9. Debt:

Line of Credit

In July 2017, the Company’s Line of Credit with CIBC Bank USA (as successor by merger to the PrivateBank and Trust Company) and BMO Harris Bank N.A. was amended to, among other things:

Provide the consent of the lenders for the Tender Offer;

Extend the termination date from April 14, 2019 to July 19, 2021;

Amend the tangible net worth covenant calculation to remove the effect of the Tender Offer;

Reduce the applicable margin on interest rate options in connection with LIBOR loans under the Line of Credit;

Permit the Company to sell up to $15.0 million in term notes to one or more affiliates or managed accounts of Prudential to partially fund the Tender Offer.

During the first nine months of 2017, the Line of Credit was used to finance in part the Tender Offer and has been and will continue to be used for general corporate purposes. The Line of Credit is secured by a lien against substantially all of the Company’s assets, contains customary financial conditions and covenants, and requires maintenance of minimum levels of debt service coverage and tangible net worth and maximum levels of leverage (all as defined within the Line of Credit). As of September 30, 2017, the Company was in compliance with all of its financial covenants. There were $41.9 million in borrowings outstanding under the line of credit bearing interest ranging from 3.23% to 4.25%, leaving $8.1 million available for additional borrowings.

Notes Payable

In July 2017, the Note Agreement with Prudential Investment Management, Inc., its affiliates and managed accounts (“Prudential”) was amended to, among other things:

Provide the consent of Prudential for the Tender Offer;

Amend the tangible net worth covenant calculation to remove the effect of the Tender Offer;

Provide for a new $12.5 million term loan to partially fund the Tender Offer.

In August 2017, the Company issued $12.5 million of Series B notes to finance in part the Tender Offer. As of September 30, 2017, with the $20.5 million in principal outstanding from the $25.0 million of Series A notes issued in May 2015, the aggregate principal outstanding under the Note Agreement was $33.0 million.

The final maturity of the Series A and Series B notes is 10 years from the issuance date. For the Series A notes, interest at a rate of 5.50% per annum on the outstanding principal balance is payable quarterly, along with required prepayments of the principal of $500,000 quarterly for the first five years, and $750,000 quarterly thereafter until the principal is paid in full. For the Series B notes, interest at a rate of 5.10% per annum on the outstanding principal balance is payable quarterly, along with required prepayments of the principal of $312,500 quarterly until the principal is paid in full. The Series A and Series B notes may be prepaid, at the option of the Company, in whole or in part (in a minimum amount of $1.0 million), but prepayments require payment of a Yield Maintenance Amount, as defined in the Note Agreement.

The Company’s obligations under the Note Agreement are secured by a lien against substantially all of the Company’s assets (as the notes rank pari passu with the Line of Credit), and the Note Agreement contains customary financial conditions and covenants, and requires maintenance of minimum levels of fixed charge coverage and tangible net worth and maximum levels of leverage (all as defined within the Note Agreement). As of September 30, 2017, the Company was in compliance with all of its financial covenants.

In connection with the Note Agreement, the Company incurred debt issuance costs, of which unamortized amounts are presented as a direct deduction from the carrying amount of the related liability.