6. Debt:

Line of Credit

As of December 28, 2019 there were no borrowings outstanding under the Company’s revolving credit facility with CIBC Bank USA (as successor by merger to The PrivateBank and Trust Company) and BMO Harris Bank N.A. (the “Line of Credit”).

In July 2017, the Line of Credit was amended to, among other things:

Provide the consent of the lenders for the 2017 Tender Offer;

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

Amend the tangible net worth covenant calculation to remove the effect of the 2017 Tender Offer;

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

Permit the Company to sell up to $15.0 million in term notes to one or more affiliates or managed accounts of Prudential Investment Management, Inc. (“Prudential”) to partially fund the 2017 Tender Offer.

In December 2019, the Line of Credit was amended to, among other things:

Provide the consent of the lenders for the 2020 Tender Offer (See Note 14 - “Subsequent Events”);

Amend the tangible net worth covenant calculation to remove the effect of the 2020 Tender Offer; and

Allow the replacement of LIBOR.

The Line of Credit has been and will continue to be used for general corporate purposes. During 2019 and 2017, the Line of Credit was used to finance in part the 2019 Tender Offer and 2017 Tender Offer (as indicated above). Borrowings under the Line of Credit are subject to certain borrowing base limitations, and 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). In July 2019 the aggregate commitments under the Line of Credit automatically reduced by $5.0 million and will reduce automatically by the same amount each subsequent July thereafter through the term of the facility. As of December 28, 2019, the Company was in compliance with all of its financial covenants and the Company’s additional borrowing availability under the Line of Credit was $45.0 million.

The Line of Credit allows the Company to choose between two interest rate options in connection with its borrowings. The interest rate options are the Base Rate (as defined) and the LIBOR Rate (as defined) plus an applicable margin of 0% and 2.0%, respectively. Interest periods for LIBOR borrowings can be one, two, three, six or twelve months, as selected by the Company. The Line of Credit also provides for non-utilization fees of 0.25% per annum on the daily average of the unused commitment.

Notes Payable

In May 2015, the Company entered into a $25.0 million Note Agreement (the “Note Agreement”) with Prudential.

In July 2017, the Note Agreement was amended to, among other things:

Provide the consent of Prudential for the 2017 Tender Offer;

Amend the tangible net worth covenant calculation to remove the effect of the 2017 Tender Offer; and

Provide for a new $12.5 million term loan to partially fund the 2017 Tender offer.

In December 2019, the Note Agreement was amended to, among other things:

Provide the consent of Prudential for the 2020 Tender Offer (See Note 14 - “Subsequent Events”); and

Amend the tangible net worth covenant calculation to remove the effects of the 2020 Tender Offer.

As of December 28, 2019, the Company had $16.0 million in principal outstanding from the $25.0 million Series A notes issued in May 2015 and $9.7 million in principal outstanding from the $12.5 million Series B notes issued in August 2017 under its Note Agreement with Prudential Investment Management, Inc., its affiliates and managed accounts.

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 December 28, 2019, 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.

As of December 28, 2019, required prepayments of the notes payable for each of the next five years and thereafter are as follows:


2020		$ 3,750,000
2021		4,250,000
2022		4,250,000
2023		4,250,000
2024		4,250,000
Thereafter		4,937,500
Total		$ 25,687,500