Vonage 2010 Annual Report Download - page 73

V
O
NA
G
EH
O
LDIN
GS CO
RP
.
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(
In thousands, except per share amounts
)
We participated in the
S
tate of New Jerse
y
’s corpo-
r
ation business tax benefit certificate transfer program
,
which allows certain hi
g
h technolo
g
y and biotechnolo
gy
companies to transfer unused New Jersey net operatin
g
l
oss carryovers to other New Jersey corporation busines
s
t
axpayers. Durin
g
2003 and 2004, we submitted an appli
-
cation to the New Jersey Economic Development Author-
i
ty, or EDA, to participate in the pro
g
ram and th
e
a
pp
lication was a
pp
roved. The EDA then issued a certi
f
i-
cate certi
f
yin
g
our eli
g
ibility to participate in the pro
g
ram.
T
he pro
g
ram requires that a purchaser pay at least 75%
of the amount of the surrendered tax benefit. In tax years
2008, 2009, and 2010, we sold approximately,
$
10,051
,
$
0, and
$
2,194, respectively, of our New Jersey State ne
t
operatin
g
loss carry forwards for a reco
g
nized benefit of
approximately
$
605 in 2008,
$
0 in 2009, and
$
168 i
n
2010.
C
ollectively, all transactions represent approx-
i
mately 85
%
o
f
the surrendered tax bene
f
it each year an
d
h
ave been reco
g
nized in the year received.
No
te 6.
L
on
g
-
T
erm
D
e
bt
A
schedule o
f
lon
g
-term debt at December 31, 2010 and 2009 is as
f
ollows:
D
ecember 31
,
2
0
1
0
D
ecember 31
,
2
009
9
.75% Credit Facility — due 2015, net of discount
$
173,004
$—
16% First Lien
S
enior Facility — due 2013, net of discount — 107,246
2
0%
S
econd Lien
S
enior Facility — due 2015, net of discount — 86,61
4
2
0% Third Lien
C
onvertible Notes — due 2015, net of discount — 6,60
8
$
173,004
$
200,468
At December 31, 2010,
f
uture payments under lon
g
-term debt obli
g
ations over each o
f
the next
f
ive years and there-
af
t
e
r
a
r
easfo
ll
o
w
s:
C
redit Facilit
y
2011
$
20,000
2012
20
,
000
2013
20
,
000
2014
20
,
000
2015
120
,
000
Minimum future payments of principa
l
200
,
000
Pl
us acc
r
e
t
ed
int
e
r
es
t
—
L
ess u
n
a
m
o
rtiz
ed d
i
scou
n
t
6
,
996
C
urrent
p
ortio
n
20
,
000
L
ong-term port
i
on $173
,
00
4
December 2010 Financin
g
O
n December 14, 2010, we entered into a credit
a
g
reement (the “Credit Facility”) consistin
g
of a $200,00
0
se
ni
o
r
secu
r
ed
t
e
rm l
oa
n. Th
eco
-
bo
rr
o
w
e
r
su
n
de
rth
e
C
redit Facility are us and Vona
g
e America Inc., our wholl
y
owned subsidiary. Obli
g
ations under the Credit Facilit
y
are
g
uaranteed,
f
ully and unconditionally, by our other
U
nited States subsidiaries and are secured by sub-
s
tantially all o
f
the assets o
f
each borrower and each o
f
t
he
g
uarantors. An a
ff
iliate o
f
the chairman o
f
our board o
f
directors and one o
f
our
p
rinci
p
al stockholders is a lender
under the Credit Facility.
Use of Proceeds
We used the net proceeds of the
C
redit Facilit
y
o
f
$
194,000 (
$
200,000 principal amount less ori
g
inal dis-
count of $6,000), plus $102,090 of cash on hand, t
o
(i) exercise our existing right to retire debt under our Firs
t
Lien
S
enior Facilit
y
, for 100% of the contractual make
-
whole price,
(
ii
)
retire debt under our
S
econd Lien
S
enior
Facilit
y
at a more than 25% discount to the contractual
m
ake-whole price, and
(
iii
)
cause the conversion of all
outstanding
C
onvertible Notes into 8,276 shares of our
common stock
(
the
C
onvertible Notes together with th
e
First Lien
S
enior Facilit
y
and the
S
econd Lien
S
enior
Facility, the “Prior Financing”). We also incurred
$
11,44
4
of fees in connection with the
C
redit Facilit
y
and repa
y
-
m
ent of the Prior Financing. We agreed to make an addi
-
t
ional cash pa
y
ment to the holders of our
S
econd Lie
n
Senior Facility in an aggregate amount of
$
9,000 if w
e
engage in
Q
ualifying Discussions
(
as defined in the Maste
r
Agreement
)
prior to June 30, 2011 that result in a merge
r
or acquisition transaction
(
as defined in the Maste
r
Agreement
)
that is consummated prior to June 30, 2012.
F-1
8
VO
NA
G
E ANN
U
AL REP
O
RT 2010