Note 2. Revolving Credit Facility

Effective March 3, 2011, we amended our unsecured revolving credit facility with Wells Fargo Bank, National Association (the “Bank”) to convert the facility to a three-year, $100 million, secured revolving credit facility, which originally matured on March 3, 2014 (the “Revolving Facility”). The unsecured revolving credit facility was originally initiated on September 27, 2007. On December 21, 2011, we amended the Revolving Facility to expand our borrowing capacity to $150 million and extended the maturity date to December 31, 2014. On February 2, 2012, we amended the Revolving Facility to modify certain financial covenants relating to net income. Effective March 30, 2012, we amended the Revolving Facility to remove certain financial covenants, to add a new covenant related to minimum “Adjusted EBITDA” (defined in the amendment as earnings before interest, income taxes, depreciation and amortization, adjusted for certain customary, non-cash items) and to add a new financial covenant for permitted acquisitions. On October 31, 2012, we amended the Revolving Facility to modify the financial covenant related to Adjusted EBITDA for the fourth quarter of 2012. This amendment also reduced our borrowing capacity under the Revolving Facility from $150 million to $100 million. We were in compliance with all financial and non-financial covenants of the Revolving Facility at September 30, 2012.

In addition to financing the acquisition of Vocollect in 2011, the Revolving Facility is used for general corporate purposes. The Revolving Facility includes financial covenants and is secured by pledges of equity in certain assets of our domestic subsidiaries and guaranties of payment obligations from certain of our domestic subsidiaries.

At September 30, 2012, after considering the financial covenant requirements, we had borrowing capacity of $24.6 million under the Revolving Facility with borrowings of $80 million and $3.1 million of letters of credit outstanding. The amount outstanding under the Revolving Facility bears interest at a variable rate equal to LIBOR plus a margin ranging from 1.25% to 1.75%. For the three and nine months ended September 30, 2012, the weighted average interest rate on borrowed funds under the Revolving Facility was 2.23% and 2.25%, respectively. Under the Revolving Facility, we made repayments of $20 million, offset by borrowings of $15 million for the three months ended September 30, 2012; and we made repayments of $32 million, offset by borrowings of $27 million, for the nine months ended September 30, 2012.

The principal terms of the Revolving Facility, following the most recent amendment, are as follow:

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Loans bear interest at a variable rate equal to (at our option) (i) LIBOR plus the applicable margin, which ranges from 1.25% to 1.75%, or (ii) the Bank’s prime rate, less the applicable margin, which ranges from 0.25% to 1.00%. If an event of default occurs and is continuing, then the interest rate on all obligations under the Revolving Facility may be increased by 2.0% above the otherwise applicable rate, and the Bank may declare any outstanding obligations under the Revolving Facility to be immediately due and payable. In addition, the Bank may exercise its security interest in our equity interests in the assets of certain of our domestic subsidiaries, and it may call the guaranties of payment obligations made by certain of our domestic subsidiaries.


•	A fee ranging from 0.60% to 1.00% on the maximum amount available to be drawn under each letter of credit that is issued and outstanding under the Revolving Facility. The fee on the unused portion of the Revolving Facility ranges from 0.15% to 0.25%.


•	Certain of our domestic subsidiaries have guaranteed the Revolving Facility.


•	The Revolving Facility contains various restrictions and covenants, including restrictions on our ability and the ability of our subsidiaries to consolidate or merge, make acquisitions, create liens, incur additional indebtedness or dispose of assets.


•	The Revolving Facility includes covenants requiring us to meet certain minimum financial performance thresholds, including:


•	A ratio of maximum funded debt to Adjusted EBITDA allowed of not more than 2.5 to 1.


•	An Asset Coverage Ratio of not less than 1 to 1 for debt to margined assets. For this purpose, a certain percentage of our accounts receivable and inventory balances are included in margined assets.


•	As at September 30, 2012, the minimum Adjusted EBITDA allowed for the trailing twelve months was $25 million for the second quarter of 2012, $35 million for the third quarter of 2012 and is $45 million for all subsequent quarters.


•	Following the amendment to the Revolving Facility on October 31, 2012, the minimum Adjusted EBITDA allowed for the trailing twelve months is $40 million for the fourth quarter of 2012 and $45 million for all subsequent quarters.