(

)

Line of Credit

As of

December 30, 2017,

the Company had a bank line of credit that provides borrowing capacity of

$35

million. Borrowings under the credit agreement are secured by our assets and a pledge of

66%

of the Company’s ownership interest in certain of its foreign subsidiaries. The credit agreement expires on

December 31, 2018

and contains various restrictions on indebtedness, liens, guarantees, redemptions, mergers, acquisitions or sale of assets, loans, transactions with affiliates, and investments. It prohibits the Company from declaring dividends without the bank’s prior consent, unless such payment of dividends would

not

violate any terms of the credit agreement. The Company is also prohibited from repurchasing shares of its common stock unless such purchase would

not

violate any terms of the credit agreement; the Company

may

not

use proceeds of the line of credit to repurchase shares. Borrowings bear interest at LIBOR plus

1.8%.

Financial covenants include maintaining a minimum tangible net worth, maintaining a minimum fixed charge coverage ratio (as defined in the credit agreement) and

not

exceeding a maximum funded debt to earnings before interest, depreciation and amortization ratio. As of

December 30, 2017: (

i) the Company was in compliance with all covenants; (ii) there were

borrowings under the line of credit; and (iii) there was

$35.0

million available for borrowing under the line of credit.