8.	LINE OF CREDIT:

The Company entered into a Credit Agreement with Wells Fargo Bank, N.A. on

October

25,

2018

(“Credit Agreement”), which provides for revolving loans and letters of credit in the aggregate amount of up to

$60

million, subject to a borrowing base (“Revolver Commitment”). The Company has the ability to increase the Revolver Commitment to

$100

million, subject to the provisions of the Credit Agreement. The borrowing base is calculated by applying various advance rates to eligible accounts receivable, contract assets, inventories, and equipment, subject to various exclusions, adjustments, and sublimits. The Credit Agreement will expire on

October

25,

2023.

As of

December

31,

2019,

the Company had

outstanding borrowings under the Credit Agreement and additional borrowing capacity of

$40.7

million, net of outstanding letters of credit and the amount required to avoid a covenant trigger event. As of

December

31,

2018,

the Company had

$11.5

million of outstanding borrowings under the Credit Agreement. Borrowings under the Credit Agreement bear interest at rates related to the daily

three

month London Interbank Offered Rate (“LIBOR”) plus

1.5%

2.0%.

As of

December

31,

2019

and

2018,

the weighted-average interest rate for outstanding borrowings was

3.43%

and

4.56%,

respectively. The Credit Agreement requires the payment of an unused line fee of between

0.25%

and

0.375%,

based on the amount by which the Revolver Commitment exceeds the average daily balance of outstanding borrowings (as defined in the Credit Agreement) during any month. Such fee is payable monthly in arrears.

The Credit Agreement contains customary representations and warranties, as well as customary affirmative and negative covenants, events of default, and indemnification provisions in favor of the lender. The negative covenants include restrictions regarding the incurrence of liens and indebtedness and certain acquisitions and dispositions of assets and other matters, all subject to certain exceptions. The Credit Agreement also requires the Company to regularly provide financial information to Wells Fargo and to maintain a specified fixed charge coverage ratio upon certain triggers.

In connection with the execution and delivery of the Credit Agreement, the Company and certain of its subsidiaries also entered into a Guaranty and Security Agreement with Wells Fargo (“Guaranty and Security Agreement”). Pursuant to the Guaranty and Security Agreement, the Company’s obligations under the Credit Agreement are secured by a security interest in substantially all of the Company’s and its subsidiaries’ assets, other than real property.

Interest expense from continuing operations from line of credit borrowings and finance leases for the years ended

December

31,

2019,

2018,

and

2017

was

$0.5

million,

$0.6

million, and

$0.5

million, respectively. A nominal amount of interest was capitalized in

2019,

2018,

and

2017.

See Note

20,

“Subsequent Events” for discussion of the

January 2020

amendment to the Credit Agreement.