CREDIT AGREEMENT

12 Months Ended

Dec. 31, 2011

CREDIT AGREEMENT

11.           CREDIT AGREEMENT

In December 2011, we amended our credit agreement (the “Amendment”). The Amendment increased the revolving credit facility of the credit agreement by $20.0 million, for a total revolving credit facility of $60.0 million. The Amendment also increased the term loan facility by $20.0 million, for a total term loan facility of $59.0 million.

The Amendment modifies certain interest rates and definitions, adds a senior leverage ratio covenant and reallocates certain lender commitments. In addition, the Amendment approved our acquisition of Voxel, which we completed concurrently with the effective date and funding of the Amendment.  Following the Amendment and the Voxel acquisition, we had fully drawn the term loan.

The interest rate on the revolving credit facility will be either (i) the Base Rate (as defined in the agreement) plus 1.75 percentage points or (ii) the LIBOR Rate (as defined in the agreement) plus 3.50 percentage points, as we elect from time to time.  The interest rate on the term loan facility will be either (x) the Base Rate plus 3.50 percentage points or (y) the LIBOR Rate plus 3.50 percentage points, as we elect from time to time.  

We must repay the term loan in quarterly installments on the last day of each fiscal quarter commencing December 31, 2011, each such quarterly installment in an amount equal to $750,000, with the remaining unpaid balance due on November 2, 2014.  Borrowings under the revolving credit facility are also due on November 2, 2014.

The credit agreement includes customary representations, warranties, negative and affirmative covenants, including certain financial covenants relating to minimum liquidity, fixed charge coverage ratio and senior leverage ratio, as well as customary events of default that could result in acceleration of the credit agreement. As of December 31, 2011, we were in compliance with these covenants.

Our obligations are secured pursuant to a security agreement, under which we granted a security interest in substantially all of our assets, including the capital stock of our domestic subsidiaries and 65% of the capital stock of our foreign subsidiaries.

We recorded a debt discount of $0.2 million related to the costs incurred for the amended term loan.  During the year ended December 31, 2011, there was no related amortized expense as the Amendment occurred on December 30, 2011.

Since the recording of the Amendment was a modification of the previous credit agreement,  we will continue to amortize the debt discount on our previous credit agreement.  During the year ended December 31, 2011, we amortized $0.1 million of the debt discount, as interest expense, using the effective interest method over the life of the loan.

A summary of our credit agreement as of December 31, 2011 and December 31, 2010 is as follows (dollars in thousands):

	December 31,
	2011			2010
Credit limit:
Revolving credit facility	$	60,000		$	40,000
Term loan		59,000			40,000
Outstanding principal balance on the term loan, less unamortized discount of $573 and $444, respectively, due November 2014		58,177			19,306
Outstanding balance on revolving credit facility		100			—
Letters of credit issued		11,130			4,135
Borrowing capacity		48,770			55,865
Interest rate – term loan		3.8	%		3.6	%
Interest rate – revolving credit facility		5.0	%		—	%
Maturities of the term loan are as follows:
2012	$	3,000
2013		3,000
2014		52,750
	$	58,750