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, reducing the minimum Adjusted EBITDA allowed for the trailing twelve-month period for the fourth quarter of 2012 from $45 million to $40 million. This amendment also set our borrowing capacity under the Revolving Facility at $100 million, reduced from $150 million.

Effective December 31, 2012, we amended the Revolving Facility to modify the financial covenant related to minimum Adjusted EBITDA, further reducing such minimum for the trailing twelve month period ended with the fourth fiscal quarter of 2012 from $40 million to $35 million, and for the trailing twelve month periods ending with each fiscal quarter of 2013 from $45 million to $35 million. The minimum Adjusted EBITDA remains unchanged at $45 million for the trailing twelve month periods ending as of the end of each subsequent fiscal quarter. This amendment also modified the financial covenant related to the ratio of total debt to EBITDA, reducing such ratio from 2.5 to 2.0 for each fiscal quarter of 2013. The financial covenant related to the ratio of total debt to EBITDA remains unchanged at 2.5 for each subsequent fiscal quarter. After giving effect to these amendments, we were in compliance with the required covenants of the Revolving Facility as of December 31, 2012. The Merger, if consummated, would be considered a “change of control” under the Revolving Facility, which would constitute an event of default; however, we anticipate that all outstanding indebtedness under the Revolving Facility will be repaid concurrently with the consummation of the Merger and the Revolving Facility would be terminated.

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 ofii equity in certain assets of our domestic subsidiaries and guaranties of payment obligations from certain of our domestic subsidiaries.

At December 31, 2012, after giving effect to the financial covenant requirements, we had borrowing capacity of $23.3 million under the Revolving Facility with borrowings of $65 million and letters of credit outstanding of $3.1 million. 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 year ended December 31, 2012, the weighted average interest rate on borrowed funds under the Revolving Facility was 2.20%. During the year ended December 31, 2012, we made repayments of $47 million under the Revolving Facility, offset by borrowings of $27 million.

The following is a schedule of required long-term debt principal payments as of December 31, 2012 (in thousands):



	Total
2013	$	—
2014	65,000
Total principal payments	$	65,000

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

•

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 2.0 to 1.0 for each fiscal quarter of 2013, and not more than 2.5 to 1.0 for each subsequent fiscal quarter.


•	An Asset Coverage Ratio of not less than 1.0 to 1.0 for debt to margined assets. For this purpose, a certain percentage of our accounts receivable and inventory balances are included in margined assets.


•	A minimum Adjusted EBITDA allowed for the trailing twelve months:


(i)	ended with the fourth fiscal quarter of 2012 of $35 million;


(ii)	ended with each fiscal quarter of 2013 of $35 million and;


(iii)	ended with each subsequent fiscal quarter of $45 million.