DEBT

Credit Facility

On May 14, 2014, we entered into a Credit Agreement with Huntington Bank , which was subsequently amended on May 14, 2015 (“Agreement”). The Agreement includes both a term loan and a revolving loan and is secured by mortgages on our facilities in West Lafayette and Evansville, Indiana and liens on our personal property. As of March 31, 2016, we were not in compliance with certain financial covenants of the Agreement. Huntington Bank advised us that the failure to meet these financial covenants constituted an event of default under the Agreement and reserved all of its rights with respect thereto including the ability to accelerate the outstanding debt under our term loan and revolving loan, to exercise their security interest and collect on the underlying collateral, to refrain from making additional advances under the revolving loan and to terminate our interest rate swap

On April 27, 2016, the Company entered into a Forbearance Agreement and Second Amendment to Credit Agreement (the “Forbearance Agreement”) with Huntington Bank. Pursuant to the Forbearance Agreement, Huntington Bank agreed to forbear from exercising its rights and remedies under the Agreement and from terminating the Company’s related swap agreement with respect to the Company’s non-compliance with applicable financial covenants under the Agreement and any further non-compliance with such covenants during the forbearance period ending June 30, 2016 (the “Specified Defaults”).

The forbearance period will terminate immediately upon the occurrence of any of the following: (i) a default under the Agreement or related agreements other than the Specified Defaults; (ii) any misrepresentation by the Company under the Forbearance Agreement; (iii) the failure of the Company to perform, observe or comply with the terms of the Forbearance Agreement; (iv) the commencement of any bankruptcy, insolvency or similar proceeding against the Company or the appointment of a trustee or similar official for the Company or a substantial part of its property; or (v) any material adverse change during the forbearance period in the financial condition, operations or business of the Company or in the value of the collateral securing indebtedness under the Agreement.

In exchange for Huntington Bank’s agreement to forbear its rights and remedies under the Agreement, the Company agreed to, among other things: (i) amend the maturity dates for the term and revolving loans under the Agreement to June 30, 2016, (ii) meet an additional financial covenant during the forbearance period; (iii) take commercially reasonable efforts to obtain financing sufficient to repay indebtedness under the Agreement in full upon the expiration of the forbearance period; and (iv) periodically deliver to Huntington Bank certain financial and budget information during the forbearance period.

If we are unable to refinance our indebtedness under the Agreement before the end of the forbearance period and were Huntington Bank to demand payment of the outstanding debt under the Agreement, we would have insufficient funds to satisfy that obligation. Huntington Bank's exercise of alternative remedies could also have a material adverse effect on our operations and financial condition.

The term loan for $5,500 bears interest at LIBOR plus 325 basis points with monthly principal payments of approximately $65 plus interest. The original term loan maturity was May 2019, which was amended by the Forbearance Agreement to June 30, 2016. On May 15, 2014, we used the proceeds from the term loan to pay off prior indebtedness. The balance on the term loan at March 31, 2016 and September 30, 2015 was $4,059 and $4,452, respectively.

The revolving loan for $2,000 bears interest at LIBOR plus 300 basis points with interest paid monthly. The original revolving loan maturity of May 2016 was extended by the Forbearance Agreement to June 30, 2016. The revolving loan also carries a facility fee of .25%, paid quarterly, for the unused portion of the revolving loan. The revolving loan includes an annual clean-up provision that requires the Company to maintain a balance of not more than 20% of the maximum loan of $2,000 for a period of 30 days in any 12 month period while the revolving loan is outstanding. The revolving loan balance was $1,128 and $86 at March 31, 2016 and September 30, 2015, respectively.

We entered into an interest rate swap agreement with respect to the above loans to fix the interest rate with respect to 60% of the value of the term loan at approximately 5.0%. We entered into this derivative transaction to hedge interest rate risk of the related debt obligation and not to speculate on interest rates. The changes in the fair value of the interest rate swap are recorded in Accumulated Other Comprehensive Income (“AOCI”) to the extent effective. We assess on an ongoing basis whether the derivative that is used in the hedging transaction is highly effective in offsetting changes in cash flows of the hedged debt. The Forbearance Agreement amended the terms of the interest rate swap to match the terms of the underlying debt resulting in no ineffectiveness.

Upon and during the occurrence of an event of default under the Forbearance Agreement, at the election of Huntington Bank and after notice to the Company, all interest accruing in respect of obligations of the Company under the Agreement may be increased by a per annum percentage equal to five percent (5%) over the otherwise applicable rate.

We incurred $134 of costs in connection with the issuance of the credit facility. These costs were capitalized and are being amortized to interest expense on a straight-line basis over five years based on the contractual term of the credit facility. As of March 31, 2016 and September 30, 2015, the unamortized portion of debt issuance costs related to the credit facility was $80 and $94, respectively, and was included in Debt issue costs, net on the consolidated balance sheets.