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Loan to Officer
6 Months Ended
Jul. 02, 2011
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]
8. Loan to Officer
 
As of July 2, 2011, there is one outstanding line of credit between the Company and its Chief Executive Officer, Richard P. Nespola, which originated in fiscal year 2001 . Aggregate borrowings outstanding against the line of credit at July 2, 2011 and January 1, 2011 totaled $300,000. The outstanding principal amount of the borrowings matures on August 17, 2011, and an event of default will occur if such amount is not paid on or prior to October 16, 2011. This amount is included in Prepaid and Other Current Assets in the current assets section of the Condensed Consolidated Balance Sheets as of July 2, 2011 and January 1, 2011. Under the line of credit agreement, Mr. Nespola may at his election transfer shares of common stock of the Company owned by him to the Company in payment of principal and/or interest under the line of credit. In addition, the independent directors on the Board of Directors may require Mr. Nespola to pledge additional shares of common stock of the Company having a value as determined under the line of credit agreement equal to the outstanding principal and interest as collateral. A copy of the line of credit agreement and the related revolving note and stock pledge documents are filed as Exhibits 10.31, 10.32 and 10.33 to this Form l0-Q.

The line of credit agreement provides for the mandatory forgiveness of all outstanding borrowings upon each of the following events: (a) termination without cause of Mr. Nespola's employment; (b) Mr. Nespola's death or disability; and (c) a change of control of the Company, as defined therein. Pursuant to the line of credit agreement, the Board of Directors has the discretion to forgive all or a portion of the principal balance at any time. Upon any forgiveness of the loan, the Company is obligated to pay Mr. Nespola a "gross-up payment" to offset any additional taxes Mr. Nespola incurs as a result of the loan forgiveness.

In accordance with the loan provisions, the interest rate charged on the loan is equal to the Applicable Federal Rate (AFR), as announced by the Internal Revenue Service, for short-term obligations (with annual compounding) in effect for the month in which the advance is made, until fully paid. Pursuant to the Sarbanes-Oxley Act, no further loan agreements or draws against the line may be made by the Company to, or arranged by the Company for its executive officers. Interest payments on this loan are current as of July 2, 2011.