8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

December 15, 2005

Date of Report (Date of earliest event reported)

HARTE-HANKS, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-7120	74-1677284
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

200 Concord Plaza Drive

San Antonio, Texas 78216

(210) 829-9000

(Address of principal executive offices and Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

On December 15, 2005, Harte-Hanks, Inc. (the “Company”) entered into amendments to several Non-Qualified Performance Stock Option Agreements (the “Amendments”), with several employees and executive officers, including Larry Franklin, Chairman; Richard M. Hochhauser, President and CEO; Peter E. Gorman, Senior Vice President and President, Harte-Hanks Shoppers; and Gary J. Skidmore, Senior Vice President – Direct Markets. The Amendments bring certain stock options into compliance with Section 409A of the Internal Revenue Code of 1986, as amended. The forms of the Amendments are attached as Exhibits 10.1.a and 10.1.b to this Current Report on Form 8-K. The following description of the Amendments is qualified in its entirety by reference to the provisions of the forms of Amendments attached as Exhibits 10.1.a and 10.1.b to this Current Report on Form 8-K.

Each Amendment modifies the Non-Qualified Performance Stock Option Agreements (the “Agreements”) previously entered into between the Company and each of the executive officers and certain other employees relating to an aggregate of 51,000 shares of the Company’s common stock at exercise prices of either $.66667 or $1.3333 per share. As amended, certain of the options granted under the Agreements (“Options”) will only be exercisable on the business day following the vesting date of each such Option at which time such employees or executive officers may either: (i) exercise the option and hold the shares acquired, or (ii) conduct an automatic cashless exercise. The vest dates of the Options occur on various dates from January 6, 2006 through January 25, 2008. The automatic cashless exercise will only occur if on the date of such exercise, the fair market value of the shares underlying the options exceeds the applicable option price for such shares. The forms of the Agreements are attached as Exhibits 10.2.a and 10.2.b to this Current Report on Form 8-K.

Item 8.01 Other Events

On December 15, 2005, the Company and certain of the employees and executive officers, including Peter E. Gorman, that entered into the Amendments described in Item 1.01 of this Current Report also entered into individual sales plans complying with Rule 10b5-1 promulgated under the Securities Exchange Act of 1934, as amended, for trading shares of the Company’s common stock. Under the respective sales plans, the Options will be exercised pursuant to a broker assisted transaction on the business day following the vesting date of each such Option, and all or a portion of the underlying shares will be sold on such date.

Item 9.01 Final Statements and Exhibits

(c) Exhibits

10.1.a	Form of Amendment to Harte-Hanks, Inc. Non-Qualified Performance Stock Option Agreement for officers
10.1.b	Form of Amendment to Harte-Hanks, Inc. Non-Qualified Performance Stock Option Agreement for non-officers

10.2.a	Form of Non-Qualified Performance Stock Option Agreement for grants dated January 6, 1997, September 24, 1997, January 7, 1998 and January 28, 1998.
10.2.b	Form of Non-Qualified Performance Stock Option Agreement for grants dated January 12, 1999 and January 25, 1999.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Harte-Hanks, Inc. Dated: December 19, 2005
By:	/s/ Sloane Levy
	Sloane Levy
	Vice President, General Counsel and Secretary

Exhibit No.	Description
10.1.a	Form of Amendment to Harte-Hanks, Inc. Non-Qualified Performance Stock Option Agreement for officers.
10.1.b	Form of Amendment to Harte-Hanks, Inc. Non-Qualified Performance Stock Option Agreement for non-officers.
10.2.a	Form of Non-Qualified Performance Stock Option Agreement for grants dated January 6, 1997, September 24, 1997, January 7, 1998 and January 28, 1998.
10.2.b	Form of Non-Qualified Performance Stock Option Agreement for grants dated January 12, 1999 and January 25, 1999.

EX-10.1.A

Exhibit 10.1.a

AMENDMENT TO

HARTE-HANKS, INC.

NON-QUALIFIED PERFORMANCE STOCK OPTION AGREEMENT

THIS AGREEMENT, effective as of the              day of December, 2005 (the “Amendment Date”) is between Harte-Hanks, Inc., a Delaware corporation (hereinafter referred to as the “Corporation”), and                          (hereinafter referred to as the “Participant”).

WITNESSETH:

WHEREAS, the Corporation has adopted the Harte-Hanks, Inc. 1991 Stock Option Plan (the “Plan”), which provides for the grant of Non-Qualified Performance Stock Options to employees of the Corporation and its Subsidiaries or Parent as selected by the Board to purchase shares of common stock of the Corporation, par value one dollar ($1.00) per share (the “Common Stock”);

WHEREAS, the Participant was awarded Non-Qualified Performance Stock Options (the “Options”) as shown on Exhibit A, which were unvested as of December 31, 2004 pursuant to stock option agreement(s) (the “Option Agreement”);

WHEREAS, the parties hereto desire to evidence in writing the terms and conditions of this amendment to the Options;

WHEREAS, new Section 409A of the Internal Revenue Code (“Code”) has affected certain tax rules relating to the Options; and

WHEREAS, the Internal Revenue Service has permitted certain amendments to stock options in order to comply with Code Section 409A, provided such amendments are agreed to no later than December 31, 2005.

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

1. As of the Award Date, the Options are hereby amended to provide that, notwithstanding any other provision of the Option Agreement, each Option will only be exercisable on the business day following the Vesting Date of the Option shown on Exhibit A and will be exercised in the manner I elect in Section 2; provided that the automatic exercise of the Option will only occur if on the date of such exercise the fair market value of the Common Stock exceeds the applicable Option Price shown on Exhibit A.

2. I hereby elect to exercise such Option in the following manner (check one)

a.              automatic exercise and hold.

             I will submit a check to the Company in the amount of the required exercise price and tax withholding amounts no later than 5pm on the exercise date.

Or

             I will pay the aggregate exercise price amount and any required tax withholding amount in Common Stock that has been owned by me for at least six months prior to the exercise date. Accordingly, I will deliver a notarized statement that I owned for at least six months the number of shares of Common Stock to be used as payment for (i) the exercise of the Option and (ii) withholding taxes due upon exercise (and delivering cash by 5pm on the date of exercise, to the extent the value of such shares is less than the exercise price and the tax amount). I recognize that the shares of Common Stock used to pay for the exercise price and taxes will be valued at the closing price on the exercise date.

b.              automatic broker-assisted cashless exercise. In order to comply with the stock ownership guidelines for officers, upon the exercise of such options I will retain fifty percent (50%) of the “Net Shares” related to the exercise. “Net Shares” means the number of shares remaining after (i) the sale of shares to cover the exercise price of options and (ii) the sale of shares sufficient to pay taxes related to the exercise of options.

I understand such exercise will be in accordance with the procedures adopted by the Committee administering the Plan.

3. Except as provided in paragraph 1, above, the Option Agreement shall remain in full force and effect until its expiration at the end of the exercise date described above.

4. By signing below, the Participant certifies that he is not in possession at this time of any material non-public information relating to the Corporation.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

	Participant:
Address:
Harte-Hanks, Inc.
By:

Exhibit A

Option No. Grant Date Exercise Price Vesting Date Number of
Options

EX-10.1.B

Exhibit 10.1.b

AMENDMENT TO

HARTE-HANKS, INC.

NON-QUALIFIED PERFORMANCE STOCK OPTION AGREEMENT

THIS AGREEMENT, effective as of the              day of December, 2005 (the “Amendment Date”) is between Harte-Hanks, Inc., a Delaware corporation (hereinafter referred to as the “Corporation”), and              (hereinafter referred to as the “Participant”).

WITNESSETH:

WHEREAS, the Corporation has adopted the Harte-Hanks, Inc. 1991 Stock Option Plan (the “Plan”), which provides for the grant of Non-Qualified Performance Stock Options to employees of the Corporation and its Subsidiaries or Parent as selected by the Board to purchase shares of common stock of the Corporation, par value one dollar ($1.00) per share (the “Common Stock”);

WHEREAS, the Participant was awarded Non-Qualified Performance Stock Options (the “Options”) as shown on Exhibit A, which were unvested as of December 31, 2004 pursuant to stock option agreement(s) (the “Option Agreement”);

WHEREAS, the parties hereto desire to evidence in writing the terms and conditions of this amendment to the Options;

WHEREAS, new Section 409A of the Internal Revenue Code (“Code”) has affected certain tax rules relating to the Options; and

WHEREAS, the Internal Revenue Service has permitted certain amendments to stock options in order to comply with Code Section 409A, provided such amendments are agreed to no later than December 31, 2005.

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

1. As of the Award Date, the Options are hereby amended to provide that, notwithstanding any other provision of the Option Agreement, each Option will only be exercisable on the business day following the Vesting Date of the Option shown on Exhibit A and will be exercised in the manner I elect in Section 2; provided that the automatic exercise of the Option will only occur if on the date of such exercise the fair market value of the Common Stock exceeds the applicable Option Price shown on Exhibit A.

2. I hereby elect to exercise such Option in the following manner (check one)

a.              automatic exercise and hold.

             I will submit a check to the Company in the amount of the required exercise price and tax withholding amounts no later than 5pm on the exercise date.

Or

             I will pay the aggregate exercise price amount and any required tax withholding amount in Common Stock that has been owned by me for at least six months prior to the exercise date. Accordingly, I will deliver a notarized statement that I owned for at least six months the number of shares of Common Stock to be used as payment for (i) the exercise of the Option and (ii) withholding taxes due upon exercise (and delivering cash by 5pm on the date of exercise, to the extent the value of such shares is less than the exercise price and the tax amount). I recognize that the shares of Common Stock used to pay for the exercise price and taxes will be valued at the closing price on the exercise date.

b.              automatic broker-assisted cashless exercise.

I understand such exercise will be in accordance with the procedures adopted by the Committee administering the Plan.

3. Except as provided in paragraph 1, above, the Option Agreement shall remain in full force and effect until its expiration at the end of the exercise date described above.

4. By signing below, the Participant certifies that he is not in possession at this time of any material non-public information relating to the Corporation.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

	Participant:
Address:
Harte-Hanks, Inc.
By:

Exhibit A

Option No. Grant Date Exercise Price Vesting Date Number of
Options

EX-10.2.A

Exhibit 10.2.a

9 Yr. Vesting

HARTE-HANKS COMMUNICATIONS, INC.

NON-QUALIFIED PERFORMANCE STOCK OPTION AGREEMENT

Option	Number of Shares of Stock	Option Price,
No.	Subject to this Option:	Per Share: $

THIS AGREEMENT, effective as of the          day of                      (the “Award Date”) is between Harte-Hanks Communications, Inc., a Delaware corporation (hereinafter referred to as the “Corporation”), and                                  (hereinafter referred to as the “Participant”).

WITNESSETH:

WHEREAS, the Corporation has adopted the Harte-Hanks Communications, Inc. 1991 Stock Option Plan (the “Plan”), which provides for the grant of Non-Qualified Performance Stock Options to employees of the Corporation and its Subsidiaries or Parent as selected by the Board to purchase shares of common stock of the Corporation, par value one dollar ($1.00) per share (the “Common Stock”);

WHEREAS, the Participant has been selected by the Board to participate in the Plan, in accordance with the provisions thereof;

WHEREAS, the Board awarded to Participant a Non-Qualified Performance Stock Option as of the Award Date; and

WHEREAS, the parties hereto desire to evidence in writing the terms and conditions of the option.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements herein contained and as an inducement to Participant to continue as an employee of the Corporation, a Subsidiary or Parent, the parties hereto hereby agree as follows:

1. As of the Award Date, the Corporation awarded to Participant this Non-Qualified Performance Stock Option to purchase from the Corporation all or any part of the number of shares of Common Stock at the option price per share as set forth above,

payable in cash (including check, bank draft or money order), on the terms and subject to the conditions, restrictions and limitations provided herein. The grant of this option was effective as of the Award Date.

2. Except as otherwise provided in Section 3, this option cannot be exercised in whole or in part prior to the ninth anniversary of the Award Date. The option may be exercised in whole or in part at any time on and after the ninth anniversary of the Award Date (to the extent not previously exercised pursuant to the provisions of Section 3), but in no event can it be exercised on or after the date on which this option lapses pursuant to Section 4.

3. Subject to the provisions of Section 4, the following provisions shall apply. As soon as practicable following the              anniversary of the Award Date, the Board shall determine the extent to which the Performance Goals provided in Section 5 have been met.

(a) If the Threshold Performance Goals are not met, this option shall become exercisable on and after the April 1 following the              anniversary of the Award Date (the “Accelerated Exercise Date”) up to a maximum of __% of the shares covered hereby.

(b) If the Threshold Performance Goals are met, but the Target Performance Goals are not met, this option shall become exercisable on and after the Accelerated Exercise Date up to a maximum of     % of the shares covered hereby.

(c) If the Target Performance Goals are met, but the Maximum Performance Goals are not met, this option shall become exercisable on and after the Accelerated Exercise Date up to a maximum of     % of the shares covered hereby.

(d) If the Maximum Performance Goals are met, this option shall become exercisable on and after the Accelerated Exercise Date up to a maximum of 100% of the shares covered hereby.

4. This option shall lapse, and Participant’s rights hereunder shall terminate, on the first to occur of the following:

(a) The expiration of ten (10) years from the Award Date;

(b) Termination of employment;

(c) The expiration of three (3) months after normal termination of employment if the Participant is then still living; or

(d) The expiration of one (1) year after the date of the Participant’s death.

As used in this option, the following expressions shall have the meaning respectively indicated:

“Termination of employment” means the Participant’s discontinuance of employment with the Corporation or a Subsidiary or Parent for any reason other than death or normal termination of employment, but a transfer of employment from one Subsidiary to another, from a Subsidiary to the Corporation or Parent, from the Corporation to a Subsidiary or Parent, or from Parent to the Corporation or a Subsidiary is not a termination of employment.

“Normal termination of employment” means the Participant’s discontinuance of employment (i) on account of normal, early or disability retirement under the pension plan, if any, of Participant’s employer, or (ii) if Participant’s employer has no pension plan or such plan does not provide for normal, early or disability retirement, as the result of disability or voluntary departure that, in either case, would be treated as normal, early or disability retirement under the Corporation’s pension plan, if any, if Participant were an employee of the Corporation.

“Parent” means any future corporation which would be a “parent corporation” of the Corporation as defined in Section 424(e) and (g) of the Internal Revenue Code of 1986, as amended.

“Subsidiary” means any corporation which would be a “subsidiary corporation” of the Corporation as defined in Section 424(f) and (g) of the Internal Revenue Code of 1986, as amended.

5. The Threshold Performance Goals, the Target Performance Goals and the Maximum Performance Goals are as follows:

Threshold Performance Goals

Target Performance Goals

Maximum Performance Goals

The foregoing computations shall be made from the Corporation’s audited consolidated financial statements, adjusted as deemed appropriate by the Board to remove the effects of any unusual or nonrecurring items or changes in accounting methods or rules.

6. This option and the rights and privileges conferred therewith shall not be sold, transferred, encumbered, hypothecated or otherwise anticipated by the Participant otherwise than by will or by the laws of descent and distribution. This option is not liable for or subject to, in whole or in part, the debts, contracts, liabilities, or torts by the Participant nor shall it be subject to garnishment, attachment, execution, levy or other legal or equitable process. This option shall be exercisable during the lifetime of the Participant only by the Participant. To the extent exercisable after the Participant’s death, this option shall be exercised only by the person or persons entitled to receive this option under the Participant’s will, duly probated, or if the Participant shall fail to make a testamentary disposition of this option, by the executor or administrator of the Participant’s estate.

7. Every share purchased through the exercise of this option shall be paid for in full at the time of exercise. This option shall be exercised in writing and in accordance with such rules and regulations as may, from time to time, be adopted by the Board under the Plan. This option shall be deemed exercised when notice of exercise is given to the Corporation accompanied by payment in full of the option price of the shares specified. In case of the exercise of this option in full, it shall be surrendered to the Corporation for cancellation. In case of the exercise of this option in part, it shall be delivered to the Corporation for the purpose of making appropriate notation thereon, or otherwise reflecting, in such manner as the Corporation shall determine, the result of such partial exercise of the option.

8. In the event that each of the outstanding shares of Common Stock (other than shares held by dissenting stockholders) shall be changed into or exchanged for a different number or kind of shares of stock of the Corporation or of another corporation (whether by reason of merger, consolidation, recapitalization, reclassification, stock dividend, split-up, combination of shares or otherwise), then there shall be substituted for each share of Common Stock then subject to this option the number and kind of shares of stock into which each outstanding share of Common Stock (other than shares held by

dissenting stockholders) shall be so changed or for which each such share shall be so exchanged, together with an appropriate adjustment of the option price.

In the event there shall be any other change in the number of, or kind of, issued shares of Common Stock, or of any stock or other securities into which such Common Stock shall have been changed, or for which it shall have been exchanged, the Board shall make such adjustment, if any, in the number, or kind, or option price of shares then subject to this option as is equitably required. Any such adjustment shall be effective and binding for all purposes of this option.

9. If at any time the Board shall determine, based on opinion of counsel to the Corporation, that listing, registration or qualification of the shares covered by this option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of the exercise of this option, this option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to counsel for the Corporation.

10. Shares issued upon the exercise of this option may not be sold except in accordance with applicable securities laws and the terms of the following restrictive legend, which shall be placed on the face of all certificates evidencing shares issued upon the exercise of this option unless the use of such legend is waived by the Corporation based on opinion of counsel that such legend is not necessary to comply with applicable securities laws:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A REGISTRATION IS IN EFFECT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SAID ACT.

Any certificate issued at any time in transfer, exchange or substitution for any certificate bearing such restrictive legend shall also bear such legend, unless the use of such legend is waived by the Corporation based on opinion of counsel that such legend is not necessary to comply with applicable securities laws.

The Corporation shall have no obligation to file any registration statement or amendment to a registration statement under the Securities Act of 1933, as amended, or otherwise in connection with the sale of shares issued upon the exercise of this option.

11. The Participant agrees that he or she will not effect, during the seven days prior to and the 90 days after the effective date of any underwritten registration undertaken by the Corporation, any public sale or distribution of any shares issued upon exercise of this option.

12. Neither the Participant nor any person claiming under or through the Participant shall be or have any of the rights or privileges of a stockholder of the Corporation in respect of any of the shares issuable upon the exercise of this option, unless and until certificates representing such shares shall have been issued and delivered to the Participant or his or her agent.

13. Any notice to be given under the terms of this option or any delivery of this option to the Corporation shall be addressed to Secretary, Harte-Hanks Communications, Inc., P. O. Box 269, San Antonio, Texas 78291, and any notice to be given to the Participant shall be addressed to the Participant at the address set forth beneath his or her signature hereto, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be deemed to have been duly given if mailed, postage prepaid, addressed as aforesaid.

14. The granting of this option shall impose no obligation upon the Participant to exercise it or any part thereof. Nothing herein contained shall affect the right of the employer to terminate Participant’s employment at any time, with or without cause, or shall be deemed to create any employment rights on the part of the Participant.

15. Subject to the limitations on the transferability of this option, this Agreement shall be binding upon and inure to the benefit of the heirs, legal representatives, successors and assigns of the parties hereto.

16. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Texas.

17. Any provision of this Agreement to the contrary notwithstanding, the Corporation may take such steps as it may deem necessary or desirable for the withholding of any taxes which it is required by law or regulation of any governmental authority, federal,

state or local, domestic or foreign, to withhold in connection with any of the shares subject hereto.

18. This option will not be treated as an incentive stock option under the Internal Revenue Code of 1986, as amended.

19. Participant accepts this option subject to all the provisions of the Plan including the provisions that authorize the Board to administer and interpret the Plan and that provide the Board’s decisions, determinations and interpretations with respect to the Plan and options granted thereunder are final and conclusive on all persons affected thereby.

20. In the event the Board determines, in accordance with the terms of the Plan, that a Change of Control or Potential Change of Control is about to occur or has occurred and that this option should become exercisable in whole or in part prior to the dates specified herein, then this option shall become exercisable on the date and to the extent so specified by the Board.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

Participant:
	ADDRESS:
	Harte-Hanks, Inc.
	By:

EX-10.2.B

Exhibit 10.2.b

9 Yr. Vesting

HARTE-HANKS, INC.

NON-QUALIFIED PERFORMANCE STOCK OPTION AGREEMENT

Option	Number of Shares of Stock	Option Price,
No.	Subject to this Option:	Per Share:

THIS AGREEMENT, effective as of the          day of                      (the “Award Date”) is between Harte-Hanks, Inc., a Delaware corporation (hereinafter referred to as the “Corporation”), and                                  (hereinafter referred to as the “Participant”).

WITNESSETH:

WHEREAS, the Corporation has adopted the Harte-Hanks, Inc. 1991 Stock Option Plan (the “Plan”), which provides for the grant of Non-Qualified Performance Stock Options to employees of the Corporation and its Subsidiaries or Parent as selected by the Board to purchase shares of common stock of the Corporation, par value one dollar ($1.00) per share (the “Common Stock”);

WHEREAS, the Participant has been selected by the Board to participate in the Plan, in accordance with the provisions thereof;

WHEREAS, the Board awarded to Participant a Non-Qualified Performance Stock Option as of the Award Date; and

WHEREAS, the parties hereto desire to evidence in writing the terms and conditions of the option.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements herein contained and as an inducement to Participant to continue as an employee of the Corporation, a Subsidiary or Parent, the parties hereto hereby agree as follows:

1. As of the Award Date, the Corporation awarded to Participant this Non-Qualified Performance Stock Option to purchase from the Corporation all or any part of the number of shares of Common Stock at the option price per share as set forth above, payable in cash (including check, bank draft or money order), on the terms and subject to the conditions, restrictions and limitations provided herein. In addition, subject to limitations established by the Board from time to time, the option price per share may be paid by

actual or constructive delivery to the Corporation of previously owned shares of Common Stock. The grant of this option was effective as of the Award Date.

2. Except as otherwise provided in Section 3, this option cannot be exercised in whole or in part prior to the ninth anniversary of the Award Date. The option may be exercised in whole or in part at any time on and after the ninth anniversary of the Award Date (to the extent not previously exercised pursuant to the provisions of Section 3), but in no event can it be exercised on or after the date on which this option lapses pursuant to Section 4.

3. Subject to the provisions of Section 4, the following provisions shall apply. As soon as practicable following the          anniversary of the Award Date, the Board shall determine the extent to which the Performance Goals provided in Section 5 have been met.

(a) If the Threshold Performance Goals are not met, this option shall become exercisable on and after the          following the          anniversary of the Award Date (the “Accelerated Exercise Date”) up to a maximum of     % of the shares covered hereby.

(b) If the Threshold Performance Goals are met, but the Target Performance Goals are not met, this option shall become exercisable on and after the Accelerated Exercise Date up to a maximum of     % of the shares covered hereby.

(c) If the Target Performance Goals are met, but the Maximum Performance Goals are not met, this option shall become exercisable on and after the Accelerated Exercise Date up to a maximum of     % of the shares covered hereby.

(d) If the Maximum Performance Goals are met, this option shall become exercisable on and after the Accelerated Exercise Date up to a maximum of 100% of the shares covered hereby.

4. This option shall lapse, and Participant’s rights hereunder shall terminate, on the first to occur of the following:

(a) The expiration of ten (10) years from the Award Date;

(b) Termination of employment;

(c) The expiration of three (3) months after normal termination of employment if the Participant is then still living; or

(d) The expiration of one (1) year after the date of the Participant’s death.

As used in this option, the following expressions shall have the meaning respectively indicated:

“Termination of employment” means the Participant’s discontinuance of employment with the Corporation or a Subsidiary or Parent for any reason other than death or normal termination of employment, but a transfer of employment from one Subsidiary to another, from a Subsidiary to the Corporation or Parent, from the Corporation to a Subsidiary or Parent, or from Parent to the Corporation or a Subsidiary is not a termination of employment.

“Normal termination of employment” means the Participant’s discontinuance of employment (i) on account of normal, early or disability retirement under the pension plan, if any, of Participant’s employer, or (ii) if Participant’s employer has no pension plan or such plan does not provide for normal, early or disability retirement, as the result of disability or voluntary departure that, in either case, would be treated as normal, early or disability retirement under the Corporation’s pension plan, if any, if Participant were an employee of the Corporation.

“Parent” means any future corporation which would be a “parent corporation” of the Corporation as defined in Section 424(e) and (g) of the Internal Revenue Code of 1986, as amended.

“Subsidiary” means any corporation which would be a “subsidiary corporation” of the Corporation as defined in Section 424(f) and (g) of the Internal Revenue Code of 1986, as amended.

5. The Threshold Performance Goals, the Target Performance Goals and the Maximum Performance Goals are as follows:

Threshold Performance Goals

Target Performance Goals

Maximum Performance Goals

The foregoing computations shall be made from the Corporation’s audited consolidated financial statements, adjusted as deemed appropriate by the Board to remove the effects of any unusual or nonrecurring items or changes in accounting methods or rules.

6. This option and the rights and privileges conferred therewith shall not be sold, transferred, encumbered, hypothecated or otherwise anticipated by the Participant otherwise than by will or by the laws of descent and distribution. This option is not liable for or subject to, in whole or in part, the debts, contracts, liabilities, or torts by the Participant nor shall it be subject to garnishment, attachment, execution, levy or other legal or equitable process. This option shall be exercisable during the lifetime of the Participant only by the Participant. To the extent exercisable after the Participant’s death, this option shall be exercised only by the person or persons entitled to receive this option under the Participant’s will, duly probated, or if the Participant shall fail to make a testamentary disposition of this option, by the executor or administrator of the Participant’s estate.

7. Every share purchased through the exercise of this option shall be paid for in full at the time of exercise. This option shall be exercised in writing and in accordance with such rules and regulations as may, from time to time, be adopted by the Board under the Plan. This option shall be deemed exercised when notice of exercise is given to the Corporation accompanied by payment in full of the option price of the shares specified. In case of the exercise of this option in full, it shall be surrendered to the Corporation for cancellation. In case of the exercise of this option in part, it shall be delivered to the Corporation for the purpose of making appropriate notation thereon, or otherwise reflecting, in such manner as the Corporation shall determine, the result of such partial exercise of the option.

8. In the event that each of the outstanding shares of Common Stock (other than shares held by dissenting stockholders) shall be changed into or exchanged for a different number or kind of shares of stock of the Corporation or of another corporation (whether by reason of merger, consolidation, recapitalization, reclassification, stock dividend, split-up, combination of shares or otherwise), then there shall be substituted for each share of Common Stock then subject to this option the number and kind of shares of stock into which each outstanding share of Common Stock (other than shares held by

dissenting stockholders) shall be so changed or for which each such share shall be so exchanged, together with an appropriate adjustment of the option price.

In the event there shall be any other change in the number of, or kind of, issued shares of Common Stock, or of any stock or other securities into which such Common Stock shall have been changed, or for which it shall have been exchanged, the Board shall make such adjustment, if any, in the number, or kind, or option price of shares then subject to this option as is equitably required. Any such adjustment shall be effective and binding for all purposes of this option.

9. If at any time the Board shall determine, based on opinion of counsel to the Corporation, that listing, registration or qualification of the shares covered by this option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of the exercise of this option, this option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to counsel for the Corporation.

10. Shares issued upon the exercise of this option may not be sold except in accordance with applicable securities laws and the terms of the following restrictive legend, which shall be placed on the face of all certificates evidencing shares issued upon the exercise of this option unless the use of such legend is waived by the Corporation based on opinion of counsel that such legend is not necessary to comply with applicable securities laws:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A REGISTRATION IS IN EFFECT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SAID ACT.

Any certificate issued at any time in transfer, exchange or substitution for any certificate bearing such restrictive legend shall also bear such legend, unless the use of such legend is waived by the Corporation based on opinion of counsel that such legend is not necessary to comply with applicable securities laws.

The Corporation shall have no obligation to file any registration statement or amendment to a registration statement under the Securities Act of 1933, as amended, or otherwise in connection with the sale of shares issued upon the exercise of this option.

11. The Participant agrees that he or she will not effect, during the seven days prior to and the 90 days after the effective date of any underwritten registration undertaken by the Corporation, any public sale or distribution of any shares issued upon exercise of this option.

12. Neither the Participant nor any person claiming under or through the Participant shall be or have any of the rights or privileges of a stockholder of the Corporation in respect of any of the shares issuable upon the exercise of this option, unless and until certificates representing such shares shall have been issued and delivered to the Participant or his or her agent.

13. Any notice to be given under the terms of this option or any delivery of this option to the Corporation shall be addressed to Secretary, Harte-Hanks, Inc., P. O. Box 269, San Antonio, Texas 78291, and any notice to be given to the Participant shall be addressed to the Participant at the address set forth beneath his or her signature hereto, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall be deemed to have been duly given if mailed, postage prepaid, addressed as aforesaid.

14. The granting of this option shall impose no obligation upon the Participant to exercise it or any part thereof. Nothing herein contained shall affect the right of the employer to terminate Participant’s employment at any time, with or without cause, or shall be deemed to create any employment rights on the part of the Participant.

15. Subject to the limitations on the transferability of this option, this Agreement shall be binding upon and inure to the benefit of the heirs, legal representatives, successors and assigns of the parties hereto.

16. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Texas.

17. Any provision of this Agreement to the contrary notwithstanding, the Corporation may take such steps as it may deem necessary or desirable for the withholding of any taxes which it is required by law or regulation of any governmental authority, federal, state or local, domestic or foreign, to withhold in connection with any of the shares subject

hereto. Subject to limitations established by the Board from time to time, any withholding taxes may be paid by delivery to the Corporation of previously owned shares of Common Stock or by reducing the number of shares issuable upon exercise of this option.

18. This option will not be treated as an incentive stock option under the Internal Revenue Code of 1986, as amended.

19. Participant accepts this option subject to all the provisions of the Plan including the provisions that authorize the Board to administer and interpret the Plan and that provide the Board’s decisions, determinations and interpretations with respect to the Plan and options granted thereunder are final and conclusive on all persons affected thereby.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

Participant:
	ADDRESS:
	Harte-Hanks, Inc.
	By: