UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
June 20, 2023 (
Date of Report (Date of Earliest Event Reported)
(Exact Name of Registrant as Specified in its Charter)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Chief Executive Officer Transition
Harte Hanks, Inc. (the “Company”) announced today a transition in the position of Chief Executive Officer, with Brian Linscott departing the Company as of June 16, 2023, and the Board of Directors (the “Board”) appointing Kirk Davis as Chief Executive Officer and nominating Mr. Davis to the Board, effective as of June 19, 2023. There were no disagreements between Mr. Linscott and the Company.
Mr. Davis, age 61, has nearly four decades of experience in the print and digital media space at the chief executive level as well as advising C-level executives, boards and key decision makers within publicly held and private equity backed publishing and digital media verticals, among others. From June 2021 – June 2023, Mr. Davis served as the Chief Executive Officer of Metro Corp., a regional media company and publisher of Philadelphia and Boston magazines. From 2006-2019, Mr. Davis served in various roles at Gatehouse Media, LLC (“GateHouse”) and its affiliates and predecessor entities, one of the largest newspaper chains in the United States, including serving as Chief Executive Officer of GateHouse and as President, Chief Operating Officer of its publicly traded parent, New Media Investment Group from 2014-2019. Earlier in his career, Mr. Davis served as Chief Executive Officer of Enterprise NewsMedia LLC and Community Newspaper Company. Since 2015, Mr. Davis has served as a member of the board of directors of The Associated Press and currently serves as Chair of its Audit Committee. Mr. Davis attended both Ohio University and Wright State University. There is no arrangement or understanding between Mr. Davis and any other person pursuant to which Mr. Davis was selected as an officer, and Mr. Davis does not have a direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. There is no family relationship between Mr. Davis and any director or executive officer of the registrant.
Employment Agreement with Kirk Davis
In connection with his appointment as Chief Executive Officer, the Company and Mr. Davis have entered into an employment agreement (the “Employment Agreement”), effective as of June 19, 2023. Pursuant to the Employment Agreement, Mr. Davis will receive an annual base salary of $450,000 and a target annual bonus opportunity equal to 100% of his base salary (with a maximum annual bonus opportunity equal to 125% of his base salary). In consideration for entering into the Employment Agreement and commencing employment with the Company, the Company has agreed to pay Mr. Davis a cash sign-on bonus of $50,000. If Mr. Davis’ employment is terminated by the Company for “cause” or if Mr. Davis resigns without “good reason,” in each case prior to June 19, 2024, Mr. Davis will be required to repay to the Company the after-tax portion of the sign-on bonus. Mr. Davis will also receive an initial equity grant consisting of approximately 240,000 stock options to purchase shares of the Company’s common stock, which will vest in three equal installments on each of the first three anniversaries of June 19, 2023, subject to Mr. Davis’ continued employment with the Company.
In the event that Mr. Davis’ employment is terminated by the Company without “cause” or if Mr. Davis resigns for “good reason,” the Company will provide Mr. Davis with the following severance payments and benefits: (i) 18 months’ of continued base salary payments, payable over 18 months, and (ii) reimbursement for the employer portion of continuation coverage premiums under COBRA for 12 months following his separation date. Mr. Davis’ receipt of the foregoing payments and benefits would be subject to his execution of an effective release of claims against the Company and certain of its affiliates. Subject to any limitations under applicable law, Mr. Davis will be required to continue to comply with confidentiality, non-solicitation and non-competition obligations in order to continue to receive these severance benefits.
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The foregoing description is qualified by reference to the full text of the Employment Agreement. A copy of the Employment Agreement is filed as Exhibit 10.1 attached hereto and is incorporated herein by reference in its entirety into this Item 5.02.
Separation Arrangement with Brian Linscott
In connection with Mr. Linscott’s separation from the Company, the Company expects to negotiate a separation agreement honoring the terms of Mr. Linscott’s employment agreement. Mr. Linscott’s separation from the Company constitutes an involuntary termination by the Company “without cause” under Mr. Linscott’s employment agreement, entitling him to receive, subject to his execution of an effective release of claims and continued compliance with certain restrictive covenants: (i) continued base salary payments for 18 months following the separation date, and (ii) reimbursement for the employer portion of continuation coverage premiums under COBRA for 12 months following his separation date. In addition, pursuant to the terms of the applicable award agreements, all of the unvested time-based restricted stock units held by Mr. Linscott will vest, and a portion of the performance-based restricted stock units held by Mr. Linscott will remain eligible to be earned during the 90-day period following his separation of employment subject to achievement of the applicable stock price goals during such period.
Item 7.01 Regulation FD Disclosure.
A copy of the press release announcing the foregoing events is furnished herewith as Exhibit 99.1 and is incorporated in this Item 7.01 by reference.
Item 8.01 Other Events
In connection with the announcement of the CEO transition, the Company confirms that the statements made in its first quarter earnings release related to the expectation that the Company will experience sequential improvement to EBITDA in the second quarter remains its expectations.
Cautionary Note Regarding Forward-Looking Statements
This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “believe,” “plan,” “target,” “forecast” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements concern management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters. Forward-looking statements are inherently uncertain and subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those anticipated or expected by the management of the Company. These statements are not guarantees of future performance and actual events or results may differ significantly from these statements. Actual events or results are subject to significant known and unknown risks, uncertainties and other important factors, many of which are beyond the Company’s control and are described in the Company’s filings with the United States Securities and Exchange Commission (the “SEC”). It should be understood that it is not possible to predict or identify all such factors. Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of the document in which they are made. The Company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which the forward-looking statement is based, except as required by law. It is advisable, however, to consult any further disclosures the Company makes on related subjects in its filings with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, if any. These statements constitute the Company’s cautionary statements under the Private Securities Litigation Reform Act of 1995.
Item 9.01 Financial Statements and Exhibits.
| Exhibit |
Description | |
| 10.1 | Employment Agreement between the Company and Kirk Davis, effective as of June 19, 2023. | |
| 99.1 | Press Release of Harte Hanks, Inc. dated June 19, 2023. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HARTE HANKS, INC. | ||
| By: | /s/ Laurilee Kearnes | |
| Name: | Laurilee Kearnes | |
| Title: | Chief Financial Officer | |
Date: June 20, 2023
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Exhibit 10.1
Execution Version
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of June 14, 2023, by and between Kirk Davis (“Employee”) and Harte Hanks, Inc. (the “Company”).
RECITALS
WHEREAS, the Company desires to employ Employee, and Employee desires to become employed by the Company, on the terms set forth in this Agreement.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Employment Term. Subject to the terms and conditions set forth herein, the Company hereby agrees to employ Employee, and Employee hereby agrees to accept employment with the Company, pursuant to the terms of this Agreement, to be effective as of the date on which Employee commences employment with the Company (such date, the “Effective Date”). Employee’s employment with the Company shall commence on the Effective Date and shall continue until terminated in accordance with the provisions set forth below. The period of Employee’s employment with the Company as set forth in this Section 1 is referred to herein as the “Employment Term.” In the event that the Effective Date does not occur for any reason, this Agreement shall be void ab initio without any obligation by the Company or the Employee.
2. Employment Duties.
(a) Commencing as of the Effective Date, Employee shall be the Chief Executive Officer of the Company and shall perform such duties and responsibilities for the Company as are customarily associated with such position or as may be assigned to Employee, from time to time, by the Board of Directors of the Company (the “Board”). Employee shall report to the Board and/or the Chairman of the Board (if separate from the Employee). In addition to serving as the Chief Executive Officer of the Company, Employee agrees to serve without additional compensation, if elected or appointed thereto, in one or more offices or as a member of the board of directors or board of managers of any of the Company’s Subsidiaries and/or affiliates, and will be nominated to the Board on or shortly following the Effective Date.
(b) Employee will devote substantially all of Employee’s business time, and Employee will devote his best efforts, to the performance of Employee’s duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services either directly or indirectly, without the prior written consent of the Board. Notwithstanding the foregoing, during the Employment Term, it shall not be a violation of this Agreement for Employee to (i) serve on the Board of the Associated Press, (ii) serve on other corporate, civic or charitable boards or committees, provided that service on any such corporate board or committee shall be subject to the prior approval of the Board, (iii) deliver lectures or fulfill speaking engagements, and (iv) manage personal investments, in each case, so long as such activities do not materially interfere with the performance of Employee’s responsibilities hereunder.
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(c) Employee shall perform his duties and responsibilities primarily from the Company’s offices located in Chelsmford, Massachusetts, and will be required to work from such location at least three-to-four days per week, or on such more frequent basis as may be requested by the Board. The Employee understands and agrees that he may be required to travel in connection with the performance of his duties.
3. Base Salary. During Employee’s employment hereunder, the Company shall pay Employee a base salary (“Base Salary”) at the annual rate of $450,000, payable in regular installments in accordance with the Company’s payment practices as in effect from time to time. The Company will consider increases in Base Salary from time to time in a manner consistent with the consideration given to other similarly-situated executives, in comparison to companies of a similar size and financial stature.
4. Bonuses.
(a) With respect to each calendar year commencing during the Employment Term, Employee will be eligible to earn a bonus with a target annual bonus opportunity equal to 100% of Base Salary (with a maximum annual bonus opportunity equal to 125% of Base Salary), with the amount earned to be based on achievement of the financial and/or individual performance goals and factors as determined by the Board or a committee thereof (the “Committee”) for the appliable year (the “Annual Bonus”). For calendar year 2023, any Annual Bonus will be awarded based on the discretion of the Board or the Committee, and will be pro-rated to reflect the number of days remaining from the Effective Date through December 31, 2023 as a portion of the full 2023 calendar year. Any Annual Bonus shall be payable at the same time or time(s) that annual bonuses are paid to senior executives of the Company generally, but in no event later than March 15th of the calendar year following the calendar year to which such Annual Bonus relates, subject to Employee remaining employed by the Company on the date such Annual Bonus is paid.
(b) Employee will receive a cash sign on bonus of $50,000 (the “Sign-on Bonus”), less applicable withholdings, in consideration for his commencement of employment with the Company, to be paid in his first regularly-scheduled paycheck following the Effective Date. If an Employee Termination shall result from Employee’s employment being terminated by the Company for Cause or from Employee’s resignation without Good Reason, in each case, prior to the first anniversary of the Effective Date, Employee will be required to repay to the Company the After-Tax Value of the Sign-on Bonus to the Company within 30 days following the date of such Employee Termination.
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5. Equity.
(a) During the Employment Term, Employee will be eligible to participate in the Company’s long-term equity incentive program(s), as determined by the Board or the Committee. On or shortly following the Effective Date, Employee shall receive an initial equity award of stock options to purchase 240,000 shares of common stock of the Company in accordance with the Non-Qualified Stock Option Award Agreement attached hereto as Exhibit B (the “Options Agreement”).
6. Benefits. Employee shall be eligible during the Employment Term to participate in such employee benefit plans and programs that are maintained from time to time for senior executives of the Company, to the extent that Employee (and Employee’s spouse and dependents, as the case may be) meet(s) the applicable eligibility requirements. The Company does not promise the adoption or continuance of any particular plan or program during the Employment Term, and Employee’s (and Employee’s spouse’s and dependents’) participation in any such plan or program shall be subject to the provisions, rules, regulations and laws applicable thereto. Employee will be entitled to no fewer than four (4) weeks’ vacation in accordance with the Company’s vacation policy as in effect from time to time.
7. Expense Reimbursement. Employee shall be entitled to reimbursement for ordinary and reasonable out of pocket documented business expenses which Employee incurs in connection with performing Employee’s duties under this Agreement, including travel, lodging and meal expenses in accordance with the Company’s travel and expense reimbursement policies applicable to other senior Employees of the Company as in effect from time to time and approved by the Board, provided, however, (x) Employee must comply fully with such travel and expense reimbursement policies and (y) the Company will not reimburse executive officers for mileage for use of personal vehicles.
8. Termination of Employment. Employee’s employment with the Company:
(a) shall terminate upon Employee’s death or Employee becoming Permanently Disabled (as determined pursuant to Section 9(d) hereof), and may be terminated at any time by Employee for any reason (or no reason), including, without limitation, for Good Reason, or by the Company, for any reason (or no reason), including, without limitation, without Cause. Any termination of Employee’s employment pursuant to the preceding sentence is referred to herein as an “Employee Termination”;
(b) shall terminate on the following date: (i) if terminated as a result of Employee’s resignation, with or without Good Reason, on the date specified in a written notice delivered by Employee to the Company, the effective date of such resignation to be no less than thirty (30) days from the date such notice is delivered to the Company, which notice period may be waived by the Company in its sole discretion; (ii) if terminated as a result of death, on the date of death; (iii) if terminated as a result of Employee becoming Permanently Disabled, on the date as of which Employee is determined to be Permanently Disabled as defined in Section 9(d); and (iv) if terminated by the Company, on the date specified in a written notice delivered by the Company to Employee.
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9. Definitions. As used in this Agreement:
(a) “After-Tax Value” means the aggregate amount of the Sign-on Bonus net of all taxes Employee is required to pay in respect of such amount and determined taking into account any tax benefits that are available to Employee in respect of such repayment. The Company shall determine in good faith the After-Tax Value, which determination shall be final, conclusive, and binding.
(b) “Cause” shall mean:
(i) Employee’s violation of any material written policy of the Company, a copy of which has been provided to the Employee at least 30 days in advance of any claimed violation;
(ii) Employee’s failure to (x) obey the lawful orders of the Board, (y) timely respond to Board inquiries, or (z) provide the Board with timely updates regarding material Company business;
(iii) Employee’s gross negligence in the performance of, or willful disregard of, Employee’s obligations to the Company;
(iv) the breach of any of Employee’s obligations under this Agreement, restrictive covenants agreement (if any), or any other material agreement entered into with the Company;
(v) the commission of an act by Employee constituting financial dishonesty against the Company;
(vi) Employee’s indictment or other criminal charge for, or conviction of or entering a plea of guilty or nolo contendere to, a crime constituting a felony; or
(vii) the commission of any act of dishonesty or moral turpitude by Employee which is, or is reasonably likely to be, detrimental to the Company.
For the purposes of this definition, “Company” shall include any affiliate or Subsidiary of the Company and any entity with whom Employee holds a position at the request of the Company. The Company may terminate Employee’s employment for Cause under this Agreement following issuance to Employee of written notice of the circumstances the Company believes constitute Cause; provided, that if the basis for termination is curable, as determined by the Board, then Employee shall have thirty (30) days after receipt of such written notice to cure such basis, and if not cured, the Company may terminate Employee’s employment for Cause. If, within thirty (30) days subsequent to Employee’s termination of employment for any reason other than by the Company for Cause, the Company determines that Employee’s employment could have been terminated for Cause, Employee’s employment will be deemed to have been terminated for Cause for all purposes, and Employee will be required to disgorge to the Company all amounts received pursuant to this Agreement or otherwise on account of such termination that would not have been payable to Employee had such termination been by the Company for Cause.
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(c) “Good Reason” shall mean, without Employee’s consent,
(i) a material diminution in Employee’s duties or position;
(ii) Employee’s Base Salary is materially reduced, other than in connection with a region-wide or Company-wide pay cut/furlough program that equally affects other members of senior management;
(iii) the Company’s material breach of its obligations under this Agreement; or
(iv) the Company requires that Employee relocate to an office location that would increase Employee’s commute by more than 50 miles from the office location set forth in Section 2(c).
provided, however, that no termination by Employee for Good Reason for any of the foregoing reasons shall be effective unless and until (A) Employee has given the Company written notice of the reasons for the termination for Good Reason no more than thirty (30) calendar days following the initial existence of the condition(s) that constitute(s) Good Reason, and has given the Company at least thirty (30) calendar days in which to remedy such condition(s), (B) the Company has failed to remedy the same during the applicable cure period, and (C) Employee actually terminates his employment within thirty (30) calendar days after the expiration of the cure period without remedy of the Good Reason by the Company.
(d) “Permanently Disabled” shall mean (i) Employee becomes eligible to receive benefits under any long-term disability plan paid for the Company on behalf of Employee or (ii) if by reason of injury or illness (including mental illness) Employee shall be unable to perform the essential functions of his position for ninety (90) consecutive days or one hundred twenty (120) days, whether or not consecutive, in a twelve (12) month period.
(e) “Person” shall mean an individual, an entity, a partnership, a corporation, a limited liability company or limited partnership, an association, a trust, a joint stock company, a trust, a joint venture, an unincorporated organization, or the United States of America or any other nation, any state or other political subdivision thereof, any entity exercising Employee, legislative, judicial, regulatory or administrative functions of government.
(f) “Subsidiary” shall mean with respect to any Person, any corporation, partnership, limited liability company, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For the purposes hereof, a Person or Persons shall be deemed to
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have a majority ownership interest in a partnership, limited liability company, association or other business entity if such Person or Persons shall be allocated a majority of partnership, limited liability company, association or other business entity gains or losses or shall be or control or have the right to appoint, as the case may be, the managing director, manager, board of advisors, of a company or other governing body of such partnership, limited liability company, association or other business entity by means of ownership interest, agreement or otherwise.
10. Payments by Virtue of Termination of Employment. Upon the occurrence of an Employee Termination:
(a) If, during the Employment Term, an Employee Termination shall result from Employee’s employment being terminated by the Company without Cause (not including as a result of Employee becoming Permanently Disabled) or from Employee’s resignation for Good Reason, Employee shall be entitled to:
(i) Employee’s unpaid and accrued Base Salary accrued to the effective date of such termination, payable in accordance with the Company’s regular payroll practices as in effect from time to time; plus
(ii) payment for accrued and unused vacation days accrued to the effective date of such termination (to the extent required by any applicable Company policy or to the extent required by appliable law) payable within 30 days following the effective date of such termination; plus
(iii) any unpaid expense reimbursement Employee is entitled to pursuant to Section 7 of this Agreement; plus
(iv) any earned but unpaid annual bonus payable in respect of the calendar year prior to the calendar year in which the Employee Termination occurs (the “Earned Annual Bonus”); plus
(v) any vested payment or benefit arising from Employee’s participation in, or benefits under, any qualified employee benefit plans, programs, or arrangements under Section 6 (other than severance plans, programs, or arrangements), which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs, or arrangements (the amounts provided for under Subsections 10(a)(i), (ii), (iii), (iv) and (v), together the “Accrued Amounts”); plus, subject to Section 11(a):
(vi) as severance pay (“Severance Pay”), Employee will continue to receive his then-current Base Salary for a period of eighteen (18) months, payable in equal installments in accordance with the Company’s regular payroll practices as in effect from time to time; provided, that the first installment of the Severance Pay shall be made on the sixtieth (60th) day after the effective date of Employee’s termination and shall include payment of any amounts that would otherwise be due prior thereto; plus
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(vii) the Company will provide continued coverage under its health insurance plans (“Health Benefits Continuation”) to Employee for a period of twelve (12) months (or, if earlier, until Employee becomes eligible to receive health insurance coverage through a subsequent employer), subject to Employee continuing to make premium payments at the current applicable employee rate for such coverage; provided, however, that if the Health Benefits Continuation is not permitted to be provided under the terms of the Company’s health insurance plans (as in effect from time to time following the date of Employee Termination), and applicable law, the Company may provide the Health Benefits Continuation pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 by paying an amount equal to the employer’s portion of premium contributions for active employees, with Employee paying the premium payments at the current applicable employee rate for such coverage; provided, further, that in any event the coverage provided pursuant to this Section 10(a)(vi) shall be counted towards the Company’s satisfaction of its COBRA obligations to Employee (clauses (v) and (vi) hereof, collectively, the “Severance Package”);
(b) if an Employee Termination shall result from Employee’s resignation (other than for Good Reason), Employee’s death or Permanent Disability or Employee’s discharge for Cause, Employee shall be entitled only to the Accrued Amounts; provided that if the Employee Termination shall result from Employee’s discharge for Cause, Employee will not be entitled to receive any Earned Annual Bonus.
11. Release of Claims.
(a) All payments and benefits due to Employee under Sections 10(a) above, except for the Accrued Amounts, shall be expressly conditioned on, and shall be payable or continued only if, Employee (or, to the extent applicable, Employee’s personal representative) delivers to the Company and does not revoke within the applicable revocation period a customary separation agreement that contains a general release of all claims. Such agreement and general release shall be executed and delivered to the Company in accordance with Section 17(a) within the time period specified therein (and in no event later than the 53rd day following the termination date). Failure to timely execute and return such release, or the revocation thereof, shall be a waiver of Employee’s right, if any, to the Severance Package. In addition, the Company’s obligation in respect of the Severance Package, shall be expressly conditioned upon Employee’s continuing compliance with the obligations under Sections 12, 13, and 15 of this Agreement and the Restrictive Agreement (as defined below).
(b) Employee hereby acknowledges and agrees that, other than the payments described in Section 10 and any payments required by the Restrictive Agreement, upon the effective date of any Employee Termination, Employee shall not be entitled to any other severance or payments of any kind under any Company benefit plan, severance policy generally available to the Company’s employees or otherwise and further, that the treatment of any equity awards granted by the Company to Employee shall be governed by the terms thereof.
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12. Resignation as an Officer and Director. Upon the effective date of any Employee Termination, Employee shall be deemed to have resigned, to the extent applicable, as an officer of the Company, as a member of the board of directors of the Company, or similar body of any Subsidiary of the Company, and as a fiduciary of any Company benefit plan. On or immediately following the effective date of any such Employee Termination, Employee shall confirm the foregoing by submitting to the Company written confirmation of Employee’s resignation(s).
13. Return of Company Property. Within (a) ten (10) days following the effective date of an Employee Termination for any reason other than death or Permanent Disability, or (b) a reasonable period of time following an Employee Termination due to death or Permanent Disability, Employee or Employee’s personal representative shall return all property of the Company in Employee’s possession, custody or control, including but not limited to all Company-owned computer equipment (hardware and software), telephones, facsimile machines, cell phones, tablet computer and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any documentation or information (however stored) relating to the business of the Company and its Subsidiaries and affiliates, the Company’s customers and clients or any prospective customers and clients. Anything to the contrary notwithstanding, Employee shall be entitled to retain (i) personal papers and other materials of a personal nature; provided, that such papers or materials do not include any confidential information), (ii) information showing Employee’s compensation or relating to reimbursement of expenses, and (iii) copies of plans, programs and agreements relating to Employee’s employment, or termination thereof, with the Company which Employee received in his capacity as a participant.
14. Restrictive Covenant Agreement. As a condition to Employee’s entry into this Agreement and his commencement of employment with the Company, Employee shall have executed to the Restrictive Covenant Agreement, in the form attached hereto as Exhibit A (the “Restrictive Agreement”) on the date he signs this Agreement, which, for the avoidance of doubt, may be revised as required by law to ensure enforceability.
15. Cooperation. From and after an Employee Termination, Employee shall provide Employee’s reasonable cooperation in connection with any legal action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Employee’s employment hereunder, provided, that the Company shall reimburse Employee for Employee’s reasonable costs and expenses incurred in connection therewith, and such cooperation shall not unreasonably burden Employee or unreasonably interfere with any subsequent employment that Employee may undertake.
16. Whistleblower. Nothing in this Agreement or the Restrictive Agreement will preclude, prohibit or restrict Employee from (a) communicating with, any federal, state or local administrative or regulatory agency or authority, including but not limited to the Securities and Exchange Commission (the “SEC”); (b) participating or cooperating in any investigation conducted by any governmental agency or authority; or (c) filing a charge of discrimination with the United States Equal Employment Opportunity Commission or any other federal state or local administrative agency or regulatory authority. Nothing in this Agreement, or any other agreement between the parties, prohibits or is intended in any manner to prohibit, Employee from (A) reporting a possible violation of federal or other applicable law or regulation to any governmental
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agency or entity, including but not limited to the Department of Justice, the SEC, the U.S. Congress, and any governmental agency Inspector General, or (B) making other disclosures that are protected under whistleblower provisions of federal law or regulation. This Agreement does not limit Employee’s right to receive an award (including, without limitation, a monetary reward) for information provided to the SEC. Employee does not need the prior authorization of anyone at the Company to make any such reports or disclosures, and Employee is not required to notify the Company that Employee has made such reports or disclosures. Nothing in this Agreement or any other agreement or policy of the Company is intended to interfere with or restrain the immunity provided under 18 U.S.C. §1833(b). Employee cannot be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (i) (A) in confidence to federal, state or local government officials, directly or indirectly, or to an attorney, and (B) for the purpose of reporting or investigating a suspected violation of law; (ii) in a complaint or other document filed in a lawsuit or other proceeding, if filed under seal; or (iii) in connection with a lawsuit alleging retaliation for reporting a suspected violation of law, if filed under seal and does not disclose the trade secret, except pursuant to a court order. The foregoing provisions regarding protected disclosures are intended to comply with all applicable laws. If any laws are adopted, amended or repealed after the execution of this Agreement, this Section 16 shall be deemed to be amended to reflect the same.
17. Miscellaneous.
(a) Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (i) when delivered in person, (ii) upon receipt when delivered via electronic mail (i.e., email), (ii) upon receipt when mailed by first class certified or registered mail, postage prepaid, (iii) one (1) business day after being sent by overnight courier, or (iv) upon confirmation of receipt by facsimile, addressed to the parties at their respective addresses specified below:
if to Company, to:
Robert Wyman Corporate
Counsel Harte Hanks, Inc.
2 Executive Drive
Chelmsford, MA 01824
with a copy (which shall not constitute notice) to:
Manan (Mike) Shah
Milbank LLP
55 Hudson Yards
New York, NY 10001-2163
if to Employee, to Employee’s most recent address on file with the Company
with a copy (which shall not constitute notice) to:
Mark W. Batten
Proskauer Rose LLP
One International Place
Boston, MA 02110
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Any party to this Agreement may change his or its address for notices by notice given pursuant to this Section 17(a).
(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, representatives, executors, administrators, distributees, devisees, legatees, successors and, solely with respect to the Company, its assigns, including without limitation any successor in interest to the Company who acquires all or substantially all of the Company’s assets.
(c) In the event of any Employee Termination, Employee shall be under no obligation to seek other employment or otherwise mitigate the obligations of the Company under this Agreement and no such substitute employment or mitigation shall affect Employee’s right to receive severance and other benefits hereunder.
(d) The Company’s obligation to pay Employee the amounts, and to make the arrangements, provided hereunder shall be subject to set off or recoupment of any amounts loaned or advanced to Employee by the Company or any Subsidiary of the Company that are supported by reasonable documentation; provided, that any such set off or recoupment shall, in each case, be applied to the next dollars due to Employee from the Company during the applicable period.
(e) Except as expressly set forth herein, this Agreement, together with the Restrictive Agreement and the Options Agreement, contains the entire agreement between the parties with respect to the subject matter hereof, and this Agreement supersedes all other agreements and drafts hereof, oral or written, between the parties hereto with respect to the subject matter hereof. No promises, statements, understandings, representations or warranties of any kind, whether oral or in writing, express or implied, have been made to Employee by any Person to induce Employee to enter into this Agreement other than the express terms set forth herein, and Employee is not relying upon any promises, statements, understandings, representations, or warranties other than those expressly set forth in this Agreement.
(f) No change or modification of this Agreement shall be valid unless the same shall be in writing and signed by all of the parties hereto. No waiver of any provisions of this Agreement shall be valid unless in writing and signed by the party charged with such waiver. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver, unless so provided in the waiver.
(g) If any provision of this Agreement (or portion thereof) shall, for any reason, be held invalid or unenforceable, such provision (or portion thereof) shall be ineffective only to the extent of such invalidity or unenforceability, and the remaining provisions of this Agreement (or portions thereof) shall nevertheless be valid, enforceable and of full force and effect. If any court of competent jurisdiction or arbitrator finds that any provision contained in this Agreement is invalid or unenforceable, then the parties hereto agree that such invalid or unenforceable provision shall be deemed modified so that it shall be valid and enforceable to the greatest extent permissible under law, and if such provision cannot be modified so as to make it enforceable or valid, such finding shall not affect the enforceability or validity of any of the other provisions contained herein.
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(h) This Agreement may be executed in identical counterparts, both of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(i) The section or paragraph headings or titles herein are for convenience of reference only and shall not be deemed a part of this Agreement. The parties have jointly participated in the drafting of this Agreement, and the rule of construction that a contract shall be construed against the drafter shall not be applied. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(j) Notwithstanding anything to the contrary in this Agreement:
(i) The parties agree that this Agreement shall be interpreted to comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended or replaced, and the regulations and authoritative guidance promulgated thereunder to the extent applicable (collectively “Code Section 409A”), and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A. In no event whatsoever will the Company be liable for any additional tax, interest or penalties that may be imposed on Employee under Code Section 409A or any damages for failing to comply with Code Section 409A.
(ii) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits considered “nonqualified deferred compensation” under Code Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” If Employee is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered nonqualified deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall be made or provided
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at the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of Employee, and (B) the date of Employee’s death (either such period, the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 17(j)(ii) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed on the first business day following the expiration of the Delay Period to Employee in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.
(iii) With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (A) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (B) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits, to be provided in any other taxable year, provided, that this clause (B) shall not be violated with regard to expenses reimbursed under any arrangement covered by Internal Revenue Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect and (C) such payments shall be made on or before the last day of Employee’s taxable year following the taxable year in which the expense occurred.
(iv) For purposes of Code Section 409A, Employee’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.
(k) This Agreement and any and all claims arising out of, under, pursuant to, or in any way related to this Agreement, including but not limited to any and all claims (whether sounding in contract or tort) as to this Agreement’s scope, validity, enforcement, interpretation, construction, and effect shall be governed by the laws of the State of New York (without regard to any conflict of laws rule which might result in the application of the laws of any other jurisdiction).
(l) The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
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(m) Notwithstanding anything that may be expressed or implied in this Agreement, Employee covenants, agrees and acknowledges that this Agreement may only be enforced against the Company. All claims or causes of action (whether in contract, tort or otherwise) arising out of or relating to this Agreement (including without limitation the negotiation, execution or performance of this Agreement and any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement) may be made only against the Company, and no one other than the Company (including without limitation any person negotiating or executing this Agreement on behalf of the Company) shall have any liability or obligation with respect to same.
(n) Notwithstanding anything in this Agreement to the contrary, if any payment or distribution Employee would receive pursuant to this Agreement or otherwise (“Payments”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payments shall be reduced to the extent necessary for the Payments to equal, in the aggregate, the Reduced Amount. The “Reduced Amount” shall be either (1) the largest portion of the Payments that would result in no Excise Tax on the Payments (after reduction), or (2) the total Payments, whichever amount (i.e., the amount determined by clause (1) or by clause (2)), after taking into account all applicable federal, state, and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Employee’s receipt, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payments may be subject to the Excise Tax. The accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the change in control shall perform the foregoing calculation. The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder. Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and Employee.
(o) Employee represents, warrants and covenants that (i) that Employee has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on his own judgment, (ii) Employee has the full right, authority and capacity to enter into this Agreement and perform Employee’s obligations hereunder, (iii) Employee is not bound by any agreement that conflicts with or prevents or restricts the full performance of Employee’s duties and obligations to the Company hereunder during or after the Employment Term, and (iv) the execution and delivery of this Agreement shall not result in any breach or violation of, or a default under, any existing obligation, commitment or agreement to which Employee is subject. Employee hereby represents that his employment with the Company will not violate any agreements or obligations with any former employer, including any non-compete or non-solicitation agreement. The Company reserves the right to terminate Employee’s employment for Cause if the Company determines that the representations and warranties in this section are false.
(p) The covenants and obligations of the Company under Sections 7, 10 (to the extent the Severance Package is payable), and 17 hereof and the covenants and obligations of Employee under Sections 12, 13, 15, and 17, hereof and in the Restrictive Agreement (as set forth therein), shall continue and survive any Employee Termination or Employee’s ceasing to be an officer or employee of the Company or any termination of this Agreement.
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18. Legal Fees. The Company will reimburse Employee’s legal expenses incurred in connection with the negotiation of this Agreement in an amount not to exceed $15,000.
[signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written, to be effective as of the Effective Date.
| Harte Hanks, Inc. | ||
| By: | /s/ John H. Griffin | |
| By: John H. Griffin, Jr. | ||
| Title: Chairman of the Board | ||
| Employee | ||
| /s/ Kirk Davis | ||
| Kirk Davis | ||
Exhibit A
Attached
Exhibit B
Attached
Exhibit 99.1
Industry-Veteran Kirk Davis Appointed New CEO at Harte Hanks
Davis brings a track record of results-driven leadership at Metro Corp. and GateHouse Media as Harte Hanks moves into its next growth phase.
CHELMSFORD—Harte Hanks Inc. (HHS) announced today that media-industry veteran Kirk Davis has been appointed as CEO, effective June 19, 2023. Mr. Davis has also been nominated as a member of the board of directors. Mr. Davis most recently served as CEO of legacy publishing company Metro Corp. and previously served as CEO of GateHouse Media, which was the second-largest regional publishing company in the United States before merging with Gannett in 2019.
He succeeds Brian Linscott, who has served as CEO of Harte Hanks since June of 2021 and previously served as Chief Operating Officer.
“We are grateful to Brian for his service and for his efforts in navigating the challenges that our business has faced in recent years, and we thank him for his many contributions,” said Jack Griffin, Chairman of the Board. “Looking forward, we are very enthusiastic about the foundation we have in place and the opportunities ahead of us. Harte Hanks is a 100-year-old company, and we’re evolving to drive improved results for our shareholders and customers for the next 100 years. Kirk Davis has driven highly successful growth strategy and operational change initiatives, and he’s highly respected by industry peers. He’s the right leader at the right time to move Harte Hanks forward.”
“Harte Hanks has national and international relevance with an ability to reach a wide range of customers, giving it real value in today’s market. As a Massachusetts resident, I’m proud that we’re headquartered in the Bay State and honored to be taking the reins,” stated Mr. Davis.
Mr. Davis has decades of media and marketing expertise, having served as CEO of prominent companies such as Metro Corp., which publishes Boston and Philadelphia magazines, and GateHouse Media, a leading multimedia company that served audiences of nearly ten million per week in states across the U.S.
“The opportunity to join a company with a 100-year life span, that has continued to evolve to meet the shifting needs of its many customers, is remarkable,” said Mr. Davis. “Today, Harte Hanks is a global company delivering customer care, analytics, strategy, technology, content, logistics and fulfilment services. I’ve dedicated my career to building value and growth in similar multichannel enterprises, and I’m excited to be part of this legacy company’s next chapter. I’m looking forward to collaborating with the talented management team and employees who have helped solidify Harte Hanks as an industry leader. Together, I think we can continue delivering world-class services, achieve bold new goals, and drive profitable growth.”
Inducement Award under NASDAQ Exemption
In connection with Mr. Davis’ appointment as CEO, the independent Compensation Committee of the Board of Directors approved an award to Mr. Davis consisting of 240,000 stock options to purchase shares of common stock of Harte Hanks, as a material inducement to Mr. Davis commencing employment with Harte Hanks. This stock option award is intended to qualify as an employee inducement award in accordance with the inducement exemption provided for under NASDAQ Listing Rule 5635(c)(4). The stock options will have an exercise price equal to the closing price of a share of Harte Hanks common stock on the grant date of June 20, 2023, and will vest in three equal installments on each of the first three anniversaries of June 19, 2023, subject to Mr. Davis’ continued employment. Any unvested stock options will be immediately vested if Mr. Davis resigns for “good reason” or is terminated without “cause,” in each case, on or within 12 months following a change in control of Harte Hanks.
About Harte Hanks
Harte Hanks (Nasdaq: HHS) is a leading global customer experience company whose mission is to partner with clients to provide them with CX strategy, data-driven analytics and actionable insights combined with seamless program execution to better understand, attract, and engage their customers.
Using its unparalleled resources and award-winning talent in the areas of Customer Care, Fulfillment and Logistics, and Marketing Services, Harte Hanks has a proven track record of driving results for some of the world’s premier brands including Bank of America, GlaxoSmithKline, Unilever, Pfizer, Warner Bros Discovery, Volvo, Ford, FedEx, Midea, Sony, and IBM among others. Headquartered in Chelmsford, Massachusetts, Harte Hanks has over 2,500 employees in offices across the Americas, Europe and Asia Pacific. For more information visit hartehanks.com
For media inquiries or further information please contact: Jim Eisenberg at jeisenberg@preti.com
Document and Entity Information |
Jun. 16, 2023 |
|---|---|
| Cover [Abstract] | |
| Entity Registrant Name | HARTE HANKS INC |
| Amendment Flag | false |
| Entity Central Index Key | 0000045919 |
| Document Type | 8-K |
| Document Period End Date | Jun. 16, 2023 |
| Entity Incorporation State Country Code | DE |
| Entity File Number | 1-7120 |
| Entity Tax Identification Number | 74-1677284 |
| Entity Address, Address Line One | 1 Executive Drive |
| Entity Address, Address Line Two | Suite 303 |
| Entity Address, City or Town | Chelmsford |
| Entity Address, State or Province | MA |
| Entity Address, Postal Zip Code | 01824 |
| City Area Code | (210) |
| Local Phone Number | 829-9000 |
| Written Communications | false |
| Soliciting Material | false |
| Pre Commencement Tender Offer | false |
| Pre Commencement Issuer Tender Offer | false |
| Security 12b Title | Common Stock |
| Trading Symbol | HHS |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | false |