Debt

As described in Note 1 - Basis of Presentation above, as part of the Merger that closed on October 21, 2011, we refinanced all of our long-term debt described below and entered into New Credit Facilities as described in Note 16 - Subsequent Events.

Prior to the Merger, our financial condition caused us from time to time to obtain waivers to the agreements governing our indebtedness and to institute certain cost-saving measures as described below.

On April 23, 2009, we closed the Refinancing and entered into our Securities Purchase Agreement (governing the Senior Notes) and a Credit Agreement (governing the Senior Credit Facility). At the time of the Refinancing, the Senior Credit Facility included a $20,000 unsecured non-amortizing term loan and a $15,000 revolving credit facility that included a $2,000 letter of credit sub-facility, on a senior unsecured basis. On April 29, 2011, as part of the Metro Sale Transaction, we repaid all of our Senior Notes payable to non-Gores holders in the amount of $103,075, which included $10,895 of accrued PIK interest (see Note 2 - Discontinued Operations). As of September 30, 2011, our existing debt was $37,610 and consisted of: $10,610 due to Gores under the Senior Notes maturing October 15, 2012 and the Senior Credit Facility, consisting of a $20,000 unsecured, non-amortizing term loan and $20,000 revolving credit facility (of which $7,000 was outstanding on September 30, 2011). The term loan and revolving credit facility (i.e., the “Senior Credit Facility”) were scheduled to mature on October 15, 2012 and were guaranteed by our subsidiaries and Gores. As of September 30, 2011, the Senior Notes bore interest at 15.0% per annum, payable 10% in cash and 5% PIK interest. The PIK interest accreted and was added to principal quarterly, but was not payable until maturity. As of September 30, 2011, the remaining accrued PIK interest was $1,321. As of September 30, 2011, loans under our Credit Agreement (which governed the Senior Credit Facility) bore interest at our option at either LIBOR plus 4.0% per annum or a base rate plus 4.0% per annum.

Notwithstanding the elimination of our debt leverage covenant as described in Note 1 - Basis of Presentation above, we were required to pay the 5% leverage fee to be imposed effective October 1, 2011 unless we provided satisfactory documentation to the holders of our Senior Notes that (1) our debt leverage ratio for any LTM period complied with any of the following debt levels for the five quarters beginning on September 30, 2011: 5.00, 5.00, 4.50, 3.50 and 3.50, and (2) more than 50% of the outstanding amount of Senior Notes held by the non-Gores holders were repaid as of such quarterly measurement date. To the extent due, the 5% leverage fee would equal 5% of the Senior Notes outstanding for the period beginning October 1, 2011 and would accrue on a daily basis from such date until the fee amount was paid in full. The fee was payable on the earlier of maturity (October 15, 2012) or the date on which the Senior Notes were paid. As described in Note 1 - Basis of Presentation above, when we calculated Adjusted EBITDA on September 30, 2011 (measured by dividing the principal amount of our Senior Notes outstanding on September 30, 2011 by the sum of our Adjusted EBITDA for the prior four completed fiscal quarters, specifically including Adjusted EBITDA from continuing operations in the third quarter of 2011), our debt leverage ratio was greater than the 5.00 level and accordingly the 5% leverage fee became accruable on October 1, 2011. The 5% leverage fee of $29 was paid on October 21, 2011 in connection with the Merger and the corresponding refinancing of our debt.

We were also obligated to pay the 2% Senior Leverage Amendment Fee described above which was payable on the earliest to occur of: (1) October 15, 2012, (2) the date on which the Senior Notes held by Gores were paid in full, surrendered or refinanced and (3) the date on which all of the collateral securing the Senior Notes was released. As discussed in Note 16 - Subsequent Event below, the closing of the Merger included the refinancing of the Senior Notes held by Gores and accordingly, the Senior Leverage Amendment Fee of $2,433 was due and paid on October 21, 2011.

Since the time of our Refinancing, we entered into seven amendments to our Securities Purchase Agreement (governing the Senior Notes) and eight amendments to our Credit Agreement (governing the Senior Credit Facility). In the case of amendments entered into on October 14, 2009, March 30, 2010, August 17, 2010 and April 12, 2011, respectively, our underperformance against our financial projections caused us to reduce our forecasted results. Of these amendments, with the exception of our revised projections at the time of our October 2009 and April 2011 amendments (where we requested and received a waiver of our covenant to be measured on December 31, 2009 and March 31, 2011, respectively, on a trailing four-quarter basis), our projections indicated that we would attain sufficient Adjusted EBITDA to comply with the debt leverage covenants then in place. Notwithstanding this, at the time we entered into the March 30, 2010 and August 17, 2010 amendments, management did not believe there was sufficient cushion in our projections of Adjusted EBITDA to predict with any certainty that we would satisfy such covenants given the unpredictability in the economy and our business. Given our constrained liquidity on June 30, 2010 and our revised projections in place at such time, as part of the August 17, 2010 amendment, our management deemed it prudent to enhance our available liquidity in addition to modifying its debt leverage covenant levels. Under the terms of this amendment, Gores agreed to: (1) purchase $15,000 of common stock, $5,000 of which was purchased on September 7, 2010 and $10,000 of which was purchased on February 28, 2011, and (2) increase its guarantee by $5,000 on our revolving credit facility. As a result of the latter, Wells Fargo agreed to increase the amount of our revolving credit facility from $15,000 to $20,000 which provided us with necessary additional liquidity for working capital purposes.

The other amendments (those entered into on April 28, 2011, April 29, 2011, May 10, 2011, July 22, 2011 and August 30, 2011, respectively), are described in more detail below. While the amendments to the Securities Purchase Agreement and the Credit Agreement had customarily matched one another substantively, on April 28, 2011, we entered into a fifth amendment to the Credit Agreement with Wells Fargo to amend the terms thereof to (1) change the interest rate margin applicable to base rate loans and LIBOR rate loans provided thereunder to, in each case, 4.00 percentage points and (2) remove the interest rate floors applicable to base rate loans and LIBOR rate loans. There was no similar or corresponding amendment to the Securities Purchase Agreement. Accordingly, the sixth amendment to the Credit Agreement is substantively like the fifth amendment to the Securities Purchase Agreement, both of which were entered into on April 29, 2011 in connection with the Metro Sale Transaction. As part of these amendments, our debt leverage covenant was eliminated from both the Securities Purchase Agreement and the Credit Agreement and we paid off all of the Senior Notes held by non-Gores holders. On May 11, 2011, we entered into a sixth amendment to our Securities Purchase Agreement for the sole purpose of incorporating an inadvertent omission from the fifth amendment, and eliminated the minimum LTM EBITDA thresholds previously applicable to the second and third quarters of 2011 that were negotiated with the non-Gores noteholders prior to the paydown of 100% of their Senior Notes. After such amendment certain, but not all, of the non-financial covenants remained in place and were applicable to the Senior Notes held by Gores, which remained outstanding under the terms of the Securities Purchase Agreement. On July 22, 2011, we entered into a seventh amendment to our Credit Agreement for the sole purpose of eliminating provisions with respect to the Sponsor Letter of Credit (as defined in the Credit Agreement), which is the letter of credit that was previously required to be posted by Gores in connection with its guaranty of the Credit Facility.

On August 30, 2011, we entered into an Eighth Amendment to our Credit Agreement and Seventh Amendment to our Securities Purchase Agreement, each for the sole purpose of extending the maturity date of the debt represented by each such agreement from July 15, 2012 to October 15, 2012. The Senior Notes held by Gores were also amended to reflect the October 15, 2012 maturity date.

We were party to one derivative financial instrument from August 17, 2010 to February 28, 2011 related to the Gores' 2011 investment in our common stock (for $10,000) and based on a trailing 30-day weighted average of our common stock's closing share price for the 30 consecutive days ending on the tenth day immediately preceding the date of the stock purchase. It also included a collar (e.g., a $4.00 per share minimum and a $9.00 per share maximum price) and, therefore was deemed to contain embedded features having the characteristics of a derivative to be settled in our common stock. Accordingly, pursuant to authoritative guidance, we determined the fair value of this derivative by applying the Black-Scholes model using the Monte Carlo simulation to estimate the price of our common stock on the derivative's expiration date and estimated the expected volatility of the derivative by using the aforementioned trailing 30-day weighted average. On August 17, 2010, we recorded an asset of $442 related to this instrument. On December 31, 2010, the fair market value of the instrument was a liability of $1,096. The derivative expired on February 28, 2011, the date Gores satisfied the $10,000 Gores equity commitment by purchasing 1,186,240 shares of common stock at a per share price of $8.43, calculated in accordance with the trailing 30-day weighted average of our common stock's closing price as described above. In connection with the Gores' 2011 investment in our common stock, the derivative expired and the reversal of the liability of $1,096 was recorded as other income in the first quarter of 2011. (See Item 3. Quantitative and Qualitative Disclosures about Market Risk for further information regarding the derivative financial instrument.)

On August 2, 2011, we repaid $8,000 of our revolving credit facility leaving an outstanding balance of $7,000 thereunder as of such date.

Long-term debt, including current maturities of long-term debt and debt Due to Gores, was as follows as of the dates listed below:



	September 30, 2011		December 31, 2010
Senior Notes
Due to Gores ⁽¹⁾	$	10,610	$	10,222
Senior Secured Notes due October 15, 2012 ⁽¹⁾	—		101,407
Senior Credit Facility
Term Loan ⁽²⁾	20,000		20,000
Revolving Credit Facility ⁽²⁾	7,000		15,000
	$	37,610	$	146,629


(1)	The applicable interest rate on such debt for the periods presented above is 15.0%, which includes 5.0% PIK interest which accrues and is added to principal on a quarterly basis. PIK interest is not due until maturity or earlier repayment of the Senior Notes. From October 1, 2011 until their repayment in full on October 21, 2011 the applicable interest rate on such debt was 20.0%.

(2)

The applicable interest rate on such debt was 4.0% as of September 30, 2011 and 7.0% as of December 31, 2010. For the period through April 28, 2011, the interest rate was variable and was payable at the greater of (i) LIBOR plus 4.5% (with a LIBOR floor of 2.5%) or (ii) the base rate plus 4.5% (with a base rate floor equal to the greater of 3.75% or the one-month LIBOR rate), at our option. As discussed in more detail above, the interest rate margins were reduced from 4.5% to 4.0% and the interest rate floors were eliminated on April 28, 2011 pursuant to the fifth amendment to the Credit Agreement with Wells Fargo.