Harte Hanks,Inc. (NYSE:HHS) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive
Agreement.
Credit Facility
On April17, 2017, Harte Hanks,Inc. (the Company) entered into a
two-year, $20,000,000 revolving credit facility (the Credit
Facility) with Texas Capital Bank, National Association (TCB) to
a Credit Agreement, dated as of April17, 2017, by and between the
Company and TCB (the Credit Agreement). The Credit Facility is
secured by substantially all of the assets of the Company to a
Security Agreement, dated as of April17, 2017, between the
Company and TCB (the Security Agreement). The Credit Facility
will be used for working capital and general corporate purposes.
The Credit Facility allows for (i)loans up to the lesser of
(a)$20,000,000, or (b)a sum equal to 85% of the value of
investment grade bonds held in a custodian account plus 50% of
the value of cash in the custodian account (the Borrowing Base),
and (ii)letters of credit issued by TCB up to the least of
(x)$5,000,000, or (y)an amount equal to $20,000,000 minus the
amount of any revolving credit loans outstanding, or (z)the
Borrowing Base minus the amount of any revolving credit loans
outstanding. The outstanding amounts advanced under the Credit
Facility will be due and payable in full on April17, 2019.
The Company may voluntarily prepay all or any portion of the
loans advanced under the Credit Facility at any time, subject to
prior written notice, without fee, premium or penalty (but
provided that such prepayment shall also include any and all
accrued but unpaid interest on the amount of principal being so
prepaid, plus the amount of certain losses suffered by TCB as a
result of such prepayment). The Credit Facility is subject to
mandatory prepayments from the net proceeds of certain asset
dispositions (subject to customary reinvestment exceptions).
Additionally, if the unpaid principal balance under the Credit
Facility plus the aggregate face amount of all outstanding
letters of credit exceeds the Borrowing Base, the Company must
immediately prepay the entire amount of such excess.
The loans under the Credit Facility will accrue interest at a
rate equal to, at the Companys option, (i)the base rate plus the
applicable margin, or (ii)the LIBOR rate. The base rate is the
prime lending rate as publicly announced from time to time by
TCB. The applicable margin is -0.75% for loans accruing interest
at the base rate and 1.95% for loans accruing interest at the
LIBOR rate. The LIBOR rate is the rate for deposits in U. S.
dollars for the applicable period as calculated by
Intercontinental Exchange Benchmark Administration Limited as
adjusted in TCBs sole discretion for certain reserve
requirements.
The Credit Agreement contains certain covenants restricting the
Companys and its subsidiaries ability to create, incur, assume or
become liable to indebtedness; create, incur or assume liens;
consummate mergers or acquisitions; liquidate, dissolve, suspend
or cease operations; or modify accounting or tax reporting
methods (other than as required by GAAP).
The Credit Agreement contains certain representations and
warranties, affirmative covenants and events of default,
including prepayment defaults, breach of representations and
warranties, covenant defaults, certain events under ERISA,
material judgments and a change of control. If an event of
default occurs, TCB will be entitled to take various actions,
including the acceleration of all amounts due under the Credit
Facility and all actions permitted to be taken by a secured
creditor. Additionally, upon an event of default or in certain
other circumstances, TCB may sell the Credit Facility to HHS
Guaranty, LLC (HHS Guaranty) to a Note Purchase Agreement, by and
between TCB and HHS Guaranty, dated as of April17, 2017, for a
purchase price equal to (i)the sum of outstanding principal,
plus (ii)accrued interest, plus (iii)TCBs reasonable costs and
expenses in connection with the event of default and such sale.
The Credit Facility is guaranteed by HHS Guaranty, an entity
formed by certain members of the Shelton family (descendants of
one of the Companys founders) and related entities. to a Fee,
Reimbursement and Indemnity Agreement (the Fee Agreement),
dated as of April17, 2017, between the Company and HHS
Guaranty, the Company has agreed to pay HHS Guaranty an annual
fee of $480,000 and reimburse it for certain costs if incurred
as a result of the guarantee. David Copeland, a director of the
Company, serves as sole manager of HHS Guaranty.
The foregoing description of the Credit Facility is subject to
and qualified in its entirety by reference to the full text of
the Credit Agreement, the Security Agreement, and the Fee
Agreement which are filed as Exhibit10.1, Exhibit10.2 and
Exhibit10.3, respectively, hereto.
Item 2.03Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
See Item 1.01 above for a description of the Credit Facility.
Item 3.01Notice of Delisting or
Failure to Satisfy a Continued Listing Ruleor Standard;
Transfer of Listing.
On April18, 2017, the Company provided a notice to the New York
Stock Exchange (NYSE) regarding the resignation of David
Copeland from the Companys Audit Committee and Compensation
Committee, effective April17, 2017. The Company determined that
Mr.Copeland did not satisfy the criteria for independence set
forth in Section303A.02 of the NYSE Listed Company Manual, due
to his role as manager of HHS Guaranty, as described in Item
1.01 above.
Mr.Copeland promptly resigned from the Companys Audit Committee
and Compensation Committee following such determination and the
Board has appointed Christopher Harte, the Companys incumbent
Chairman, to serve on the Companys Audit Committee to fill the
vacancy resulting from Mr.Copelands resignation. The Board has
previously determined that Mr.Harte satisfies the criteria for
independence set forth in Section303A.02 of the NYSE Listed
Company Manual, and has determined that Mr.Harte meets the
heightened criteria for independence for audit committee
members. Mr.Copeland will continue to serve on the Board.
Item 9.01Financial Statements and
Exhibits.
(d)Exhibits. The following exhibits are being filed or
furnished herewith:
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ExhibitNumber |
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ExhibitTitle |
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10.1 |
Credit Agreement, dated April17, 2017, between Harte |
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10.2 |
Security Agreement, dated April17, 2017, between Harte |
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10.3 |
Fee, Reimbursement and Indemnity Agreement, dated |
|
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99.1 |
April18, 2017 Press Release of Harte Hanks,Inc.* |
*Furnished herewith.
About Harte Hanks, Inc. (NYSE:HHS)
Harte Hanks, Inc. (Harte Hanks) is a multi-channel marketing company. The Company’s Customer Interaction business offers a range of marketing services, in media from direct mail to e-mail, including agency and digital services; database marketing solutions and business-to-business lead generation; direct mail, and contact centers. Its agency services are customer engagement agencies specializing in direct and digital communications for both consumer and business-to-business markets. The Company’s digital solutions integrate online services within the marketing mix and include search engine management, display, digital analytics, Website development and design, digital strategy, social media, e-mail, e-commerce and interactive relationship management and a range of other services that support its core businesses. Harte Hanks, Inc. (NYSE:HHS) Recent Trading Information
Harte Hanks, Inc. (NYSE:HHS) closed its last trading session up +0.01 at 1.36 with 102,482 shares trading hands.
