Long-term Debt and Obligations

6 Months Ended

Jun. 30, 2013

9. Long-term Debt and Obligations

In March 2012, the Company entered into a loan and security agreement (the “credit facility”), pursuant to which it incurred $13.0 million in term loan borrowings in 2012 and subsequently incurred an additional $5.0 million in term loan borrowings in April 2013, for an aggregate principal amount of $18.0 million. All of such borrowings accrue interest at a rate of 8.89%. Through January 2014, the Company is required to pay interest only on such term loan borrowings. Following the expiration of the interest only payment period, the Company is required to pay principal and interest in 30 equal monthly installments, plus an end of term payment equal to 5.5% of the amount borrowed, or $990,000, at maturity in July 2016. The Company may at its option prepay all of the term loan borrowings by paying the lender, among other things, all principal and accrued interest, the end of term payment plus a premium of up to 3% of the amount borrowed. Pursuant to the credit facility, from time to time the Company can also incur revolver borrowings of up to the lesser of $2.0 million or a borrowing base tied to the amount of eligible accounts receivable. Interest on revolver borrowings accrues at a floating rate equal to the prime rate plus 3.70% (subject to a floor of 6.95%) and is payable monthly. The Company is also required to pay a fee of 0.075% per month on the unused portion of the revolver borrowings.

The credit facility contains customary conditions to borrowing, events of default and covenants, including covenants that restrict the Company’s ability to dispose of assets, merge with or acquire other entities, incur indebtedness, incur encumbrances, make distributions to holders of the Company’s capital stock, make investments or engage in transactions with its affiliates. In addition, the Company must comply with a financial covenant based on life sciences revenue. This financial covenant is measured monthly on a trailing three month basis. The Company is in compliance with all covenants as of June 30, 2013. The Company’s obligations under the credit facility are secured by substantially all of its assets other than intellectual property.

Pursuant to an office building lease, the owner of the building financed a portion of tenant improvements under an arrangement in which the Company is obligated to pay the amount financed over the term of the lease. The amount financed totaled $843,000 and is being repaid over the five-year term of the lease, which expires in August 2016. Interest accrues on the unpaid balance at a rate of 10% per annum.

Borrowings, including current portion, consisted of the following (in thousands):


	June 30, 2013			December 31, 2012
Landlord payable	$	145		$	235
Term loans payable		18,195			13,115

		18,340			13,350
Less: Unamortized debt discount		(618	)		(591	)
Current portion		(2,675	)		(2,789	)

Non-current portion	$	15,047		$	9,970

Scheduled future payments for principal obligations under outstanding debt facilities were as follows at June 30, 2013 (in thousands):


Long-term debt:
2013	$	101
2014		6,192
2015		7,295
2016		4,752

	$	18,340

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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