NOTE 7 - LINE OF CREDIT AND LETTER OF CREDIT FACILITIES

9 Months Ended

Sep. 27, 2014

NOTE 7 – LINE OF CREDIT AND LETTER OF CREDIT FACILITIES

Line of Credit Facility

On September 16, 2014, the Company entered into a three year Loan and Security Agreement (“Loan Agreement”) with Regions Bank (“Lender”) pursuant to which the Lender agreed to extend credit to the Company in the form of revolving loans of up to the lesser of $10.0 million (the "Commitment") or a defined Borrowing Base. The Loan Agreement includes a sub-facility for standby and / or trade letters of credit of up to $2.5 million. This Loan Agreement will mature on September 16, 2017. There were no loans outstanding under this Loan Agreement as of September 27, 2014.

The Loan Agreement requires the Company to comply with various financial, affirmative and negative covenants affecting its businesses and operations, including:

·	The Company will not be party to mergers, acquisitions, consolidations, reorganizations or similar transactions.

·	The Company will not sell, lease, transfer or otherwise dispose of any of its properties or assets (subject to certain exceptions set forth in the Loan Agreement).

·	The Company will not declare, pay or make any dividend or distribution on any shares of common or preferred stock or make any cash payment to repurchase or otherwise retire any common or preferred stock.

·	The Company will maintain a fixed charge coverage ratio of not less than 1.10 to 1.00.

·	The Company will not permit capital expenditures during any fiscal year to exceed $3.5 million.

Any loans will bear interest at a rate per annum equal to the LIBOR Index Rate plus 2.25%. If the loan is converted to a Base Rate Loan, then such loan will bear interest at a rate per annum equal to the Base Rate (defined as a rate per annum equal to the greatest of (a) the Federal Funds Rate in effect on such day plus 0.50%, (b) the Prime Rate in effect on such day, or (c) a per annum rate equal to LIBOR determined with respect to an interest period of one month plus 1.00%) plus 1.25%.

Also on September 16, 2014, the Company terminated its previous credit facility with PNC Bank. There were no loans outstanding under that facility on that date. See “Note 9 - Credit Facilities” of our 2013 Annual Report on Form 10-K for a description of the material terms of the PNC credit facility.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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