Exhibit 10.3

 

HARTE HANKS, INC.
RESTRICTED STOCK AWARD AGREEMENT

 

To: Shirish R. Lal

 

Date of Grant:              , 2016

 

Number of Shares:

 

HARTE HANKS, INC. (the “Company”), is pleased to grant you, as an inducement
material to your entry into employment with the Company, a restricted stock
award (the “Restricted Stock Award”) with respect to a number of shares of Stock
(as defined below), subject to the terms and conditions set forth in this
Restricted Stock Award Agreement (this “Agreement”).  The grant of the
Restricted Stock Award is specifically conditioned upon (i) the approval of this
grant to you by the Board (as defined below), and (ii) the execution by you of
this Agreement, agreeing to all of the terms and conditions set forth herein. 
The Date of Grant and the number of shares of Stock subject to this Restricted
Stock Award are stated above.  The Restricted Stock Award is not governed by the
Harte-Hanks, Inc. 2013 Omnibus Incentive Plan, 2005 Omnibus Incentive Plan or by
any other equity compensation plan of the Company (or of any of its
affiliates).  Instead, this Restricted Stock Award is made outside of any equity
compensation plan of the Company (or any of its affiliates), as an inducement
contemplated by Section 303A.08 of the New York Stock Exchange Listed Company
Manual.  No payment is required for the Stock that you receive pursuant to this
Restricted Stock Award.

 

This Agreement sets forth the terms of the agreement between you and the Company
with respect to the Restricted Stock Award.  By accepting this Agreement, you
agree to be bound by all of the terms hereof.

 

1.         Definitions.  Unless otherwise defined herein, as used in this
Agreement, the following terms have the meanings set forth below:

 

(a)        “Board” means the board of directors of the Company.

 

(b)        “Change in Control” means the first day that any one or more of the
following conditions shall have been satisfied:

 

(i)         the acquisition of any outstanding voting securities by any person,
after which such person (as the term is used for purposes of Section 13(d) or
14(d) of the Exchange Act) has beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the then
outstanding voting securities of the Company; provided, however, that for
purposes of this definition, the following acquisitions shall not constitute a
Change in Control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any company controlled
by, controlling or under common control with the Company, or (D) any acquisition
by any corporation pursuant to a transaction that complies with Sections
(iii)(A) and (iii)(B) of this definition;

 

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(ii)         individuals who, as of the Date of Grant, constitute the Board of
Directors (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the Date of Grant, whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board;

 

(iii)        consummation of a reorganization, merger, statutory share exchange
or consolidation or similar corporate transaction involving the Company, or the
acquisition of assets or stock of another entity by the Company or any of its
subsidiaries (each, a “Business Combination”), in each case unless (A) the
stockholders of the Company immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the combined voting
power of the outstanding voting securities of the entity resulting from such
Business Combination (including, without limitation, an entity that, as a result
of such transaction, owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries), and
(B) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement or of the
action of the Board providing for such Business Combination; or

 

(iv)        approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

 

(c)        “Change in Control Severance Agreement” means that certain Change in
Control Severance Agreement by and between the Company and you, effective on or
about the date you commenced employment with the Company, as may be amended from
time to time with your consent.

 

(d)        “Code” means the Internal Revenue Code of 1986, as amended.

 

(e)        “Committee” means the Compensation Committee of the Board.

 

(f)         “Date of Grant” means the date designated as such on the first
page of this Agreement.

 

(g)        “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

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(h)        “Fair Market Value” means with respect to Stock, as of any date, the
closing price of a share of Stock on the New York Stock Exchange for the last
trading day prior to that date.  If no such prices are reported, then Fair
Market Value shall mean the average of the high and low sale prices for the
Stock (or if no sale prices are reported, the average of the high and low bid
prices) as reported by the principal regional stock exchange, or if not so
reported, as reported by Nasdaq or a quotation system of general circulation to
brokers and dealers; provided, however, that with respect to same day sales,
Fair Market Value shall mean the per share price actually paid for shares of
Stock in connection with such sale.

 

(i)         “Stock” means the Company’s $1.00 par value per share voting common
stock, or any other securities that are substituted therefor.

 

2.         Vesting.  The shares of Stock subject to this Restricted Stock Award
vest and become non-forfeitable (a) in three installments of equal amount
(subject to whole-share rounding), with one such installment vesting on each of
the first three anniversaries of the Date of Grant; provided that you are still
employed by the Company on each applicable vesting date, (b) upon your death,
“Disability” (as such term is defined in the Change in Control Severance
Agreement) prior to your termination of employment, or (c) pursuant to the terms
of the Change in Control Severance Agreement.  Other than pursuant to the terms
of the Change in Control Severance Agreement, if your employment terminates
prior to the date the Stock vests all unvested Stock shall be forfeited at the
time of such termination.  In addition, if you fail to satisfy the applicable
requirements of the Change in Control Severance Agreement (including the
delivery of an irrevocable release), shares which would otherwise vest pursuant
to the Change in Control Severance Agreement shall be forfeited.

 

3.         Restricted Shares.  The shares of Stock you receive under this
Agreement will be considered “Restricted Shares” until they vest.  You may not
sell, transfer, pledge or otherwise dispose of, make any short sale of, grant
any option for the purchase of or enter into any hedging or similar transaction
with the same economic effect as a sale, any Restricted Shares.  The Restricted
Shares are also restricted in the sense that they may be forfeited to the
Company.  Stock that vests in accordance with the vesting schedule set forth in
Section 2 above will no longer be considered Restricted Shares.

 

4.         Stock Certificates.  Your Restricted Shares will be held for you by
the Company in book entry form at its transfer agent until it vests, after which
you may request transfer or issuance of a certificate.  If you receive a stock
certificate evidencing the grant of the Restricted Shares, the Committee may in
its sole discretion require one or more of the following methods of enforcing
the restrictions referred to in Section 3: (a) placing a legend on the stock
certificates referring to the restrictions, (b) requiring you to keep the stock
certificates, duly endorsed, in the custody of the Company while the
restrictions remain in effect, or (c) requiring that the stock certificates,
duly endorsed, be held in the custody of a third party while the restrictions
remain in effect.

 

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5.         Privileges of a Stockholder.  From and after the time the Restricted
Shares are issued in your name, you will be entitled to all the rights of
absolute ownership of the Restricted Shares, including the right to vote those
shares and to receive dividends thereon if, as, and when declared by the Board,
subject, however, to the terms, conditions and restrictions set forth in this
Agreement; provided, however, that each dividend payment will be made no later
than the 60th day following the date such dividend payment is made to
stockholders generally.

 

6.         Conditions.  Notwithstanding any provision of this Agreement to the
contrary, the issuance of Stock (including Restricted Shares) will be subject to
compliance with all applicable requirements of federal, state, or foreign law
with respect to such securities and with the requirements of any stock exchange
or market system upon which the Stock may then be listed.  No Stock will be
issued hereunder if such issuance would constitute a violation of any applicable
federal, state, or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Stock may
then be listed. The Company may require you, as a condition of receiving the
Stock, to give written assurances in substance and form satisfactory to the
Company and its counsel to the effect that you are acquiring the Stock subject
to the Restricted Stock Award for your own account for investment and not with
any present intention of selling or otherwise distributing the same, and to such
other effects as the Company deems necessary or appropriate to comply with
federal and applicable state securities laws.

 

7.         Change in Capital Structure.  In the event that the Board determines
that any dividend or other distribution (whether in the form of cash, Stock,
other securities or other property), recapitalization, reclassification, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spin-off, combination, repurchase, liquidation, dissolution or sale, transfer,
exchange or other disposition of all or substantially all of the assets of the
Company, or exchange of Stock or other securities of the Company, issuance of
warrants or other rights to purchase Stock or other securities of the Company,
or other similar corporate transaction or event including a Change in Control,
in the Board’s sole discretion, affects the Stock such that an adjustment is
determined by the Board to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under this Agreement, then the Board shall direct the Committee to, in such
manner as it determines is equitable, adjust any or all of the number and kind
of shares of Stock (or other securities or property) subject to the Restricted
Stock Award; provided that no such adjustment shall be affected if it would
cause the Restricted Stock Award to become subject to Section 409A of the Code. 
This Agreement shall not in any way affect or restrict the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Stock or the rights thereof or which are convertible into or
exchangeable for Stock, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

 

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8.         Extraordinary Events.  In the event of any transaction or event
described in Section 7 or any unusual or nonrecurring transaction or event
affecting the Company, any affiliate of the Company or the financial statements
of the Company or any affiliate, or of changes in applicable laws, regulations
or accounting principles occurs, including any Change in Control, the Board, in
its sole and absolute discretion, and on such terms and conditions as it deems
appropriate, is hereby authorized to direct the Committee to take any one or
more of the following actions whenever the Board determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under this Agreement, to
facilitate such transactions or events or to give effect to such changes in
laws, regulations or principles:

 

(a)        To provide for the cancellation of the Restricted Stock Award in
exchange for an amount of cash equal to the amount that could have been attained
upon the realization of your rights had the Restricted Stock Award been fully
vested (including an amount equal to zero if no cash could have been so attained
or realized);

 

(b)        To provide that the Restricted Stock Award cannot vest after such
event; provided, however, that no action shall be taken pursuant to this clause
(b) without your consent, which consent shall not be unreasonably withheld;

 

(c)        To provide that such Restricted Stock Award shall be vested and
nonforfeitable as to all shares covered thereby and that all restrictions with
respect thereto shall lapse, notwithstanding anything to the contrary herein;

 

(d)        To provide that the Restricted Stock Award be assumed by the
successor or survivor corporation, or a parent or subsidiary thereof, or shall
be substituted for by similar options, rights or awards covering the stock of
the successor or survivor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares; and

 

(e)        To make such other adjustments in the number and type of shares of
Stock (or other securities or property) subject to the Restricted Stock Award;
provided that no such adjustment shall be affected if it would cause the
Restricted Stock Award to become subject to Section 409A of the Code.

 

9.         Authority of the Committee.  This Agreement and the Restricted Stock
Award granted hereunder shall be administered by the Committee except to the
extent the Board elects to administer this Agreement and the Restricted Shares
granted hereunder, in which case references herein to the “Committee” shall be
deemed to include references to the “Board.”  The Committee shall have the
authority, in its sole and absolute discretion, to (i) adopt, amend, and rescind
administrative and interpretive rules and regulations relating to this
Agreement; (ii) accelerate the time of vesting of the Restricted Shares;
(iii) construe this Agreement and the Restricted Stock Award; (iv)

 

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make determinations of the Fair Market Value of the Stock subject to this
Agreement; (v) delegate its duties under this Agreement to such agents as it may
appoint from time to time; (vi) terminate, modify, or amend this Agreement,
provided that, no amendment or termination may decrease your rights inherent in
the Restricted Stock Award prior to such amendment without your express written
permission except to the extent such amendment is necessary to comply with
applicable laws and regulations and to conform the provisions of this Agreement
to any change thereto; and (vii) make all other determinations, perform all
other acts, and exercise all other powers and authority necessary or advisable
for administering this Agreement, including the delegation of those ministerial
acts and responsibilities as the Committee deems appropriate.  The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in this
Agreement in the manner and to the extent it deems necessary or desirable to
carry the Agreement into effect, and the Committee shall be the sole and final
judge of that necessity or desirability.  The determinations of the Committee on
the matters referred to in this Section 9 shall be final and conclusive.

 

10.        Section 16.  Notwithstanding any other provisions of this Agreement,
the grant of this Restricted Stock Award shall comply with the applicable
provisions of Rule 16b-3 promulgated under the Exchange Act and shall be subject
to any additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are
requirements for the application of such exemptive rule.  To the extent
permitted by applicable law, the Restricted Stock Award shall be deemed amended
to the extent necessary to conform to such applicable exemptive rule.

 

11.        Withholding Taxes.  No Stock will be released to you unless you have
made acceptable arrangements to pay any withholding taxes that may be due as a
result of receipt of this Restricted Stock Award or the vesting of the Stock you
receive under this Restricted Stock Award.  These arrangements may include
withholding of Stock that otherwise would be released to you when the Restricted
Shares vest.  The Fair Market Value of the Stock withheld (determined as of the
date when the taxes otherwise would have been withheld in cash) will be applied
as a credit against the taxes.  Any provision of this Agreement to the contrary
notwithstanding, the Company may take such steps as it may deem necessary or
desirable for the withholding of any taxes which it is required by law or
regulation of any governmental authority, federal, state or local, domestic or
foreign, to withhold in connection with any shares subject hereto.

 

12.        Notices.  Any notice to be given under the terms of this Agreement
shall be deemed to have been duly given or made only if (i) delivered personally
or by overnight courier, (ii) delivered by facsimile transmission with answer
back confirmation, (iii) mailed (postage prepaid by certified or registered
mail, return receipt requested) (effective upon actual receipt), or
(iv) delivered by electronic communication to the address below.  An electronic
communication (“Electronic Notice”) shall be deemed written notice for purposes
of this letter if sent with return receipt requested to the electronic mail
address specified by the receiving party.  Electronic Notice shall be deemed
received at the time the party sending Electronic Notice receives verification
of

 

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receipt by the receiving party.  The party receiving Electronic Notice may
request and shall be entitled to receive the notice on paper, in a
non-electronic form (“Non-electronic Notice”) which shall be sent to the
requesting party within five days after receipt of the written request for
Non-electronic Notice.  Either party from time to time may change its address,
facsimile number, electronic mail address, or other information for the purpose
of notices to that party by giving written notice specifying such change to the
other party hereto.

 

If to the Executive:  at the most recent address reflected in the payroll
records of the Company

 

If to the Company:

Harte Hanks, Inc.

 

9601 McAllister Freeway, Suite 610

 

San Antonio, Texas 78216

 

Attention: General Counsel

 

Email: general.counsel@hartehanks.com

 

or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.

 

13.        No Guarantee of Continued Service.  You acknowledge and agree that
the vesting of Stock pursuant to the vesting schedule set forth in this
Agreement is earned only by continuing as an employee at the will of the Company
(and not through the act of being hired or being granted this Restricted Stock
Award).  You further acknowledge and agree that this Agreement, the transactions
contemplated hereunder and the vesting schedule set forth herein do not
constitute an express or implied promise of continued employment for the vesting
period, for any period, or at all, and shall not interfere in any way with your
right or the right of the Company or any affiliate to dismiss you from
employment, free from any liability, or any claim under this Agreement, at any
time with or without cause.

 

14.        Protection of Goodwill.  You acknowledge that the Company is
providing you with this Restricted Stock Award in connection with and in
consideration for your promises and covenants contained herein.  Specifically,
in consideration for the Restricted Stock Award, which you acknowledge provides
a material incentive for you to grow, develop and protect the goodwill and
confidential and proprietary information of the Company, you agree that the
Restricted Stock Award (itself and in combination with any other awards made to
you) constitutes independent and sufficient consideration for all
non-competition, non-solicitation and confidentiality covenants between you and
the Company, and agree and acknowledge that you will fully abide by each of such
covenants.  You further acknowledge that your promise to fully abide by each of
the protective covenants referenced above is a material inducement for the
Company to provide you with the Restricted Stock Award.

 

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15.        Successors & Assigns.  Subject to the limitations on the
transferability of this Restricted Stock Award and the Restricted Shares, this
Agreement shall be binding upon and inure to the benefit of the heirs, legal
representatives, successors and assigns of the parties hereto.

 

16.        Governing Law.  The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of Delaware, without
giving effect to any conflict of law provisions thereof, except to the extent
Delaware law is preempted by federal law.  The obligation of the Company to sell
and deliver Stock hereunder is subject to applicable laws and to the approval of
any governmental authority required in connection with the authorization,
issuance, sale, or delivery of such Stock.

 

17.        Clawback.  Pursuant to the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the “Act”), the Stock subject to this Agreement shall not be
deemed fully earned or vested, even if distributed to you, if this Restricted
Stock Award or any portion thereof is deemed “incentive compensation” and
subject to recovery, or “clawback,” by the Company pursuant to the provisions of
the Act and any rules or regulations promulgated thereunder or by any stock
exchange on which the Company’s securities are listed (the “Rules”).  In
addition, you hereby acknowledge that this Agreement may be amended as necessary
and/or shall be subject to any recoupment policies adopted by the Company to
comply with the requirements and/or limitations under the Act and the Rules, or
any other federal or stock exchange requirements, including by expressly
permitting (or, if applicable, requiring) the Company to revoke, recover and/or
clawback the shares of Stock issued pursuant hereto.

 

18.        Other Benefits.  The amount of any compensation deemed to be received
by you as a result of the receipt or vesting of this Restricted Stock Award will
not constitute “earnings” with respect to any other benefits provided to you by
the Company or an affiliate, including without limitation benefits under any
pension, profit sharing, life insurance or salary continuation plan.

 

19.        Furnish Information.  You shall furnish to the Company all
information requested by the Company to enable it to comply with any reporting
or other requirements imposed upon the Company by or under any applicable
statute or regulation.  From time to time, the Board and appropriate officers of
the Company shall and are authorized to take whatever action is necessary to
file required documents with governmental authorities and other appropriate
persons to make shares of Stock available for issuance pursuant to this
Agreement.

 

20.        No Liability for Good Faith Determinations. The Company and the
members of the Committee and the Board shall not be liable for any act, omission
or determination taken or made in good faith with respect to this Agreement or
the Restricted Shares granted hereunder.

 

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21.        Execution of Receipts and Releases.  Any payment of cash or any
issuance or transfer of shares of Stock or other property to you, or to your
legal representative, heir, legatee or distributee, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such persons hereunder. The Company may require you or your legal
representative, heir, legatee or distributee, as a condition precedent to such
payment or issuance, to execute a release and receipt therefor in such form as
it shall determine.

 

22.        No Guarantee of Interests.  Neither the Committee, the Board nor the
Company guarantees the Stock of the Company from loss or depreciation.

 

23.        Company Records.  Records of the Company or its affiliates regarding
your period of employment, termination of employment and the reason therefor,
leaves of absence, re-employment, and other matters shall be conclusive for all
purposes hereunder, unless determined by the Company to be incorrect.

 

24.        Company Action.  Any action required of the Company shall be by
resolution of its Board or by a person authorized to act by resolution of the
Board.

 

25.        Severability.  If any provision of this Agreement is held to be
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions hereof, but such provision shall be fully severable and
this Agreement shall be construed and enforced as if the illegal or invalid
provision had never been included herein.

 

26.        Headings; Word Usage.   The titles and headings of Sections are
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.  Words used in the masculine shall apply
to the feminine where applicable, and wherever the context of this Agreement
dictates, the plural shall be read as the singular and the singular as the
plural.

 

27.        Fractional Shares.  In no event may the Restricted Shares be adjusted
for any fractional shares.  The Committee shall determine whether cash or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer as of the Date of Grant first above written.

 

 

HARTE HANKS, INC.

 

 

 

 

 

By:

 

 

 

Robert L. R. Munden

 

 

Senior Vice President,

 

 

General Counsel & Secretary

 

ACKNOWLEDGED AND AGREED:

 

 

 

 

 

 

 

Shirish R. Lal

 

 

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