(8)	Notes Payable

The components of notes payable at December 31, 2016 and 2015 are as follows:

	2016		2015
	(In thousands)
Revolving credit agreement	$	1,500	$	1,043
Current portion of long-term notes payable......................................		300		300
Long-term notes payable		3,900		4,200
Total revolving credit agreement	$	5,700	$	5,543

Principal payments of debt for years subsequent to 2017 are as follows (in thousands):

	Amount
	(In thousands)
2017	$	1,800
2018		300
2019		300
2020		3,300
2021		-
	$	5,700

Revolving Credit Agreement

On December 29, 2015, the Company entered into a Loan Agreement (the “Loan Agreement”) with Frost Bank (“Frost”). The Loan Agreement provides two separate revolving credit facilities to the Company. The first facility (“Facility A”) provides the Company with a $4.00 million revolving line of credit with a two-year term maturing December 29, 2017, subject to a maximum loan amount (the “Borrowing Base”) based on a formula related to the value of certain of the Company’s accounts, inventories and equipment.Under Facility A, the Company may borrow, repay and reborrow, up to the Borrowing Base. Facility A also allows the issuance of standby letters of credit. As of December 31, 2016, we had $1.25 million in letters of credit outstanding. Facility A requires a period of not less than 30 consecutive days during each calendar year that the entire outstanding principal amount of the revolving credit facility is paid. Upon Facility A’s maturity date, all outstanding principal and unpaid accrued interest is due and payable. The Company borrowed $1.04 million under Facility A upon initiation of the Loan Agreement and had $1.50 million drawn and outstanding as of December 31, 2016. There was no additional borrowing capacity as of December 31, 2016 due to non-compliance with its financial covenants.

The second facility (“Facility B”) provides the Company with a $4.50 million declining revolving line of credit. The Company may be borrow, repay and reborrow from the line. The amount available to borrow under Facility B declines from the initial $4.50 million by $0.15 million each six months. Facility B’s maturity date is December 29, 2020 when all outstanding principal and unpaid accrued interest is due and payable. The Company was advanced $4.50 million under Facility B upon the initiation of the Loan Agreement which was to pay off the remaining balance on the facility from JP Morgan Chase Bank N.A. (“Chase”) and as of December 31, 2016, the outstanding balance is $4.20 million.

Under the Loan Agreement, the interest rate on both facilities is the three month LIBOR (0.98% at December 31, 2016) plus 4.00% per year. The Loan agreement also provides for usual and customary covenants and restrictions including that the borrower must maintain a fixed charge coverage ratio of no less than 1.25 to 1.00, and will not permit the ratio of consolidated total liabilities to consolidated net worth to exceed 1.25. Additionally, the Company’s obligations under Facility A are secured by:

1. All our accounts receivable, whether now owned or hereafter acquired.

2. All our inventory, whether now owned or hereafter acquired.

3. All our machinery and equipment, whether now owned or hereafter acquired.

4. A collateral assignment on all future distributions from joint ventures.

The Company’s obligations under Facility B are secured by:

1. Our fee simple interest in certain real estate and improvements in Beaumont, Texas.

2. Any parking, utility and ingress/egress easements on the foregoing property.

3. A collateral assignment on all future distributions from joint ventures.

The Company’s subsidiaries, M&I Electric Industries, Inc. and South Coast Electric Systems, LLC are additional obligors on the Loan Agreement.

The Company had $5.70 million of borrowings outstanding under the Frost credit agreement at December 31, 2016 and $5.54 million at December 31, 2015.

On March 23, 2017, the Company sold a $7.00 million Senior Secured Term Note (the “Note”) to a third-party lender to repay all outstanding borrowings under the existing revolving credit facilities and provide approximately $1.00 million of additional working capital. The Note is payable in monthly interest only payments, in arrears, with $0.50 million of principal repayable no later than June 30, 2017 and the balance due March 23, 2021. The Note is secured by all assets of the Company, with few exceptions, and bears interest at a fixed rate of 11.50%.