment of the Exercise Price of
an Option granted under this Section 2 shall be subject to the following:
(a) Subject to the following provisions of this subsection 2.4, the full
Exercise Price for shares of Stock purchased upon the exercise of any Option
shall be paid at the time of such exercise (except that, in the case of an
exercise arrangement approved by the Committee and described in subsection
2.4(c), payment may be made as soon as practicable after the exercise).
(b) The Exercise Price shall be payable in cash or, at the option of the
Committee, by tendering shares of Stock (by either actual delivery of shares
or by attestation, with such shares valued at Fair Market Value as of the
day of exercise), or in any combination thereof, as determined by the
Committee.
(c) The Committee may permit a Participant to elect to pay the Exercise
Price upon the exercise of an Option by authorizing a third party to sell
shares of Stock (or a sufficient portion of the shares) acquired upon
exercise of the Option and remit to the Company a sufficient portion of the
sale proceeds to pay the entire Exercise Price and any tax withholding
resulting from such exercise.
2.5 SETTLEMENT OF AWARD. Distribution following exercise of an Option or
SAR, and shares of Stock distributed pursuant to such exercise, shall be subject
to such conditions, restrictions and contingencies as the Committee may
establish. Settlement of SARs may be made in shares of Stock (valued at their
Fair Market Value at the time of exercise), in cash, or in a combination
thereof, as determined in the discretion of the Committee. The Committee, in its
discretion, may impose such conditions, restrictions and contingencies with
respect to shares of Stock acquired pursuant to the exercise of an Option or SAR
as the Committee determines to be desirable.
SECTION 3 OTHER AWARDS
3.1 STOCK AWARD. A Stock Award is a grant of shares of Stock or of a right
to receive shares of Stock (or their cash equivalent or a combination of both)
in the future. Each Stock Award shall be subject to such conditions,
restrictions and contingencies as the Committee shall determine. These may
include continuous service and/or the achievement of performance goals. The
performance goals that may be used by the Committee for such Awards may consist
of cash generation targets, profit, revenue and market share targets,
profitability targets as measured by return ratios, and stockholder returns. The
Committee may designate a single goal criterion or multiple goal criteria for
performance measurement purposes, with the measurement based on absolute Company
or business unit performance and/or on performance as compared with that of
other publicly-traded companies.
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3.2 CASH AWARD. A Cash Award is a right denominated in cash or cash units
to receive a payment, which may be in the form of cash, shares of Stock or a
combination, based on the attainment of pre-established performance goals and
such other conditions, restrictions and contingencies as the Committee shall
determine. The performance goals that may be used by the Committee for such
awards may consist of cash generation targets, profits, revenue and market share
targets, profitability targets as measured by return ratio, stockholder returns
and such other goals as may be designated by the Committee. The Committee may
designate a single goal criterion or multiple goal criteria for performance
measurement purposes with the measurement based on absolute Company or business
unit performance and/or on performance as compared with that of other
publicly-traded companies.
SECTION 4 OPERATION AND ADMINISTRATION
4.1 EFFECTIVE DATE. Subject to the approval of the stockholders of the
Company, the Plan shall be effective as of September 7, 1999 (the "Effective
Date"); provided, however, that to the extent that Awards are made under the
Plan prior to its approval by stockholders, they shall be contingent on approval
of the Plan by the stockholders of the Company. The Plan shall be unlimited in
duration and, in the event of Plan termination, shall remain in effect as long
as any Awards under it are outstanding; provided, however, that, to the extent
required by the Code, no Incentive Stock Options may be granted under the Plan
on a date that is more than ten years from the date the Plan is adopted or, if
earlier, the date the Plan is approved by stockholders.
4.2 SHARES SUBJECT TO PLAN.
(a) (i) Subject to the following provisions of this subsection 4.2, the
maximum number shares of Stock that may be delivered to Participants and
their beneficiaries under the Plan shall be 2,750,000.
(ii) Any shares of Stock granted under the Plan that are forfeited
back to the Company because of the failure to meet an Award contingency
or condition shall again be available for delivery pursuant to new Awards
granted under the Plan. To the extent any shares of Stock covered by an
Award are not delivered to a Participant or beneficiary because the Award
is forfeited or canceled, or the shares of Stock are not delivered
because the Award is settled in cash, such shares shall not be deemed to
have been delivered for purposes of determining the maximum number of
shares of Stock available for delivery under the Plan.
(iii) If the Exercise Price of any Option granted under the Plan or
any Prior Plan is satisfied by tendering shares of Stock to the Company
(by either actual delivery or by attestation), only the number of shares
of Stock issued net of the shares of Stock tendered shall be deemed
delivered for purposes of determining the maximum number of shares of
Stock available for delivery under the Plan.
(iv) Shares of Stock delivered under the Plan in settlement,
assumption or substitution of outstanding awards (or obligations to grant
future awards) under the plans or arrangements of another entity shall
not reduce the maximum number of shares of Stock available for delivery
under the Plan, to the extent that such settlement, assumption or
substitution as a result of the Company or a Related Company acquiring
another entity (or an interest in another entity).
(b) Subject to subsection 4.2(c), the following additional maximums are
imposed under the Plan.
(i) The maximum number of shares of Stock that may be issued by
Options intended to be Incentive Stock Options shall be 2,750,000 shares.
(ii) The maximum number of shares that may be covered by Awards
granted to any one individual pursuant to Section 2 (relating to Options
and SARs) shall be 500,000 shares during any three consecutive calendar
years.
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(iii) The maximum payment that can be made for awards granted to any
one individual pursuant to Section 3 (relating to Stock Awards and Cash
Awards) shall be $1,000,000 for any single or combined performance goals
established for any specified performance period. If an Award granted
under Section 3 is, at the time of grant, denominated in shares, the
value of the shares of Stock for determining this maximum individual
payment amount will be the Fair Market Value of a share of Stock on the
first day of the applicable performance period.
(c) Subject to Section 4.14 below relating to changes in control, in the
event of a corporate transaction involving the Company (including, without
limitation, any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares), the Committee (a) will make any
appropriate adjustments to the maximum number of shares of Stock that may be
delivered to Participants and their beneficiaries under this subsection
4.2(a) and (b), and (b) will adjust Awards to preserve the benefits or
potential benefits of the Awards. Action by the Committee may include
adjustment of: (i) the number and kind of shares which may be delivered
under the Plan; (ii) the number and kind of shares subject to outstanding
Awards; and (iii) the Exercise Price of outstanding Options and SARs; as
well as any other adjustments that the Committee determines to be equitable.
4.3 LIMIT ON DISTRIBUTION. Distribution of shares of Stock or other
amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall
have no liability to deliver any shares of Stock under the Plan or make any
other distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act of 1933), and the
applicable requirements of any securities exchange or similar entity.
(b) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of shares of Stock, the issuance may be
effected on a noncertificated basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange or a national
market system, including without limitation the Nasdaq National Stock
Market.
4.4 TAX WITHHOLDING. Whenever the Company proposes or is required to
distribute Stock under the Plan, the Company may require the recipient to remit
to the Company an amount sufficient to satisfy any Federal, state and local tax
withholding requirements prior to the delivery of any certificate for such
shares or, in the discretion of the Committee, the Company may withhold from the
shares to be delivered shares sufficient to satisfy all or a portion of such tax
withholding requirements. Whenever under the Plan payments are to be made in
cash, such payments may be net of an amount sufficient to satisfy any Federal,
state and local tax withholding requirements.
4.5 DIVIDENDS AND DIVIDEND EQUIVALENTS. An Award may provide the
Participant with the right to receive dividends or dividend equivalent payments
with respect to Stock which may be either paid currently or credited to an
account for the Participant, and may be settled in cash or Stock as determined
by the Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Stock equivalents.
4.6 PAYMENTS. Awards may be settled through cash payments, the delivery of
shares of Stock, the granting of replacement Awards, or combination thereof as
the Committee shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Committee shall determine. The Committee may permit or require the deferral
of any Award payment, subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest, or
dividend equivalents, including converting such credits into deferred Stock
equivalents.
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4.7 TRANSFERABILITY. Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution.
4.8 FORM AND TIME OF ELECTIONS. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
4.9 AGREEMENT WITH COMPANY. At the time of an Award to a Participant under
the Plan, the Committee may require a Participant to enter into an agreement
with the Company (the "Agreement") in a form specified by the Committee,
agreeing to the terms and conditions of the Plan and to such additional terms
and conditions, not inconsistent with the Plan, as the Committee may, in its
sole discretion, prescribe.
4.10 LIMITATION OF IMPLIED RIGHTS.
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of the
Company or any Related Company whatsoever, including, without limitation,
any specific funds, assets, or other property which the Company or any
Related Company, in their sole discretion, may set aside in anticipation of
a liability under the Plan. A Participant shall have only a contractual
right to the stock or amounts, if any, payable under the Plan, unsecured by
any assets of the Company or any Related Company. Nothing contained in the
Plan shall constitute a guarantee that the assets of such companies shall be
sufficient to pay any benefits to any person.
(b) The Plan does not constitute a contract of employment, and selection
as a Participant will not give any Eligible Individual the right to be
retained in the employ of the Company or any Related Company, nor any right
or claim to any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan. Except as otherwise
provided in the Plan, no Award under the Plan shall confer upon the holder
thereof any right as a stockholder of the Company prior to the date on which
the individual fulfills all conditions for receipt of such rights.
4.11 NO FRACTIONAL SHARES. No fractional shares of Stock shall be issued
or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash shall be paid or transferred in lieu of any fractional
shares of Stock, or whether such fractional shares of Stock or any rights
thereto shall be canceled.
4.12 EVIDENCE. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
4.13 EXCEEDING LIMITATIONS. To the extent that the aggregate Fair Market
Value of Stock (determined at the time the Option is granted) with respect to
which Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year (under all plans of the Company and all
Related Companies) exceeds $100,000, such Options shall be treated as
Non-Qualified Stock Options, to the extent required by Section 422 of the Code.
4.14 CHANGE IN CONTROL. Subject to the provisions of subsection 4.2
(relating to the adjustment of shares), and except as otherwise provided in the
Plan or the agreement reflecting the applicable Award, upon the occurrence of a
Change in Control:
(a) All outstanding Options (regardless of whether in tandem with SARs)
shall become fully exercisable.
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(b) All outstanding SARs (regardless of whether in tandem with Options)
shall become fully exercisable.
(c) All Stock Awards shall become fully vested.
4.15. ACTION BY COMPANY OR RELATED COMPANY. Any action required or
permitted to be taken by the Company or any Related Company shall be by
resolution of its board of directors, or by action of one or more members of the
board (including a committee of the board) who are duly authorized to act for
the board, or (except to the extent prohibited by applicable law or applicable
rules of any stock exchange) by a duly authorized officer of the Company.
4.16. GENDER AND NUMBER. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
SECTION 5 COMMITTEE
5.1. ADMINISTRATION. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the "Committee") in
accordance with this Section 5.
5.2. SELECTION OF COMMITTEE. The Committee shall be selected by the Board,
and shall consist of two or more members of the Board.
5.3. POWERS OF COMMITTEE. The authority to manage and control the
operation and administration of the Plan shall be vested in the Committee,
subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the Eligible Individuals those
persons who shall receive Awards, to determine the time or times of receipt,
to determine the types of Awards and the number of shares covered by the
Awards, to establish the terms, conditions, performance criteria,
restrictions, and other provisions of such Awards, and (subject to the
restrictions imposed by Section 6) to cancel or suspend Awards. In making
such Award determinations, the Committee may take into account the nature of
services rendered by the individual, the individual's present and potential
contribution to the Company's success and such other factors as the
Committee deems relevant.
(b) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to determine the extent to which Awards under the
Plan will be structured to conform to the requirements applicable to
performance-based compensation as described in Code Section 162(m), and to
take such action, establish such procedures, and impose such restrictions at
the time such Awards are granted as the Committee determines to be necessary
or appropriate to conform to such requirements.
(c) The Committee will have the authority and discretion to establish
terms and conditions of Awards as the Committee determines to be necessary
or appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States.
(d) The Committee will have the authority and discretion to interpret
the Plan, to establish, amend, and rescind any rules and regulations
relating to the Plan, to determine the terms and provisions of any
agreements made pursuant to the Plan, and to make all other determinations
that may be necessary or advisable for the administration of the Plan.
(e) Any interpretation of the Plan by the Committee and any decision
made by it under the Plan is final and binding.
(f) Except as otherwise expressly provided in the Plan, where the
Committee is authorized to make a determination with respect to any Award,
such determination shall be made at the time the Award is made, except that
the Committee may reserve the authority to have such determination
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made by the Committee in the future (but only if such reservation is made at
the time the Award is granted and is expressly stated in the Agreement
reflecting the Award).
(g) In controlling and managing the operation and administration of the
Plan, the Committee shall act by a majority of its then members, by meeting
or by a writing filed without a meeting. The Committee shall maintain and
keep adequate records concerning the Plan and concerning its proceedings and
acts in such form and detail as the Committee may decide.
5.4 DELEGATION BY COMMITTEE. Except to the extent prohibited by applicable
law or the applicable rules of a stock exchange, the Committee may allocate all
or any portion of its responsibilities and powers to any one or more of its
members and may delegate all or any part of its responsibilities and powers to
any person or persons selected by it. Any such allocation or delegation may be
revoked by the Committee at any time.
5.5 INFORMATION TO BE FURNISHED TO COMMITTEE. The Company and Related
Companies shall furnish the Committee with such data and information as may be
required for it to discharge its duties. The records of the Company and Related
Companies as to an Eligible Individual's employment or other provision of
services, termination of employment or cessation of the provision of services,
leave of absence, reemployment and compensation shall be conclusive on all
persons unless determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Committee such evidence,
data or information as the Committee considers desirable to carry out the terms
of the Plan.
SECTION 6 EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
6.1 EFFECT ON OTHER AWARDS OR BONUSES. Neither adoption of the Plan nor
the grant of Awards to a Participant will affect the Company's right to grant to
such Participant Awards that are not subject to the Plan, to issue to such
Participant Stock as a bonus or otherwise, or to adopt other plans or
arrangements under which Stock may be issued to Eligible Individuals.
6.2 DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION. The Board may
at any time discontinue granting Awards under the Plan. The Board may at any
time or times alter or amend the Plan or any outstanding Award for any purpose
which may at the time be permitted by law, or may at any time terminate the Plan
as to any further grants of Awards, provided that (except to the extent
expressly required or permitted by the Plan) no such amendment will, without the
approval of (a) the Company's stockholders, to the extent stockholder approval
of the amendment is required by applicable law or regulations or the
requirements of the principal exchange or interdealer quotation system on which
the Stock is listed or quoted, (i) increase the maximum number of shares
available under the Plan, (ii) change the group of persons eligible to receive
Awards under the Plan, (iii) extend the time within which Awards may be granted,
or (iv) amend the provisions of this Section 6.2, and (b) each affected
Participant if the amendment, alteration or termination would adversely affect
the Participant's rights or obligations under any Award made prior to the date
of the amendment, alteration or termination. The termination of the Plan would
not affect the validity of any Award outstanding on the date of termination.
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