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Note F - Long-term Debt

9 Months Ended

Sep. 30, 2021

Note F — Long-Term Debt

As of September 30, 2021 and December 31, 2020, long-term debt was as follows:

In thousands	*September 30, 2021*		*December 31, 2020*
Revolving credit facility	$	13,100	$	17,100
Paycheck Protection Program Term Note		-		10,000
Total debt		13,100		27,100
Less: current portion of long-term debt		-		(4,926	)
Long-term debt	$	13,100	$	22,174

Credit Facility

As of September 30, 2021 and December 31, 2020, we had $13.1 million and $17.1 million of borrowings outstanding under the Texas Capital Credit Facility (as defined below), respectively. As of September 30, 2021, we had the ability to borrow an additional $0.8 million under the Texas Capital Facility.

As of each of September 30, 2021 and December 31, 2020, we had letters of credit outstanding in the amount of $1.1 million. No amounts were drawn against these letters of credit at September 30, 2021. These letters of credit exist to support insurance programs relating to worker‘s compensation, automobile, and general liability.

On April 17, 2017, we entered into a secured credit facility with Texas Capital Bank, N.A (“Texas Capital Bank”), that provided a $20.0 million revolving credit facility (the “Texas Capital Credit Facility”) and for letters of credit issued by Texas Capital Bank up to $5.0 million. The Texas Capital Credit Facility is secured by substantially all of the Company’s and its material domestic subsidiaries’ assets. 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 originally had an expiration date of April 17, 2019, at which point all outstanding amounts would have been due. On January 9, 2018, we entered into an amendment to the Texas Capital Credit Facility that increased the borrowing capacity to $22.0 million and extended the maturity by one year to April 17, 2020. On May 7, 2019, we entered into a second amendment to the Texas Capital Credit Facility which further extended the maturity of the facility by one year to April 17, 2021. On May 11, 2020, we entered into a third amendment to the Texas Capital Credit Facility which further extended the maturity of the facility by one year to April 17, 2022 and decreased the borrowing capacity to $19.0 million. On May 5, 2021, we entered into a fourth amendment to the Texas Capital Credit Facility which further extended the maturity of the facility by one year to April 17, 2023 and decreased the borrowing capacity to $15.0 million. The Texas Capital Credit Facility remains secured by substantially all our assets and continues to be guaranteed by HHS Guaranty, LLC.

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. The Company has been in compliance of all the requirements.

Under the Texas Capital Credit Facility, we can elect to accrue interest on outstanding principal balances at either LIBOR plus 1.95% or prime plus 0.75%. Unused commitment balances accrue interest at 0.50%. We are required to pay a quarterly fee of 0.5% of the value of the collateral HHS Guaranty actually pledged to secure the facility as consideration for the guarantee, which for the three months ended September 30, 2021 amounted to $0.1 million.

Cash payments for interest were $63 thousand and $37 thousand for the three months ended September 30, 2021 and 2020, respectively. Cash payments for interest were $0.3 million and $0.4 million for the nine months ended September 30, 2021 and 2020, respectively.

Paycheck Protection Program Term Note

On April 14, 2020, the Company entered into a promissory note with Texas Capital Bank, for an unsecured loan with a principal amount of $10.0 million made to the Company pursuant to the Paycheck Protection Program (“PPP Term Note”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Term Note is guaranteed by the United States Small Business Administration.

The proceeds were used to maintain payroll or make certain permitted interest payments, lease payments and utility payments.

We applied for forgiveness of the entire $10.0 million PPP Term Note in the first quarter of 2021 because we used the proceeds from the loan as contemplated under the CARES Act. On June 10, 2021, we received notice that the entire amount of our PPP Loan was forgiven by the SBA. We recorded the $10.0 million of debt extinguishment as "Gain from extinguishment of debt" in the Condensed Consolidated Statements of Comprehensive Income (Loss) in the three months ended June 30, 2021.