Item 1.01. Entry into a Material Definitive Agreement
As previous reported, Micropac Industries, Inc. (the "Company") purchased 9.2
acres of land in Garland, Texas in 2017. The Company intended to use this land
tract to consolidate the three existing buildings into a new manufacturing
center in the future. The Company is currently designing the new facility using
contractors. The Company anticipates that it will use a combination of cash and
a commercial real estate construction loan for the construction of a new 76,000
square foot manufacturing center on the 9.2 acres of land.
On March 26, 2021, the Company (acting as borrower) entered into a Construction
Loan Agreement with Frost Bank ("Frost"), (acting as lender). The Construction
Loan Agreement provides for a construction loan, in amounts not to exceed a
total principal balance of $16,160,000 with an interest rate of (3.40%) per
annum. The Construction Loan Agreement is attached as Exhibit 10.3 attached
hereto.
On March 26, 2021, the Company renewed the Revolving Loan Agreement with Frost
through the "Sixth Amendment to Loan Agreement." (Attached as Exhibit 10.2
hereto). The Revolving Loan Agreement provides for revolving credit loans, in
amounts not to exceed a total principal balance of $6,000,000 with a rate equal
to prime rate. The Revolving Loan Agreement was originally entered into on
January 23, 2013, between the "Company" as borrower and Frost as lender.
Construction Loans. Subject to the terms of the Loan Agreement, Frost will lend
to the Company an aggregate amount not to exceed $16,160,000.00.
Principal and interest shall be due and payable monthly in an amounts determined
by Lender required to fully amortize the outstanding principal balance of this
Note over a period of twenty-five (25) years, payable on the twenty-sixth (26th)
day of each and every calendar month, beginning April 26, 2023, and continuing
regularly thereafter until March 26, 2031, when the entire amount hereof,
principal and accrued interest then remaining unpaid, shall be then due and
payable; interest being calculated on the unpaid principal each day principal is
outstanding and all payments made credited to any collection costs and late
charges, to the discharge of the interest accrued and to the reduction of the
principal, in such order as Lender shall determine.
The interest rate of (3.40%) per annum including an Interest-Only Period.
Interest only shall be due and payable monthly as it accrues on the twenty-sixth
(26th) day of each and every calendar month, beginning April 26, 2021, and
continuing regularly and monthly thereafter until March 26, 2023; interest being
calculated on the unpaid principal each day principal is outstanding and all
payments made credited to any collection costs and late charges, to the
discharge of the interest accrued and to the reduction of the principal, in such
order as Lender shall determine.
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The loan shall be secured by a "Deed of Trust, Security Agreement - Financing
Statement" covering the 9.2 acre tract in Garland, Texas and the improvements
made on it.
Revolving Credit Loans. Subject to the terms of the, Loan Agreement, Frost will
lend to the Company, on a revolving basis, amounts not to exceed a total
principal balance of $6,000,000.00, minus amounts available and amounts
previously disbursed under outstanding Frost letters of credit. Subject to
certain terms and conditions, the Company may borrow, repay and reborrow under
the Loan Agreement.
The interest on the outstanding and unpaid principal balance shall be computed
at a per annum rate equal to the lesser of (a) a rate equal to the Prime Rate
per annum; provided, however, in no event shall the resulting rate be less than
three and one-quarter percent (3.25%).
This summary of the Loan Agreement and related instruments and documents
executed pursuant thereto does not purport to be complete and are qualified in
their entirety by reference to the full text thereof, which is filed as Exhibit
10.14 attached hereto.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The information included in Item 1.01 of this Current Report is incorporated by
reference into this Item 2.03.
Item 9.01. Financial Statements and Exhibits
10.1 "Loan Agreement dated as of January 23, 2013 by and among Frost Bank and
Micropac Industries, Inc. which is filed as Exhibit 10.1 to the Form 8K
filed January 29, 2013 which is incorporated by reference herein.
10.13 "Sixth Amendment to Loan Agreement" dated March 26, 2021 between
Micropac Industries, Inc. as borrower and Frost Bank attached hereto.
10.14 Construction Loan Agreement" dated March 26, 2021 between Micropac
Industries, Inc. as borrower and Frost Bank attached hereto.
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