NOTE 8 — DEBT

The following table presents the Company’s debt as of:

(Dollars in thousands)	September 30, 2013		December 31, 2012
Lines of credit	$	500	$	1,000
Long-term debt:
Notes Payable	$	37,246	$	37,246
Term loan		6,000		6,900
Seller notes		1,173		2,906
Total long-term debt, including amounts due within one year	$	44,419	$	47,052

The following table represents the Company’s long-term debt due within one year as of:

(Dollars in thousands)	September 30, 2013		December 31, 2012
Contractual principal payments due within one year:
Term loan	$	1,200	$	1,200
Seller notes		1,173		2,290
Long-term debt due within one year	$	2,373	$	3,490

Lines of credit

Lines of credit consists of Industrial Supply’s $8.0 million asset-based revolving line of credit, which matures in September 2014 and is subject to a borrowing base. At September 30, 2013 and December 31, 2012, outstanding borrowings on the revolving line of credit were $0.5 million and $1.0 million, respectively. As of September 30, 2013, available borrowing capacity under the revolving line of credit was $7.5 million. The line of credit has a variable interest rate based upon the lender’s base rate, which was 4.0% on September 30, 2013, and is secured by all of the assets of Industrial Supply. Interest expense on lines of credit was $23 thousand and $8 thousand for the three months ended September 30, 2013 and 2012, respectively, and $72 thousand and $70 thousand for the nine months ended September 30, 2013 and 2012, respectively.

Notes Payable

On July 16, 2010, as partial settlement of the Company’s then outstanding 9.0% Trust Originated Preferred Securities (the “TOPrS”), the former holders of the TOPrS received $39.0 million in notes payable, due December 2016, bearing interest at 9.0% per annum (the “Notes Payable”). In 2012, the Company acquired and retired $1.8 million of the Notes Payable. Interest expense on the Notes Payable was $0.8 million and $0.9 million for the three months ended September 30, 2013 and 2012, respectively, and $2.5 million and $2.6 million for the nine months ended September 30, 2013 and 2012, respectively.

The Notes Payable indenture contains covenants that limit the ability of the Company and certain subsidiaries, subject to certain exceptions and qualifications, to (i) pay dividends or make distributions, repurchase equity securities, or make guarantee payments on the foregoing; (ii) make payments on debt securities that rank pari passu or junior to the Notes Payable; (iii) effect a change in control of the Company; or (iv) enter into transactions with affiliated parties that are not at arms-length.

Term loan

The term loan consists of Industrial Supply’s $8.0 million loan originally funded in September 2011 and maturing in September 2016, which had an outstanding balance of $6.0 million and $6.9 million at September 30, 2013 and December 31, 2012, respectively. The term loan is subject to annual principal payments of $0.8 million in year one, $1.2 million in each of years two and three, $1.6 million in each of years four and five, with a balloon payment of any remaining principal balance due at maturity. The term loan has a variable interest rate based upon the lender’s base rate plus 1.00% per annum; as of September 30, 2013, the interest rate was 5.00%. The term loan is secured by all of the assets of Industrial Supply. Interest expense on the term loan was $0.1 million and $0.1 million for the three months ended September 30, 2013 and 2012, respectively, and $0.2 million and $0.3 million for the nine months ended September 30, 2013 and 2012, respectively.

Seller notes

Seller notes are comprised of $5.0 million in obligations owed to the former owners of NABCO, issued in connection with the 2011 NABCO business combination. The seller notes had aggregate outstanding balances of $1.2 million and $2.9 million at September 30, 2013 and December 31, 2012, respectively. The seller notes mature on January 29, 2016 and are subject to scheduled quarterly principal payments and, subject to certain conditions, accelerated principal payments. Based on NABCO’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the year ended December 31, 2012, $1.7 million of accelerated principal payments are due and payable in the year ending December 31, 2013. The seller notes bear interest at 6.00% per annum and interest is paid quarterly. Interest expense on the seller notes was $27 thousand and $59 thousand for the three months ended September 30, 2013 and 2012, respectively, and $0.1 million and $0.2 million for the nine months ended September 30, 2013 and 2012, respectively.

As of September 30, 2013 and December 31, 2012, the Company was in compliance with all of the covenants under its debt agreements, which includes restrictions on dividends from Industrial Supply to Signature.