Notes Payable

The following table summarizes our notes payable balances as of December 31, 2012 and 2011:



Lender	Due Date	Interest Rate	2012			2011
Bridge Bank – term note payable - March 1, 2012	February 10, 2016	4.25% (prime, plus 1 percentage point)	$	4,222,222		$	—
Bridge Bank – term note payable - February 15, 2011	Matured March 1, 2012	5.25% (prime, plus 2 percentage points)	—			475,000
Bridge Bank – revolving credit line - March 1, 2012	March 1, 2014	3.75% (prime, plus 0.5 percentage point)	3,600,000			—
Bridge Bank – revolving credit line - February 15, 2011	Matured March 1, 2012	5.25% (prime, plus 2 percentage points)	—			2,431,303
Total			$	7,822,222		$	2,906,303
Less: current portion			(1,333,333		)	(452,000		)
Term and revolving credit line - long term portion			$	6,488,889		$	2,454,303

Principal Payments:

Principal payments under the term note payable are due as follows as of December 31, 2012:



2013	$	1,333,333
2014	1,333,333
2015	1,333,333
2016	222,223
Total	$	4,222,222

Bridge Bank Credit and Term Note Payable

On February 15, 2011, we entered into the Business Financing Agreement (the “Agreement”) with Bridge Bank, N.A. (“Bridge Bank”). This Agreement provides for a revolving credit facility of up to $8.0 million and replaces the $5.0 million credit facility with Wachovia Bank, N.A. (“Wachovia”) that was scheduled to expire in March 2011. The Bridge Bank credit facility allows us to borrow against 80% of eligible accounts receivable balances, which are generally those balances owed by U.S. based customers that are less than 90 days from the date of invoice. In addition, the Bridge Bank facility provides an additional term credit of $475,000 to collateralize a stand-by letter of credit required by our corporate headquarters lease. Under the terms of the Agreement, we must maintain certain depository, operating and investment accounts at Bridge Bank; provide Bridge Bank a first priority perfected security interest in all of our accounts and personal property; provide various monthly, quarterly and annual reports; limit additional indebtedness to $500,000 of purchase money including capital leases and an additional $500,000 of all other indebtedness; and maintain “operating profit” of net income plus interest and taxes plus non-cash expenses for amortization, depreciation, stock based compensation, discontinued operations and non-recurring items of not less than $100,000 for the immediate proceeding three month period. At the closing of the Agreement several fees were paid including a facility fee (0.25% of the maximum credit limit), a due diligence fee ($800), a fee-in-lieu-of-warrant ($21,250) and a non-formula facility fee ($4,750). The facility fee is due annually. A maintenance fee of .125% of the average daily balance and the finance charge (Prime Rate plus 200 bonus points) and are due monthly. The outstanding borrowings under the Agreement were fully repaid to Bridge Bank on March 1, 2012 with a portion of the proceeds of the new Business Financing Agreement signed March 1, 2012.

On March 1, 2012 we entered into a new Business Financing Agreement with Bridge Bank, for a $10 million accounts receivable revolving credit facility (the “Revolving Credit Line”) and a $5 million term loan (the “Term Loan”) . The Revolving Credit Line replaced the Company’s then existing $8 million revolving credit facility. The new credit facility will be used primarily to satisfy our working capital needs following the closing of the merger with Vertro. described later in this report. Subject to the terms of the new agreement, we are entitled to obtain advances against the Revolving Credit Line up to 80% of eligible accounts receivable balances, which are generally those balances owed by U.S. based customers that are less than 90 days from the date of invoice, plus $1 million up to the credit limit of $10 million. In addition, subject to the terms of the agreement, the Company is entitled to borrow up to $5 million under the Term Loan portion of the credit facility, which is repayable in 45 equal monthly installments beginning June 2012. The Revolving Credit Line portion of the credit facility expires on February 28, 2014, at which time all loan advances under the Revolving Credit Line become due and payable. The Term Loan expires in February 2016. Under the terms of the new agreement, we must maintain certain depository, operating and investment accounts at Bridge Bank; provide Bridge Bank a first priority perfected security interest in all of our accounts and personal property; provide various monthly, quarterly and annual reports; and limit additional indebtedness to $500,000 of purchase money including capital leases and an additional $500,000 of all other indebtedness. In addition, the Company must maintain through May 2012 an “operating profit” of net income plus interest and taxes plus non-cash expenses for amortization, depreciation, stock based compensation, discontinued operations, non-recurring non-cash items and certain closing costs associated with the merger transaction with Vertro of not less than $200,000 for the immediate proceeding three month period; after May 2012 a Debt Service Coverage Ratio of at least 1.50 to 1.0 tested on the immediate proceeding three month period; and an Asset Coverage Ratio of not less than 1.10 to 1 at all times until September 30, 2012 and 1.25 to 1.0 thereafter. Interest on the Revolving Credit Line is payable monthly at prime plus 0.5% plus a monthly maintenance fee of 0.125% percentage points on the average daily account balance. Interest on the Term Loan bears interest at prime plus 1%. In connection with establishing the credit facility, the Company incurred fees payable to Bridge Bank of approximately $100,000. The agreement calls for a termination fee until the first anniversary and prepayment fee on the Term Loan until the first anniversary.

On June 29, 2012 we entered into the First Business Financing Modification Agreement with Bridge Bank (the "First Amendment") changing the minimum asset coverage ratio to 0.75 to 1.00 for the June 2012, July 2012 and August 2012, 0.80 to 1.00 for the September 2012, 0.85 to 1.00 for the October 2012, 1.00 to 1.00 for the November 2012 and1.15 to 1.00 beginning December 2012. It also changed the minimum operating profit measured monthly on a trailing 3 month basis to not less than $200,000 for June 2012, $500,000 for July 2012, $1,000,000 for August 2012 and $1,500,000 for September 2012. Further, the First Amendment required from October 2012 and thereafter that the Debt Service Coverage Ratio be at least 1.50 to 1.0, on a trailing 3 month basis and waived the event of default caused by the non-compliance of the Asset Coverage Ratio in April and May 2012.

On October 11, 2012 we entered into the Second Business Financing Modification Agreement with Bridge Bank (the "Second Amendment") changed the minimum asset coverage ratio to 0.9 to 1.0 for September 2012 and October 2012, 1.0 to 1.0 for November and December 2012 and 1.15 to 1.0 for each measuring period thereafter beginning January 2013. It also changed the minimum operating profit measured monthly on a trailing 3 month basis to not less than $600,000 for the September 2012 measuring period and $1,000,000 for the October 2012 measuring period. Also changed was the minimum debt service ratio, measured monthly on a trailing 3 month basis, to not less than 1.1 to 1.0 for November 2012 measuring period, 1.25 to 1.0 for December 2012 and 1.50 to 1.0 for each measuring period thereafter beginning January 2013. Further, the Second Amendment waived the event of default caused by the non-compliance of the operating profit in July and August 2012. Additionally, pursuant to the Second Amendment, the Company issued Bridge Bank a warrant to purchase 51,724 shares of our own common stock exercisable at $0.87 per share until October 2017. The warrant was valued at $45,000, which was recorded to interest expense.

As of December 31, 2012, we had a balance outstanding of approximately $4.2 million on the Term Loan and $3.6 million on the Revolving Credit Line, and we were in compliance with all terms of the amended Bridge Bank credit facility. We had approximately $1.5 million available under the Revolving Credit Line as of December 31, 2012.