NetSpend 2010 Annual Report Download - page 89

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Table of Contents
NetSpend Holdings, Inc.
Notes to Consolidated Financial Statements (Continued)
December 31, 2008, 2009 and 2010
NOTE 9: DEBT (Continued)
$15.0 million letter of credit facility. At the Company's option, the Company may prepay any borrowings in whole or in part, without any
prepayment penalty or premium.
The outstanding borrowings under the new credit facility bear interest, at the Company's election, as either base rate or Eurodollar loans.
Base rate loans bear annual interest at the base rate (the greater of the federal funds rate plus 0.50%, the prime rate, or one-month LIBOR plus
1.00%) plus a spread of 1.50% to 2.25% based on the Company's leverage ratio. Eurodollar loans bear interest at the adjusted LIBOR for the
interest period in effect for such borrowings plus a spread of 2.50% to 3.25% based on the Company's leverage ratio. The Company's interest
rate on Eurodollar loans, which comprised all of the Company's outstanding borrowings as of December 31, 2010 was 2.8%.
The new credit facility contains certain financial and non-financial covenants and requirements, including a leverage ratio, fixed charge
ratio and certain restrictions on the Company's ability to make investments, pay dividends or sell assets. It also provides for customary events
of default as defined in the agreement, including failure to pay any principal or interest when due, failure to comply with covenants, and default
in the event of a change in control. The Company was in compliance with these covenants as of December 31, 2010.
Under the new credit facility, letters of credit may be issued for a period of up to one year and will have an expiration date of one year or
ten business days prior to the new credit facility's maturity date of September 2015, and may contain provisions for automatic renewal, subject
to certain conditions. Letters of credit bear interest as Eurodollar loans. As of December 31, 2010, the Company was not utilizing any of its
available letters of credit.
The Company pays a participation fee with respect to any participation in letters of credit, which accrues at the applicable rate on the
average daily amount of such lender's letter of credit exposure from the effective date to the date on which such lender ceases to have any letter
of credit and exposure. The Company also pays the lending bank a fronting fee, which accrues at the rate of 0.25% per annum on the average
daily amount of the letter of credit exposure from the effective date to the date on which there ceases to be any letter of credit exposure, as well
as the issuing bank's standard fees. Participation fees and fronting fees are payable in arrears on the last day of each calendar quarter for such
calendar quarter. During the year ended December 31, 2010, the Company did not pay any participation or fronting fees.
The terms of the new credit facility require the Company to pay a commitment fee to the administrative agent for the account of each
lender, which accrues at a rate per annum equal to 0.45% to 0.50%, based on the Company's leverage ratio, on the average daily unused amount
of each commitment of such lender, and is payable in arrears on the last day of each calendar quarter for such calendar quarter. During the year
ended December 31, 2010, the Company paid $0.1 million in commitment fees.
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