NOTE 11 - BORROWINGS

The credit facilities and other debt of the Company and related borrowings outstanding are as follows (in thousands):



	As of December 31, 2015				As of December 31, 2014
	Availability		Borrowings Outstanding		Borrowings Outstanding
Credit facilities:
TD Bank – secured revolving credit facility ⁽¹⁾	$	10,997	$	—	$	—
Republic Bank – secured revolving credit facility	2,233		—		—
			—		—
Other debt:
Senior Notes			10,000		10,000
Mortgage debt			9,877		10,088
Note payable to RSO			—		558
Other debt			870		324
Total borrowings outstanding			$	20,747	$	20,970


(1)	The amount of the facility shown has been reduced $503,000 for an outstanding letter of credit at December 31, 2015.

Corporate and Real Estate Debt

TD Bank, N.A. (“TD Bank”). In March 2011, the Company entered into a line of credit loan agreement with TD Bank that, through April 24, 2014, allowed for borrowings up to $7.5 million with interest at either (a) the prime rate plus 2.25% or (b) a specified London Interbank Offered Rate ("LIBOR") plus 3%. The interest rate used varies from one to six month LIBOR depending upon the period of the borrowing. In April 2014, the Company amended the TD Bank facility to (i) extend the maturity date to the earlier of (a) the expiration of the Company's management agreement with RSO or (b) December 31, 2017; (ii) increase the maximum borrowing amount to $11.5 million provided that the Company maintains an aggregate value of pledged securities of $6.0 million; and (iii) require that the Company have no cash advances outstanding for 30 consecutive days during each 1-year period beginning on April 25, 2014. The Company is charged an annual unused facility fee of 0.5% and a 5.25% fee on the $503,000 outstanding letter of credit.

Borrowings are secured by a first priority security interest in certain of the Company's assets and the guarantees of certain subsidiaries, including (i) the present and future fees and investment income earned in connection with the management of, and investments in, sponsored CDOs and CLOs, (ii) a pledge of 18,972 shares of TBBK common stock, and (iii) a pledge of 540,168 shares of RSO common stock held by the Company.

As of December 31, 2015 and December 31, 2014, there were no borrowings outstanding. Availability on the TD Bank facility was $11.5 million as of December 31, 2015, before reduction for an outstanding letter of credit. In 2016, due to a market decline in the value of the pledged securities, availability under the line of credit was reduced to $7.5 million.

Republic First Bank (“Republic Bank”). In February 2011, the Company entered into a $3.5 million revolving credit facility with Republic Bank. The facility bears interest at the prime rate of interest plus 1% with a floor of 4.5%. The loan is secured by a pledge of 175,000 shares of RSO common stock held by the Company and a first priority security interest in an office building located in Philadelphia, Pennsylvania. Availability under this facility is limited to the lesser of (a) the sum of (i) 25% of the appraised value of the real estate, based upon the most recent appraisal delivered to the bank and (ii) 100% of the cash and 75% of the market value of the pledged RSO shares held in the pledged account; and (b) 100% of the cash and 100% of the market value of the pledged RSO shares held in the pledged account. The loan has an unused annual facility fee equal to 0.25%. In November 2013, the Company further amended this facility to extend the maturity date to December 28, 2016 and increase the unused annual facility fee to 0.50%. As of December 31, 2015 there were no borrowings outstanding and availability under this facility as of December 31, 2015, was $2.2 million.

Senior Notes

The Company's $10.0 million of 9% senior notes (the "Senior Notes"), which mature on March 31, 2018, were originally issued with detachable 5-year warrants to purchase a total of 3,690,195 shares of common stock, all of which have been exercised as of December 31, 2014. The effective interest rate for 2015 and 2014 was 9.1% and 9.3%, respectively. On August 28, 2014, the Senior Notes were modified to extend the maturity date from March 31, 2015 to March 31, 2018 and to include an early redemption feature. The Company may early redeem all or any part of the Senior Notes upon notification to the note holders at the redemption price plus any accrued and unpaid interest through to the date of such redemption. The redemption price is at a premium to par, as follows: prior to March 31, 2016 at 102%, between March 31, 2016 and March 31, 2017 at 101%, and thereafter at 100%.

Note payable to RSO - Real Estate

In January 2010, RSO advanced $2.0 million to the Company under an 8% promissory note that matured on January 14, 2015. Interest was payable quarterly in arrears and requires principal repayments upon the receipt of distributions from one of the Company’s real estate investment funds. The principal balance of the note was $558,000 at December 31, 2014. The note was fully repaid in April of 2015.

Other Debt - Real Estate and Corporate

Real estate − mortgage. In August 2011, the Company obtained a $10.7 million mortgage for its hotel property in Savannah, Georgia. The 6.36% fixed rate mortgage, which matures in September 2021, requires monthly principal and interest payments of $71,331. The principal balance as of December 31, 2015 and 2014 was $9.9 million and $10.1 million, respectively.

Corporate - capital leases. In October 2013, the Company entered into a capital lease for the purchase of computer equipment at an interest rate of 6.5%. The two-year lease requires monthly payments of $16,377. The principal balance of the lease at December 31, 2015 was $0. In June 2014, the Company entered into a three-year capital lease for the purchase of computer equipment with monthly payments of $4,205. The principal balance of the lease at December 31, 2015 was $70,777. In December 2014, the Company entered into a thirty-nine month capital lease with monthly payments of $1,985. The principal balance of the lease at December 31, 2015 was $52,578. In January 2015 and March 2015, the Company entered into two three-year capital leases for computer equipment with monthly payments of $15,649 and $10,882, respectively. The principal balances of the leases at December 31, 2015 were $439,054 and $275,766, respectively. In August 2015, the Company entered into a three-year capital lease for equipment with monthly payments of $1,008. The principal balance of the lease at December 31, 2015 was $31,821.

Debt repayments

Annual principal payments on the Company’s aggregate borrowings for the five years ending December 31, and thereafter, are as follows (in thousands):



2016	$	601
2017	609
2018	10,380
2019	273
2020	290
Thereafter	8,594
Total	$	20,747

Covenants

The TD Bank credit facility is subject to certain financial covenants, which are customary for the type and size of the facility, including debt service coverage and debt to equity ratios. The debt to equity ratio restricts the amount of recourse debt the Company can incur based on a ratio of recourse debt to net worth.

The covenant for the mortgage on the Company's hotel property requires maintaining a minimum debt coverage ratio. In addition, although non-recourse in nature, the loan is subject to limited standard exceptions (or “carveouts”) which the Company has guaranteed. These carveouts will expire as the loan is paid down over the next ten years. The Company has control over the operations of the underlying property, which mitigates the potential risk associated with these carveouts and, accordingly, no liabilities for these obligations have been recorded in the consolidated financial statements. To date, the Company has not been required to make any carveout payments.

The Company was in compliance with all of its financial debt covenants as of December 31, 2015.