Notes Payable to Bank and Long-Term Debt

6 Months Ended

Jun. 30, 2013

Notes Payable to Bank and Long-Term Debt [Abstract]

Notes Payable to Bank and Long-Term Debt

D.Note Payable to Bank and Long-Term Debt

	June 30, 2013		December 31, 2012
Note Payable:	(in thousands)
MtronPTI revolving loan with J.P. Morgan Chase Bank, N.A. ("Chase") due June 30, 2014. The loan bears interest at the greater of Chase's prime rate or the one-month LIBOR rate plus 2.50% per annum (3.25% at June 30, 2013), which is due and payable monthly.	$	881	$	1,249
Long-Term Debt:
MtronPTI term loan with Chase paid February 7, 2013.		—		58
Less:  Current maturities		—		58
Long-Term Debt	$	—	$	—

On June 30, 2011, MtronPTI entered into a loan agreement with Chase, which was amended on June 28, 2012, September 28, 2012, and June 30, 2013 (the "Chase Loan Agreement"). The Chase Loan Agreement provides for a revolving line of credit in the amount of $1,500,000, to be used solely for working capital needs (the "Chase Revolving Loan") and matures on June 30, 2014, provided that the Chase Loan Agreement may be extended for up to three 12—month renewal terms upon written request by MtronPTI and approval by Chase.

At June 30, 2013, MtronPTI had approximately $881,000 outstanding under the Chase Revolving Loan and available borrowing capacity of approximately $619,000 under the Chase Revolving Loan.

All outstanding obligations of MtronPTI under the Chase Loan Agreement are collateralized by a first priority security interest in all of the assets of MtronPTI, excluding real property. Additionally, in connection with the Chase Loan Agreement, PTI entered into a separate agreement with Chase providing that PTI would not mortgage or otherwise encumber certain real property it owns in Florida while any credit facility is outstanding under the Chase Loan Agreement.

As additional security for MtronPTI's obligations under the Chase Loan Agreement, MtronPTI has made a cash collateral deposit of $1,500,000 with Chase and entered into an Assignment of Deposit agreement with Chase providing Chase with a security interest in the account holding the deposit. The amount of the cash collateral deposit with Chase is included in restricted cash in the accompanying condensed consolidated balance sheet as of June 30, 2013.  The related Assignment of Deposit agreement restricts MtronPTI's ability to withdraw any portion of the deposit and does not allow MtronPTI to assign the deposit or any part thereof.

The Chase Loan Agreement contains a variety of affirmative and negative covenants, including, but not limited to, a financial covenant that MtronPTI maintain tangible net worth not less than $8,000,000. As of June 30, 2013, MtronPTI was not in compliance with the tangible net worth covenant under the Chase Loan Agreement.  Based on the definition of tangible net worth under the Chase Loan Agreement, MtronPTI had a tangible net worth of $7,778,000 as of June 30, 2013, as compared to the minimum requirement of $8,000,000. Chase has waived non-compliance with this covenant as of June 30, 2013, in accordance with the terms of a letter agreement dated August 6, 2013. Additionally, MtronPTI has requested an amendment to the Chase Loan Agreement to adjust the financial covenants to better enable its compliance with the terms of such covenants in future periods. While MtronPTI intends to finalize an amendment with Chase shortly, there can be no assurance that it will enter into such an amendment.