UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 8, 2005
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SCAN-OPTICS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 000-05265 06-0851857
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
169 Progress Drive, Manchester, CT 06040
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 645-7878
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 8.01 Other Events.
As of July 1, 2005, Scan-Optics, Inc. failed to repay certain amounts
due under that certain Third Amended and Restated Credit Agreement, dated March
30, 2004, as amended by the First Amendment thereto, dated June 27, 2005 (the
"Credit Agreement") and is in breach of certain other provision under the Credit
Agreement. On July 8, 2005, Patriarch Partners Agency Services, LLC, as agent to
the lenders under the Credit Agreement (the "Lenders"), submitted to the company
a draft foreclosure agreement (the "Draft Foreclosure Agreement") pursuant to
which Scan-Optics, Inc. would surrender substantially all of its assets to the
Lenders or their assignee(s) in full satisfaction of the outstanding debt owed
by Scan-Optics, Inc. to the Lenders under the Credit Agreement. In response to
the Lenders' proposal, Scan-Optics, Inc. has entered into negotiations with the
Lenders regarding possible terms and conditions under which it would surrender
substantially all of its assets. No final agreement has been reached or approved
by either party. The company is also discussing with the Lenders their
assumption of all of Scan-Optics, Inc.'s obligations to its existing trade
creditors and certain other unsecured obligations in order to maximize the
enterprise value of Scan-Optics Inc.'s assets.
Based on discussions with the Lenders, Scan-Optics, Inc. believes that it is
most likely the intention of the Lenders to continue operating the acquired
assets following any surrender of assets by Scan-Optics, Inc. and to continue
servicing Scan-Optics Inc.'s customer base. However, following any surrender of
the company's assets to the Lenders there is unlikely to be any value remaining
in Scan-Optics, Inc. for the company's stockholders and remaining unsecured
creditors. The company is also considering other available alternatives to the
Lenders' proposal.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCAN-OPTICS, INC.
By:
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Name: Peter H. Stelling
Title: Chief Financial Officer, Vice President,
Treasurer and Secretary
Date: July 14, 2005