In connection with the purchase of Astro Machine, on August 4, 2022, we entered into a Second Amendment to Amended and Restated Credit Agreement (the “Second Amendment”) with Bank of America, N.A., as lender (the “Lender”). The Second Amendment amended the Amended and Restated Credit Agreement dated as of July 30, 2020, as amended by the First Amendment to Amended and Restated Credit Agreement, dated as of March 24, 2021, and the LIBOR Transition Amendment, dated as of December 24, 2021 (the “Existing Credit Agreement,” and the Existing Credit Agreement as amended by the Second Amendment, the “Amended Credit Agreement”), between the Company and the Lender.

The Amended Credit Agreement provides for (i) a new term loan in the principal amount of $6.0 million, which term loan

was

in addition to the existing term loan outstanding under the Existing Credit Agreement in the principal amount of $9.0 million as of the effective date of the Second Amendment, and (ii) an increase in the aggregate principal amount of the revolving credit facility available from $22.5 million to $25.0 million. At the closing of the Second Amendment, we borrowed the entire $6.0 million term loan and $12.4

million under the revolving credit facility, and the proceeds of such borrowings were used in part to pay the purchase price payable under the Purchase Agreement and certain related transaction costs. The revolving credit facility may otherwise be used for corporate purposes.

The Amended Credit Agreement requires that the term loan be paid in quarterly installments on the last day of each of our fiscal quarters over the term of the Amended Credit Agreement on the following repayment schedule: the principal amount of each quarterly installment required to be paid on the last day of each of our fiscal quarters ending on or about October 31, 2022 through July 31, 2023 is $375,000; and the principal amount of each quarterly installment required to be paid on the last day of each of our fiscal quarters ending on or about October 31, 2023 through April 30, 2027 is $675,000. The entire remaining principal balance of the term loan is required to be paid on August 4, 2027. We may voluntarily prepay the term loan, in whole or in part, from time to time without premium or penalty (other than customary breakage costs, if applicable). We may repay borrowings under the revolving credit facility at any time without premium or penalty (other than customary breakage costs, if applicable), but in any event no later than August 4, 2027, and any outstanding revolving loans thereunder will be due and payable in full, and the revolving credit facility will terminate, on such date. We may reduce or terminate the revolving line of credit at any time, subject to certain thresholds and conditions, without premium or penalty.

The

interest rates under the Amended Credit Agreement are as follows: the term loan and revolving credit loans bear interest at a rate per annum equal to, at our option, either (a) the BSBY Rate as defined in the Amended Credit Agreement (or, in the case of revolving credit loans denominated in a currency other than U.S. Dollars, the applicable quoted rate), plus a margin that varies within a range of

1.60

% to

2.50

% based on our consolidated leverage ratio, or (b) a fluctuating reference rate equal to the highest of (i) the federal fund rate plus

0.50

%, (ii) Bank of America’s publicly announced prime rate, (iii) the BSBY Rate plus

1.00

%, or (iv)

0.50

%, plus a margin that varies within a range of

0.60

% to

1.50

% based on our consolidated leverage ratio. In addition to certain other fees and expenses that we are required to pay to the Lender, we are required to pay a commitment fee on the undrawn portion of the revolving credit facility that varies within a range of

0.15

% and

0.35

% based on our consolidated leverage ratio. The loans under the Amended Credit Agreement are subject to certain mandatory prepayments, subject to various exceptions, from (a) net cash proceeds from certain dispositions of property, (b) net cash proceeds from certain issuances of equity, (c) net cash proceeds from certain issuances of additional debt and (d) net cash proceeds from certain extraordinary receipts.

Amounts repaid under the revolving credit facility may be reborrowed, subject to continued compliance with the Amended Credit Agreement. No amount of the term loan that is repaid may be reborrowed.

We must comply with various customary financial and

non-financial

covenants under the Amended Credit Agreement. The financial covenants under the Amended Credit Agreement consist of a maximum consolidated leverage ratio, a minimum consolidated fixed charge coverage ratio and a minimum consolidated asset coverage ratio. The primary

non-financial

covenants limit our and our subsidiaries’ ability to incur future indebtedness, to place liens on assets, to pay dividends or distributions on our or our subsidiaries’ capital stock, to repurchase or acquire our or our subsidiaries’ capital stock, to conduct mergers or acquisitions, to sell assets, to alter our or our subsidiaries’ capital structure, to make investments and loans, to change the nature of our or our subsidiaries’ business, and to prepay subordinated indebtedness, in each case subject to certain exceptions and thresholds as set forth in the Amended Credit Agreement, certain of which provisions were modified by the Second Amendment. As of October 29, 2022, we believe we are compliance with all of the covenants in the Credit Agreement.

The Lender is entitled to accelerate repayment of the loans and to terminate its revolving credit commitment under the Amended Credit Agreement upon the occurrence of any of various customary events of default, which include, among other events, the following (which are subject, in some cases, to certain grace periods): failure to pay when due any principal, interest or other amounts in respect of the loans, breach of any of our covenants or representations under the loan documents, default under any other of our or our subsidiaries’ significant indebtedness agreements, a bankruptcy, insolvency or similar event with respect to us or any of our subsidiaries, a significant unsatisfied judgment against us or any of our subsidiaries, or a change of control.

Our obligations under the Amended Credit Agreement continue to be secured by substantially all of our personal property assets (including a pledge of the equity interests we hold in ANI ApS, AstroNova GmbH and AstroNova SAS), subject to certain exceptions, and by a mortgage on our owned real property in West Warwick, Rhode Island, and are guaranteed by, and secured by substantially all of the personal property assets of Astro Machine.

Summary of Outstanding Debt

Revolving Credit Facility

During the first nine months of the current year, we borrowed a net of $19.9 million on our revolving line of credit. The balance outstanding under the revolving line of credit bore interest at a weighted average rate of 7.32% and 5.74%

for the three and nine months ended October 29, 2022, respectively, and we incurred

$341,000 and $409,000

for interest on this obligation during the three and nine months ended October 29, 2022, respectively. Additionally, during the nine months ended October 29, 2022, we incurred

$25,000 of commitment fees on the undrawn portion of our revolving credit facility. At October 30, 2021, there was no balance outstanding on the revolving line of credit, and no interest was incurred for the three and nine months ended October 30, 2021. We incurred $38,000 of commitment fees on the undrawn portion of our revolving credit facility for the nine months ended October 30, 2021. Both the interest expense and commitment fees are included as interest expense in the accompanying condensed consolidated income statement for all periods presented. At October 29, 2022, there is $5.1 million remaining available for borrowing under

our

revolving line of credit.

Long-Term Debt

Long-term debt in the accompanying condensed consolidated balance sheets is as follows:


(In thousands)	October 29, 2022			January 31, 2022
USD Term Loan (7.75% as of October 29, 2022); maturity date of August 4, 2027	$	14,625		$	—
USD Term Loan (2.35% as of January 31, 2022); maturity date of September 30, 2025		—			9,250

		14,625			9,250
Debt Issuance Costs, net of accumulated amortization		(93	)		(96	)
Current Portion of Term Loans		(1,800	)		(1,000	)

Long-Term Debt	$	12,732		$	8,154

ring the three and nine months ended October 29, 2022, we recognized $266,000 and $384,000, respectively, of interest expense on debt. During the three and nine months ended October 30, 2021, we recognized $50,000 and $230,000, respectively, of interest expense on debt. Interest expense is included in the accompanying condensed consolidated income statement for all periods presented.

The sch

dule of required principal payments re

aining during the next five years on long-term debt outstanding

of October 29, 2022, is

follows:


(In thousands)
Fiscal 2023, remainder	$	375
Fiscal 2024		2,100
Fiscal 2025		2,700
Fiscal 2026		2,700
Fiscal 2027		2,700
Fiscal 2028 and beyond		4,050

	$	14,625