TRANSACTIONS WITH RELATED PARTIES

6 Months Ended

Jul. 02, 2016

TRANSACTIONS WITH RELATED PARTIES

TRANSACTIONS WITH RELATED PARTIES

17.TRANSACTIONS WITH RELATED PARTIES

Oaktree Capital Management, L.P. (“Oaktree”) provides certain management, advisory and consulting services to us pursuant to a Management Services Agreement that became effective on September 30, 2010. Oaktree is the management company for OCM.  Maine Street Holdings, Inc. (“Maine”) also provided certain management, advisory and consulting services to us pursuant to a Management Services Agreement that was effective on September 30, 2010 but the agreement with Maine was terminated on September 30, 2015.  Maine is controlled by our minority owners.  In consideration for the services provided, we were required to pay a quarterly management fee of $750, in advance, to both Oaktree and Maine.  We were also required to reimburse Oaktree and Maine for certain out-of-pocket expenses incurred with respect to the performance of services.  With respect to the agreement with Oaktree, we recorded expenses of $841 and $5,042 for 2nd Quarter 2016 and the year to date period ended July 2, 2016, respectively, for fees and out-of-pocket expenses. Similar expenses of $3,471 and $7,935 were recorded for Oaktree in 2nd Quarter 2015 and the year to date period ended July 4, 2015, respectively. Such expenses recorded for Maine in 2nd Quarter 2015 and the year to date period ended July 4, 2015 were $750 and $1,500, respectively. We include such expenses in selling, general and administrative expenses.  In connection with the IPO of our common stock on July 20, 2016, we paid Oaktree an aggregate success fee of $9,000 on July 20, 2016.  This payment was made pursuant to the Management Services Agreement which required payment in an amount equal to three times the annual management fee in the event of consummation of an IPO of our equity securities or equity interests or a sale of all or substantially all of our assets.  We are not required to make any further payments to Maine.  The management services agreement with Oaktree was terminated effective July 20, 2016 in connection with our IPO.

At July 2, 2016, Oaktree and its affiliates held $49,173 of the carrying value of the 2016 First Lien Term Loan. At January 2, 2016, Oaktree and its affiliates held $31,772 of the carrying value of the 2012 Second Lien Term Loan.  Interest accrued and not paid to Oaktree and its affiliates was $20 and $692 as of July 2, 2016 and January 2, 2016, respectively, and is included in accrued interest in the accompanying unaudited Condensed Consolidated Balance Sheets.  Interest expense recorded with respect to such debt was $712 and $1,480 for 2nd Quarter 2016 and the year to date period ended July 2, 2016, respectively. For 2nd Quarter 2015 and the year to date period ended July 4, 2015, such interest expense was $768 and $1,537, respectively.

Written procedures adopted by the Company and its Audit Committee currently restrict and govern related party transactions.  Pursuant to those procedures, certain related party transactions require pre-approval by our Chief Executive Officer and Chief Financial Officer, and if the transaction is material, by the Audit Committee before such transactions can be binding.