(

)

Indebtedness

February 1, 2018,

the Company, as the borrower, entered into an unsecured

$70

million Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) with certain of the Company’s subsidiaries (the “Subsidiary Guarantors”) and Bank of America, N.A., in its capacity as the initial lender, Administrative Agent, Swingline Lender and L/C Issuer, and certain other lenders from time to time party thereto. The Amended and Restated Credit Agreement amends and restates the Company’s prior credit agreement.

The credit facilities under the Amended and Restated Credit Agreement (the “Amended and Restated Credit Facilities”) consist of a

$20

million unsecured term loan and an unsecured revolving credit facility, under which the Company

may

borrow up to

$50

million. The Amended and Restated Credit Agreement matures on

February 1, 2023.

The proceeds borrowed pursuant to the Amended and Restated Credit Agreement

may

be used for general corporate purposes, as well as permitted acquisitions. The Company’s obligations under the Amended and Restated Credit Agreement are guaranteed by the Subsidiary Guarantors.

The Amended and Restated Credit Agreement calls for interest of LIBOR plus a margin that ranges from

1.0%

1.5%

or, at the discretion of the Company, the bank’s prime rate less a margin that ranges from

0.25%

to zero. In both cases the applicable margin is dependent upon Company performance. Under the Amended and Restated Credit Agreement, the Company is subject to a minimum fixed-charge coverage financial covenant as well as a maximum total funded debt to EBITDA financial covenant. The Amended and Restated Credit Agreement contains other covenants customary for transactions of this type, including restrictions on certain payments, permitted indebtedness and permitted investments. As of

March 31, 2020

there were

amounts outstanding under the Amended and Restated Credit Facilities other than

$0.7

million in standby letters of credit outstanding drawable as a financial guarantee on worker’s compensation insurance policies. As of

March 31, 2020,

the applicable interest rate was approximately

1.99%

and the Company was in compliance with all covenants under the Amended and Restated Credit Agreement.

Derivative Financial Instruments

The Company uses interest-rate-related derivative instruments to manage its exposure related to changes in interest rates on its variable-rate debt instruments. The Company does

not

enter into derivative instruments for any purpose other than cash flow hedging. The Company does

not

speculate using derivative instruments. By using derivative financial instruments to hedge exposures to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, the Company is

not

exposed to the counterparty’s credit risk. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with carefully selected major financial institutions based upon their credit profile. Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that

may

be undertaken. The Company assesses interest rate risk by identifying and monitoring changes in interest rate exposures that

may

adversely impact expected future cash flows and by evaluating hedging opportunities. The Company’s debt obligations expose the Company to variability in interest payments due to changes in interest rates. The Company believes that it is prudent to limit the variability of a portion of its interest payments. To meet this objective, in connection with the term loan under the Amended and Restated Credit Agreement, the Company entered into a

$20

million,

-year interest rate swap agreement under which the Company receives

three

-month LIBOR plus the applicable margin and pays a

2.7%

fixed rate plus the applicable margin. The swap agreement was established to modify the Company’s interest rate exposure by converting interest on the term loan from a variable rate to a fixed rate to hedge against the possibility of rising interest rates during the term of the loan. Because the Company repaid its term loan in full, the swap agreement

longer serves this purpose and

may

be canceled by the Company prior to its expiration date. The notional amount was approximately

$13.6

million at

March

31,

2020.

The fair value of the swap as of

March 31, 2020

and

2019

was approximately $(

624

) thousand and $(

175

) thousand, respectively and is included in other liabilities. Changes in the fair value of the swap are recorded in other expense and were approximately

$300

thousand and

$239

thousand during the

three

-months ended

March 31, 2020

and

2019,

respectively.