Debt

MidCap Loan and Security Agreement

On August 30, 2013, the Company entered into an Amended and Restated Credit, Security and Guaranty Agreement (the "Amended Credit Facility") with MidCap. The Amended Credit Facility amended and restated the prior credit facility that the Company had MidCap (the "Credit Facility").

Pursuant to the Amended Credit Facility, the Company increased the borrowing limit from $50 million to $73 million. The Company also extended the maturity to August 2016. The Amended Credit Facility consists of a $28 million term loan drawn at closing with a $5 million delayed draw within 12 months, for a total term loan maximum borrowing of $33 million and a revolving line of credit with a maximum borrowing base of $40 million. The Company used the term loan proceeds of $28 million to repay a portion of the outstanding balance on the prior revolving line of credit.

The term loan interest rate is priced at the London Interbank Offered Rate ("LIBOR") plus 8.0%, subject to a 9.5% floor, and the revolving line of credit interest rate bears interest at LIBOR plus 6.0%, reset monthly. At December 31, 2013, the revolving line of credit carried an interest rate of 6.2% and the term loan carried an interest rate of 9.5%. The borrowing base is determined, from time to time, based on the value of domestic eligible accounts receivable and domestic eligible inventory. As collateral for the Amended Credit Facility, the Company granted MidCap a security interest in substantially all of its assets, including all accounts receivable and all securities evidencing its interests in its subsidiaries.

In addition to monthly payments of interest, monthly repayments of $0.3 million of the principal for the term loan are due beginning in October 2013 through maturity, with the remaining principal due upon maturity.

In connection with the execution of the Amended Credit Facility, the Company incurred approximately $0.4 million in costs were capitalized as debt issuance costs. Approximately $0.4 million of the net remaining unamortized debt issuance costs related to the prior Credit Facility remained within the unaudited consolidated balance sheets, which will be amortized over the term of the Amended Credit Facility.

On June 7, 2012, the Company entered into the prior Credit Facility with MidCap, which permitted the Company to borrow up to $40 million under a revolving line of credit and included an option to increase the borrowing base to $50 million with the prior consent of MidCap. As collateral for the Credit Facility, the Company granted MidCap a security interest in substantially all of its assets, including all accounts receivable and all securities evidencing its interests in its subsidiaries.

Upon execution of the prior Credit Facility, the Company drew $34.3 million on the Credit Facility to pay off its existing term loan with Silicon Valley Bank (“SVB”) totaling $8.1 million and its existing line of credit with SVB totaling $17.6 million (collectively the “SVB Credit Facility”). The Company paid early termination and other fees to SVB associated with the SVB Credit Facility of $2.3 million and wrote-off $0.6 million of unamortized debt issuance and debt discount costs related to the SVB Credit Facility. The total loss on extinguishment of debt costs of $2.9 million is included in interest expense in the nine months ended September 30, 2012. The Company paid an up-front commitment fee to MidCap of $0.2 million and debt issuance costs of $0.2 million, which were capitalized as deferred debt issuance costs.

The Amended Credit Facility includes traditional lending and reporting covenants including a fixed charge coverage ratio and a senior leverage ratio to be maintained by the Company. The Amended Credit Facility also includes several potential events of default, such as payment default and insolvency conditions, which could cause interest to be charged at a rate which is up to five percentage points above the rate effective immediately before the event of default or result in MidCap’s right to declare all outstanding obligations immediately due and payable. In January 2013, the Company entered into a limited waiver and limited consent agreement with MidCap (the “Waiver”). Under the Waiver, MidCap gave the Company its consent to waive certain provisions of the prior Credit Facility in connection with the acquisition of Phygen and related to the maintenance of cash balances in the U.S. In February 2013, the Company and MidCap entered into a first amendment to the Credit Facility (the First Amendment”). The First Amendment allowed the Company to exclude payments related to the Phygen acquisition and the settlement agreement with Cross Medical Products, LLC (“Cross”) from calculation of the fixed charge coverage ratio and the senior leverage ratio. In conjunction with the First Amendment, the Company paid MidCap a fee of $0.1 million. In July 2013, the Company entered into a second limited waiver and limited consent agreement with MidCap (the “Second Waiver”). Under the Second Waiver, MidCap gave the Company its consent to waive certain provisions of the prior Credit Facility related to the maintenance of cash balances in the U.S. for past periods through September 30, 2013. On August 30, 2013, the Company entered into the Amended Credit Agreement with MidCap. The Company was in compliance with all of the covenants of the Amended Credit Facility as of December 31, 2013.

During the year ended December 31, 2013, the Company repaid $168.9 million, including a $28.0 million repayment using the proceeds from the new term loan, and drew an additional $154.6 million on its working capital line of credit. The balance of the line of credit and the term loan as of December 31, 2013 was $24.8 million and $27.3 million, respectively. Amortization of the debt discount and debt issuance costs, accretion of the finance charge and non-cash extinguishment of debt costs, which were recorded as non-cash interest expense, totaled $0.2 million, $0.9 million and $0.4 million for the years ended December 31, 2013, 2012 and 2011, respectively. Interest expense for the term loans and the Company’s working capital line of credit, excluding debt discount and debt issuance cost amortization, accretion of the additional finance charge and extinguishment of debt costs, totaled $3.6 million, $2.6 million and $2.2 million for the years ended December 31, 2013, 2012 and 2011, respectively.

SVB Loan and Security Agreement

On October 29, 2010, the Company entered into an amended and restated loan and security agreement with SVB (the “SVB Credit Facility”), which was amended in December 2011. The amended SVB Credit Facility consisted of a working capital line of credit, which permitted the Company to borrow up to $22 million and a $10 million term loan. The actual amount available was based on eligible accounts receivable and eligible inventory. The term loan carried a fixed interest rate equal to the greater of 8.5% or the SVB prime rate plus 4.5% with principal plus interest repayments due in 16 equal quarterly installments. The term loan matured October 2015 and the Company was subject to a prepayment penalty if the term loan is repaid prior to maturity. In June 2012, the SVB Credit Facility was terminated and replaced by the MidCap Credit Facility.

Other Debt Agreements

The Company has various capital lease arrangements. The leases bear interest at rates ranging from 6.6% to 9.6%, are generally due in monthly principal and interest installments, are collateralized by the related equipment, and have various maturity dates through June 2017.

Long-term debt consists of the following (in thousands):



	December 31,
	2013			2012
Credit Facility with MidCap	$	52,081		$	38,634
Capital leases (See Note 7)	1,336			1,770
Note payable related to software license purchases	58			59
Financing agreements for premiums on insurance policies	1,427			1,204
Total debt	54,902			41,667
Less: current portion	(4,924		)	(1,700		)
Total long-term debt	$	49,978		$	39,967

Principal payments on debt are as follows as of December 31, 2013 (in thousands):



Year Ending December 31,
2014	$	4,485
2015	3,000
2016	46,081
2017	—
2018	—
Thereafter	—

Total	53,566
Add: capital lease principal payments	1,336

Total	54,902
Less: current portion of long-term debt	(4,924		)

Long-term debt, net of current portion	$	49,978