Debt

Silicon Valley Bank Credit Facilities

On February 18, 2010, we entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”) to provide us with borrowing capacity of up to $5.0 million, subject to a percentage of our outstanding eligible accounts receivable, at a floating annual interest rate equal to the greater of (a) 6% or (b) SVB’s prime rate then in effect plus 2%. The credit facility was originally scheduled to mature on February 17, 2011, but it was amended to extend the maturity date until May 18, 2011 and to revise the calculation of eligible borrowing base and add certain financial covenants relating to our adjusted EBITDA.

On May 18, 2011, we entered into a Second Loan Modification Agreement (the “Second Loan Modification Agreement”) with SVB. Under the Second Loan Modification Agreement, SVB made a term loan to us in the amount of $6.0 million (the “Term Loan”). The Term Loan is to be repaid by us in 48 monthly installments, plus accrued interest payable monthly in arrears, and unless earlier terminated, matures on the earlier of either May 1, 2015 or an event of a default under the loan agreement. The Term Loan carries a floating annual interest rate equal to SVB’s prime rate then in effect plus 2%.

We may prepay amounts due under the Term Loan for a fee equal to (i) $60,000, if such prepayment is made on or before May 18, 2013; or (ii) zero, if such prepayment is made after May 18, 2013.

In addition to the terms and conditions of the Term Loan, the Second Loan Modification Agreement reduced our maximum borrowing capacity under the revolving credit facility (the “Line of Credit” and together with the Term Loan the “Credit Facilities”) from $5.0 million to $1.0 million and extended its maturity date until May 18, 2012.

Effective as of May 17, 2012, we entered into a Third Loan Modification Agreement (the “Third Loan Modification Agreement”) with SVB. Under the Third Loan Modification Agreement, the Line of Credit maturity date was extended until May 17, 2014.

As modified by the Second Loan Modification Agreement and the Third Loan Modification Agreement, the annual interest rate on the Line of Credit is equal to the greater of (a) 6% or (b) SVB’s prime rate plus 1%, payable monthly in arrears, and we are obligated to pay to SVB an unused Line of Credit fee equal to one-quarter of one percent (0.25%), of the unused borrowing capacity payable monthly. We may terminate the Line of Credit for a termination fee of $10,000, which fee would not be payable in the event that the Line of Credit is replaced by another loan facility with SVB.

Amounts due under the Credit Facilities are secured by substantially all of our assets, including intellectual property, personal property and bank accounts.

The Credit Facilities require us to observe a number of financial and operational covenants, including maintenance of a specified liquidity ratio, achievement of certain adjusted EBITDA targets, protection and registration of intellectual property rights, and certain customary negative covenants. As of September 30, 2012, we were in compliance with all covenants.

In addition, the Credit Facilities contain customary events of default, including nonpayment of principal, interest or other amounts, violation of covenants, material adverse change, an event of default under any subordinated debt documents, incorrectness of representations and warranties in any material respect, bankruptcy, judgments in excess of a threshold amount, and violations of other agreements in excess of a threshold amount. If any event of default occurs SVB may declare due immediately all borrowings under the Credit Facilities and foreclose on the collateral. Furthermore, an event of default under the Credit Facilities would result in an increase in the interest rate on any amounts outstanding.

The balance under the Term Loan at September 30, 2012 was $4.1 million, of which $2.5 million was classified as long-term and $1.6 million was classified as short-term. No amounts were outstanding under the Line of Credit at September 30, 2012, and the $1.0 million remains available.

Note Payable to Hansen Medical, Inc.

In January 2010, we issued to Hansen Medical, Inc. (“Hansen”) a note (the “Hansen Note”) in the original principal amount of $5.0 million, which was subordinated to our obligations to SVB. The Hansen Note bore interest at a fixed rate of 8.5% and was secured by substantially all of our assets. On May 23, 2011, in connection with the Second Loan Modification Agreement with SVB, we repaid the Hansen Note in full. We and Hansen agreed upon a final payoff in the amount of approximately $3.0 million as payment in full for all principal and accrued interest under the Hansen Note, which represented a $190,000 discount from the then outstanding balance. The discount will be amortized into income over the remaining life of our Development and Supply Agreement with Hansen. At September 30, 2012, there was approximately $62,000 remaining in deferred credits to be amortized. Upon receipt of this final payment, all security interests in our assets held by Hansen as collateral for our obligations under the Hansen Note were terminated and released.