NOTE B — LONG-TERM DEBT


	March 6, 2012				May 31, 2011
	Payable within one year		Payable after one year		Payable within one year		Payable after one year
	(in thousands)
Construction Loan —
Construction Phase	$	—	$	—	$	220	$	2,780
Term Loans		6,120		16,136		6,428		17,415

Revolving Loan		—		—		—		—

Stock Repurchase Loan —
Draw Phase		—		—		104		896
Term Loans		131		784		—		—

2009 Term Loan		1,029		707		1,002		1,481

	$	7,280	$	17,627	$	7,754	$	22,572

The portion payable after one year matures as follows:


	March 6, 2012		May 31, 2011
	(in thousands)
Annual period ending in 2013	$	—	$	6,848
2014		5,542		5,118
2015		4,274		3,943
2016		3,395		3,031
2017		2,167		1,984
2018		1,738		1,421
Subsequent to 2018		511		227

	$	17,627	$	22,572

The Company has four unsecured loans in place, all with the same lending institution. A single Amended and Restated Loan Agreement (2010 Loan Agreement), under which the Company may not assume or permit to exist any other indebtedness, governs the four loans. The 2010 Loan Agreement amended and restated two prior loan agreements that consisted of a construction draw facility (Construction Loan) and a revolving credit agreement (Revolving Loan), and added a Stock Repurchase Loan. Borrowing under these three credit lines is permitted through April 15, 2012. The 2009 Term Loan, previously governed by the revolving credit agreement, is also governed under the 2010 Loan Agreement. The renegotiation of 2010 Loan Agreement is anticipated to expand present borrowing capacity when it is completed in April 2012, providing uninterrupted access to credit facilities for construction and working capital.

Construction Loan

The Construction Loan is an unsecured draw credit line intended to finance construction and opening and/or the refurbishing of restaurant operations. The 2010 Loan Agreement made $15,000,000 available to be borrowed for its intended purpose when it went into effect in October 2010. As of March 6, 2012, the amount available to be borrowed had been reduced to $8,500,000, which is net of the sum of $6,500,000 borrowed since the inception of the 2010 Loan Agreement, including $2,000,000 borrowed since the beginning of fiscal year 2012.

The Construction Loan is subject to an unused commitment fee equal to 0.25 percent of the amount available to be borrowed. Funds borrowed are initially governed as a Construction Phase loan on an interest only basis. Interest is calculated with a pricing matrix that uses changeable basis points, determined by certain of the Company's financial ratios. Interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly. Payment of principal without penalty is permitted at the end of any rate period.

Within six months of borrowing (assuming no prepayment at the end of the rate period), the balance outstanding under each loan in the Construction Phase must be converted to a Term Loan, with an amortization period of not less than seven nor more than 12 years as chosen by the Company. For funds borrowed between September 2007 and September 2010, any Term Loan converted with an initial amortization period of less than 12 years, a one-time option, without penalty or premium, is available during the chosen term to extend the amortization period up to a total of 12 years. Outstanding balances of loans initiated prior to September 2007 had to be converted with an amortization period not to exceed seven years. Upon conversion to an amortizing Term Loan, the Company may select a fixed interest rate over the chosen term or may choose among various adjustable rate options.

Prepayments of Term Loans that were initiated prior to September 2009 are permissible upon payment of sizable prepayment fees and other amounts. For Term Loans initiated after September 2009, the Company has the option at the time of conversion to include a small breakfunding premium over the otherwise applicable fixed interest rate in exchange for the right to prepay in whole or in part at any time without incurring a prepayment fee. After September 2010, the breakfunding premium included at conversion is also necessary in order to be permitted to extend the amortization period up to 12 years without incurring additional costs.

As of March 6, 2012, the aggregate outstanding balance under the Construction Loan was $22,256,000, which consisted entirely of Term Loans; no balance was in the Construction Phase awaiting conversion. Since the inception of the Construction Loan (including prior agreements), 22 of the Term Loans ($52,500,000 out of $97,000,000 in original notes) had been retired as of March 6, 2012, together with $1,000,000 that was retired without penalty in December 2011 (the end of its specific rate period) directly from the Construction Phase. All of the outstanding Term Loans are subject to fixed interest rates, the weighted average of which is 4.92 percent, all of which are being repaid in 84 equal monthly installments of principal and interest aggregating $642,000, expiring in various periods ranging from September 2012 through February 2019.

Revolving Loan

The Revolving Loan provides an unsecured credit line that allows for borrowing of up to $5,000,000 to fund temporary working capital needs. Amounts repaid may be re-borrowed so long as the amount outstanding does not exceed $5,000,000 at any time. The Revolving Loan, none of which was outstanding as of March 6, 2012, is subject to a 30 consecutive day out-of-debt period each fiscal year. Interest is determined by the same pricing matrix used for loans in the Construction Phase as described above under the Construction Loan. Interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly. The loan is also subject to a 0.25 percent unused commitment fee.

Stock Repurchase Loan

The Stock Repurchase Loan is an unsecured draw credit line intended to finance repurchases of the Company's common stock, under which up to $10,000,000 may be borrowed. As of March 6, 2012, $9,000,000 remained available to be borrowed. Amounts drawn are on an interest-only basis for six months (Draw Phase). Interest is determined by the same pricing matrix used for loans in the Construction Phase as described above under the Construction Loan. Interest is payable at the end of each specific rate period selected by the Company, which may be monthly, bi-monthly or quarterly. Prepayment of principal without penalty is permitted at the end of any rate period during the Draw Phase. The balance outstanding must be converted semi-annually to a Term Loan amortized over seven years. The Stock Repurchase Loan is not subject to an unused commitment fee.

Borrowing capacity under the Stock Repurchase Loan will expire April 15, 2012. It is not expected to be included under the renewal of the 2010 Loan Agreement that is currently being renegotiated.

The balance of the $1,000,000 that was converted into a Term Loan in July 2011 had been reduced to $915,000 as of March 6, 2012. The loan requires 84 equal installments of $13,000 including principal and interest at a fixed 3.56 percent interest rate, which matures in July 2018.

2009 Term Loan

The unsecured 2009 Term Loan originated in September 2009 when $4,000,000 was borrowed to fund the acquisition of five Big Boy restaurants from the landlord of the facilities. The 2009 Term Loan, the outstanding balance of which was $1,735,000 as of March 6, 2012, requires 48 monthly installments of $89,000 including principal and interest at a fixed 3.47 percent interest rate. The final payment of the loan is due October 21, 2013.

Loan Covenants

The 2010 Loan Agreement contains covenants relating to cash flows, debt levels, lease expense, asset dispositions, investments and restrictions on pledging certain restaurant operating assets. The Company was in compliance with all loan covenants as of March 6, 2012. The 2010 Loan Agreement does not require compensating balances.

Fair Values

The fair values of the fixed rate Term Loans within the Construction Loan as shown in the following table are based on fixed rates that would have been available at March 6, 2012 if the loans could have been refinanced with terms similar to the remaining terms under the present Term Loans. The carrying value of substantially all other long-term debt approximates its fair value.


	Carrying Value		Fair Value
Term Loans under the Construction Loan	$	22,256,000	$	23,115,000