EXHIBIT 10.3

 

HARTE-HANKS, INC.
RESTRICTED STOCK AWARD AGREEMENT

 

To: Robert A. Philpott

 

Date of Grant: July     , 2013

 

Number of Shares: 100,000

 

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).  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)                                 “Cause” means deficiencies in performance or
conduct, as determined in the sole discretion of the Company, resulting in
termination of employment.

 

(c)                                  “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.

 

(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.

 

(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.

 

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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, or (b) to the extent sooner, upon a Change in Control; provided, however,
that the Stock subject to this Restricted Stock Award will vest in accordance
with the vesting schedule described above only if you are still employed by the
Company on each applicable vesting date.  If your employment terminates prior to
the date the Stock vests (including without limitation a termination by the
Company with or without Cause, death, disability (within the meaning of Section
22(e)(3) of the Code) or retirement on or after your attainment of age 70, or a
voluntary termination by you) all unvested Stock shall be forfeited at the time
of such termination.

 

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.

 

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

 

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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.

 

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;

 

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(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) 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

 

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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 made by personal delivery, through the mail, or
by facsimile, electronic mail or other electronic transmission to the Company’s
Secretary, Harte-Hanks, Inc., 9601 McAllister Freeway, Suite 610, San Antonio,
Texas 78216, Fax: (210) 829-9139.  Any notice to be given to you shall be
addressed to you at your address indicated in the Company’s payroll records,
your company email address or at such other address as either party may
hereafter designate in writing to the other.  Any person entitled to notice
hereunder may waive such notice.

 

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.

 

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

 

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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.

 

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.

 

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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:

 

 

 

 

Douglas C. Shepard

 

 

 

EVP and Chief Financial Officer

 

 

 

 

ACKNOWLEDGED AND AGREED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert A. Philpott

 

 

 

 

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