Debt:

9 Months Ended

Sep. 26, 2020

Debt:

Debt:

9. Debt:

Line of Credit

In September 2020, the Company’s Line of Credit with CIBC Bank USA and BMO Harris Bank N.A. was amended to, among other things:

● Decrease the aggregate commitments from $40.0 million to $25.0 million;

● Remove BMO Harris Bank N.A. as a lender under the Credit Agreement;

● Extend the termination date from July 19, 2021 to August 31, 2024;

● Amend the tangible net worth covenant requirement to be reset as of September 26, 2020;

● Permit the Company to issue up to $25.0 million in additional term notes to one or more affiliates or managed accounts of Prudential.

As of September 26, 2020, there were no borrowings outstanding under the Company’s Line of Credit, leaving $25.0 million available for additional borrowings.

The Line of Credit has been and will continue to be used for general corporate purposes. During the first quarter of 2020, the Line of Credit was used to finance in part the 2020 Tender Offer (as indicated above). 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 26, 2020, the Company was in compliance with all of its financial covenants.

Notes Payable

In September 2020, the Note Agreement with Prudential Investment Management, Inc., its affiliates and managed accounts (“Prudential”) was amended to, among other things, amend the tangible net worth covenant requirement to be reset as of September 26, 2020.

As of September 26, 2020, the Company had $14.3 million in principal outstanding from the $25.0 million Series A notes issued in May 2015 and $8.7 million in principal outstanding from the $12.5 million Series B notes issued in August 2017 under the Note Agreement.

The final maturity of the Series A and Series B notes is 10 years from the issuance date (May 2025 and August 2027, respectively). 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 26, 2020, 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.