Note

– Debt

East West Bank Revolving Credit Facility

August 10, 2017,

we entered into the

2017

Credit Agreement

with East West Bank which provides for a

three

-year

$30

million senior secured revolving credit facility (the "New Credit Facility"). The

2017

Credit Agreement allows us to borrow up to

85%

of our eligible receivables and up to

85%

of the appraised value of our eligible equipment. Under the

2017

Credit Agreement, there are

required principal payments until maturity and we have the option to pay variable interest rate based on (i)

-month LIBOR plus a margin of

3.5%

or (ii) interest at the Wall Street Journal prime rate plus a margin of

1.75%.

Interest is calculated monthly and paid in arrears. Additionally, the New Credit Facility is subject to an unused credit line fee of

0.5%

per annum multiplied by the amount by which total availability exceeds the average monthly balance of the New Credit Facility, payable monthly in arrears. The New Credit Facility is collateralized by substantially all of our assets and subject to financial covenants. The outstanding principal loan balance matures on

August 10, 2020.

Under the terms of the

2017

Credit Agreement, collateral proceeds will be collected in bank-controlled lockbox accounts and credited to the New Credit Facility within

one

business day.

As of

December 31, 2018,

we had an outstanding principal loan balance under the

2017

Credit Agreement of approximately

$33.9

million with weighted average interest rates of

6.06

% per year for

$33.0

million of outstanding LIBOR Rate borrowings and

.25

% per year for the approximately

$883,000

of outstanding Prime Rate borrowings. As of

December 31

2018,

approximately

$3.0

million was available to be drawn under the

2017

Credit Agreement, subject to limitations including the minimum liquidity covenant described below.

As of

December 31, 2017,

we had an outstanding principal loan balance under the

2017

Credit Agreement of approximately

$27.1

million with interest rates of

5.06%

and

4.88%

per year for

$24.5

million of outstanding LIBOR Rate borrowings and

6.25%

per year for the approximately

$2.6

of outstanding Prime Rate borrowings. As of

December 31, 2017,

approximately

$2.1

million was available to be drawn under the

2017

Credit Agreement, subject to limitations including the minimum liquidity covenant described below.

Under to the

2017

Credit Agreement, we are subject to the following financial covenants:

(

)

Maintenance of a Fixed Charge Coverage Ratio (“FCCR”) of

not

less than

1.10

1.00

at the end of each month, with a buildup beginning on

January 1, 2017,

through

December 31, 2017,

upon which the ratio will be measured on a trailing

twelve

-month basis;

(

)

In periods when the trailing

twelve

-month FCCR is less than

1.20

1.00,

we are required to maintain minimum liquidity of

$1,500,000

(including excess availability under the

2017

Credit Agreement and balance sheet cash).

August 10, 2017,

an initial advance of approximately

$21.8

million was made under the New Credit Facility to repay in full all

obligations outstanding under our Prior Credit Facility and fund certain closing costs and fees.

November

20,

2017,

Enservco Corporation (the “Company”) entered into a First Amendment and Waiver (the “Amendment and Waiver”) with respect to the

2017

Credit Agreement, dated

November 20, 2017,

by and among the Company and East West Bank.

Pursuant to the Amendment and

Waiver, East West Bank waived an event of default with respect to the Company’s failure to satisfy the minimum fixed charge coverage ratio set forth in the

2017

Credit Agreement for the reporting period ended

September 30, 2017,

and permitted the Company to forego testing of its fixed charge coverage ratio as of

October 31, 2017

and

November 30, 2017.

In connection with the Amendment and Waiver, the Company agreed to pay East West Bank an amendment fee in the amount of

$20,000.

In connection with the acquisition of Adler Hot Oil Service, LLC ("Adler") (See Note

), on

October 26, 2018,

Enservco and East West Bank entered into a Second Amendment to Loan and Security Agreement and Consent (the “Second Amendment to LSA”), which amended the Loan and Security Agreement dated

August 10, 2017

by and between Enservco and East West Bank (the “Loan Agreement”). Pursuant to the Second Amendment to LSA, East West Bank consented to the Transaction and increased the maximum borrowing limit of the senior secured revolving credit facility provided to Enservco under the Loan Agreement to

$37.0

million. Proceeds of

$6.2

million from the increased senior secured revolving credit facility were used in the Transaction to make the cash payments at closing and retire the indebtedness of Adler. In connection with the Second Amendment to LSA the capital expenditure limitation contained within the Loan Agreement was increased to

$3.0

million from

$2.5

million.

October 26, 2018,

in connection with the Second Amendment to LSA, Adler entered into a Joinder Agreement, pursuant to which Adler was joined as a party to the Loan Agreement.

As of

December 31, 2018,

we were in compliance with all covenants contained in the

2017

Credit Agreement.

2014

PNC Credit Facility

September 2014,

the Company entered into an Amended and Restated Revolving Credit and Security Agreement (the

"2014

Credit Agreement") with PNC Bank, National Association ("PNC") which provided for a

five

-year

$30

million senior

secured revolving credit facility which replaced a prior revolving credit facility and term loan with PNC that totaled

$16

million (the

"2012

Credit Agreement"). The

2014

Credit Agreement allowed the Company to borrow up to

85%

of eligible receivables and up to

75%

of the appraised value of trucks and equipment. Under the

2014

Credit Agreement, there were

required principal payments until maturity and the Company had the option to pay variable interest rate based on (i)

-month LIBOR plus an applicable margin ranging from

4.50%

5.50%

for LIBOR Rate Loans or (ii) interest at PNC Base Rate plus an applicable margin of

3.00%

4.00%

for Domestic Rate Loans. Interest was calculated monthly and added to the principal balance of the loan. Additionally, the Company incurred an unused credit line fee of

0.375%.

The revolving credit facility was collateralized by substantially all of the Company’s assets and subject to financial covenants. On

August 10, 2017

we repaid all amounts due under our Prior Credit Facility with PNC Bank using proceeds from New Credit Facility.

Debt Issuance Costs

We have capitalized certain debt issuance costs incurred in connection with the credit agreements discussed above and these costs are being amortized to interest expense over the term of the facility on a straight-line basis. The long-term portion of debt issuance costs of approximately

$208,000

and

$232,000

is included in Other Assets in the accompanying condensed consolidated balance sheets for

December 31, 2018

and

2017,

respectively. D

uring the years ended

December 31, 2018

and

2017,

the Company amortized approximately

$105,000

and

$121,000

of these costs to Interest Expense. During the year ended December

31,

2017,

the Company expensed unamortized debt issuance costs of

$327,000

upon repayment of the Prior Credit Facility.

Notes Payable

Long-term debt consists of the following at years

December 31, 2018

and

2017

(in thousands):

	December 31,			December 31,
	2018			2017

Seller Subordinated Note. Interest is at 8%. Matures March 31, 2019	$	4,000		$	-

Subordinated Promissory Note with related party, Interest is at 10%, interest is paid quarterly. Matures June 28, 2022		1,000			1,500

Subordinated Promissory Note with related party, Interest is at 10%, interest is paid quarterly. Matures June 28, 2022		1,000			1,000

Real Estate Loan for our facility in North Dakota, interest at 3.75%, monthly principal and interest payment of $5,255 ending October 3, 2028. Collateralized by land and property purchased with the loan.		258			309

Vehicle loans for three trucks, interest at 8.59%, monthly principal and interest payments of $3,966, matures in August 2021		113			-

Note payable to the seller of Heat Waves. The note was garnished by the Internal Revenue Service (“ IRS”) in 2009 and is due on demand; paid in annual installments of $36,000 per agreement with the IRS.		89			125
Total		6,460			2,934
Less debt discount		(167	)		(271	)
Less current portion		(4,149	)		(182	)
Long-term debt, net of current portion	$	2,144		$	2,481

Aggregate maturities of debt, excluding the

2017

Credit Agreement described in Note

are as

follows (in thousands):

Years Ended December 31,
2019	$	4,149
2020		64
2021		53
2022		2,024
2023		25
Thereafter		145
Total	$	6,460