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Financing Arrangements
12 Months Ended
Dec. 31, 2015
Debt Disclosure [Abstract]  
Financing Arrangements
Financing Arrangements
Credit Agreement
On January 9, 2013, we refinanced our existing credit agreement and entered into a new credit agreement, or the Credit Agreement, with Bank of America, N.A. as administrative agent, swing line lender and L/C issuer, Silicon Valley Bank as syndication agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated as sole lead arranger and sole book manager, and the lenders from time to time party thereto. We refer to the Credit Agreement and related documents as the Senior Credit Facility.
The Senior Credit Facility provides for an $85.0 million revolving line of credit, which we can increase to $110.0 million subject to the conditions set forth in the Credit Agreement. The revolving line of credit also includes a letter of credit subfacility of $10.0 million and a swing line loan subfacility of $5.0 million. The Senior Credit Facility has a maturity date of January 9, 2018. As of December 31, 2015, we had no outstanding debt under our Senior Credit Facility.  We incurred unused commitment fees and administrative fees of $0.3 million for the year ended December 31, 2015, which is included in interest expense in the consolidated statements of operations.
Borrowings under the Senior Credit Facility bear interest at a per annum rate equal to, at our option, either (a) a base rate equal to the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (iii) the eurodollar rate for base rate loans plus 1.00%, plus an applicable rate ranging from 0.50% to 1.25%, or (b) the eurodollar rate for eurodollar rate loans plus an applicable rate ranging from 1.50% to 2.25%. The initial applicable rate is 0.50% for base rate loans and 1.50% for eurodollar rate loans, subject to adjustment from time to time based upon our achievement of a specified consolidated leverage ratio.
In addition to paying interest on the outstanding principal under the Senior Credit Facility, we are also required to pay a commitment fee to the administrative agent at a rate per annum equal to the product of (a) an applicable rate ranging from 0.25% to 0.50% multiplied by (b) the actual daily amount by which the aggregate revolving commitments exceed the sum of (1) the outstanding amount of revolving borrowings, and (2) the outstanding amount of letter of credit obligations. The initial applicable rate is 0.25%, subject to adjustment from time to time based upon our achievement of a specified consolidated leverage ratio.
We also will pay a letter of credit fee to the administrative agent for the account of each lender in accordance with its applicable percentage of a letter of credit for each letter of credit, which fee will be equal to the applicable rate then in effect, multiplied by the daily maximum amount available to be drawn under the letter of credit. The initial applicable rate for the letter of credit is 1.50%, subject to adjustment from time to time based upon our achievement of a specified consolidated leverage ratio.
We have the right to prepay our borrowings under the Senior Credit Facility from time to time in whole or in part, without premium or penalty, subject to the procedures set forth in the Senior Credit Facility.
All of our obligations under the Senior Credit Facility are unconditionally and jointly and severally guaranteed by each of our existing and future, direct or indirect, domestic subsidiaries, subject to certain exceptions. In addition, all of our obligations under the Senior Credit Facility, and the guarantees of those obligations, are secured, subject to permitted liens and certain other exceptions, by a first-priority lien on our and our subsidiaries’ tangible and intangible personal property, including a pledge of all of the capital stock of our subsidiaries.
The Senior Credit Facility requires us to maintain certain financial covenants. In addition, the Senior Credit Facility requires us to maintain all material proprietary databases and software with a third-party escrow agent in accordance with an escrow agreement that we reaffirmed in connection with the Senior Credit Facility. The Senior Credit Facility also contains certain affirmative and negative covenants limiting, among other things, additional liens and indebtedness, investments and distributions, mergers and acquisitions, liquidations, dissolutions, sales of assets, prepayments and modification of debt instruments, transactions with affiliates, and other matters customarily restricted in such agreements. The Senior Credit Facility also contains customary events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross defaults to other contractual agreements, events of bankruptcy and insolvency, and a change of control.
On November 6, 2015, we entered into a First Amendment and Consent to our Senior Credit Facility (the “First Amendment”).
The First Amendment modifies the calculation of cash EBITDA under the Senior Credit Facility to exclude up to $130.0 million of expenses related to the proposed settlements with the FTC and representatives of a national class of consumers, potential settlements with certain states' attorneys general and fees incurred in relation to the litigation and potential settlements.
In addition, pursuant to the First Amendment, through the end of the fourth full fiscal quarter ending after the date on which the courts have approved the settlement agreements with the FTC and the national class of consumers (the “Settlement Date”), we are required to comply with certain additional financial and reporting covenants in the Senior Credit Facility.
Further, until the later of the one year anniversary of the Settlement Date, and the date on which we have received court approval with at least 50% of the state attorney generals that have proceedings currently pending or initiated on or before November 6, 2016 related to the issues presented in the FTC Order, if any, the revolving line of credit under the Senior Credit Facility is limited to letters of credit in the ordinary course of business not to exceed $2.0 million in the aggregate at any one time and certain permitted acquisitions of up to $25.0 million in the aggregate, unless a higher amount is consented to by the holders of 66 2/3% of the aggregate revolving commitments.
Pursuant to terms of the First Amendment, we are also subject to additional limitations and conditions on acquisitions and making certain types of payments (including dividends, redemptions or other distributions) with respect to our equity interests.
At December 31, 2015, we were in compliance with all covenants of the Senior Credit Facility.
Letters of Credit
In August 2013, a letter of credit in the amount of $1.2 million was released by the counterparty in connection with the execution of the amendment to our office lease with respect to our headquarters.  In December 2014, a letter of credit in the amount of $0.3 million was released by the counterparty in connection with the execution of a new office lease with respect to our office in Irvine, California. As of December 31, 2015, we had an outstanding letter of credit in the amount of $0.3 million in connection with an office lease in San Francisco, California.