FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of January
9, 2018, is between HARTE HANKS, INC., a Delaware corporation (“Borrower”), and
TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, a national banking association
(“Lender”).
RECITALS:
A.Borrower and Lender entered into that certain Credit Agreement dated as of
April 17, 2017 (the “Agreement”).
B.    Pursuant to the Agreement, Pledgor executed (a) that certain Note Purchase
Agreement dated as of April 17, 2017 (the “Note Purchase Agreement”) pursuant to
which Pledgor agreed to purchase the Revolving Credit Note from Lender upon the
circumstances described therein, and that certain Pledge Agreement dated as of
April 17, 2017 (the “Pledge Agreement”) pursuant to which Pledgor granted to
Lender a security interest in the collateral therein described.
C.    Borrower and Lender now desire to amend the Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.

Definitions
Section 1.1    Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the meanings given to such terms
in the Agreement, as amended hereby.
ARTICLE II.    

Amendments
Section 2.1    Amendment to Certain Definitions. Effective as of the date
hereof, the definition of each of the following terms contained in Section 1.1
of the Agreement is amended to read in its respective entirety as follows:
“Borrowing Base” means, as of any date, an amount equal to the sum of (a) ninety
percent (90%) of the value of Investment Grade Bonds held in the Custodian
Account, plus (b) one hundred percent (100%) of the value of cash in the
Custodian Account.
“Commitment” means the obligation of Lender to make Revolving Credit Advances
pursuant to Section 2.1(a) in an aggregate principal amount at any time
outstanding up to but not exceeding $22,000,000.00, subject, however, to
termination pursuant to Section 10.2.
“Debt” means, of any Person as of any date of determination (without
duplication): (a) all obligations of such Person for borrowed money; (b) all
obligations of such Person evidenced by bonds, notes, debentures, or other
similar instruments; (c) all obligations of such Person to pay the deferred
purchase price of Property or services, except trade accounts payable of such
Person arising in the ordinary course of business that are not past due by more
than ninety (90) days; (d) all Capitalized Lease Obligations of such Person; (e)
all Debt or other obligations of others Guaranteed by such Person; (f) all
obligations secured by a Lien existing on Property owned by such Person, whether
or not the obligations secured thereby have been assumed by such Person or are
non-recourse to the credit of such Person; (g) any other obligation for borrowed
money or other financial accommodations which in accordance with GAAP would be
shown as a liability on the balance sheet of such Person; (h) any repurchase
obligation or liability of a Person with respect to accounts, chattel paper or
notes receivable sold by such Person; (i) any liability under a sale and
leaseback transaction that is not a Capitalized Lease Obligation; (j) any
obligation under any so-called “synthetic leases;” (k) any obligation arising
with respect to any other transaction that is the functional equivalent of
borrowing but which does not constitute a liability on the balance sheets of a
Person; (l) all payment and reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers’ acceptances,
surety or other bonds and similar instruments; and (m) all liabilities of such
Person in respect of unfunded vested benefits under any Plan; provided, however,
“Debt” shall expressly exclude operating lease liabilities, whether such
liabilities are incurred before or after the effective date of Accounting
Standards Update (ASU) 2016-02.
“Investment Grade Bonds” means securities (as defined in Section 8.102 of the
UCC) that (a) are listed and traded on the New York Stock Exchange, the American
Stock Exchange or the NASDAQ – National Market System, (b) constitute debt, as
opposed to equity, (c) have a minimum investment rating of at least A- (or
equivalent) and an average investment rating of AA – (or equivalent) by Standard
& Poor’s, Moody’s Investors Services or Fitch Ratings, (d) have durations to
maturity of less than five (5) years and (e) are otherwise acceptable to Lender
in its reasonable discretion.
“Termination Date” means 11:00 A.M., Dallas, Texas time on April 17, 2020, or
such earlier date on which the Commitment terminates as provided in this
Agreement.
Section 2.2    Addition of Section 2.6. Effective as of the date hereof, Section
2.6 shall be added to the Agreement and shall read in its entirety as follows:
“Section 2.6.    Monitoring Fee. Borrower agrees to pay to Lender a monitoring
fee in the amount of $2,500.00 per calendar quarter in the event that Borrower
utilizes more than seventy percent (70%) of the Commitment at any time during
such calendar quarter, which in turn triggers weekly monitoring of the Borrowing
Base by Lender. For the purpose of determining whether a monitoring fee is
payable hereunder, the Commitment shall be deemed utilized by the amount of all
outstanding Advances and Letter of Credit Liabilities. Accrued monitoring fees
shall be payable quarterly in arrears on the last day of each April, July,
October, and January during the term of this Agreement and on the Termination
Date (if applicable). Once payment of the monitoring fee is accessed for any
quarter, such monitoring fee is fully earned and non-refundable. The weekly
monitoring by Lender will remain in effect until the Commitment utilization
falls to or below and stays at or below, seventy percent (70%) for ten (10)
consecutive Business Days.
Section 2.3    Amendment to Exhibits. Effective as of the date hereof, (i)
Exhibit “A” (Revolving Credit Note) to the Agreement is amended to conform in
its entirety to Annex “A” to this Amendment.
ARTICLE III.    

Conditions Precedent
Section 3.1    Conditions. The effectiveness of this Amendment is subject to the
receipt by Lender of the following in form and substance satisfactory to Lender:
(a)    Certificate. A certificate of a Secretary or other officer of Borrower
acceptable to Lender certifying (i) resolutions of the Board of Directors of
Borrower which authorize the execution, delivery and performance by Borrower of
this Amendment and the other Loan Documents to which Borrower is or is to be a
party and (ii) the names of the officers of Borrower authorized to sign this
Amendment and each of the other Loan Documents to which Borrower is or is to be
a party together with specimen signatures of such Persons.
(b)    Governmental Certificates. Certificates issued by the appropriate
government officials of the state of incorporation of Borrower and Pledgor as to
the existence and good or active, as applicable, standing of Borrower and
Pledgor.
(c)    Revolving Credit Note. The Revolving Credit Note executed by Borrower.
(d)    Note Purchase Agreement. An amended and restated Note Purchase Agreement
executed by Borrower substantially in the form of Annex “B” hereto.
(e)    First Amendment to Security Agreement. The First Amendment to Security
Agreement executed by Borrower and its Subsidiaries substantially in the form of
Annex “C” hereto.
(f)    Trustee and Beneficiary Certificates. A certificate from each of the
trustees of the trusts which organized and capitalized Pledgor and from each of
the beneficiaries of such trusts.
(g)    Opinions of Counsel. (i) A favorable opinion of Dykema Gossett PLLC,
legal counsel to Borrower, as to such matters as Lender may reasonably report,
and (ii) a favorable opinion of Strasburger & Price, LLP, legal counsel to the
Pledgor, as to such matters as Lender may reasonably request.
(h)    Fees. A $10,000.00 origination fee for the increase of the Commitment and
a $25,000.00 extension/modification fee paid by Borrower to Lender.
(i)    Additional Information. Such additional documents, instruments and
information as Lender may request.
Section 3.2    Additional Conditions. The effectiveness of this Amendment is
also subject to the satisfaction of the additional conditions precedent that (i)
the representations and warranties contained herein and in all other Loan
Documents, as amended hereby, shall be true and correct as of the date hereof as
if made on the date hereof, (ii) all proceedings, corporate or otherwise, taken
in connection with the transactions contemplated by this Amendment and all
documents, instruments and other legal matters incident thereto shall be
satisfactory to Lender, and (iii) no Event of Default shall have occurred and be
continuing and no event or condition shall have occurred that with the giving of
notice or lapse of time or both would be an Event of Default.
ARTICLE IV.    

Ratifications, Representations, and Warranties
Section 4.1    Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect. Borrower and Lender agree that the
Agreement as amended hereby shall continue to be the legal, valid and binding
obligation of such Persons enforceable against such Persons in accordance with
its terms.
Section 4.2    Representations, Warranties and Agreements. Borrower hereby
represents and warrants to Lender that (i) the execution, delivery, and
performance of this Amendment and any and all other Loan Documents executed or
delivered in connection herewith have been authorized by all requisite corporate
action on the part of Borrower and will not violate the Organizational Documents
of Borrower, (ii) the representations and warranties contained in the Agreement
as amended hereby, and all other Loan Documents are true and correct on and as
of the date hereof as though made on and as of the date hereof, (iii) no Event
of Default has occurred and is continuing and no event or condition has occurred
that with the giving of notice or lapse of time or both would be an Event of
Default, (iv) Borrower is in full compliance with all covenants and agreements
contained in the Agreement as amended hereby, (v) Borrower is indebted to Lender
pursuant to the terms of the Revolving Credit Note, in the form attached hereto,
as the same may have been renewed, modified, extended or rearranged, including,
without limitation, any renewals, modifications and extensions made pursuant to
this Amendment, (vi) the liens, security interests, encumbrances and assignments
created and evidenced by the Loan Documents are, respectively, valid and
subsisting liens, security interests, encumbrances and assignments and secure
the Revolving Credit Note as the same may have been renewed, modified or
rearranged, including, without limitation, any renewals, modifications and
extensions made pursuant to this Amendment, and (vii) Borrower has no claims,
credits, offsets, defenses or counterclaims arising from the Loan Documents or
Lender’s performance under the Loan Documents.
ARTICLE V.    

Miscellaneous
Section 5.1    Survival of Representations and Warranties. All representations
and warranties made in this Amendment or any other Loan Documents including any
Loan Document furnished in connection with this Amendment shall fully survive
the execution and delivery of this Amendment and the other Loan Documents, and
no investigation by Lender or any closing shall affect the representations and
warranties or the right of Lender to rely on them.
Section 5.2    Reference to Agreement. Each of the Loan Documents, including the
Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement, as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement, as amended hereby.
Section 5.3    Expenses of Lender. As provided in the Agreement, Borrower agrees
to pay on demand all costs and expenses incurred by Lender in connection with
the preparation, negotiation and execution of this Amendment and the other
documents and instruments executed pursuant hereto and any and all amendments,
modifications and supplements thereto, including, without limitation, the costs
and fees of Lender’s legal counsel, and all costs and expenses incurred by
Lender in connection with the enforcement or preservation of any rights under
the Agreement, as amended hereby, or any other Loan Document, including, without
limitation, the costs and fees of Lender’s legal counsel.
Section 5.4    Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 5.5    APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE
IN HOUSTON, HARRIS COUNTY, TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Section 5.6    Successors and Assigns. This Amendment is binding upon and shall
inure to the benefit of Lender and Borrower and their respective successors and
assigns, except Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Lender.
Section 5.7    Counterparts. This Amendment and the other Loan Documents may be
executed in one or more counterparts, each of which when so executed shall be
deemed to be an original, but all of which when taken together shall constitute
one and the same instrument. Delivery of an executed signature page of this
Amendment and/or any other Loan Document by a scanned PDF attached to an e-mail
or facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
Section 5.8    Effect of Waiver. No consent or waiver, express or implied, by
Lender to or for any breach of or deviation from any covenant, condition or duty
by Borrower shall be deemed a consent or waiver to or of any other breach of the
same or any other covenant, condition or duty.
Section 5.9    Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
Section 5.10    RELEASE. IN CONSIDERATION OF LENDER’S AGREEMENTS CONTAINED
HEREIN, BORROWER (FOR ITSELF AND ON BEHALF OF ITS DIRECTORS, MEMBERS,
SHAREHOLDERS, MANAGERS, OFFICERS, EMPLOYEES, AGENTS, PRINCIPALS, AFFILIATES,
PREDECESSORS, HEIRS, LEGAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS) HEREBY
WAIVES, AND RELEASES LENDER AND ITS OFFICERS, EMPLOYEES, AGENTS, DIRECTORS,
SHAREHOLDERS, SUBSIDIARIES, PREDECESSORS, SUCCESSORS AND ASSIGNS FROM, ANY AND
ALL CLAIMS, LOSSES, LIABILITIES, DAMAGES, COSTS AND EXPENSES (INCLUDING
ATTORNEYS’ FEES), WHETHER KNOWN OR UNKNOWN, ASSERTED OR UNASSERTED, THAT
DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION,
PERFORMANCE, ADMINISTRATION OR ENFORCEMENT OF THE AGREEMENT, ANY OTHER RELATED
DOCUMENT OR THIS AMENDMENT, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE
AGREEMENT, ANY OTHER RELATED DOCUMENT OR THIS AMENDMENT OR (C) ANY BREACH BY
BORROWER OR ANY GUARANTOR OF ANY COVENANT, AGREEMENT OR REPRESENTATION CONTAINED
IN THE AGREEMENT, ANY OTHER RELATED DOCUMENT OR THIS AMENDMENT.
Section 5.11    INDEMNIFICATION. BORROWER, INDIVIDUALLY AND ON BEHALF OF ITS
DIRECTORS, MEMBERS, SHAREHOLDERS, MANAGERS, OFFICERS, EMPLOYEES, AGENTS,
PRINCIPALS, AFFILIATES, PREDECESSORS, HEIRS, LEGAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS (COLLECTIVELY, THE “INDEMNIFYING PARTIES”), HEREBY UNCONDITIONALLY
AND IRREVOCABLY INDEMNIFIES AND HOLDS HARMLESS LENDER AND ITS OFFICERS,
EMPLOYEES, ATTORNEYS, AGENTS, DIRECTORS, SHAREHOLDERS, SUBSIDIARIES,
PREDECESSORS, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “INDEMNIFIED PARTIES”)
FROM AND AGAINST ANY AND ALL COSTS, EXPENSES, CLAIMS, DEMANDS, DAMAGES, ACTIONS,
CAUSES OF ACTION, LIABILITY OR SUITS AT LAW OR IN EQUITY, OF WHATEVER KIND OR
NATURE, WHETHER ARISING UNDER STATE OR FEDERAL LAW, RULE OR REGULATION, WHETHER
NOW EXISTING OR HEREAFTER ARISING, WHETHER KNOWN OR UNKNOWN OR ASSERTED OR
UNASSERTED, THAT DIRECTLY OR INDIRECTLY IN ANY WAY RELATE TO, ARE BASED UPON, OR
ARISE OUT OF ANY CIRCUMSTANCE, EVENT, MATTER, OCCURRENCE, COURSE OF DEALING,
TRANSACTION, FACT, ACT, OMISSION, OBLIGATION, DUTY, RESPONSIBILITY, WARRANTY,
STATEMENT OR REPRESENTATION WHATSOEVER RELATED IN ANY WAY TO (A) THE AGREEMENT,
(B) THIS AMENDMENT, (C) ANY OTHER RELATED DOCUMENT OR (D) ANY DOCUMENTS OR
INSTRUMENTS EXECUTED IN CONNECTION WITH OR IN EVIDENCE OF ANY INDEBTEDNESS
BETWEEN BORROWER AND ANY GUARANTOR AND LENDER (ALL OF WHICH CLAIMS ARE REFERRED
TO COLLECTIVELY AS THE “INDEMNIFIED CLAIMS”), INCLUDING, WITH RESPECT TO ALL OF
THE ABOVE, INDEMNIFIED CLAIMS WHICH AROSE FROM THE NEGLIGENCE OF AN INDEMNIFIED
PARTY, PROVIDED THAT THE OBLIGATIONS OF THE INDEMNIFYING PARTIES UNDER THIS
SECTION SHALL NOT APPLY TO THE EXTENT AN INDEMNIFIED CLAIM AROSE FROM AN
INDEMNIFIED PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. EACH INDEMNIFYING
PARTY HEREBY COVENANTS AND AGREES NOT TO IN ANY MANNER WHATSOEVER SUE ANY
INDEMNIFIED PARTY IN ANY COURT OR TRIBUNAL OR BRING ANY ACTION, LAWSUIT OR CAUSE
OF ACTION (WHETHER BY WAY OF DIRECT ACTION, COUNTERCLAIM, CROSSCLAIM OR
INTERPLEADER) AGAINST ANY INDEMNIFIED PARTY IN ANY MANNER WHATSOEVER BASED UPON
ANY MATTER DIRECTLY OR INDIRECTLY RELATED TO ANY INDEMNIFIED CLAIM.
Section 5.12    WAIVER OF TRIAL BY JURY. BORROWER AND LENDER HEREBY VOLUNTARILY,
KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR
OTHERWISE) BETWEEN BORROWER AND LENDER ARISING OUT OF OR IN ANY WAY RELATED TO
THIS AMENDMENT, THE AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY RELATIONSHIP
BETWEEN BORROWER AND LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER
TO PROVIDE THE FINANCING EVIDENCED BY THE AGREEMENT AND THE LOAN DOCUMENTS.
Section 5.13    ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS, AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THIS AMENDMENT AND THE OTHER INSTRUMENTS, DOCUMENTS AND
AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS AMENDMENT, AND MAY NOT
BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL
AGREEMENTS AMONG THE PARTIES HERETO.

Executed as of the date first written above.
BORROWER:

HARTE HANKS, INC.

By:     /s/ Jon C. Biro                

Name: Jon C. Biro                

Title: Executive Vice President & CFO    
LENDER:

TEXAS CAPITAL BANK, NATIONAL ASSOCIATION

By:    /s/ Annalese Smolik                

Annalese Smolik

Senior Vice President

The undersigned Pledgor hereby consents and agrees to this Amendment and agrees
that the Pledge Agreement executed by Pledgor shall remain in full force and
effect and shall continue to be the legal, valid and binding obligations of
Pledgor, enforceable against Pledgor in accordance with its terms and shall
secured the repayment of the Obligations, including, without limitation, as
evidenced by the renewal, extension and increase of the Revolving Credit Note in
substantially the form of Annex “A” attached hereto, as renewed, extended and/or
modified from time to time.
HHS GUARANTY, LLC

By:        /s/David L. Copeland        

Name:    David L. Copeland        

Title:    Managing Member        

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