INDEBTEDNESS

Following is a summary of the Company’s debt, net of unamortized debt issuance costs:



	December 31,
(In Thousands) ¹	2017		2016
DAMI Credit Facility	$	—	$	47,302
Revolving Facility	—		—
Senior Unsecured Notes, 3.95%, Due in Installments through April 2018	24,994		49,975
Senior Unsecured Notes, 4.75%, Due in Installments through April 2021	239,784		299,562
Term Loan, Due in Installments through September 2022	96,272		94,626

Capital Lease Obligation:
with Related Parties	1,314		3,095
with Unrelated Parties	6,434		3,269
Total Debt	368,798		497,829
Less: Current Maturities	97,192		146,515
Long-Term Debt	$	271,606	$	351,314

¹Total debt as of December 31, 2017 includes unamortized debt issuance costs of $1.5 million. The Company has also recorded $3.2 million of debt issuance costs related to the revolving credit facility within prepaid expenses and other assets in the consolidated balance sheets.

Revolving Credit Agreement and Term Loan

On September 18, 2017, the Company entered into a second amended and restated revolving credit and term loan agreement (the "Amended Agreement") to, among other things, (i) increase the maximum revolving credit commitment from $225.0 million to $400.0 million (including increases in the existing letter of credit subfacility from $20.0 million to $35.0 million); (ii) provide for a $100.0 million term loan facility, an increase of $15.6 million from the $84.4 million remaining principal on the previous $125.0 million term loan, which is prepayable without penalty; (iii) amend the interest rate to bear interest at an adjusted London Interbank Overnight (LIBO) rate plus a margin within a range of 1.25% to 2.25% depending on the Company’s total net debt to EBITDA ratio or, alternatively, the administrative agent's prime rate plus a margin ranging from 0.25% to 1.25%, with the amount of such margin determined based upon the ratio of the Company's total net debt to EBITDA, for loans based on the base rate; (iv) provide for quarterly term loan repayment installments of $2.5 million, payable on the last day of each March, June, September, and December; and (v) extend the maturity date from December 9, 2019 to September 18, 2022. The increases to the Company’s revolving credit availability and term loan facility are intended for general working capital needs and were used to fully repay and terminate the $53.0 million of outstanding borrowings under its DAMI credit facility, which was scheduled to mature on October 15, 2017. The term loan interest rate was 2.82% as of December 31, 2017.

The Amended Agreement also provides for an uncommitted incremental facility increase option which, subject to certain terms and conditions, permits the Company at any time prior to the maturity date to request an increase in extensions of credit available thereunder (whether through additional term loans and/or revolving credit commitments or any combination thereof) by an aggregate additional principal amount of up to the greater of $250.0 million or any amount provided that the incremental borrowing does not result in a total debt to adjusted EBITDA ratio greater than 2.50:1.00, with such additional credit extensions provided by one or more lenders thereunder at their sole discretion.

The Company pays a commitment fee on unused balances, which ranges from 0.15% to 0.30% as determined by the Company's ratio of total debt to adjusted EBITDA. As of December 31, 2017, the amount available under the revolving credit component of the Amended Agreement was reduced by approximately $6.1 million for our outstanding letters of credit, resulting in availability of $393.9 million.

The Company concluded that the Amended Agreement constituted a debt modification and is deferring the $1.7 million of unamortized debt issuance costs remaining as of the amendment date over the term of the Amended Agreement. In connection with the Amended Agreement, the Company incurred $3.0 million of lender fees and third party legal and administrative fees, of which $0.2 million was recorded as interest expense within the consolidated statements of earnings for the year ended December 31, 2017.

Senior Unsecured Notes

2011 Note Purchase Agreement

Pursuant to the note purchase agreement dated as of July 5, 2011, as amended, the Company and certain of its subsidiaries as co-obligors previously issued $125.0 million in senior unsecured notes to the purchasers in a private placement. The notes bear interest at a rate of 3.95% per year and mature on April 27, 2018. Payments of interest commenced on July 27, 2011 and are due quarterly, and principal payments of $25.0 million commenced on April 27, 2014 and are due annually until maturity.

On April 14, 2014, the Company entered into the third amendment which revised the 2011 note purchase agreement to, among other things, replace the interest rate of 3.75% per year with an interest rate of 3.95% commencing April 28, 2014, conform the covenants, representations, warranties and events of default to the changes reflected in the revolving credit and term loan agreement, to contemplate the acquisition of Progressive and to authorize the new 2014 senior unsecured notes.

2014 Note Purchase Agreements

On April 14, 2014, the Company entered into note purchase agreements, as amended, pursuant to which the Company and certain of its subsidiaries as co-obligors issued $300.0 million in aggregate principal amount of senior unsecured notes in a private placement. The notes bear interest at the rate of 4.75% per year and mature on April 14, 2021. Payments of interest commenced on July 14, 2014 and are due quarterly, and principal payments of $60.0 million commenced on April 14, 2017 and are due annually until maturity.

Financial Covenants

The revolving credit and term loan agreement, senior unsecured notes discussed above, and franchise loan program discussed in Note 9 to these consolidated financial statements contain financial covenants, which include requirements that the Company maintain ratios of (i) adjusted EBITDA plus lease expense to fixed charges of no less than 2.50:1.00 and (ii) total debt to adjusted EBITDA of no greater than 3.00:1.00. In each case, adjusted EBITDA refers to the Company’s consolidated net income before interest and tax expense, depreciation (other than lease merchandise depreciation), amortization expense, and other cash and non-cash charges as defined in the Amended Agreement.

If the Company fails to comply with these covenants, the Company will be in default under these agreements, and all amounts could become due immediately. Under the Company’s revolving credit and term loan agreement, senior unsecured notes and franchise loan program, the Company may pay cash dividends in any year so long as, after giving pro forma effect to the dividend payment, the Company maintains compliance with its financial covenants and no event of default has occurred or would result from the payment. At December 31, 2017, the Company was in compliance with all covenants related to its outstanding debt.

Capital Leases with Related Parties

As of December 31, 2017, the Company had nine remaining capital leases with a limited liability company ("LLC") controlled by a group of current and former executives of the Company. In October and November 2004, the Company sold 11 properties, including leasehold improvements, to the LLC. The LLC obtained borrowings collateralized by the land and buildings totaling $6.8 million. The Company leases the land and buildings collateralizing the borrowings under a 15-year term lease at an aggregate annual rental of $0.8 million. The transaction has been accounted for as a capital lease in the accompanying consolidated financial statements. The rate of interest implicit in the leases is approximately 9.7%. Accordingly, the land and buildings, associated depreciation expense and lease obligations are recorded in the Company’s consolidated financial statements. No gain or loss was recognized related to the properties sold to the LLC. In January 2018, the Company extended six of the nine lease agreements with an additional five year term commencing at the expiration of the original lease agreements in November 2019.

Future principal maturities under the Company’s debt and capital lease obligations are as follows:



(In Thousands)
2018	$	97,556
2019	72,768
2020	71,670
2021	70,693
2022	57,561
Thereafter	—
Total	$	370,248