Credit Facility

The Company's long-term credit facility consists of:



	August 1, 2015			January 31, 2015
Credit Facility
Revolving loan	$	45,000,000		$	40,700,000
Term loan	13,852,000			12,007,000
Total long-term credit facility	58,852,000			52,707,000
Less current portion of long-term credit facility	(2,143,000		)	(1,736,000		)
Long-term credit facility, excluding current portion	$	56,709,000		$	50,971,000

On February 9, 2012, the Company entered into a credit and security agreement (as amended on March 6, 2015, the "Credit Facility") with PNC Bank, N.A. ("PNC"), a member of The PNC Financial Services Group, Inc., as lender and agent. The Credit Facility, which includes The Private Bank as part of the facility, provides a revolving line of credit of $75.0 million and provides for a $15.0 million term loan on which the Company has drawn to fund improvements at the Company's distribution facility in Bowling Green, Kentucky. The Credit Facility also provides an accordion feature that would allow the Company to expand the size of the revolving line of credit by another $15.0 million upon certain conditions being met.

All borrowings under the Credit Facility mature and are payable on May 1, 2018. Subject to certain conditions, the Credit Facility also provides for the issuance of letters of credit in an aggregate amount up to $6.0 million which, upon issuance, would be deemed advances under the Credit Facility. Maximum borrowings and available capacity under the revolving line of credit under the Credit Facility are equal to the lesser of $75.0 million or a calculated borrowing base comprised of eligible accounts receivable and eligible inventory. The Credit Facility is secured by substantially all of the Company’s personal property, as well as the Company’s real properties located in Eden Prairie, Minnesota and Bowling Green, Kentucky. Under certain circumstances, the borrowing base may be adjusted if there were to be a significant deterioration in value of the Company’s accounts receivable and inventory.

The revolving line of credit under the Credit Facility bears interest at LIBOR plus 3% per annum. The term loan bears interest at either (i) a fixed rate based on the LIBOR Rate for interest periods of one, two, three or six months, or (ii) a daily floating alternate base rate (the “Base Rate”), plus until January 31, 2015, a margin of 5% on the Base Rate and 6% on the LIBOR Rate and then the margin adjusts each fiscal year to a rate consisting of between 4% and 5% on Base Rate term loans and 5% to 6% on LIBOR Rate term loans based on the Company’s leverage ratio as demonstrated in its financial statements. As of August 1, 2015, the Company had borrowings of $45.0 million under its revolving credit facility. Remaining capacity under the revolving credit facility as of August 1, 2015 is $28.0 million, of which approximately $3.0 million is earmarked for our distribution facility expansion, with the balance providing liquidity for working capital and general corporate purposes. The Credit Facility also provides for a $15.0 million term loan on which the Company has drawn to fund an expansion at the Company's distribution facility in Bowling Green, Kentucky. As of August 1, 2015, there was approximately $13.9 million outstanding under the Credit Facility term loan of which $2.1 million was classified as current in the accompanying balance sheet.

Principal borrowings under the term loan are to be payable in monthly installments over an 84 month amortization period commencing on January 1, 2015 and are also subject to mandatory prepayment in certain circumstances, including, but not limited to, upon receipt of certain proceeds from dispositions of collateral. Borrowings under the term loan are also subject to mandatory prepayment starting in the fiscal year ending January 30, 2016 in an amount equal to fifty percent (50%) of excess cash flow for such fiscal year, with any such payment not to exceed $2.0 million in any such fiscal year. The Credit Facility is also subject to other mandatory prepayment in certain circumstances. In addition, if the total Credit Facility is terminated prior to maturity, the Company would be required to pay an early termination fee of 0.5% if terminated on or before May 1, 2016; and no fee if terminated after May 1, 2016. Interest expense recorded under the Credit Facility for the three- and six-month periods ended August 1, 2015 was $668,000, and $1,260,000, respectively and $383,000 and $774,000 for the three- and six-month periods ended August 2, 2014, respectively.

The Credit Facility contains customary covenants and conditions, including, among other things, maintaining a minimum of unrestricted cash plus facility availability of $10.0 million at all times and limiting annual capital expenditures. As our unused line availability was greater than $10.0 million at August 1, 2015, no additional cash was required to be restricted. Certain financial covenants, including minimum EBITDA levels (as defined in the Credit Facility) and a minimum fixed charge coverage ratio, become applicable only if unrestricted cash plus facility availability falls below $16.0 million or upon an event of default. In addition, the Credit Facility places restrictions on the Company’s ability to incur additional indebtedness or prepay existing indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, to merge or consolidate with other entities, and to make certain restricted payments, including payments of dividends to common shareholders.

Costs incurred to obtain amendments to the Credit Facility totaling $877,000 and unamortized costs incurred to obtain the original Credit Facility totaling $466,000 have been deferred and are being expensed as additional interest over the five-year term of the Credit Facility.

The aggregate maturities of the Company's long-term Credit Facility as of August 1, 2015 is as follows:



	Credit Facility
Fiscal year	Term loan		Revolving loan		Total
2015	$	1,072,000	$	—	$	1,072,000
2016	2,143,000		—		2,143,000
2017	2,143,000		—		2,143,000
2018	8,494,000		45,000,000		53,494,000
2019	—		—		—
	$	13,852,000	$	45,000,000	$	58,852,000