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Credit Facility
6 Months Ended
Jun. 30, 2014
Debt Disclosure [Abstract]  
Credit Facility
Credit Facility
In December 2011, the Company obtained a secured credit facility in the form of a revolving line of credit up to a maximum of $15.0 million (the “Revolving Line of Credit”) and an equipment term loan (the “Equipment Term Loan”) (together, the “Credit Facility”). In general, amounts borrowed under the Credit Facility are secured by a lien on all of the Company’s assets other than its intellectual property. In addition, under the credit agreement, the Company is required to pledge 65% of its equity interests in its Swiss subsidiary. The Company has also agreed not to encumber any of its intellectual property. The agreement contains certain restrictive covenants that limit the Company’s ability to, amongst other things; (i) incur additional indebtedness or guarantees; (ii) create liens or other encumbrances on its property; (iii) enter into a merger or similar transaction; (iv) invest in another entity; (v) declare or pay dividends; and (vi) invest in fixed assets in excess of a defined dollar amount. Repayment of amounts owed pursuant to the Credit Facility may be accelerated in the event that the Company is in violation of the representations, warranties and covenants made in the credit agreement, including certain financial covenants. The financial covenants that the Company must meet during the term of the credit agreement include quarterly minimum liquidity ratios, minimum quick ratios and EBITDA targets and an annual net income target. Borrowings under the Credit Facility bear interest, payable monthly, at either (i) the bank's prime rate or (ii) LIBOR plus 2.25%, at the Company's option subject to certain limitations. Further, the Company incurs an unused commitment fee, payable quarterly, equal to 0.25% per annum of the average daily unused amount of the Revolving Line of Credit.
The Equipment Term Loan was available to finance 80% of eligible equipment purchases made between April 1, 2011 and April 30, 2012. During this period, the Company borrowed $5.0 million under the Equipment Term Loan. In March 2014, the Company borrowed $3.0 million under the Revolving Line of Credit, and no other amounts have been borrowed to date under the Revolving Line of Credit.
As of December 31, 2013, the Company was not in compliance with the financial covenant pertaining to the quarterly EBITDA target for the quarter ended December 31, 2013. As a result of this noncompliance, borrowings outstanding under the Credit Facility were classified as a current obligation in the consolidated balance sheet as of December 31, 2013.
During the quarter ended March 31, 2014, the Company was in violation with respect to the requirement to maintain a minimum liquidity ratio at all times. On February 27, 2014, the Company entered into a forbearance agreement with the bank wherein the bank agreed to forbear from further exercise of its rights and remedies under the credit agreement to call the Company's outstanding debt obligation in connection with this event of default for a period terminating on the earlier of April 30, 2014 or the occurrence of any additional events of default. The forbearance agreement also required the Company to maintain at least $1.0 million in its account maintained at the bank until the amount outstanding under the Revolving Line of Credit is repaid. On April 30, 2014, the Company entered into another forbearance agreement with the bank which extended the forbearance period from April 30, 2014 to June 30, 2014, or the occurrence of any additional events of default, and removed the requirement for the Company to maintain at least $1.0 million in its account maintained at the bank.
During the quarter ended June 30, 2014, the Company was in violation with respect to the requirement to maintain a minimum liquidity ratio at all times and the failure to maintain the required EBITDA for the quarter ended June 30, 2014. On June 30, 2014, the Company entered into another forbearance agreement with the bank which extended the forbearance period from June 30, 2014 to August 31, 2014, or the occurrence of any additional events of default. As a result of this noncompliance, the bank's obligation to extend any further credit ceased and terminated, and borrowings outstanding under the Credit Facility have been classified as a current obligation in the consolidated balance sheet as of June 30, 2014.
As of June 30, 2014, $1.4 million was outstanding under the Equipment Term Loan and the applicable interest rate was LIBOR plus 2.25% (2.5% as of June 30, 2014). If the bank does not exercise its right to accelerate repayment of this balance after the forbearance period discussed above, under the original terms of the Credit Facility, principal and interest under the Equipment Term Loan are payable in 36 equal monthly installments such that the Equipment Term Loan is fully repaid by the maturity date of April 30, 2015, but may be prepaid in whole or in part at any time. As of June 30, 2014, $3.0 million was outstanding under the Revolving Line of Credit and the applicable interest rate was LIBOR plus 2.25% (2.5% as of June 30, 2014). The amount outstanding under the Revolving Line of Credit is scheduled to be repaid by August 31, 2014.