Note 4 - Debt Financing
Credit Facility – Avidbank
On March 22, 2011, the Company amended their revolving credit facility with Avidbank, which provides up to $1 million in financing against eligible receivables. The material terms of the amended revolving credit facility are as follows:
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The interest rate for all advances shall be the greater of 8.5% and the then in effect prime rate plus 3.5% and subject to a minimum semiannual interest payment of $20 thousand |
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Interest shall be paid monthly in arrears. |
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The expiration date of the facility is March 15, 2012, at which time any outstanding advances, and accrued and unpaid interest thereon, will be due and payable. |
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The obligations of Optex Systems, Inc. to Avidbank are secured by a first lien on all of its assets (including intellectual property assets should it have any in the future) in favor of Avidbank. |
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The facility contains customary events of default. Upon the occurrence of an event of default that remains uncured after any applicable cure period, Avidbank’s commitment to make further advances may terminate, and Avidbank would also be entitled to pursue other remedies against Optex Systems, Inc. and the pledged collateral. |
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Pursuant to a guaranty executed by Optex Systems Holdings in favor of Avidbank, Optex Systems Holdings has guaranteed all obligations of Optex Systems, Inc. toAvidbank. |
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The facility contains a requirement for the Company to maintain a zero balance on the revolving line for a period of at least 30 consecutive days during the period from March 15, 2011 and March 15, 2012. |
As of January 1, 2012, the outstanding balance on the line of credit is $188 thousand. For the period ended January 1, 2012, the total interest expense against the outstanding line of credit balance was $10 thousand. Optex Systems Holdings satisfied the 30 consecutive zero balance on the revolving line of credit between August 4, 2011 and September 4, 2011. |