Long-Term Debt

Credit Facilities

On March 10, 2016, we entered into a secured credit facility with Wells Fargo Bank, N.A. as Administrative Agent, consisting of a maximum $65.0 million revolving credit facility and a $45.0 million term loan facility (together the "2016 Secured Credit Facility"). The 2016 Secured Credit Facility was secured by substantially all of our assets and material domestic subsidiaries. The 2016 Secured Credit Facility was used for general corporate purposes, and to replace and repay outstanding borrowings.

Prepayment of the 2016 Secured Credit Facility was required upon the completion of the sale of Trillium in accordance with its terms. The proceeds of the Trillium sale were used to repay in full all outstanding loans, together with interest, and all other amounts due in connection with repayment. Prepayment penalties of approximately $1.3 million were incurred as a result of repaying the 2016 Secured Credit Facility. The credit and guarantee agreements related to the 2016 Secured Credit Facility were likewise terminated.

On April 17, 2017, we entered into a secured credit facility with Texas Capital Bank, N.A., that provides a $20 million revolving credit facility (the "Texas Capital Credit Facility"). The Texas Capital Credit Facility is being used for general corporate purposes and to provide collateral for letters of credit issued by Texas Capital Bank up to $5.0 million. The Texas Capital Credit Facility is secured by substantially all assets of the company and its material domestic subsidiaries. The Texas Capital Credit Facility is guaranteed by HHS Guaranty, LLC, an entity formed to provide credit support for Harte Hanks by certain members of the Shelton family (descendants of one of our founders).

The Texas Capital Credit Facility is due and payable in full on April 17, 2019. We can elect to accrue interest on outstanding principal balances at either LIBOR plus 1.95% or prime less 0.75%. Unused credit balances will accrue interest at 0.50%. Harte Hanks is required to pay an annual fee of $0.5 million as consideration for the collateral balances provided by HHS Guaranty, LLC and reimburse it for certain costs if incurred as a result of the guarantee.

The Texas Capital Credit Facility is subject to customary covenants requiring insurance, legal compliance, payment of taxes, prohibition of second liens, and secondary indebtedness, as well as the filing of quarterly and annual financial statements.

As of August 9, 2017, we were not in compliance with the Texas Capital Credit Facility's covenant requiring us to file our financial reports for the quarter ending June 30, 2017 with the Securities and Exchange Commission within forty-five days of the quarter end. On August 14, 2017, we entered into a waiver with Texas Capital Bank that waived our noncompliance through October 20, 2017. We filed our financial reports for the quarter ending June 30,2017 on October 2, 2017. We are required to meet covenants established by the Texas Capital Credit Facility following the expiration of the waiver.

Our long-term debt obligations were as follows:



In thousands	September 30, 2017		December 31, 2016
Texas Capital Credit Facility ($20.0 million capacity), various interest rates based on (a) LIBOR plus 1.95% or (b) prime minus 0.75% (effective rate of 3.18% at September 30, 2017), due April 17, 2019	$	12,000	$	—
Total debt	12,000		—
Less current maturities	—		—
Total long-term debt	$	12,000	$	—

The carrying values and estimated fair value of our outstanding debt were as follows:



	September 30, 2017				December 31, 2016
In thousands	Carrying Value		Fair Value		Carrying Value		Fair Value
Total debt	$	12,000	$	12,000	$	—	$	—

Based on the recent entry into the Texas Capital Credit Facility, carrying values estimate fair value. These current rates are considered Level 2 inputs under the fair value hierarchy established by ASC 820, Fair Value Measurement, as they are based upon information obtained from third party banks.

At September 30, 2017, we had letters of credit in the amount of $3.8 million. $3.3 million of our letters of credit were backed by cash collateral with the other $0.5 million offset against our availability on the Texas Capital Credit Facility. These letters of credit exist to support insurance programs relating to workers’ compensation, automobile, and general liability. No amounts were drawn against these letters of credit at September 30, 2017.