NOTE

— DEBT AND CREDIT AGREEMENTS

The Company's outstanding debt balances as of

September 30, 2020

and

December 31, 2019

consisted of the following:

	September 30,			December 31,
	2020			2019
Line of credit	$	7,649		$	11,517
PPP Loans		9,151			—
Other notes payable		531			1,563
Long-term debt		342			342
Less: Current portion		(8,176	)		(12,917	)
Long-term debt, net of current maturities	$	9,497		$	505

Credit Facility

October 26, 2016,

the Company established a

three

-year secured revolving line of credit with CIBC Bank USA (“CIBC”). This line of credit has been amended from time to time. On

February 25, 2019,

the line of credit was expanded and extended for

three

years when the Company and its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the

“2016

Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto (the “Lenders”), providing the Company and its subsidiaries with a

$35,000

secured credit facility (the “Credit Facility”).

The Credit Facility is an asset-based revolving credit facility, pursuant to which the Lenders advance funds against a borrowing base consisting of approximately (a)

85%

of the face value of eligible receivables of the Company and its subsidiaries, plus (b) the lesser of (i)

50%

of the lower of cost or market value of eligible inventory of the Company, (ii)

85%

of the orderly liquidation value of eligible inventory and (iii)

$12.5

million, plus (c) the lesser of (i) the sum of (A)

75%

of the appraised net orderly liquidation value of the Company's eligible machinery and equipment plus (B)

50%

of the fair market value of the Company's mortgaged property and (ii)

$12

million. Subject to certain borrowing base conditions, the aggregate Credit Facility limit under the

2016

Amended and Restated Loan Agreement is

$35

million with a sublimit for letters of credit of

$10

million. Borrowings under the Credit Facility bear interest at a per annum rate equal to, at the option of the Company, the one,

two

three

-month LIBOR rate or the base rate, plus a margin. The initial applicable margin was

5.50%

for LIBOR rate loans and

3.50%

for base rates loans. Upon certain pay downs, a pricing grid based on the Company's trailing

twelve

month fixed charge coverage ratio has become effective under which applicable margins would now range from

2.25%

2.75%

for LIBOR rate loans and

0.00%

0.75%

for base rate loans. The Company must also pay an unused facility fee equal to

0.50%

per annum on the unused portion of the Credit Facility along with other standard fees. The initial term of the

2016

Amended and Restated Loan Agreement ends on

February 25, 2022.

With the exception of the balance impacted by the interest rate swap (as defined below), the Company is allowed to prepay in whole or in part advances under the Credit Facility without penalty or premium other than customary “breakage” costs with respect to LIBOR loans.

The

2016

Amended and Restated Loan Agreement contains customary representations and warranties applicable to the Company and its subsidiaries. It also contains a requirement that the Company, on a consolidated basis, maintain a minimum quarterly fixed charge coverage ratio along with other customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications. The Company was in compliance with all financial covenants as of

September 30, 2020

The obligations under the Credit Facility are secured by, subject to certain exclusions, (i) a

first

priority security interest in all accounts receivable, inventory, equipment, cash and investment property, and (ii) a mortgage on the Abilene, Texas tower and Pittsburgh, Pennsylvania gearing facilities. The Company was in compliance with all financial covenants as of

September 30, 2020.

June 2019,

in conjunction with the

2016

Amended and Restated Loan Agreement, the Company entered into a floating to fixed interest rate swap with CIBC. The swap agreement has a notional amount of

$6,000

and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire term of the Credit Facility at

2.13%,

before considering the Company's risk premium. The interest rate swap is accounted for using mark-to-market accounting. Accordingly, changes in the fair value of the swap each reporting period are adjusted through earnings, which

may

subject the Company's results of operations to non-cash volatility. The interest rate swap liability is included in the “Accrued liabilities” line item of the Company's condensed consolidated financial statements as of

September 30, 2020

and

December 31, 2019

As of

September 30, 2020

, there was

$7,649

of outstanding indebtedness under the Credit Facility, with the ability to borrow an additional

$19,214,

under the Credit Facility.

October

29,

2020,

the Company executed the First Amendment to the

2016

Amended and Restated Loan Agreement (the “First Amendment”), implementing a payoff of a syndicated lender and a pricing grid based on the Company's trailing

twelve

month EBITDA under which applicable margins range from

2.25%

2.75%

for LIBOR rate loans and

0.00%

and

0.75%

for base rate loans, and extending the term of the Credit Facility to

July

31,

2023.

Other

2016,

the Company entered into a

$570

loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, less current maturities” line item of our condensed consolidated financial statements as of

September 30, 2020

and

December 31, 2019

. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years

2019

and

2018,

$114

of the loan was forgiven. As of

September 30, 2020

, the loan balance was

$342.

In addition, the Company has outstanding notes payable for capital expenditures in the amount of

$531

and

$1,563

as of

September 30, 2020

and

December 31, 2019

, respectively, with

$527

and

$1,400

included in the “Line of credit and other notes payable” line item of the Company's condensed consolidated financial statements as of

September 30, 2020

and

December 31, 2019

, respectively. The notes payable have monthly payments that range from

$36

and an interest rate of approximately

5%.

The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from

February 2021

August 2022.

April 15, 2020,

the Company received funds under notes and related documents (“PPP Loans”) with CIBC, under the Paycheck Protection Program (the “PPP”) which was established under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) enacted on

March 27, 2020

in response to the COVID-

pandemic and is administered by the U.S. Small Business Administration (the “SBA”). The Company received total proceeds of

$9,530

from the PPP loans and made repayments of

$379

May 13, 2020.

Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of

2020

enacted on

June 5, 2020 (

the “Flexibility Act”), the PPP Loans, and accrued interest and fees

may

be forgiven following a period of

twenty-four

weeks after PPP Loan proceeds are received (the “covered period”) if they are used for qualifying expenses as described in the CARES Act including payroll costs and benefits (which must equal or exceed

60%

of the amount requested to be forgiven), rent, mortgage interest, and utilities, which are subject to certain reductions based on the number of full time equivalent employees and the level of compensation for employees during such covered period. The amount of loan forgiveness will be reduced if the borrower terminates employees or significantly reduces salaries during such period, subject to certain exceptions. Subject to the terms and conditions applicable to loans administered by the SBA under the PPP, as amended by the Flexibility Act, the unforgiven portion of a PPP Loan is payable over a

two

year period at an interest rate of

1.00%,

with a deferral of payments of principal, interest and fees until the date on which the SBA remits the loan forgiveness amount to the lender (or notifies the lender that

loan forgiveness is allowed), provided that the borrower applies for forgiveness within

months after the last day of the covered period (and if

not,

payment of principal and interest shall commence

months after the last day of the covered period). The Company used at least

60%

of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses that the Company believes to be consistent with the terms of the PPP and plans to submit its forgiveness applications to CIBC during the

fourth

quarter of

2020.

While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the PPP Loans, the Company cannot provide assurance that it has

not

taken and will

not

take actions that could cause the Company to be ineligible for forgiveness of the PPP Loans, in whole or in part.