9.	Long-Term Debt

2014 Term Loan Agreement

In April 2014, the Company entered into a term loan agreement under which it may borrow up to $45.0 million, including an option to defer payment of a portion of the interest that would accrue on the borrowing under the term loan agreement. Upon initial closing, the Company borrowed $20.0 million, the proceeds of which were primarily used to repay the outstanding balance under the Company’s former credit facility plus a related $1.0 million end of term payment, a $0.3 million make-whole premium, and deferred interest. The Company incurred and recorded a total charge to interest expense of $1.4 million related to the repayment of the former credit facility, including a loss on extinguishment of debt of $0.6 million. In October 2014, the Company borrowed an additional $10.0 million under the term loan agreement.

In October 2015, the Company amended the term loan agreement to, among other provisions, increase the maximum borrowing capacity to $60.0 million (excluding deferred interest), reduce the applicable interest rate from 12.5% to 12.0%, extend the interest-only period through March 2021, and extend the final maturity to March 2022. Under the amended agreement, borrowings accrue interest at 12.0% annually, payable quarterly, of which 3.0% can be deferred during the first six years of the term at the Company’s option and paid together with the principal at maturity. The Company has elected to exercise the option to defer payment of interest and has recorded $1.5 million of deferred interest through December 31, 2015. In December 2015, the Company borrowed an additional $10.0 million under the terms of the amended agreement and is required to borrow an additional $5.0 million no later than June 30, 2016. At its option, the Company may borrow up to an additional $15.0 million through December 31, 2016. Total borrowings and deferred interest under the amended term loan agreement were $41.5 million and $30.4 million as of December 31, 2015 and 2014, respectively.

Under the amended term loan agreement, the Company may pay interest-only for the first seven years of the term and principal payments are due in four equal installments during the eighth year of the term. The Company has the option to prepay the term loan, in whole or part, at any time subject to payment of a redemption fee of up to 4%, which declines 1% annually thereafter, with no redemption fee payable if prepayment occurs after the fourth year of the loan. In addition, a facility fee equal to 2.0% of the amount borrowed plus any accrued interest is payable at the end of the term or when the loan is repaid in full. A long-term liability of $1.1 million is being accreted using the effective interest method for the facility fee over the term of loan agreement, with a corresponding reduction to the debt. Obligations under the term loan agreement are collateralized by substantially all of the Company’s assets.

The term loan agreement contains customary conditions to borrowings, events of default and negative covenants, including covenants that could limit the Company’s ability to, among other things, incur additional indebtedness, liens or other encumbrances, make dividends or other distributions; buy, sell or transfer assets; engage in any new line of business; and enter into certain transactions with affiliates. The term loan agreement also includes a $2.0 million minimum liquidity covenant and revenue-based financial covenants, which was $55.0 million for 2015 with annual increases of $15.0 million for each subsequent fiscal year thereafter. If the Company’s actual revenues are below the minimum annual revenue requirement for any given year, it may avoid a related default by generating proceeds from an equity or subordinated debt issuance equal to the shortfall between its actual revenues and the minimum revenue requirement. The Company was in compliance with its financial covenants as of December 31, 2015.

The Company incurred $4.0 million, $4.1 million and $1.9 million of interest expense under the term loan agreement for the years ended December 31, 2015, 2014 and 2013, respectively. In 2014, the Company incurred $1.4 million of interest expense related to the repayment of the former credit facility, including a loss on extinguishment of debt of $0.6 million.

2012 Credit Facility

In 2012, the Company entered into a credit facility and incurred $13.0 million and $5.0 million in term loan borrowings during the years ended December 31, 2012 and 2013, respectively. In connection with the term loan borrowings during 2012, the Company issued warrants to purchase an aggregate of 76,940 shares of Series D and 20,837 shares of Series E preferred stock at exercise prices of $8.45 and $14.40 per share, respectively. In connection with the term loan borrowings during 2013, the Company issued warrants to purchase an aggregate of 10,418 shares of Series E preferred stock. The issued warrants were valued at the date of issuance using the Black-Scholes option pricing model with the following assumptions: fair value of preferred stock equal to exercise price of warrant, volatility of 57.0 to 61.0% and a risk free interest rate of 1.63 to 2.20%. The warrants were treated as a debt discount and were amortized over the term of the debt. In connection with the Company’s initial public offering, these warrants became exercisable for shares of the Company’s common stock.

Lease Financing Obligations

The Company has entered into agreements to lease certain hardware, software and capitalized installation costs, the longest of which expires in June 2017. Ownership of the leased property transfers to the Company at the end of the lease terms. The fair value at lease inception is recorded in property, plant and equipment and is depreciated over the shorter of the useful life of the assets or the lease term. A total cost of $716,500 and $668,500 and accumulated depreciation of $286,600 and $102,600 for leased property is included in property, plant and equipment at December 31, 2015 and 2014, respectively.

Long-term debt and lease financing obligations consisted of the following at December 31 (in thousands):


	2015			2014
Term loans payable	$	41,487		$	30,420
Lease financing obligations		284			506

Total long-term debt and lease financing obligations		41,771			30,926
Unamortized debt issuance costs		(545	)		(680	)
Current portion of lease financing obligations		(226	)		(251	)

Long-term debt and lease financing obligations, net of debt issuance costs and current portion	$	41,000		$	29,995

Scheduled future payments of principal for outstanding debt and lease financing obligations were as follows at December 31:


2016	$	226
2017		58
2018		—
2019		—
2020		—
Thereafter		41,487

	$	41,771