5.	Line of Credit and Long-Term Debt

The Company’s Credit Agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) dated

October

25,

2018

(“Credit Agreement”), as amended on

January

31,

2020

by the Consent and Amendment

No.

to Credit Agreement with Wells Fargo (collectively the “Amended Credit Agreement”) provides for a term loan, as well as letters of credit and revolving loans in the aggregate amount of up to

$74

million, subject to a borrowing base (“Revolver Commitment”). 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 Amended Credit Agreement will expire on

October

25,

2024.

The Amended 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 Amended Credit Agreement also requires the Company to regularly provide financial information to Wells Fargo and to maintain a Senior Leverage Ratio (as defined in the Amended Credit Agreement)

not

greater than

3.00

and a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement) of at least

1.10

1.00.

The Company was in compliance with its financial covenants as of

March

31,

2020.

The Company's obligations under the Amended Credit Agreement are secured by a security interest in certain real property owned by the Company and its subsidiaries and substantially all of Company’s and its subsidiaries’ other assets.

Line of Credit

As of

March

31,

2020,

the Company had

outstanding revolving loan borrowings under the Amended Credit Agreement and additional revolving loan borrowing capacity of

$60.4

million. As of

December

31,

2019,

the Company had

outstanding borrowings under the Credit Agreement. Revolving loan borrowings under the Amended Credit Agreement bear interest at rates related to the daily

three

month London Interbank Offered Rate (“LIBOR”) plus

1.5%

2.0%.

As of

March

31,

2020

and

December

31,

2019,

the weighted-average interest rate for outstanding revolving loan borrowings was

3.04%

and

3.43%

respectively. The Amended Credit Agreement provides a mechanism for determining an alternative benchmark rate to the LIBOR. The Amended 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 Amended Credit Agreement) during any month. Such fee is payable monthly in arrears.

Long-Term Debt

Pursuant to the Amended Credit Agreement, on

March

31,

2020,

the Company entered into a term loan for

$15.9

million with Wells Fargo that matures on

October

25,

2024

and bears interest at the daily

three

month LIBOR plus

2.0%

2.5%.

The term loan requires monthly principal payments of

$0.3

million plus accrued interest. As of

March

31,

2020,

the outstanding balance of the term loan was

$15.9

million. The Company is obligated to prepay the term loan to the extent that the outstanding principal balance at any time exceeds

60%

of the fair market value of specified real property securing the loan. The Company is also obligated to prepay the term loan in an amount equal to

20%

of Excess Cash Flow (as defined in the Amended Credit Agreement). Subject to certain limitations, the Company

may

also voluntarily prepay all or a portion of the loan balance upon

ten

business days’ written notice.

Future principal payments of long-term debt are as follows (in thousands):

Year ending December 31,
Remainder of 2020	$	2,117
2021		3,176
2022		3,176
2023		3,176
2024		4,234
Thereafter		-
Total future principal payments	$	15,879