STRR

Business Context and Reporting Period

Company: Star Equity Holdings, Inc. (Star)
Filing Type: Form 8-K (Current Report)
Date of Report: August 14, 2026
Event: Entry into a Material Definitive Agreement (Merger Agreement) with Harte Hanks, Inc. (HH). Star's wholly-owned subsidiary, Merger Sub - R, Inc., will merge with and into HH, with HH surviving as a wholly-owned subsidiary of Star.

Key Financial Metrics and Transaction Terms

Merger Consideration:

• Cash Option: $5.00 per share of HH common stock.
• Preferred Stock Option: 0.50 shares of Star's 10% Series A Cumulative Perpetual Preferred Stock per share of HH common stock.
• Non-Electing Shares: Star may elect to pay cash, preferred stock, or a combination.

Cash Cap: The aggregate cash consideration is capped at $19,200,000. If cash elections exceed this cap, cash payments are prorated, and the remainder is converted to preferred stock. Equity Awards:

• Vested Options/RSUs: Converted to cash or preferred stock based on the excess of merger consideration over exercise price (for options) or full value (for RSUs).
• Performance Stock Units (PSUs): Cancelled without payment.

Financing: Star intends to fund the cash portion using available cash and debt financing, potentially via a drawdown of up to $15 million on HH's existing credit facility with Texas Capital Bank. Termination Fees: $1,152,000 payable by either party under specified termination scenarios. Liability for breach is capped at $1,152,000 per party.

Material Changes and Conditions

Conditions to Closing:

• Approval by HH stockholders.
• Effectiveness of the Form S-4 Registration Statement.
• Receipt of required third-party consents.
• Consummation of Debt Financing (including consent from Texas Capital Bank).
• Accuracy of representations and warranties and performance of covenants.

Support Agreements: HH directors and certain officers have entered into agreements to vote their shares in favor of the merger and against alternative transactions. Delisting: HH common stock will be de-listed from Nasdaq and de-registered under the Exchange Act following the closing.

Outlook, Risks, and Management Commentary

Management Commentary: Star intends to file a Form S-4 containing a joint Proxy Statement/Prospectus. The transaction is subject to customary representations, warranties, and covenants. Risks and Uncertainties:

• Failure to satisfy closing conditions, including stockholder approval or debt financing.
• Uncertainties regarding the timing of consummation.
• Market price volatility of the Parent Preferred Stock relative to the merger consideration value.
• Unexpected costs or adverse reactions to the merger announcement.
• Integration risks and failure to realize anticipated benefits.

Forward-Looking Statements: The filing contains forward-looking statements regarding the structure, timing, and completion of the merger, which are subject to risks and uncertainties that may cause actual results to differ materially.

Investor Verification Checklist

• Form S-4 Filing: Verify the upcoming Form S-4 and Proxy Statement/Prospectus for detailed financial data and voting instructions.
• Debt Financing Status: Confirm the status of the debt financing arrangement with Texas Capital Bank or alternative lenders.
• Stockholder Approval: Monitor the date and results of the HH Stockholder Meeting required to approve the Merger Proposal.
• Preferred Stock Terms: Review the specific terms of Star's 10% Series A Cumulative Perpetual Preferred Stock to be issued as consideration.
• Termination Triggers: Understand the specific conditions under which the $1,152,000 termination fee would be triggered.