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Note 9 Subsequent Events
On April 16, 2020,
Optex Systems Holdings, Inc. and its subsidiary, Optex Systems, Inc. (“Optex”, and with the Company, the “Borrower”)
entered into a line of credit facility (the “Facility”) with BBVA, USA (“BBVA”) The substantive terms are
as follows:
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The principal amount of the Facility is $2.25 million. The Facility matures on April 15, 2022. The interest rate is BBVA’s Prime Rate and is fixed at 3% for the first year, and all accrued and unpaid interest is payable monthly in arrears starting on May 15, 2020; and the principal amount is due in full with all accrued and unpaid interest and any other fees on April 15, 2022. |
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There are commercially standard covenants including, but not limited to, covenants regarding maintenance of corporate existence, not incurring other indebtedness except trade debt, not changing more than 25% stock ownership of Borrower, and a Fixed Charge Coverage Ratio of 1.25:1, with the Fixed Charge Coverage Ratio defined as (earnings before taxes, amortization, depreciation, amortization and rent expense less cash taxes, distribution, dividends and fair value of warrants) divided by (current maturities on long term debt plus interest expense plus rent expense). |
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The Facility contains commercially standard events of default including, but not limited to, not making payments when due; incurring a judgment of $10,000 or more not covered by insurance; not maintaining collateral and the like. |
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The Facility is secured by a first lien on all of the assets of Borrower. |
On April 30, 2020, the Optex Systems Holdings,
Inc. Board of Directors held a meeting and voted to increase the annual board compensation for the three independent directors
from $22,000 to $36,000 with an effective date of January 1, 2020, in addition to granting 100,000 restricted shares to each independent
director which shall vest at a rate of 20% per year (20,000 shares) each January 1st, over the next five years, through
January 1, 2025.
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