Document:

chrs-ex101d_502.htm

Exhibit 10.1(d)

COHERUS BIOSCIENCES, INC. 

2016 EMPLOYMENT COMMENCEMENT INCENTIVE PLAN
RESTRICTED STOCK AWARD GRANT NOTICE 

Coherus BioSciences, a Delaware corporation, (the “Company”), pursuant to its 2016 Employment Commencement Incentive Plan, as amended from time to time (the “Plan”), hereby grants to the individual listed below (the “Participant”), in consideration of the mutual agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the number of shares of the Company’s Common Stock set forth below (the “Shares”).  This Restricted Stock award is subject to all of the terms and conditions as set forth herein and in the Restricted Stock Award Agreement attached hereto as Exhibit A (the “Agreement”) (including without limitation the Restrictions on the Shares set forth in the Agreement) and the Plan, each of which is incorporated herein by reference.  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Restricted Stock Award Grant Notice (the “Grant Notice”) and the Agreement.

		
	
Participant:
	
[_________________________________________]

	
Grant Date:
	
[_________________________________________]

	
Total Number of Shares of Restricted Stock:
	
[______________________] Shares

	
Vesting Commencement Date:
	
[_________________________________________]

	
Vesting Schedule:
	
[_________________] 

	
Termination:
	
If the Participant experiences a Termination of Service prior to the applicable vesting date, any portion of the Award (and the Shares subject thereto) that has not become vested on or prior to the date of such Termination of Service (after taking into consideration any vesting that may occur in connection with such Termination of Service, if any) will thereupon be automatically forfeited by the Participant, and the Participant’s rights in such portion of the Award and any Shares subject thereto shall thereupon lapse and expire.

 

By his or her signature and the Company’s signature below, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and this Grant Notice.  The Participant has reviewed the Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Agreement and the Plan.  The Participant further acknowledges that he or she has not been previously employed in any capacity by the Company or any Affiliate, or if previously employed, is setting forth his or her signature below following a bona-fide period of non-employment with the Company and its Affiliates, and that the grant of the Restricted Stock is an inducement material to the Participant’s agreement to enter into employment with the Company or an Affiliate. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.  In addition, by signing below, the Participant also agrees that the Company, in its sole discretion, may satisfy any withholding obligations in accordance with Section 2.2(c) of the Agreement by (i) withholding shares of Common Stock otherwise issuable to the Participant upon vesting of the shares of Restricted Stock, (ii) instructing a broker on the Participant’s behalf to sell shares of Common Stock otherwise issuable to the Participant upon vesting of the shares of Restricted Stock and submit the proceeds of such sale to the Company, or (iii) using any other method permitted by Section 2.2(c) of the Agreement or the Plan.  If the participant is married or part of a registered domestic partnership, his or her spouse or domestic partner has signed the Consent of Spouse or Registered Domestic Partner attached to this Grant Notice as Exhibit B.

				
	
COHERUS BIOSCIENCES, INC.:Holder:
	
PARTICIPANT:

	
By:
	
 
	
By:
	
 

	
Print Name: 
	
 
	
Print Name:  
	
 

	
Title:
	
 
	
  
	
 

	
Address: 
	
333 Twin Dolphin Drive, Suite 600
	
Address: 
	
 

	
 
	
Redwood City, CA 94065
	
 
	
 

 

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US-DOCS\70221284.2

EXHIBIT A
TO RESTRICTED STOCK AWARD GRANT NOTICE

RESTRICTED STOCK AWARD AGREEMENT

Pursuant to the Restricted Stock Award Grant Notice (the “Grant Notice”) to which this Restricted Stock Award Agreement (this “Agreement”) is attached, Coherus BioSciences, Inc., a Delaware corporation (the “Company”) has granted to the Participant the number of shares of Restricted Stock (the “Shares”) under the Company’s 2016 Employment Commencement Incentive Plan, as amended from time to time (the “Plan”), as set forth in the Grant Notice.  Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and Grant Notice.

ARTICLE I.

general

1.1Incorporation of Terms of Plan.  The Award (as defined below) is subject to the terms and conditions of the Plan, which are incorporated herein by reference.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.

ARTICLE II.

award of restricted stock

2.1Award of Restricted Stock.  

(a)Award.  Pursuant to the Grant Notice and upon the terms and conditions set forth in the Plan and this Agreement, effective as of the Grant Date set forth in the Grant Notice, the Company has granted to the Participant an award of Restricted Stock (the “Award”) under the Plan in consideration of the Participant’s commencement of employment with the Company or any Affiliate, and for other good and valuable consideration.  The number of Shares subject to the Award is set forth in the Grant Notice.  

(b)Book Entry Form; Certificates.  At the sole discretion of the Administrator, the Shares will be issued in either (i) uncertificated form, with the Shares recorded in the name of the Participant in the books and records of the Company’s transfer agent with appropriate notations regarding the restrictions on transfer imposed pursuant to this Agreement, and upon vesting and the satisfaction of all conditions set forth in Sections 2.2(b) and (d) hereof, the Company shall remove such notations on any such vested Shares in accordance with Section 2.2(e) below; or (ii) certificated form pursuant to the terms of Sections 2.1(c), (d) and (e) below. 

(c)Legend.  Certificates representing Shares issued pursuant to this Agreement shall, until all Restrictions (as defined below) imposed pursuant to this Agreement lapse or have been removed and the Shares have thereby become vested or the Shares represented thereby have been forfeited hereunder, bear the following legend (or such other legend as shall be determined by the Administrator):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN VESTING REQUIREMENTS AND MAY BE SUBJECT TO FORFEITURE UNDER THE TERMS OF A RESTRICTED STOCK AWARD AGREEMENT, BY AND BETWEEN COHERUS BIOSCIENCES, INC. AND THE REGISTERED OWNER OF SUCH SHARES, AND SUCH SHARES MAY NOT BE, DIRECTLY OR INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER ANY CIRCUMSTANCES, EXCEPT PURSUANT TO THE PROVISIONS OF SUCH AGREEMENT.”

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(d)Escrow.  The Secretary of the Company or such other escrow holder as the Administrator may appoint may retain physical custody of any certificates representing the Shares until all of the Restrictions on transfer imposed pursuant to this Agreement lapse or shall have been removed; in such event, the Participant shall not retain physical custody of any certificates representing unvested Shares issued to him or her.  The Participant, by acceptance of the Award, shall be deemed to appoint, and does so appoint, the Company and each of its authorized representatives as the Participant’s attorney(s)-in-fact to effect any transfer of unvested forfeited Shares (or Shares otherwise reacquired by the Company hereunder) to the Company as may be required pursuant to the Plan or this Agreement and to execute such documents as the Company or such representatives deem necessary or advisable in connection with any such transfer.

(e)Removal of Notations; Delivery of Certificates Upon Vesting.  As soon as administratively practicable after the vesting of any Shares subject to the Award pursuant to Section 2.2(b) hereof, the Company shall, as applicable, either remove the notations on any Shares subject to the Award issued in book entry form which have vested or deliver to the Participant a certificate or certificates evidencing the number of Shares subject to the Award which have vested (or, in either case, such lesser number of Shares as may be permitted pursuant to Section 12.2 of the Plan). The Participant (or the beneficiary or personal representative of the Participant in the event of the Participant’s death or incapacity, as the case may be) shall deliver to the Company any representations or other documents or assurances required by the Company.  The Shares so delivered shall no longer be subject to the Restrictions hereunder.

2.2Restrictions.

(a)Forfeiture.  Notwithstanding any contrary provision of this Agreement, upon the Participant’s Termination of Service for any or no reason, any portion of the Award (and the Shares subject thereto) which has not vested prior to or in connection with such Termination of Service (after taking into consideration any accelerated vesting and lapsing of Restrictions which may occur in connection with such Termination of Service (if any)) shall thereupon be forfeited immediately and without any further action by the Company, and the Participant’s rights in any Shares and such portion of the Award shall thereupon lapse and expire.  For purposes of this Agreement, “Restrictions” shall mean the restrictions on sale or other transfer set forth in Section 3.3 hereof and the exposure to forfeiture set forth in this Section 2.2(a).  

(b)Vesting and Lapse of Restrictions.  Subject to Section 2.2(a) above, the Award shall vest and Restrictions shall lapse in accordance with the vesting schedule set forth in the Grant Notice (rounding down to the nearest whole Share).  

(c)Tax Withholding.  As set forth in Section 11.2 of the Plan, the Company shall have the authority and the right to deduct or withhold, or to require the Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state and local taxes required by law to be withheld with respect to any taxable event arising in connection with the Award.  The Company shall not be obligated to deliver any new certificate representing Shares to the Participant or the Participant’s legal representative or enter such Shares in book entry form unless and until the Participant or the Participant’s legal representative shall have paid or otherwise satisfied in full the amount of all federal, state and local taxes applicable to the taxable income of the Participant resulting from the grant or vesting of the Award or the issuance of Shares. 

(d)Conditions to Delivery of Shares.  Subject to Section 2.1 above, the Shares deliverable under this Award may be either previously authorized but unissued Shares, treasury Shares or Shares purchased on the open market.  Such Shares shall be fully paid and nonassessable.  The Participant acknowledges that the Plan and the grant of any Award thereunder is intended to conform with the requirements of the rules promulgated by the Nasdaq Stock Market, including without limitation, Nasdaq Listing Rule 5635(c)(4). The Company shall not be required to issue or deliver any Shares under this Award prior to fulfillment of the conditions set forth in Section 11.4 of the Plan.

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Notwithstanding the foregoing, the issuance of such Shares shall not be delayed if and to the extent that such delay would result in a violation of Section 409A of the Code.  In the event that the Company delays the issuance of such Shares because it reasonably determines that the issuance of such Shares will violate Applicable Law, such issuance shall be made at the earliest date at which the Company reasonably determines that issuing such Shares will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii).

(e)To ensure compliance with the Restrictions, the provisions of the charter documents of the Company, and/or Applicable Law and for other proper purposes, the Company may issue appropriate “stop transfer” and other instructions to its transfer agent with respect to the Restricted Stock.  The Company shall notify the transfer agent as and when the Restrictions lapse.

2.3Consideration to the Company.  In consideration of the grant of the Award pursuant hereto, the Participant agrees to render faithful and efficient services as an Employee of the Company or any Affiliate.  

ARTICLE III.

other provisions

3.1Section 83(b) Election.  If the Participant makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Participant would otherwise be taxable under Section 83(a) of the Code, the Participant hereby agrees to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.

3.2Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules.  All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon the Participant, the Company and all other interested persons. The Board may at any time, and from time to time, in its absolute discretion, exercise any and all rights and duties of the Administrator under the Plan; provided, however, any action taken by the Board in connection with the administration of the Plan, this Agreement or the Award shall not be deemed approved by the Board unless and until such action is approved by a majority of the Non-Employee Directors.   No member of the Administrator or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Award.

3.3Restricted Stock Not Transferable.  Until the Restrictions hereunder lapse or expire pursuant to this Agreement and the Shares vest, the Restricted Stock (including any Shares received by holders thereof with respect to Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall be subject to the restrictions on transferability set forth in Section 11.3 of the Plan; provided, however, that this Section 3.3 notwithstanding, with the consent of the Administrator, the Shares may be transferred to one or more Permitted Transferees, subject to and in accordance with Section 11.3 of the Plan.

3.4Rights as Stockholder.  Except as otherwise provided herein, upon the Grant Date, the Participant shall have all the rights of a stockholder of the Company with respect to the Shares, subject to the Restrictions, including, without limitation, voting rights and rights to receive any cash or stock dividends, in respect of the Shares subject to the Award and deliverable hereunder.  

3.5Tax Consultation.  The Participant understands that the Participant may suffer adverse tax consequences in connection with the Restricted Stock granted pursuant to this Agreement (and the Shares issuable with respect thereto).  The Participant represents that the Participant has consulted with any tax consultants the Participant deems advisable in connection with the Restricted Stock and that the Participant is not relying on the Company for any tax advice.

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3.6Adjustments upon Specified Events.  The Administrator may accelerate the vesting of the Restricted Stock in such circumstances as it, in its sole discretion, may determine.  The Participant acknowledges that the Restricted Stock is subject to adjustment, modification and termination in certain events as provided in this Agreement and Section 13.2 of the Plan.

3.7Notices.  Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to the Participant shall be addressed to the Participant at the Participant’s last address reflected on the Company’s records.  By a notice given pursuant to this Section 3.7, either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.

3.8Participant’s Representations.  If the Shares issuable hereunder have not been registered under the Securities Act or any applicable state laws on an effective registration statement at the time of such issuance, the Participant shall, if required by the Company, concurrently with such issuance, make such written representations as are deemed necessary or appropriate by the Company and/or its counsel.

3.9Titles.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

3.10Governing Law.  The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

3.11Conformity to Securities Laws.  The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act, and any and all Applicable Law.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Award is granted, only in such a manner as to conform to such Applicable Law.  To the extent permitted by Applicable Law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such Applicable Law.

3.12Amendment, Suspension and Termination.  To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board; provided, however, that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the Award in any material way without the prior written consent of the Participant.

3.13Successors and Assigns.  The Company or any Affiliate may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company and its Affiliates.  Subject to the restrictions on transfer set forth in Section 3.3 hereof, this Agreement shall be binding upon the Participant and his or her heirs, executors, administrators, successors and assigns.

3.14Stockholder Approval Not Required. The Plan will not be submitted for approval by the Company’s stockholders. As described in more detail in Section 13.3 of the Plan, pursuant to Nasdaq Stock Market Rule 5635(c), the Award and the Shares issuable with respect thereto pursuant to the Plan are not subject to stockholder approval. 

3.15Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, then the Plan, the Award and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule.  To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

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3.16Not a Contract of Employment.  Nothing in this Agreement or in the Plan shall confer upon the Participant any right to serve as an Employee of the Company or any of its Affiliates or shall interfere with or restrict in any way the rights of the Company and its Affiliates, which rights are hereby expressly reserved, to terminate the employment of the Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company or an Affiliate and the Participant.

3.17Entire Agreement.  The Plan, the Grant Notice and this Agreement (including all Exhibits thereto, if any) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and its Affiliates and the Participant with respect to the subject matter hereof.

3.18Limitation on the Participant’s Rights.  Participation in the Plan confers no rights or interests other than as herein provided.  This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets.  The Participant shall have only the rights of a general unsecured creditor of the Company and its Affiliates with respect to amounts credited and benefits payable, if any, with respect to the Shares issuable hereunder.

 

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EXHIBIT B
TO RESTRICTED STOCK AWARD GRANT NOTICE

CONSENT OF SPOUSE OR REGISTERED DOMESTIC PARTNER

I, _______________, spouse or domestic partner of _______________, have read and approve the Restricted Stock Award Grant Notice (the “Grant Notice”) to which this Consent of Spouse or Registered Domestic Partner is attached and the Restricted Stock Award Agreement (the “Agreement”) attached to the Grant Notice.  In consideration of issuing to my spouse or domestic partner the shares of the common stock of Coherus BioSciences, Inc. set forth in the Grant Notice, I hereby appoint my spouse or domestic partner as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights in said Agreement or any shares of the common stock of Coherus BioSciences, Inc. issued pursuant thereto under the community property laws or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Dated: ______________________________________________

Signature of Spouse or Domestic Partner

 

 

 

 

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US-DOCS\70221284.2Exhibit 10.1

 

WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT

 

THIS  WAIVER  AND  SECOND  AMENDMENT  TO  CREDIT  AGREEMENT  (this  “Amendment”)  is  entered  into  as  of  August  5,  2016  by  and  among  the  lenders  identified  on  the  signature  pages  hereof  (each  of  such  lenders,  together  with  its  successors  and  permitted  assigns,  is  referred  to  hereinafter  as  a  “Lender”),  WELLS  FARGO  BANK,  NATIONAL  ASSOCIATION,  a  national  banking  association,  as  administrative  agent  for  each  member  of  the  Lender  Group  and  the  Bank  Product  Providers  (in  such  capacity,  together  with  its  successors  and  assigns  in  such  capacity,  “Agent”),  WELLS  FARGO  BANK,  NATIONAL  ASSOCIATION,  a  national  banking  association,  as  sole  lead  arranger  (in  such  capacity,  together  with  its  successors  and  assigns  in  such  capacity,  the  “Sole  Lead  Arranger”),  WELLS  FARGO  BANK,  NATIONAL  ASSOCIATION,  a  national  banking  association,  as  sole  book  runner  (in  such  capacity,  together  with  its  successors  and  assigns  in  such  capacity,  the  “Sole  Book  Runner”),  HARTE  HANKS,  INC.,  a  Delaware  corporation  (“Harte  Hanks”),  TRILLIUM  SOFTWARE,  INC.,  a  Delaware  corporation  (“Trillium”),  3Q  DIGITAL,  INC.,  a  Delaware  corporation  (“3Q”),  HARTE-HANKS  DATA  SERVICES  LLC,  a  Maryland  limited  liability  company  (“Data  Services”),  HARTE-HANKS  DIRECT,  INC.,  a  New  York  corporation  (“HH  Direct”),  HARTE-HANKS  DIRECT  MARKETING/DALLAS,  INC.,  a  Delaware  corporation  (“HH  Dallas”),  HARTE-HANKS  DIRECT  MARKETING/FULLERTON,  INC.,  a  California  corporation  (“HH  Fullerton”),  HARTE  HANKS  DIRECT  MARKETING/BALTIMORE,  INC.,  a  Maryland  corporation  (“HH  Baltimore”),  HARTE-HANKS  DIRECT  MARKETING/JACKSONVILLE,  LLC,  a  Delaware  limited  liability  company  (“HH  Jacksonville”),  HARTE-HANKS  DIRECT  MARKETING/KANSAS  CITY,  LLC,  a  Delaware  limited  liability  company  (“HH  Kansas  City”),  HARTE-HANKS  LOGISTICS,  LLC,  a  Florida  limited  liability  company  (“Logistics”),  HARTE-HANKS  RESPONSE  MANAGEMENT/AUSTIN,  INC.,  a  Delaware  corporation  (“HH  Austin”),  HARTE-HANKS  RESPONSE  MANAGEMENT/BOSTON,  INC.,  a  Massachusetts  corporation  (“HH  Boston”),  HARTE-HANKS  STRATEGIC  MARKETING,  INC.,  a  Delaware  corporation  (“Strategic  Marketing”),  NSO,  INC.,  an  Ohio  corporation  (“NSO”),  SALES  SUPPORT  SERVICES,  INC.,  a  New  Jersey  corporation  (“Sales  Support”  and,  together  with  Harte  Hanks,  Trillium,  3Q,  Data  Services,  HH  Direct,  HH  Dallas,  HH  Fullerton,  HH  Baltimore,  HH  Jacksonville,  HH  Kansas  City,  Logistics,  HH  Austin,  HH  Boston,  Strategic  Marketing  and  NSO  are  referred  to  hereinafter  each  individually  as  a  “Borrower”,  and  individually  and  collectively,  jointly  and  severally,  as  the  “Borrowers”).

 

WHEREAS, Borrowers, Agent, and Lenders are parties to that certain Credit Agreement dated as of March 10, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, Borrowers have notified Agent and the Lenders that Events of Default exist under Section 8.2(a) of the Credit Agreement as a result of a breach of (a) Section 7(a) of the Credit Agreement due to Borrowers’ failure to have a Fixed Charge Coverage Ratio of at least 1.0:1.0, measured for the 12 month period ending on April 30, 2016 and (b) Section 7(b) of the Credit Agreement due to Borrowers’ failure to have a Leverage Ratio of not greater than 2.25:1.0, measured for the 12 month period ending on June 30, 2016 (the “Existing Events of Default”); and

 

WHEREAS, Borrowers have requested that Agent and the Lenders (a) waive the Existing Events of Default, and Agent and the Lenders have agreed to such waiver, on the terms and conditions set forth herein and (b) amend the Credit Agreement in certain respects.

 

NOW THEREFORE, in consideration of the premises and mutual agreements herein contained, the parties hereto agree as follows:

 

Section 1.                                    Definitions.  Capitalized terms used herein but not defined shall have the meanings given to such terms in the Credit Agreement.

 

 

Section 2.                                    Waiver.  Subject to the satisfaction of the conditions set forth in Section 4 below, and in reliance upon the representations and warranties of the Loan Parties set forth in Section 5 below, Agent and Lenders hereby waive the Existing Events of Default.  This is a limited waiver and shall not be deemed to constitute a waiver of any other Event of Default or any future breach by the Borrowers of the Credit Agreement or any of the other Loan Documents or any other requirements of any provision of the Credit Agreement or any other Loan Documents.

 

Section 3.                                    Amendments to Credit Agreement.  Subject to the satisfaction of the conditions set forth in Section 4 below, and in reliance upon the representations and warranties of the Loan Parties set forth in Section 5 below, the Credit Agreement is hereby amended as follows:

 

(a)                                 Section 2.1(a)(ii) of the Credit Agreement is hereby amended and restated, to read as follows:

 

(ii) such Lender’s Pro Rata Share of an amount equal to the lesser of:

 

(A) the amount equal to (1) the Maximum Revolver Amount less (2) the Availability Block less (3) the sum of (y) the Letter of Credit Usage at such time, plus (z) the principal amount of Swing Loans outstanding at such time, and

 

(B) the amount equal to (1) the Borrowing Base as of such date (based upon the most recent Borrowing Base Certificate delivered by Borrowers to Agent) less (2) the Availability Block less (3) the sum of (y) the Letter of Credit Usage at such time, plus (z) the principal amount of Swing Loans outstanding at such time.

 

(b)                                Section 2.4(e)(i) of the Credit Agreement is hereby amended and restated, to read as follows:

 

(i) Borrowing Base.  If, at any time, (A) the Revolver Usage on such date exceeds (B) the Borrowing Base less the Availability Block reflected in the Borrowing Base Certificate most recently delivered by Borrowers to Agent, then Borrowers shall immediately prepay the Obligations in accordance with Section 2.4(f)(i) in an aggregate amount equal to the amount of such excess.

 

(c)                                 Effective as of May 31, 2016, Section 2.6(a) of the Credit Agreement is hereby amended and restated, to read as follows:

 

(a) Interest Rates. Except as provided in Section 2.6(c), all Loans, and all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof, shall bear interest as follows:

 

(i) if the relevant Obligation is a portion of a Revolving Loan that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin,

 

(ii) if the relevant Obligation is a portion of a Revolving Loan that is a Base Rate Loan, at a per annum rate equal to the Base Rate plus the Base Rate Margin,

 

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(iii) if the relevant Obligation is a portion of the Term Loan that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus 8.22 percentage points,

 

(iv) if the relevant Obligation is a portion of the Term Loan that is a Base Rate Loan, at a per annum rate equal to the Base Rate plus 7.22 percentage points, and

 

(v) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

 

(d)                                Section 2.11(b) of the Credit Agreement is hereby amended and restated, to read as follows:

 

(b) Issuing Bank shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the requested issuance:

 

(i) the Letter of Credit Usage would exceed $6,500,000; provided that, for a period of no greater than 30 days occurring between August 15, 2016 and October 15, 2016, which 30-day period shall commence upon the first issuance of a Letter of Credit that causes the Letter of Credit Usage to exceed $6,500,000, an additional $5,000,000 of outstanding Letters of Credit to replace the Letters of Credit issued by Bank of America, N.A. and outstanding on the Second Amendment Closing Date (in form and substance reasonably acceptable to Agent) shall also be permitted, or

 

(ii) the Letter of Credit Usage (less, for a period of no greater than 30 days occurring between August 15, 2016 and October 15, 2016, which 30-day period shall commence upon the first issuance of a Letter of Credit that causes the Letter of Credit Usage to exceed $6,500,000, the amout of outstanding Letters of Credit issued to replace the Letters of Credit issued by Bank of America, N.A. and outstanding on the Second Amendment Closing Date, in an amount not to exceed $5,000,000) would exceed the Maximum Revolver Amount less the Availability Block less the outstanding amount of Revolving Loans (including Swing Loans), or

 

(iii) the Letter of Credit Usage (less, for a period of no greater than 30 days occurring between August 15, 2016 and October 15, 2016, which 30-day period shall commence upon the first issuance of a Letter of Credit that causes the Letter of Credit Usage to exceed $6,500,000, the amout of outstanding Letters of Credit issued to replace the Letters of Credit issued by Bank of America, N.A. and outstanding on the Second Amendment Closing Date, in an amount not to exceed $5,000,000) would exceed the Borrowing Base at such time less the Availability Block less the outstanding principal balance of the Revolving Loans (inclusive of Swing Loans) at such time.

 

(e)                                 Article 5 of the Credit Agreement is hereby amended by adding a new Section 5.17 at the end thereof as follows:

 

5.17 Consultant.

 

(a) On June 22, 2016, Administrative Borrower retained and engaged Focus Management Group USA (the “Consultant”) pursuant to that certain Agreement for Consulting Services (the “Consulting Agreement”) by and between Administrative Borrower and the Consultant. 

 

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Such retention and engagement is acceptable to Required Lenders. Administrative Borrower shall continue such retention and engagement of Consultant until consummation of the Trillium Sale.  Administrative Borrower (i) agrees to cooperate with the Consultant as necessary to allow the Consultant to perform  requested services, (ii) shall authorize the Consultant to provide to Lenders such information and reports from time to time with respect to Administrative Borrower and its Subsidiaries as the Consultant has prepared for Administrative Borrower in accordance with the Consulting Agreement, including, without limitation, regarding Administrative Borrower’s and its Subsidiaries’ financial condition, business, assets and liabilities, and (iii) shall authorize Consultant to communicate directly with Lenders as any Lender may reasonably request; provided, that Administrative Borrower shall be invited and permitted to participate in any oral communications and shall be carbon copied on any electronic or other written communications.  All fees and expenses of the Consultant shall be solely the responsibility of Borrowers, in no event shall Agent or Lenders have any liability or responsibility with respect to the Consultant, including, without limitation, as to the payment of the Consultant’s fees or expenses.  Neither Agent nor any Lender shall have any obligation or liability to any Borrower, any Guarantor, the Consultant or any other Person by reason of any acts or omissions of the Consultant.

 

(b) Upon the reasonable request of any Lender, the Loan Parties (i) will provide to Lenders summary status reports regarding the Trillium Sale (including redacted summaries of letters of intent, indications of interest, or relevant draft transaction documents) and (ii) shall request that its investment banker provide to the Lenders such other information relating to the status of the Trillium Sale as any Lender may reasonably request from time to time.  Any confidential information, whether written or oral, provided to Agent relating to the Trillium Sale shall be subject to Section 17.9 of the Credit Agreement. The Loan Parties may redact information regarding the names and identities of interested parties provided to the Lenders pursuant to this Section 5.17(b).

 

(f)                                   Article 5 of the Credit Agreement is hereby amended by adding a new Section 5.18 at the end thereof as follows:

 

5.18 Cash Flow Forecasts.  On or before July 15, 2016, Administrative Borrower shall deliver to Lenders a 13-week cash flow forecast prepared in consultation with the Consultant, which shall include projections of Borrowers’ cash, Cash Equivalents and Excess Availability, and be in form and substance acceptable to Required Lenders (the “Initial Cash Flow Forecast”).  No later than the third Business Day of each week thereafter, Administrative Borrower shall deliver to Lenders an updated 13-week cash flow forecast that updates the cash flow forecast most recently delivered in accordance with this Agreement, to include an additional week in the forecast (each a “Subsequent Cash Flow Forecast”), which Subsequent Cash Flow Forecasts shall be in form and substance acceptable to Required Lenders, together with a variance report that includes a reconciliation of the actual performance to projected performance set forth in the Initial Cash Flow Forecast on a weekly basis as well as a cumulative basis, together with an explanation in reasonable detail of the reasons for any variation in such period, which reconciliation shall be prepared with the reasonable consultation with and approval of the Consultant. Administrative Borrower’s obligations under this Section 5.18 shall cease upon consummation of the Trillium Sale.

 

4

 

(g)                                Article 5 of the Credit Agreement is hereby amended by adding a new Section 5.19 at the end thereof as follows:

 

5.19 Consultant Report.  On or before August 1, 2016, Administrative Borrower shall cause Consultant to deliver a written report to Lenders that sets forth  Consultant’s analysis and validation of the Loan Parties’ most recently delivered 13-week cash flow forecast and the Loan Parties’ most recently delivered monthly Projections.

 

(h)                                 Effective as of May 31, 2016, Section 7(a) of the Credit Agreement is hereby amended and restated, to read as follows:

 

(a) Fixed Charge Coverage Ratio. Have a Fixed Charge Coverage Ratio, measured on a month-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:

 

	
Applicable Ratio
    	
 
    	
Applicable Period
    
	
1.1:1.0
    	
 
    	
For the 12 month period ending   September 30, 2016 and each 12 month period ending each month thereafter
    

 

(i)                                     Effective as of July 1, 2016, Section 7(b) of the Credit Agreement is hereby amended and restated, to read as follows:

 

(b) Leverage Ratio. Have a Leverage Ratio, measured on a month-end basis, of not greater than the applicable ratio set forth in the following table for the applicable date set forth opposite thereto:

 

	
Applicable Ratio
    	
 
    	
Applicable Period
    
	
2.25:1.0
    	
 
    	
September 30, 2016,   October 31, 2016, November 30, 2016 and December 31, 2016
    
	
2.0:1.0
    	
 
    	
The last day of each month thereafter
    

 

(j)                                     Section 7 of the Credit Agreement is hereby amended by adding a new Section 7(e) at the end thereof as follows:

 

5

 

(e) Minimum EBITDA.  Have EBITDA, measured on a month-end basis, of at least the required amount set forth in the following table for the applicable period set forth opposite thereto:

 

	
Required Amount
    	
 
    	
Applicable Period
    
	
$
    	
496,000
    	
 
    	
For the 2 month period ending June 30, 2016
    
	
$
    	
2,291,000
    	
 
    	
For the 3 month period ending July 31, 2016
    
	
$
    	
4,970,000
    	
 
    	
For the 4 month period ending August 31, 2016
    
	
$
    	
7,978,000
    	
 
    	
For the 5 month period ending September 30, 2016
    
	
$
    	
10,577,000
    	
 
    	
For the 6 month period ending October 31, 2016
    
	
$
    	
13,268,000
    	
 
    	
For the 7 month period ending November 30, 2016
    
	
$
    	
16,000,000
    	
 
    	
For the 8 month period ending December 31, 2016
    
	
$
    	
18,000,000
    	
 
    	
For the 9 month period ending January 31, 2017
    
	
$
    	
20,000,000
    	
 
    	
For the 10 month period ending February 28, 2017
    
	
$
    	
22,000,000
    	
 
    	
For the 11 month period ending March 31, 2017
    
	
$
    	
24,000,000
    	
 
    	
For the 12 month period ending April 30, 2017 and   each 12 month period ending each month thereafter
    

 

(k)                                 Section 8.2(a) of the Credit Agreement is hereby amended and restated, to read as follows:

 

(a)                                 fails to perform or observe any covenant or other agreement contained in any of (i) Sections 3.6, 5.1, 5.2, 5.3 (solely if any Borrower is not in good standing in its jurisdiction of organization), 5.5, 5.6, 5.7 (solely if any Borrower refuses to allow Agent or its representatives or agents to visit any Borrower’s properties, inspect its assets or books or records, examine and make copies of its books and records, or discuss Borrowers’ affairs, finances, and accounts with officers and employees of any Borrower), 5.10, 5.11, 5.13, 5.14, 5.15, 5.16, 5.17, 5.18 or 5.19 of this Agreement, (ii) Section 6 of this Agreement, (iii) Section 7 of this Agreement, or (iv) Section 7 of the Guaranty and Security Agreement;

 

6

 

(l)                                     Effective as of May 31, 2016, the definition of Applicable Margin set forth in Schedule 1.1 of the Credit Agreement is hereby amended and restated to read as follows:

 

“Applicable Margin” means, as of any date of determination and with respect to Revolving Loans that are Base Rate Loans or LIBOR Rate Loans, as applicable, the applicable margin set forth in the following table that corresponds to the Average Excess Availability of Borrowers for the most recently completed month; provided, that for the period from June 1, 2016 through and including August 31, 2016, the Applicable Margin shall be set at the margin in the row styled “Level III”; provided further, that any time an Event of Default has occurred and is continuing, the Applicable Margin shall be set at the margin in the row styled “Level III”:

 

	
Level
    	
 
    	
Average Excess
   Availability
    	
 
    	
Applicable Margin 
   Relative to Revolving 
   Loans that are Base 
   Rate Loans (the “Base 
   Rate Margin”)
    	
 
    	
Applicable Margin 
   Relative to Revolving 
   Loans that are LIBOR 
   Rate Loans (the “LIBOR 
   Rate Margin”)
    
	
I
    	
 
    	
> $35,000,000
    	
 
    	
2.00   percentage points
    	
 
    	
3.00   percentage points
    
	
II
    	
 
    	
<   $35,000,000 and > $17,500,000
    	
 
    	
2.25   percentage points
    	
 
    	
3.25   percentage points
    
	
III
    	
 
    	
<   $17,500,000
    	
 
    	
2.50   percentage points
    	
 
    	
3.50   percentage points
    

 

The Applicable Margin shall be re-determined as of the first day of each calendar month of Borrowers.

 

(m)                             The definition of Overadvance set forth in Schedule 1.1 of the Credit Agreement is hereby amended and restated to read as follows:

 

“Overadvance” means, as of any date of determination, that the Revolver Usage is greater than the lesser of (i) the Borrowing Base and (ii) the Maximum Revolver Amount.

 

(n)                                 The definition of Reserves set forth in Schedule 1.1 of the Credit Agreement is hereby amended and restated to read as follows:

 

“Reserves” means, as of any date of determination, those reserves (other than Receivable Reserves, 3QD Earnout Reserves, Bank Product Reserves and the Availability Block) that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain (including reserves with respect to (a) sums that any Borrower or its Subsidiaries are required to pay under any Section of the Agreement or any other Loan Document (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay, and (b) amounts owing by any Borrower or its Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than a Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent likely would have a priority superior to the Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral) with respect to the Borrowing Base or the Maximum Revolver Amount.

 

7

 

(o)                                The definition of 3QD Earnout Reserves set forth in Schedule 1.1 of the Credit Agreement is hereby amended and restated to read as follows:

 

“3QD Earnout Reserves” means, as of any date of determination, those reserves that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain with respect to the Borrowing Base or the Maximum Revolver Amount, for the anticipated amount of the 3QD Earnout, which reserves shall be instituted on a monthly, building basis beginning on April 1, 2016 and shall increase by not less than (i) $1,000,000 per month thereafter until June 30, 2016, (ii) $250,000 per month thereafter until the earlier of (A) the first month following the date on which the Trillium Sale occurs or (B) September 30, 2016, and (iii) $1,000,000 per month thereafter beginning with the earlier of (A) the first month following the date on which the Trillium Sale occurs and (B) October 1, 2016 (not to exceed, in the aggregate, the forecasted or actual amount of the 3QD Earnout payable at any time, as applicable), and shall be maintained until such 3QD Earnout has been paid in full.

 

(p)                                Schedule 1.1 of the Credit Agreement is hereby further amended by adding in proper alphabetical order the following additional definitions:

 

“Availability Block” means a reserve in an amount equal to $3,000,000 (or such lower amount as approved by Agent in its sole discretion).

 

“Second Amendment Closing Date” means August 5, 2016.

 

“Trillium Sale” means the potential sale, conveyance, transfer or other disposition of Trillium’s Equity Interests or assets to a third party, the terms of which must be permitted pursuant to Section 6.4.

 

(q)                                Schedule 3.6 of the Credit Agreement is hereby amended by amending and restating paragraph 2 set forth therein in its entirety as follows:

 

Within 180 days after the Closing Date, the Loan Parties shall have closed such Deposit Accounts of the Loan Parties maintained on the Closing Date at Bank of America, N.A., Comerica Bank, BBVA Compass Bank, UMB Bank, PNC Bank and JPMorgan Chase Bank, N.A.

 

(r)                        Schedule 5.1 of the Credit Agreement is hereby amended and restated in its entirety as set forth on Exhibit A hereto.

 

(s)                     Schedule 5.2 of the Credit Agreement is hereby amended and restated in its entirety as set forth on Exhibit B hereto.

 

Section 4.                                    Conditions to Effectiveness of Amendment.  The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions precedent:

 

(a)                                 Representations and Warranties. The representations and warranties set forth in Section 5 hereof shall be true and correct (and each of the Loan Parties so certifies, by their signatures below) as of the date hereof.

 

8

 

(b)                                No Default or Event of Default. No Default or Event of Default (other than the Existing Events of Default) shall exist immediately prior to giving effect to this Amendment and no Default or Event of Default shall exist thereafter.

 

(c)                                 Execution of this Amendment. The Agent shall have received a fully-executed copy of this Amendment, signed by each of the Loan Parties, the Agent and the Lenders, and such related due diligence items as the Agent shall reasonably require in connection with this Amendment.

 

(d)                                Execution of the Amendment to the Agreement Among Lenders. The Agent shall have received a fully-executed copy of Amendment No. 1 to Agreement Among Lenders, signed by the Agent, LBC Credit Partners III, L.P. and LBC III WF Funding, LLC.

 

(e)                                 Fees and Expenses. Agent shall have received all fees and expenses set forth in Section 8 and Section 10 of this Amendment.

 

Section 5.                                    Representations and Warranties.  Each of the Loan Parties hereby, jointly and severally, represents and warrants to the Agent, for the benefit of the Lenders, that the following are true and correct:

 

(a)                                 After giving effect to the waiver set forth in Section 2 hereof, no Default or Event of Default has occurred and is continuing.

 

(b)                                All representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date of this Amendment (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date).

 

(c)                                 This Amendment and the other related documents to which each is a party constitutes the legal, valid and binding obligation of obligations of each Borrower and are enforceable against such Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally.

 

Section 6.                                    Reaffirmation. Each Loan Party hereby ratifies, affirms, acknowledges and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable and collectible obligations of the Loan Parties, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights of setoff whatsoever with respect to the Credit Agreement or any other Loan Document.  Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations.  The Liens and rights securing payment of the Obligations are hereby ratified and confirmed by each Loan Party in all respects.

 

9

 

Section 7.                                    Release.

 

(a)                                 In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Borrower and each other Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, each Lender and all such other Persons being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever (individually, a “Claim” and collectively, “Claims”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which any such Loan Party or any of their respective successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto which arises at any time on or prior to the day and date of this Amendment.

 

(b)                                Each Borrower and each other Loan Party understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.

 

(c)                                 Each Borrower and each other Loan Party agrees that no fact, event, circumstance, evidence or transaction existing or arising on or prior to the date hereof which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.

 

Section 8.                                    Miscellaneous.

 

(a)                                 Effect of this Amendment. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Agent under the Credit Agreement or any other Loan Document, nor constitute a waiver of any provision of the Credit Agreement or any other Loan Document, except as specifically set forth herein.

 

(b)                                Expenses.  Borrowers jointly and severally agree to pay on demand all Lender Group Expenses of Agent and all Lenders (including, without limitation, the reasonable and documented fees and expenses of outside counsel for Agent and all Lenders) in connection with the preparation, negotiation, execution, delivery and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith.  All obligations provided herein shall survive any termination of this Amendment and the Credit Agreement as modified hereby.

 

(c)                                 Counterparts.  This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of the executed counterpart of this Amendment by facsimile or electronic mail shall be as effective as delivery of a manually executed counterpart to this Amendment.

 

10

 

Section 9.                                    Governing Law.  THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.  THE CHOICE OF LAW AND VENUE AND JURY TRIAL WAIVER SET FORTH IN SECTION 12 OF THE CREDIT AGREEMENT ARE INCORPORATED HEREIN BY REFERENCE AND SHALL APPLY IN ALL RESPECTS TO THIS AMENDMENT.

 

Section 10.                             Amendment Fee.  The Loan Parties hereby agree to pay to the Agent for the benefit of the Lenders, on or prior to the date hereof a fee in the amount of $220,000, which fee shall be deemed fully earned and non-refundable as of the date hereof and shall be chargeable to the Loan Account.

 

Section 11.                             Accrued Interest.  All interest which accrued under the Credit Agreement prior to May 31, 2016 shall not be affected by the amendment to Section 2.6(a) or the defined term “Applicable Margin” set forth above.  Such accrued interest shall remain due and owing and shall be paid as provided in the Credit Agreement without giving effect to this Amendment.  All changes to interest rates contemplated hereby shall be effective as of May 31, 2016.

 

[Signature Pages Follow]

 

11

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.

 

	
BORROWERS:
    	
HARTE   HANKS, INC.
    
	
 
    	
TRILLIUM   SOFTWARE, INC.
    
	
 
    	
HARTE-HANKS   RESPONSE MANAGEMENT/BOSTON, INC.
    
	
 
    	
HARTE-HANKS   LOGISTICS, LLC
    
	
 
    	
HARTE HANKS   DIRECT MARKETING/BALTIMORE, INC.
    
	
 
    	
HARTE-HANKS   DIRECT, INC.
    
	
 
    	
HARTE-HANKS   DIRECT MARKETING/JACKSONVILLE, LLC
    
	
 
    	
HARTE-HANKS   DIRECT MARKETING/KANSAS CITY, LLC
    
	
 
    	
HARTE-HANKS   STRATEGIC MARKETING, INC.
    
	
 
    	
HARTE-HANKS   RESPONSE MANAGEMENT/AUSTIN, INC.
    
	
 
    	
SALES SUPPORT   SERVICES, INC.
    
	
 
    	
3Q   DIGITAL, INC.
    
	
 
    	
HARTE-HANKS   DATA SERVICES LLC
    
	
 
    	
HARTE-HANKS   DIRECT MARKETING/DALLAS, INC.
    
	
 
    	
HARTE-HANKS   DIRECT MARKETING/FULLERTON, INC.
    
	
 
    	
NSO, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Douglas C. Shepard
    
	
 
    	
Name:
    	
Douglas C. Shepard
    
	
 
    	
Title:
    	
Authorized Officer
    

 

Signature Page to Waiver and Second Amendment to Credit Agreement

 

 

	
 
    	
WELLS FARGO BANK,   NATIONAL ASSOCIATION,   a national banking association, as Agent, as Sole Lead Arranger, as Sole Book   Runner and as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul Truax
    
	
 
    	
Name: Paul Truax
    
	
 
    	
Its: Authorized Signatory
    

 

Signature Page to Waiver and Second Amendment to Credit Agreement

 

 

	
 
    	
LBC III WF FUNDING, LLC,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ C J Calabrese
    
	
 
    	
Name: C J Calabrese
    
	
 
    	
Its: Authorized Signatory
    

 

Signature Page to Waiver and Second Amendment to Credit Agreement

 

 

CONSENT AND REAFFIRMATION

 

The undersigned hereby (i) acknowledges receipt of a copy of the foregoing Waiver and Second Amendment to Credit Agreement (the “Amendment”); (ii) consents to Borrowers’ execution and delivery of the Amendment; (iii) agrees to be bound by the Amendment; and (iv) affirms that nothing contained therein shall modify in any respect whatsoever any Loan Documents (other than as specifically provided in the Amendment) to which the undersigned is a party and reaffirms that the Loan Documents to which it is a party shall continue to remain in full force and effect.  Although each of the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, the undersigned understands that Agent and Lenders have no obligation to inform the undersigned of such matters in the future or to seek the undersigned’s acknowledgment or agreement to future amendments, waivers or consents, and nothing herein shall create such a duty.

 

 

IN WITNESS WHEREOF, the undersigned has executed this Consent and Reaffirmation on and as of the date of the Amendment.

 

	
 
    	
HARTE-HANKS FLORIDA, INC.
    
	
 
    	
HARTE-HANKS PRINT, INC.
    
	
 
    	
HARTE-HANKS STS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Douglas C. Shepard
    
	
 
    	
Name:
    	
Douglas C. Shepard
    
	
 
    	
Title:
    	
Authorized Officer
    

 

Consent and Reaffirmation to Waiver and Second Amendment to Credit Agreement

 

 

EXHIBIT A

SCHEDULE 5.1

[see attached]

 

 

Schedule 5.1

 

Deliver to Agent and each Lender each of the financial statements, reports, or other items set forth below at the following times in form satisfactory to Agent:

 

	
Weekly (no later than the 3rd   Business Day of each week), 
    	
 
    	
(a)                          a status update with respect to the Trillium Sale from   Administrative Borrower, and

 

(b)                         the cash flow forecast and variance report required to be   delivered pursuant to Section 5.18 of the Agreement.
    
	
 
    	
 
    	
 
    
	
Monthly, as soon as available, but in   any event within 30 days (45 days in the case of a month that is the end of   one of Administrative Borrower’s fiscal quarters) after the end of each month   during each of Administrative Borrower’s fiscal years,
    	
 
    	
(c)                          a report summarizing Recurring Revenues by type for   (i) the prior month, and (ii) the trailing twelve months on a   monthly basis,

 

(d)                         an unaudited consolidated and consolidating balance sheet,   income statement, statement of cash flow, and statement of shareholder’s   equity covering Administrative Borrower’s and its Subsidiaries’ operations   during such period and compared to the prior period and Agent approved plan,   together with an explanation in reasonable detail of the reasons for any   variation in such period, together with an unaudited, standalone income   statement for Trillium in form substantially consistent with income   statements previously provided to Agent and a corresponding discussion and   analysis of results from management, and

 

(e)                          a Compliance Certificate along with the underlying   calculations, including the calculations to arrive at EBITDA, Fixed Charge   Coverage Ratio, Leverage Ratio, Recurring Revenue and Capital Expenditures.
    
	
 
    	
 
    	
 
    
	
Quarterly (no later than the last day   of the month 45 days following the end of each fiscal quarter),
    	
 
    	
(f)                            IP Reporting Certificate, and

 

(g)                         a report detailing Recurring Revenue retention statistics for   the prior quarter and for the trailing four quarters, in form and methodology   consistent with what has been previously provided to Agent.
    
	
 
    	
 
    	
 
    
	
Annually, as soon as available, but   in any event within 90 days after the end of each of Administrative Borrower’s   fiscal years,
    	
 
    	
(h)                          consolidated and consolidating financial statements of   Administrative Borrower and its Subsidiaries for each such fiscal year,   audited by independent certified public accountants reasonably acceptable to   Agent and certified, without any qualifications (including any   (A) “going concern” or like qualification or exception,   (B) qualification or exception as to the scope of such audit, or   (C) qualification which relates to the treatment or classification of   any item and which, as a condition to the removal of such qualification,   would require an adjustment to such item, the effect of which would be to   cause any noncompliance with the provisions of Section 7 of the   Agreement), by such accountants to have been prepared in accordance with GAAP   (such audited financial statements to include a balance sheet, income   statement, statement of cash flow, and statement of shareholder’s equity,   and, if prepared, such accountants’ letter to management),

 

(i)                              a Compliance Certificate along with the underlying   calculations, including the calculations to arrive at EBITDA, Fixed Charge   Coverage Ratio, Leverage Ratio, Recurring Revenue, and Capital Expenditures,
    

 

1

 

	
 
    	
 
    	
(j)                              a detailed calculation of Excess Cash Flow, and

 

(k)                          an updated Perfection Certificate.
    
	
 
    	
 
    	
 
    
	
Annually, as soon as available, but   in any event within 30 days prior to the start of each of Administrative   Borrower’s fiscal years,
    	
 
    	
(l)                              copies of Administrative Borrower’s Projections, in form   and substance (including as to scope and underlying assumptions) satisfactory   to Agent, in its Permitted Discretion, for the forthcoming 3 fiscal years, on   a quarter by quarter basis, certified by the chief financial officer of Borrower   as being such officer’s good faith estimate of the financial performance of   Administrative Borrower during the period covered thereby.
    
	
 
    	
 
    	
 
    
	
If and when filed by Administrative   Borrower,
    	
 
    	
(m)                      Form 10-Q quarterly reports, Form 10-K annual   reports, and Form 8-K current reports,

 

(n)                          any other filings made by Administrative Borrower with the   SEC, and

 

(o)                         any other information that is provided by Administrative   Borrower to its stockholders generally.
    
	
 
    	
 
    	
 
    
	
Promptly, but in any event within 5   days after Administrative Borrower has knowledge of any event or condition   that constitutes a Default or an Event of Default,
    	
 
    	
(p)                         notice of such event or condition and a statement of the   curative action that Borrower proposes to take with respect thereto.
    
	
 
    	
 
    	
 
    
	
Promptly after the commencement   thereof, but in any event within 5 days after the service of process with   respect thereto on Administrative Borrower or any of its Subsidiaries, 
    	
 
    	
(q)                         notice of all actions, suits, or proceedings brought by or   against Administrative Borrower or any of its Subsidiaries before any   Governmental Authority which reasonably could be expected to result in a   Material Adverse Effect.
    
	
 
    	
 
    	
 
    
	
Upon the request of Agent,
    	
 
    	
(r)                             any other information reasonably requested relating to the   financial condition of Administrative Borrower or its Subsidiaries.
    

 

2

 

EXHIBIT B

SCHEDULE 5.2

[see attached]

 

 

Schedule 5.2

 

Provide Agent and each Lender with each of the documents set forth below at the following times in form satisfactory to Agent:

 

	
Weekly (no later than the 3rd   Business Day of each week), 
    	
 
    	
(a)                                Prior to the completion of the bank account closure   described in paragraph 2 of Schedule 3.6, a detailed report (including   screenshots) regarding Borrower’s and its Subsidiaries’ cash and Cash   Equivalents, including an indication of which amounts constitute Qualified   Cash.
    
	
 
    	
 
    	
 
    
	
Monthly (no later than the 15th day   of each month), 
    	
 
    	
(b)                              an executed Borrowing Base Certificate,

 

(c)                                a detailed aging, by total, of Borrower’s billed and   unbilled Accounts (aged by reference to the empty date in respect of unbilled   Accounts), together with a reconciliation and supporting documentation for   any reconciling items noted (delivered electronically in an acceptable   format, if Borrower has implemented electronic reporting),

 

(d)                               a detailed calculation of those Accounts that are not   eligible for the Borrowing Base, including but not limited to deferred   revenue, customer deposits and pre-paid postage accruals, if Borrower has not   implemented electronic reporting,

 

(e)                                a listing of unbilled Accounts, in each case showing the   date of the service or order and the current status thereof,

 

(f)                                   notice of all claims, offsets, or disputes asserted by   Account Debtors with respect to Administrative Borrower’s and its   Subsidiaries’ Accounts, and

 

(g)                                a summary aging, by vendor, of Administrative Borrower’s   and its Subsidiaries’ accounts payable and any book overdraft (delivered   electronically in an acceptable format, if Borrower has implemented   electronic reporting) and an aging, by vendor, of any held checks.
    
	
 
    	
 
    	
 
    
	
Monthly (within 30 days (45 days in   the case of a month that is the end of a fiscal quarter) after the end of   each month),
    	
 
    	
(h)                                a reconciliation of Accounts and trade accounts payable   from Administrative Borrower’s general ledger accounts to its monthly   financial statements including any book reserves related to each category. 
    
	
 
    	
 
    	
 
    
	
Quarterly (no later than the last day   of the month 45 days following the end of each fiscal quarter),
    	
 
    	
(i)                                     a report regarding Administrative Borrower’s and its   Subsidiaries’ accrued, but unpaid, ad valorem taxes.
    

 

1

 

	
Promptly upon any officer of a Loan   Party becoming aware of any of the following events, such Loan Party shall   notify Agent in writing of such event and provide the documentation listed   with respect to each such event,
    	
 
    	
(j)                                     the occurrence of any Notification Event or of any   “prohibited transaction,” as described in section 406 of ERISA or in section   4975 of the IRC in connection with any Pension Plan or any trust created   thereunder, a written notice signed by a chief financial officer of such Loan   Party, specifying the nature thereof, what action the Loan Party proposes to   take with respect thereto, and, when known, any action taken or proposed by   the Internal Revenue Service, the Department of Labor or the PBGC or other   governmental body with respect thereto,

 

(k)                                 any notice from the PBGC setting forth an intention to   terminate or appoint a trustee to administer a Pension Plan, copies of any   such notices and any written correspondence from the Loan Party to the PBGC   with respect thereto,

 

(l)                                     a request by any Loan Party or ERISA Affiliate for an   estimate of its Withdrawal Liability from any Multiemployer Plan or any   estimate of Withdrawal Liability is provided to any Loan Party, any such   estimate and any written communications related thereto received by, or   delivered by, any Loan Party with respect thereto,

 

(m)                             any written notice to a Multiemployer Plan that a Loan   Party or ERISA Affiliate is withdrawing from such Multiemployer Plan, a copy   of such notice; and

 

(n)                                 any notification from a Multiemployer Plan, that such Multiemployer   Plan has incurred a mass withdrawal or that any withdrawal obligations of a   Loan Party are accelerated or increased, copies of such notification and any   written correspondence from the Loan Party with respect thereto.
    
	
 
    	
 
    	
 
    
	
Promptly after the filing thereof   with the United States Secretary of Labor, the Internal Revenue Service or   the PBGC,
    	
 
    	
(o)                                copies of each annual and other report (including all   attachments thereto) with respect to each Pension Plan or any trust created   thereunder.
    
	
 
    	
 
    	
 
    
	
Annually,
    	
 
    	
(p)                                a detailed list of Administrative Borrower’s and its   Subsidiaries’ customers, with address and contact information.
    
	
 
    	
 
    	
 
    
	
Upon request by Agent,
    	
 
    	
(q)                                such other reports, including but not limited to a summary   aging of the Administrative Borrower’s Accounts, and a summary aging, by   vendor, of Borrower’s accounts payable, and any book overdrafts, and copies   of purchase orders and invoices for Equipment acquired by Borrower or its   Subsidiaries, and as to the Collateral or the financial condition of   Administrative Borrower and its Subsidiaries, as Agent may reasonably   request. 
    

 

2

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