REVOLVING CREDIT FACILITY (Notes)

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Revolving Credit Facility

REVOLVING CREDIT FACILITY

On April 12, 2013, we entered into a three-year $25.0 million million senior secured revolving credit facility with Silicon Valley Bank. Under the Credit Facility, advances are available based on (i) the achievement of certain quarterly EBITDA levels, and (ii) a borrowing base formula equal to the sum of up to (a) 80 percent of eligible accounts receivable and advance billings and (b) 30 percent of eligible inventory, minus any reserves established by the bank. At June 30, 2013, we had $10.0 million outstanding under the Credit Facility.

In the absence of an event of default, any amounts outstanding under the Credit Facility may be repaid and re-borrowed anytime until the maturity date, which is April 12, 2016.

At our option, the borrowings under the Credit Facility can bear interest at an Alternate Base Rate (“ABR”) or Eurodollar Rate. ABR loans bear interest at a per annum rate equal to the greater of the Federal Funds Effective Rate plus 0.50 percent or prime rate plus an applicable margin that varies between 0.25 percent and 1.50 percent depending on our consolidated EBITDA for the four fiscal quarters most recently ended. Eurodollar loans bear interest at a margin over British Bankers' Association LIBOR Rate divided by 1 minus Eurocurrency Reserve Requirements. The applicable margin on Eurodollar loan varies between 3.25 percent and 4.50 percent depending on our consolidated EBITDA for the four fiscal quarters most recently ended. As of June 30, 2013, the effective interest rate on our outstanding borrowings was 4.75 percent, which represented the greater of the Federal Funds Effective Rate plus 0.50 percent and the prime rate, plus 1.5 percent. If an event of default occurs under the Credit Facility, the interest rate will increase by 2.0 percent per annum.

The obligations under the Credit Facility are guaranteed by Mattson International, Inc., our wholly-owned subsidiary (together with Mattson, collectively referred to as the “Loan Parties”), and are secured by substantially all of the assets of the Loan Parties, including a pledge of the capital stock holdings of the Loan Parties in certain of our direct subsidiaries.

The Credit Facility contains customary affirmative covenants and negative covenants including financial covenants requiring us and our subsidiaries to maintain a minimum level of consolidated EBITDA as defined in the Credit Facility, for two consecutive quarters, and a minimum quick ratio, as well as restrictions on liens, investments, indebtedness, fundamental changes, sale leaseback transactions, swap agreements, accounting changes, dispositions of property, making certain restricted payments (including restrictions on dividends and stock repurchases), entering into new lines of business, and transactions with affiliates.

The obligations under the Credit Facility may be accelerated upon the occurrence of an event of default under the Credit Facility, which includes customary events of default, including payment defaults, defaults in the performance of affirmative and negative covenants, the material inaccuracy of representations or warranties, bankruptcy and insolvency related defaults, defaults relating to matters such as ERISA, judgments, and a change of control. Due to the potential for acceleration of obligations under the Credit Facility upon the occurrence of certain events, some of which are outside our control, borrowings under the Credit Facility are classified within current liabilities in the Condensed Consolidated Balance Sheets.

As of June 30, 2013, we were required to maintain a minimum consolidated quick ratio of 0.75 to 1.0 and a minimum consolidated EBITDA as defined in the Credit Facility, of negative $11.0 million for the two consecutive quarters ended June 30, 2013. As of June 30, 2013, we were in compliance with our financial covenants.

We incurred $0.4 million debt issuance costs in connection with the Credit Facility, which will be amortized over the three-year term of the Credit Facility. In addition we pay monthly commitment fees, equal to 0.3750 percent per annum, on the unused portion of the Credit Facility.