HARTE HANKS INC: conclusion of a material definitive agreement, termination of a material definitive agreement, creation of a direct financial obligation or obligation under an off-balance sheet arrangement of a holder, financial statements and supporting documents (form 8-K)


Item 1.01 Conclusion of a Material Definitive Agreement.

At December 21, 2021, Harte Hanks, Inc. (the “Company”) has entered into a three-year contract, $ 25,000,000 revolving asset-backed credit facility (the “New Credit Facility”) with Texas Capital Bank (“TCB”) under an asset-backed revolving credit agreement, dated December 21, 2021, by and among the Company, the subsidiary guarantors who are parties to it (each, a “Guarantor” and together the “Guarantors” and jointly with the Company, the “Parties to the loan”) and TCB (the “ABL Contract”). The New Credit Facility is guaranteed by substantially all of the assets of the Company and the Guarantors under a Pledge and Guarantee Agreement dated December 21, 2021, between the Company, TCB and the other licensors who are parties thereto (the “Security Agreement”).

The new credit facility provides for loans up to the lesser of (a) $ 25,000,000, and (b) the amount available for a “borrowing base” calculated primarily by reference to the Company’s cash and cash equivalents and accounts receivable. The new credit facility allows the Company to use up to $ 3,000,000 of its borrowing capacity to issue letters of credit.

Borrowings under the New Credit Facility bear interest at a floating rate equal to the rate of the Bloomberg Short-Term Bank Yield Index plus a margin of 2.25% per annum. The outstanding amounts advanced under the New Credit Facility are due and payable in full on December 21, 2024.

The Company may voluntarily prepay all or part of the loans granted under the New Credit Facility at any time without premium or penalty. The New Credit Facility is subject to mandatory prepayments (i) from the net proceeds of asset dispositions not otherwise authorized under the ABL Agreement; (ii) if the outstanding principal balance under the New Credit Facility plus the aggregate face amount of all letters of credit outstanding exceeds the Borrowing Base, the Company shall immediately prepay the full amount of such excess. ; (iii) an amount equal to 50% of the net proceeds from the issuance of share capital (subject to customary exceptions); or (iv) an amount equal to the net proceeds of any debt issuance not otherwise authorized under the ABL Agreement.

The ABL Agreement contains certain restrictive clauses limiting the ability of the Company and its subsidiaries to create, contract, assume or become liable for indebtedness; make certain investments; pay dividends or buy back shares of the Company; create, contract or assume privileges? mergers or acquisitions consumed? liquidate, dissolve, suspend or cease its activities? or change accounting or tax reporting methods (other than those required by GAAP).

The ABL Agreement contains certain representations and warranties, affirmative covenants and events of default, including defaults on payments, breach of representations and warranties, defaults of commitments, certain events under ERISA, the cross acceleration to other debts, material judgments and a change of control. If an event of default arises, TCB will be entitled to take various actions, including accelerating all amounts due under the New Credit Facility and all actions that may be taken by a secured creditor.

In connection with the conclusion of the New Credit Facility, the Company and TCB terminated the Company’s existing revolving credit facility with TCB (the “Old Credit Facility”). Prior to the termination of the old credit facility, the Company used the cash on hand to repay $ 8.1 million outstanding under the old credit facility and the balance $ 5 million loans outstanding under the old credit facility were deemed to be outstanding under the new credit facility. Unlike the old credit facility, TCB did not require that the new credit facility be secured by HHS Warranty, LLC, an entity formed to support the Company’s credit by certain members of the Shelton family (descendants of one of the Company’s founders).

The foregoing description of the New Credit Facility is submitted and qualified in its entirety by reference to the full text of the ABL Agreement and the Pledge and Guarantee Agreement which are filed as Exhibit 10.1 and Exhibit 10.2, respectively. , hereof.

Section 1.02 Termination of a Material Definitive Agreement.

The information in Item 1.01 relating to the Old Credit Facility is incorporated in this Item 1.02 by reference.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information in Item 1.01 concerning the New Credit Facility and the ABL Agreement is incorporated in Item 2.03 by reference.

Item 9.01 Financial statements and supporting documents.

(d) Exhibitions. The following documents are filed or provided herewith:

Exhibit Number   Exhibit Title
  10.1             Loan Agreement, dated December 21, 2021, among Harte Hanks,
                 Inc. the subsidiary guarantors party thereto and Texas Capital
                 Bank, National Association.
  10.2             Security Agreement, dated December 21, 2021, between Harte
                 Hanks, Inc. and Texas Capital Bank, National Association.
  99.1             December 21, 2021 Press Release of Harte Hanks, Inc.*
104              Cover Page Interactive Data File (embedded within the Inline
                 XBRL document)






* Furnished herewith


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