13. Secured Credit Facility
|12 Months Ended|
Dec. 31, 2016
|Secured Credit Facility|
|13. Secured Credit Facility||
At December 31, 2016 and 2015, secured credit facilities are comprised of the following:
Indebtedness under revolving credit facility
On August 28, 2015, FNACentered into a $40.0 million Credit Facility with Opus Bank, whichfacility was amended and restated in December 2015 (the Amended Credit Facility). The Amended Credit Facility consisted of a $15.0 million, four-year revolvingcredit facility, and a $25.0 million, five-year term loan. The maturity date of amounts borrowed under the credit facility was August 28, 2019, and the maturity date of any amounts borrowed under the term loan was August 28, 2020.
As of December 31, 2015, the Company had borrowed $15.0 million under the Amended Credit Facility and $25.0 million under the term loan. The proceeds from thiscredit facility were used to retire approximately $11.0 million of notes held by Plexus Fund II, L.P., Plexus Funds III, L.P. and Plexus Fund QP III, L.P. (Plexus) and $28.0 million to fund our purchase of the assets of RootAxcess and the stock of Fidelity(See Note 5).
On November 14, 2016, contemporaneously with the Apptix acquisition (see note 5), FNAC entered into a new credit agreement (the East West Credit Agreement) with East West Bankand Opus (collectively with East West Bank, the East West Lenders). Under the East West Credit Agreement, the East West Lenders extended the Company (i) a $65.0 million term loan and (ii) a $5.0 million revolving credit facility (which includes up to $4 million in swingline loans that may be accessed on a short-term basis). The proceeds of the term loan were used to retire the $40 million outstanding under the Amended Credit Facility, and to fund the cash portion of the purchase price of the Apptix acquisition. In connection with the retirement of the Amended Credit Facility, FNAC recognized a loss on the extinguishment of debt in the amount of $0.2 million.
Borrowings under the East West Credit Agreement are evidenced by promissory notes bearing interest at rates computed based upon either the then current prime rate of interest or LIBOR rate of interest, as selected by FNAC. Interest on borrowings that FNAC designates as base rate loans bear interest at the greater of the prime rate published by the Wall Street Journal or 3.25% per annum, in each case plus 2% per annum. Interest on borrowings that FNAC designates as LIBOR rate loans bear interest at the LIBOR rate of interest published by the Wall Street Journal, plus 5% per annum.
The Company is required to repay the term loan in equal monthly payments of $270,833 commencing January 1, 2017 and continuing until January 1, 2018, when monthly payments increase to $541,667, until the maturity date of the term loan on November 12, 2021. Borrowings under the revolving credit facility are also payable on the November 12, 2021 maturity date of the facility. At December 31, 2016, $3.0 million was outstanding under the revolving credit facility.
In conjunction with the execution of the East West Credit Agreement, the Company and the East West Lenders also entered into (i) an IP Security Agreement under which the Company has pledged intellectual property to the East West Lenders to secure payment of the East West Credit Agreement, (ii) Subordination Agreements under which certain creditors of the Company and the East West Lenders have established priorities among them and reached certain agreements as to enforcing their respective rights against the Company, and (iii) a Pledge and Security Agreement under which Fusion and FNAC have each pledged its equity interest in its subsidiaries to the East West Lenders.
Under the East West Credit Agreement:
At December 31, 2016, the Company was in compliance with all of the financial covenants contained in the East West Credit Agreement.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://www.xbrl.org/2003/role/presentationRef