Item 1.01.
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Entry into a Material Definitive Agreement.
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On
January 2, 2008, Captaris, Inc. (
Captaris
), as borrower, entered into a Credit Agreement providing for a senior secured revolving credit facility, with Wells Fargo Foothill, LLC, as arranger, administrative
agent, swing lender, and letter of credit issuer, and the other lenders party thereto (the
Credit Facility
).
The
Credit Facility provides for a $10,000,000 revolving line of credit commitment, which may be used (i) for revolving loans, (ii) for swing line advances, subject to a sublimit of $2,000,000 and (iii) to request the issuance of letters
of credit on Captariss behalf, subject to a sublimit of $5,000,000. On or before January 2, 2009, Captaris may, subject to applicable conditions, request an increase in the commitment under the Credit Facility of up to $10,000,000. The
credit available under the Credit Facility may be used to, among other purposes, pay a portion of the purchase price for the acquisition of Océ Document Technologies GmbH as described in Item 2.01 and to finance the ongoing working
capital, capital expenditure, and general corporate needs of Captaris. Upon the closing of the Credit Facility on January 2, Captaris obtained an initial cash advance of approximately $9.8 million.
Captaris, subject to applicable conditions, may elect interest rates on its revolving borrowings calculated by reference to (i) the LIBOR rate (the
LIBOR Rate
) fixed for given interest periods,
plus
a margin determined by Captariss average daily balance of the revolving loan usage during the preceding month or (ii) Wells Fargo Bank, National
Associations prime rate (or, if greater, the average rate on overnight federal funds plus one half of one percent) (the
Base Rate
),
plus
a margin determined by Captariss average daily balance of the
revolving loan usage during the preceding month. For swing line borrowings, Captaris will pay interest at the Base Rate,
plus
a margin determined by Captariss average daily balance of the revolving loan usage during the preceding month.
For borrowings made with the LIBOR Rate, the margin ranges from 250 to 275 basis points, while for borrowings made with the Base Rate, the margin ranges from 100 to 125 basis points.
The Credit Facility matures on January 2, 2013, at which time all outstanding borrowings must be repaid and all outstanding letters of credit must
have been cash collateralized.
The Credit Facility provides for the payment of specified fees and expenses, including commitment and
unused line fees, and contains certain loan covenants, including, among others, financial covenants providing for a minimum EBITDA and maximum amount of capital expenditures, and limitations on Captariss ability with regard to the incurrence
of debt, the existence of liens, stock repurchases and dividends, investments, and mergers, dispositions and acquisitions, and events constituting a change in control. Captariss obligations under the Credit Facility are guaranteed by certain
of Captariss direct and indirect domestic subsidiaries (collectively, the
Guarantors
).
The Credit Facility
contains events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, and cross defaults to
certain other indebtedness. The occurrence of an event of default will increase the applicable rate of interest and could result in the acceleration of Captariss obligations under the Credit Facility and the obligations of any or all of the
Guarantors to pay the full amount of Captariss obligations under the Credit Facility.
The foregoing summary is qualified in its
entirety by reference to the full text of the Credit Agreement attached hereto as Exhibit 10.1, which exhibit is incorporated herein by reference.