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NOTES PAYABLE | 9 Months Ended
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Sep. 30, 2019
Debt Disclosure [Abstract] |
Notes Payable | NOTES PAYABLE The following table summarizes our outstanding debt as of the dates indicated:
| Maturity |  | Stated Interest Rate |  | Balance as of September 30, 2019 |  | Balance as of December 31, 2018
Subordinated Notes Payable- acquisitions | 10/1/2019 – 7/1/2021 |  | 2.00% - 3.00% |  |  | $ | 8,646 |  |  | $ | 10,964 |
Term Loan – Wells Fargo Syndicate Partner | 5/25/2022 |  | 10.74 | % |  | 55,683 |  |  | 52,106 |
Term Loan - Wells Fargo | 5/25/2022 |  | 5.74 | % |  | 55,683 |  |  | 52,106 |
Total Notes Payable |  |  |  |  | 120,012 |  |  | 115,176 |
Short-term notes payable |  |  |  |  | 5,399 |  |  | 5,864 |
Long-term notes payable |  |  |  |  | $ | 114,613 |  |  | $ | 109,312 |
The following table summarizes the debt issuance costs as of the dates indicated:
Notes Payable | Gross Notes Payable at September 30, 2019 |  | Debt Issuance Costs and Debt Discount |  | Net Notes Payable at September 30, 2019
Notes payable, current portion | $ | 5,399 |  |  | $ | (1,179 | ) |  | $ | 4,220 |
Notes payable, net of current portion | 114,613 |  |  | (2,140 | ) |  | 112,473 |
Total Notes Payable | $ | 120,012 |  |  | $ | (3,319 | ) |  | $ | 116,693 |
Notes Payable | Gross Notes Payable at December 31, 2018 |  | Debt Issuance Costs and Debt Discount |  | Net Notes Payable at December 31, 2018
Notes payable, current portion | $ | 5,864 |  |  | $ | (1,131 | ) |  | $ | 4,733 |
Notes payable, net of current portion | 109,312 |  |  | (2,083 | ) |  | 107,229 |
Total Notes Payable | $ | 115,176 |  |  | $ | (3,214 | ) |  | $ | 111,962 |
The following table summarizes the future principal payments related to our outstanding debt as of September 30, 2019:
Year Ended | Gross Amount
December 31, 2019 (October to December) | $ | 1,034 |
December 31, 2020 | 5,159 |
December 31, 2021 | 10,082 |
December 31, 2022 | 103,737 |
Gross Notes Payable | $ | 120,012 |
Term Loan - Wells Fargo In March 2018, we entered into a second amended and restated credit agreement (the “Second Restated Credit Agreement”) with Wells Fargo, and the lenders that are parties thereto, amending and restating the terms of the Amended and Restated Credit Agreement dated as of May 2017, which had previously amended and restated our credit agreement from March 2014. The Second Restated Credit Agreement contains customary events of default, including, among others, payment defaults, covenant defaults, judgment defaults, bankruptcy and insolvency events, cross defaults to certain indebtedness, incorrect representations or warranties, and change of control. In some cases, the defaults are subject to customary notice and grace period provisions. We and our wholly-owned active subsidiaries are also parties to a Guaranty and Security Agreement with Wells Fargo Bank in connection with our Second Restated Credit Agreement (and earlier versions of the credit agreement). Under the Guaranty and Security Agreement, we and each of our wholly-owned active subsidiaries have guaranteed all obligations under the Credit Agreement and granted a security interest in substantially all of our and our subsidiaries’ assets. The Second Restated Credit Agreement provides for a total of $175,000 in available financing consisting of (a) $105,000 in the aggregate principal amount of term loans; (b) a $5,000 line of credit; (c) a $25,000 delayed draw term loan commitment for the financing of permitted acquisitions; and (d) a $40,000 accordion. Financing under the delayed draw term loan commitment and accordion are subject to certain conditions as described in the Second Restated Credit Agreement. The Second Restated Credit Agreement amends the applicable margin rates for determining the interest rate payable on the loans as follows:
Leverage Ratio | First Out Revolver Base Rate Margin | First Out Revolver LIBOR Rate Margin | First Out TL Base Rate Margin | First Out TL LIBOR Rate Margin | Last Out Base Rate Margin | Last Out LIBOR Rate Margin
≤ 3.25:1 | 4.25 percentage points | 5.25 percentage points | 1.75 percentage points | 2.75 percentage points | 6.75 percentage points | 7.75 percentage points
> 3.25:1 | 4.75 percentage points | 5.75 percentage points | 2.25 percentage points | 3.25 percentage points | 7.25 percentage points | 8.25 percentage points
LIBOR is expected to be discontinued after 2021. The Second Restated Credit Agreement provides procedures for determining a replacement or alternative rate in the event that LIBOR is unavailable. However, there can be no assurances as to whether such replacement or alternative rate will be more or less favorable than LIBOR. We intend to monitor the developments with respect to the potential phasing out of LIBOR after 2021 and will work with our lenders to ensure any transition away from LIBOR will have minimal impact on our financial condition. We however can provide no assurances regarding the impact of the discontinuation of LIBOR on the interest rate that we would be required to pay or on our financial condition. The outstanding principal amount of the term loans is payable as follows:
• | $263 beginning on June 30, 2018 and the last day of each fiscal quarter thereafter up to March 31, 2020, plus an additional amount equal to 0.25% of the principal amount of all delayed draw term loans;
• | $656 beginning on June 30, 2020 and the last day of each fiscal quarter thereafter up to March 31, 2021, plus an additional amount equal to 0.625% of the principal amount of all delayed draw term loans; and
• | $1,313 beginning on June 30, 2021 and the last day of each fiscal quarter thereafter, plus an additional amount equal to 1.25% of the principal amount of all delayed draw term loans.
The Second Restated Credit Agreement also:
• | amended our leverage ratio covenant;
• | amended our fixed charge coverage ratio to be not less than 1.25:1 at March 31, 2018 and each quarter-end thereafter; and
• | removed the TTM recurring revenue covenant.
In January 2019, we entered into a Consent and Amendment No. 2 to the Second Restated Credit Agreement (the “Consent and Amendment No. 2”), with Wells Fargo Bank, National Association and Goldman Sachs Specialty Lending Holdings, Inc. Under the terms and conditions of the Consent and Amendment No. 2, the agent and required lenders consented to our acquisition of Payroll Maxx LLC as a “permitted acquisition” and we borrowed a delayed draw term loan in the aggregate amount of $8,000. The Consent and Amendment No. 2 also amends, among other things, our leverage ratio covenant to increase the maximum ratio to 6.00:1 at March 31, 2019, June 30, 2019 and September 30, 2019 and then stepping down each quarter-end thereafter through December 31, 2020. As of September 30, 2019 and December 31, 2018, $4,000 and $0 was outstanding and $1,000 and $5,000, respectively, was available for borrowing under the revolver. As of September 30, 2019, we are in compliance with all terms of our credit agreement as our lenders have waived compliance with our leverage ratio covenant of 6.00 to 1:00 as of September 30, 2019, and further consented to advances made to our United Kingdom subsidiaries in excess of the $3,000 limit. The waivers were made conditional upon a number of factors related to the pending sale of our workspace solution business (see Note 11 -Subsequent Events). If we are unable to close on the sale of our workspace solution business by December 15, 2019, or close on the sale but otherwise fail to satisfy the conditions to the waiver, then the lenders' waiver will expire. We are also in the process of negotiating an amendment to our credit facility with our lenders. If we are unable to negotiate an amendment by the date we close on the sale of our workspace solution business, the lenders will modify our maturity date to March 13, 2020 to provide time for us to complete and enter an amendment with our lenders or to facilitate a credit facility with new lenders. We expect to be in compliance with our debt agreements and related covenants over the next twelve months.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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