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Note 5 - Debt Financing
Credit Facility – Avidbank
In April 2012, the Company amended its revolving credit facility with Avidbank. The new renewable revolving maturity date is April 15, 2014. The facility provides up to $1 million in financing against eligible receivables for up to two years. 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 7.0% and the then in effect prime rate plus 3.5%. The additional minimum interest payment requirement has been eliminated. |
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Interest shall be paid monthly in arrears. |
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The loan period is from July 15th through July 14th of the following year, beginning with the period of July 15, 2012 through July 14, 2013 and a revolving loan maturity date of April 15, 2014, at which time any outstanding advances, and accrued and unpaid interest thereon, will be due and payable. |
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A renewal fee of $10,000 is due on the 15th day of April each year beginning with April 15, 2012. |
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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. to Avidbank. |
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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 each loan period. The zero balance requirement was satisfied during the three months ending March 30, 2014. |
On April 15, 2014, the Company amended its revolving credit facility with Avidbank to extend the maturity date to June 15, 2014. See “Subsequent Events”.
As of March 30, 2014, the outstanding balance on the line of credit was $0. For the three and six months ended March 30, 2014, the total interest expense against the outstanding line of credit balance was $1 thousand and $8 thousand, respectively. For the three and six months ended March 31, 2013, the total interest expense against the outstanding line of credit balance was $6 thousand.
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