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Exhibit
10.5
FORM OF SEVERANCE
AGREEMENT
AGREEMENT made as of
June 27, 2008, between Harte-Hanks, Inc., a Delaware
corporation (the “Company”), and Peter E. Gorman (the
“Executive”).
WHEREAS, the Executive is
currently serving as an Executive Vice President of the
Company;
WHEREAS, the Executive
possesses an intimate knowledge of the business and affairs of the
Company, its policies, methods, personnel and plans for the future
and has acquired contacts of considerable value to the Company;
and
WHEREAS, the Board of
Directors of the Company (the “Board”) recognizes that
the Executive’s contribution to the growth and success of the
Company has been substantial and wishes to offer an inducement to
the Executive to remain in the employ of the Company;
NOW, THEREFORE, in
consideration of the foregoing and of the respective covenants and
agreements of the parties herein contained, this Agreement sets
forth benefits which the Company will pay to Executive in the event
of termination of Executive’s employment under the
circumstances described herein:
1. Term . Except as otherwise
provided in Section 4, the term of this Agreement shall be
effective upon a Change in Control (as defined herein) and continue
until the earlier of (a) the expiration of the second
anniversary of the occurrence of a Change in Control, (b) the
Executive’s death, or (c) the Executive’s earlier
voluntary retirement (except as provided in Section 3(a)(ii))
(the “Term”).
2. Definitions .
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(a) |
Cause . For “Cause” means that the Board
determines in good faith that the Executive shall have
committed: |
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(i) |
an intentional material act of fraud or embezzlement in
connection with his duties or in the course of his employment with
the Company; |
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(ii) |
intentional wrongful material damage to property of the
Company; or |
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(iii) |
intentional wrongful disclosure of material secret processes or
material confidential information of the Company. |
For the purposes of this
Agreement, no act, or failure to act, on the part of the Executive
will be deemed “intentional” unless done, or omitted to
be done, by the Executive not in good faith and without reasonable
belief that his action or omission was in the best interest of the
Company.
Severance Agreement - Page 1
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(b) |
Change in Control . A “Change in Control” of
the Company shall have occurred if any of the following events
shall occur: |
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(i) |
the Company is merged, consolidated or reorganized into or with
another corporation or other legal person and as a result of such
merger, consolidation or reorganization less than 60% of the
combined voting power of the then outstanding securities of the
remaining corporation or legal person or its ultimate parent
immediately after such transaction is received in respect of or in
exchange for voting securities of the Company pursuant to such
transaction; |
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(ii) |
the Company sells all or substantially all of its assets to any
other corporation or other legal person and as a result of such
sale less than 60% of the combined voting power of the then
outstanding securities of such corporation or legal person or its
ultimate parent immediately after such transaction is received in
respect of or in exchange for voting securities of the Company
pursuant to such sale; |
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(iii) |
any person (including any “person” as such term is
used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act), has become the beneficial owner (as the term
“beneficial owner” is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange Act) of
securities which when added to any securities already owned by such
person would represent in the aggregate 30% or more of the combined
voting power of the then outstanding securities of the Company;
or |
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(iv) |
such other events that cause a Change in Control of the Company
as determined by the Board in its sole discretion. |
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(c) |
Code . The “Code” shall mean the Internal
Revenue Code of 1986, as amended. |
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(d) |
Disability . “Disability” shall have the
meaning given to disability in the Company’s long-term
disability insurance plan. |
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(e) |
Severance Compensation . The “Severance
Compensation” shall be a lump sum cash amount equal to 200%
of the sum of (i) the annual base salary of the Executive in
effect immediately prior to the Change in Control or the
Termination Date, whichever is larger, plus (ii) the average
of the bonus or incentive compensation of the Executive, received
from the Company for the two fiscal years preceding the year in
which the Change in Control occurred or for the two fiscal years
preceding the year in which the Termination Date occurs, whichever
is larger. |
Severance Agreement - Page 2
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(f) |
Termination Date . The “Termination Date”
shall be the date upon which the Executive or the Company
terminates the employment of the Executive and such termination
constitutes a “separation from service,” as defined and
applied in Section 409A of the Code. |
3. Rights of Executive Upon Change in
Control and Termination .
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(a) |
The Company shall provide the Executive, ten days following the
Termination Date (subject to Section 12 if the Executive is a
specified employee), and provided the Executive has executed the
release described in Section 7 below, Severance Compensation
in lieu of compensation to the Executive for periods subsequent to
the Termination Date, if, following the occurrence of a Change in
Control, any of the following events shall occur: |
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(i) |
the Company terminates the Executive’s employment (
i.e. , the Executive separates from service) during the Term
other than for any of the following reasons: |
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(2) |
the Executive suffers a Disability and is unable to work (with
or without reasonable accommodation) for a period of 180
consecutive days; or |
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(ii) |
the Executive terminates his employment ( i.e. ,
separates from service) after such Change in Control during the
Term and a material adverse change in the employment relationship
without the Executive’s consent, which shall include the
occurrence of at least one of the following events: |
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(1) |
a material adverse change in the nature or scope of the
authorities, functions or duties attached to the position with the
Company that the Executive had immediately prior to the Change in
Control; |
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(2) |
a reduction in the Executive’s salary, bonus or incentive
compensation or a significant reduction in scope or value of other
monetary or non-monetary benefits (other than benefits pursuant to
a broad based employee benefit plan) to which the Executive was
entitled from the Company immediately prior to the Change in
Control; |
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(3) |
a determination by the Executive made in good faith that as a
result of a Change in Control and a change in circumstances
thereafter, he has been rendered substantially unable to carry out,
or has been substantially hindered in the performance of, the
authorities, functions or duties attached to his position
immediately prior to the Change in Control; |
Severance Agreement - Page 3
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(4) |
the Company shall require the Executive to materially relocate
his principal location of work from the location thereof
immediately prior to the Change in Control, or to travel away from
his office in the course of discharging his responsibilities or
duties significantly more than required of him prior to the Change
in Control; or |
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(5) |
the Company commits any material breach of this
Agreement; |
provided, however, that with
regard to each change described above, the Executive must provide
written notice to the Company within 90 days of the occurrence of
such change, and the Company shall have 30 days in which to cure;
or
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(iii) |
the Executive terminates his employment ( i.e. separates
from service) for any reason during the 30-day period following the
first anniversary of the Change in Control. |
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(b) |
Severance Compensation pursuant to this Section 3 will not
be subject to setoff or mitigation. |
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(c) |
Upon a Change in Control, or in the event the Company becomes
obligated to make the payments specified in Section 4(a), all
equity-based awards previously granted by the Company to the
Executive and not yet exercised will become vested and fully
exercisa |
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