NOTE 3: LONG-TERM OBLIGATIONS

The following is a summary of long-term debt and other long-term obligations outstanding (in thousands):

	Final Maturity Date	Weighted- Average Interest Rate		September 30, 2013		December 31, 2012
				(in thousands)
Senior secured term loan	August 2020	4.75	%	$	300,000	$	—
Senior revolving loan	August 2018	—		—		199,000
Capital leases	April 2017	6.0	%	6,943		2,860
Note payable	October 2014	2.2	%	5,085		7,080
Acquisition-related liabilities	July 2013	—		—		3,499
Total long-term obligations, including current portion				312,028		212,439
Current maturities of long-term obligations
Senior secured term loan				3,000		—
Capital leases				4,002		1,640
Notes payable				4,057		4,012
Acquisition-related liabilities				—		3,499
Total current maturities of long-term obligations				11,059		9,151
Total long-term obligations				$	300,969	$	203,288

2013 Secured Credit Facility

On August 27, 2013, we entered into a $400 million senior secured credit facility consisting of a senior revolving loan in a principal amount equal to $100 million, maturing in August 2018, and a senior secured term loan in a principal amount equal to $300 million, maturing in August 2020 (the “Credit Facility”). The Credit Facility replaces the Fourth Amended and Restated Credit and Security Agreement, dated as of April 25, 2011 (the “Former Credit Facility”).

During the term of the Credit Facility, Epiq has the right, subject to compliance with the covenants specified in the Credit Facility, to increase the Credit Facility to a maximum of $600 million including increasing the total borrowing capacity under the senior revolving loan up to a maximum of $200 million. The Credit Facility is secured by liens on our real property and a significant portion of our personal property.

Proceeds from the senior secured term loan were used to pay for, among other items, fees and expenses of approximately $8.1 million associated with the Credit Facility, and the repayment of the outstanding balance under the Former Credit Facility, which was then terminated. During the three months ended September 30, 2013, approximately $1.0 million was included in interest expense on the accompanying Condensed Consolidated Statements of Income, related to the write-off of a portion of the unamortized deferred debt issuance costs for the Former Credit Facility. Within 90 days following the August 27, 2013 closing date of the Credit Facility, we are required, under terms specified in the Credit Facility, to enter into a hedging arrangement related to protection against interest rate fluctuations. As of the filing date these financial statements were issued we have not yet entered into any hedging arrangements.

The senior secured term loan bears interest as follows: (1) 2.75% plus prime rate subject to a 2% floor; or (2) 3.75% plus one, two, three or six month LIBOR rate subject to a 1% LIBOR floor. As of September 30, 2013, all outstanding borrowings under the term loan were based on LIBOR subject to a 1% LIBOR floor and the applicable margin was 3.75%.

Borrowings under the senior revolving loan bear interest at various rates based on our total net leverage ratio with two rate options as follows: (1) for base rate advances, borrowings bear interest at prime rate plus 200 to 300 basis points; and (2) for LIBOR rate advances, borrowings bear interest at LIBOR rate plus 300 to 400 basis points. As of September 30, 2013, there were no borrowings outstanding under the senior revolving loan.

Commencing on December 31, 2013, the term loan facility requires quarterly payments of principal, in equal installments, in an aggregate principal amount equal to 0.25% per quarter, or approximately $3.0 million annually, of the original aggregate principal amount of the term loan facility and a final installment equal to the remaining principal balance in August 2020.

The Credit Facility contains a financial covenant related to a net leverage ratio (as defined in the Credit Facility) which is not permitted to exceed 4.50 to 1.00 as well as other customary covenants related to limitations on (i) creating liens, debt, guarantees or other contingent obligations, (ii) engaging in mergers, acquisitions and consolidations, (iii) paying dividends or other distributions to, and redeeming and repurchasing securities from, equity holders, (iv) prepaying, redeeming or repurchasing subordinated or junior debt, and (v) engaging in certain transactions with affiliates, in each case, subject to customary exceptions. As of September 30, 2013, we were in compliance with all covenants.

The annual maturities under the senior secured term loan, due August 2020, for the next five fiscal years and thereafter are:

(in thousands)
Year Ending December 31,
2013	$	750
2014	3,000
2015	3,000
2016	3,000
2017	3,000
2018 and Thereafter	287,250
Total	$	300,000

Capital Leases

We lease certain equipment under capital leases that generally require monthly payments with final maturity dates during various periods through 2017. As of September 30, 2013, our capital lease obligations had a weighted-average interest rate of approximately 6.0%.

Note Payable

During 2011 we entered into a note payable related to a software license agreement that bears interest of approximately 2.2% and is payable quarterly through October 2014.

Acquisition-related Liabilities

Amounts recorded in connection with acquisition-related liabilities as of September 30, 2013 and December 31, 2012 are as follows:

	September 30, 2013		December 31, 2012
	(in thousands)
De Novo deferred acquisition price
Current portion	$	—	$	3,499
Total De Novo deferred acquisition price	$	—	$	3,499

De Novo Legal LLC

In connection with the acquisition of De Novo Legal LLC (“De Novo”) on December 28, 2011, a portion of the purchase price was deferred and was being held for potential indemnification claims. During the third quarter of 2013 we paid $3.1 million of the deferred purchase price, adjusted for indemnification claims, to the sellers. The balance remaining after payment to the sellers of $0.8 million was written off as a credit to operating expense, which is included in Other Operating Income on the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2013.

The undiscounted amount of all potential future payments that could be required under the De Novo contingent consideration opportunity is between $0 and $29.1 million over the remaining measurement period which ends on December 31, 2013. Based on our assessments of projected revenue over the remainder of the measurement period, we determined that it is not likely that any contingent consideration for De Novo will be realized and as such there is no liability recorded related to this contingent consideration as of September 30, 2013 and December 31, 2012.

Jupiter eSources LLC

The undiscounted amount of all potential future payments that could be required under the Jupiter eSources LLC (“Jupiter eSources”) contingent consideration is between $0 and $10.0 million over the remaining measurement period through December 2014. Based on our assessments of projected revenue over the remainder of the measurement period, we determined that it is not likely that any contingent consideration for Jupiter eSources will be realized and as such there is no liability recorded related to this contingent consideration as of September 30, 2013 and December 31, 2012.

In connection with the acquisition of Jupiter eSources we withheld a portion of the purchase price for potential claims for indemnification and purchase price adjustments in the amount of $8.4 million that was paid in May 2012. The $8.4 million payment was previously misclassified as an investment activity and has been reclassified as a financing activity in the unaudited Condensed Consolidated Statement of Cash Flows for the nine month period ended September 30, 2012.