9.                       Debt Instruments

The Company is party to a four year, $30.0 million credit facility with a syndicate of financial institutions, which expires on May 12, 2015. The amount of borrowings available under the credit facility at any time is based on the Company’s monthly accounts receivable balance at such time, and the amounts borrowed are collateralized by the Company’s personal property (including such accounts receivable but excluding intellectual property). Under the credit facility, the Company can request up to $5.0 million in letters of credit be issued by the financial institutions.

The credit facility contains customary events of default, conditions to borrowing and covenants, including restrictions on the Company’s ability to dispose of assets, make acquisitions, incur debt, incur liens and make distributions to stockholders. The credit facility also includes a financial covenant requiring the maintenance of minimum liquidity of at least $5.0 million. During the continuance of an event of a default, the lenders may accelerate amounts outstanding, terminate the credit facility and foreclose on all collateral.

In July 2013, the Company borrowed approximately $10.0 million from the credit facility to enhance its working capital position. The amount borrowed is included in long-term debt on the Company’s balance sheet. At July 31, 2013, the applicable interest rate for the amount borrowed was 2.94%.

The Company is party to a cash collateral agreement in connection with the issuance of letters of credit that were used to satisfy deposit requirements under facility leases. In June 2013, the Company requested the issuance of $3.2 million in letters of credit in connection with new facility leases. As of July 31, 2013, the Company had $4.0 million of cash collateral that was considered to be restricted cash. Of this amount, $3.5 million is included in other long-term assets and $0.5 million is included in prepaid expenses and other current assets on the Company’s balance sheets.

As of July 31, 2013, the Company had $16.0 million of available borrowing capacity under the credit facility.