LINE OF CREDIT AND LONG-TERM DEBT

9 Months Ended

Sep. 30, 2020

On April 24, 2020, (a) Encina Business Credit, LLC (“EBC”) and the lenders under our Revolving Credit Agreement with EBC (the “EBC Lenders”), and Vertex Operating, entered into a Fourth Amendment and Limited Waiver to Credit Agreement, effective on April 24, 2020, pursuant to which the EBC Lenders agreed to amend the EBC Credit Agreement; and (b) the EBC Lenders and Vertex Operating entered into a Fourth Amendment and Limited Waiver to ABL Credit Agreement, effective on April 24, 2020, pursuant to which the EBC Lenders agreed to amend the Revolving Credit Agreement (collectively, the “Waivers”). The Waivers amended the credit agreements to extend the due date of amounts owed thereunder from February 1, 2021 to February 1, 2022.

On August 7, 2020, the Company and Vertex Operating entered into a Fifth Amendment to Credit Agreement with EBC (the “Fifth Amendment”), which amended the EBC Credit Agreement to provide the Company up to a $2 million term loan to be used for capital expenditures (the “CapEx Loan”), which amounts may be requested from time to time by the Company, provided that not more than four advances of such amount may be requested, with each advance being not less than $500,000 (in multiples of $100,000). The amendment also provided that any prepayments of the EBC Credit Agreement would first be applied to the term loan and then to the CapEx Loan. The CapEx Loan bears interest at the rate of LIBOR (1.55% at September 30, 2020) plus 7%, or to the extent that LIBOR is not available, the highest of the prime rate and the Federal Funds Rate plus 0.50%, in each case, plus 6%. We are required to repay the CapEx Loan in monthly installments of 1/48th of the amount borrowed, each month that the CapEx Loan is outstanding, with a final balloon payment due at maturity. The obligation of EBC to fund the CapEx Loan is subject to customary conditions and requirements set forth in the Fifth Amendment, including the requirement that the Company has maintained daily availability under the ABL Credit Agreement greater than $1 million for the last thirty days, and that such availability would remain over $1 million, on a pro forma basis with such new loan. We are also required to provide the agent for the EBC Credit Agreement, a first priority security interest in the rolling stock collection assets or other assets acquired with the CapEx Loan.

Loan Agreements

On May 4, 2020, the Company applied for a loan from Texas Citizens Bank in the principal amount of $4.22 million, pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020. On May 5, 2020, the Company received the loan funds. The Note is unsecured, matures on April 28, 2022, and bears interest at a rate of 1.00% per annum, payable monthly commencing on February 2021, following an initial deferral period as specified under the PPP. Under the terms of the PPP, the entire amount may be forgiven to the extent loan proceeds are used for qualifying expenses. As of the date of this report, the Company believes it has used the PPP funds for qualifying expenses.

On May 27, 2020, the Company entered into a loan contract security agreement with John Deere to finance $152,643 to purchase equipment. The Note matures on June 27, 2024, and bears interest at a rate of 2.45% per annum, payable monthly commencing on June 27, 2020. The payment of the note is secured by the equipment purchased.

Insurance Premiums

The Company financed insurance premiums through various financial institutions bearing interest rates from 4.00% to 4.90% per annum. All such premium finance agreements have maturities of less than one year and have a balance of $1,893,668 at September 30, 2020 and $1,165,172 at December 31, 2019.

Finance Leases

On April 2, 2020, the Company obtained one finance lease with payments of $9,322 per month for three years and on July 28, 2020, the Company entered into another finance lease with payments of $3,545 per month for three years. The amount of the finance lease obligation has been reduced to $410,928 at September 30, 2020.

On May 22, 2020, the Company entered into one finance lease. Payments are $15,078 per month for three years and the amount of the finance lease obligation has been reduced to $485,745 at September 30, 2020.

The Company's outstanding debt facilities as of September 30, 2020 and December 31, 2019 are summarized as follows:


Creditor	Loan Type	Origination Date	Maturity Date	Loan Amount		Balance on September 30, 2020		Balance on December 31, 2019
Encina Business Credit, LLC	Term Loan	February 1, 2017	February 1, 2022	$	20,000,000	$	5,658,000	$	13,333,000
Encina Business Credit SPV, LLC	Revolving Note	February 1, 2017	February 1, 2022	$	10,000,000	—		3,276,230
Encina Business Credit, LLC	Capex Loan	August 7, 2020	February 1, 2022	$	2,000,000	1,250,617		—
Wells Fargo Equipment Lease-Ohio	Finance Lease	April-May, 2019	April-May, 2024	$	621,000	465,678		551,260
AVT Equipment Lease-Ohio	Finance Lease	April 2, 2020	April 2, 2023	$	337,155	410,928		—
AVT Equipment Lease-HH	Finance Lease	May 22, 2020	May 22, 2023	$	551,609	485,745		—
John Deere Note	Note	May 27, 2020	June 24, 2024	$	152,643	140,487		—
Tetra Capital Lease	Finance Lease	May, 2018	May, 2022	$	419,690	195,761		264,014
Well Fargo Equipment Lease-VRM LA	Finance Lease	March, 2018	March, 2021	$	30,408	4,485		12,341
Texas Citizens Bank	PPP Loan	May 5, 2020	April 28, 2022	$	4,222,000	4,222,000		—
Various institutions	Insurance premiums financed	Various	< 1 year	$	2,902,428	1,893,668		1,165,172
Total						14,727,369		18,602,017
Deferred finance costs						—		(47,826)
Total, net of deferred finance costs						$	14,727,369	$	18,554,191

Future contractual maturities of notes payable as of September 30, 2020 are summarized as follows:


Creditor	Year 1		Year 2		Year 3		Year 4		Year 5		Thereafter
Encina Business Credit, LLC	$	900,000	$	4,758,000	$	—	$	—	$	—	$	—
Encina Business Credit SPV, LLC	—		—		—		—		—		—
Encina Business Credit, LLC	158,966		1,091,651		—		—		—		—
John Deere Note	37,071		37,991		38,934		26,491		—		—
Well Fargo Equipment Lease- Ohio	119,356		125,643		132,261		88,418		—		—
AVT Equipment Lease-Ohio	124,308		135,272		151,348		—		—		—
AVT Equipment Lease-HH	145,296		158,111		182,338		—		—		—
Tetra Capital Lease	96,530		99,231		—		—		—		—
Well Fargo Equipment Lease- VRM LA	4,485		—		—		—		—		—
Texas Citizens Bank	1,877,461		2,344,539		—		—		—		—
Various institutions	1,893,668		—		—		—		—		—
Totals	$	5,357,141	$	8,750,438	$	504,881	$	114,909	$	—	$	—