Debt

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



	December 31,
	2013			2012
Comerica Revolver	$	—		$	780
Comerica Term Loan	—			2,000
Escalate Term Loan (A)	—			5,920
SRS Note	1,885			2,328
Main Street Term Loan	9,000			—
Main Street Revolver	300			—
	11,185			11,028
Less current maturities	(950		)	(1,397		)
Long-term debt, net of current portion	$	10,235		$	9,631

(A) Total proceeds less debt discount as discussed below

On October 17, 2013, the Company entered into a loan agreement by and among the Company and its subsidiaries, and Main Street Capital Corporation (“Main Street”), as lender and as administrative agent and collateral agent for itself and the other lenders from time to time party thereto (the "Main Street Loan Agreement"). The Main Street Loan Agreement provides for an $11,000,000 senior secured term loan facility (“Main Street Term Loan”) and a $2,000,000 senior secured revolving loan facility (the “Main Street Revolver”). As of December 31, 2013, the Company has borrowed $9,000,000 under the Main Street Term Loan and $300,000 on the Main Street Revolver and the Company used the proceeds from this debt issuance to repay the former debt obligations with Comerica Bank (“Comerica”) and Escalate Capital Partners SBIC I, L.P. (“Escalate”) as summarized below.

Borrowings under the Main Street Term Loan and Main Street Revolver mature on October 17, 2018 and October 17, 2015, respectively, unless sooner terminated as provided in the Main Street Loan Agreement. The Main Street Loan Agreement provides that the Main Street Term Loan borrowings bear interest at 12% per annum and the Main Street Revolver borrowings bear interest at 8% per annum. Interest payments on the outstanding borrowings under both the Main Street Term Loan and Main Street Revolver are due monthly. The Company is required to make quarterly principal payments on the Main Street Term Loan as follows: (i) starting on February 15, 2014 to April 15, 2015 in an amount equal to 33% of Excess Cash Flow generated by the Company (as defined in the Main Street Loan Agreement and effectively equal to cash flow from operations less capital expenditures less principal payments on capital leases) during the trailing fiscal quarter and (ii) from August 15, 2015 to August 15, 2018 in an amount equal to 50% of Excess Cash Flow generated by the Company during the trailing fiscal quarter. The Company may prepay borrowings under the Main Street Loan Agreement at any time without premium or penalty, subject to certain notice and minimum prepayment requirements.

The obligations of the Company under the Main Street Loan Agreement are secured by substantially all of the assets of the Company, including all intellectual property, equity interests in subsidiaries, equipment and other personal property. The Main Street Loan Agreement contains standard representations, warranties and covenants for a transaction of its nature, including, among other things, covenants relating to (i) financial reporting and notification, (ii) payment of obligations, (iii) compliance with applicable laws and (iv) notification of certain events. The Main Street Loan Agreement also contains various covenants and restrictive provisions which may, among other things, limit the Company's ability to sell assets, incur additional indebtedness, make investments or loans and create liens. The Main Street Loan Agreement also contains financial covenants, including a fixed charge coverage ratio covenant and a debt to Adjusted EBITDA ratio covenant. See“Management's Discussion and Analysis of Financial Condition and Results of Operations" under Item 7 of this Annual Report on Form 10-K for a description of Adjusted EBITDA. The Main Street Loan Agreement contains events of default customary for similar financings with corresponding grace periods, including failure to pay any principal or interest when due, failure to perform or observe covenants, breaches of representations and warranties, certain cross defaults, certain bankruptcy related events, monetary judgments defaults and a change in control. Upon the occurrence of an event of default, the outstanding obligations under the Main Street Loan Agreement may be accelerated and become immediately due and payable. As of December 31, 2013, the Company was in compliance with all required covenants.

On October 1, 2012, the Company entered into a Loan and Security Agreement (the "Comerica Loan Agreement") with Comerica, providing the Company with a $2,000,000 term loan (the "Comerica Term Loan") and a revolving line of credit (the “Comerica Revolver”). As of December 31, 2013 and 2012, the Company had outstanding borrowings of $0 and $780,000, respectively, under the Comerica Revolver and $0 and $2,000,000, respectively, under the Comerica Term Loan. On October 17, 2013, outstanding borrowings on the Comerica Loans were repaid in full in connection with entry into the Main Street Loan Agreement.

On October 1, 2012, in connection with the Affinity acquisition, the Company entered into a Loan and Security Agreement (the “Escalate Loan Agreement”) with Escalate, which provided the Company with a $6,500,000 term loan (the “Escalate Term Loan”) for a term of 60 months. The Escalate Term Loan had interest at a fixed rate of 12% per annum, with interest-only payable monthly for the first 24 months. The outstanding balance of the Escalate Term Loan was payable in 36 equal monthly installments of principal, plus all accrued interest, beginning on October 31, 2014. In connection with the Escalate Term Loan, the Company agreed to pay Escalate a $300,000 fee (the "$300,000 Escalate Fee") upon the earlier to occur of: (i) the maturity date of October 1, 2017 or (ii) repayment in full of the obligations. In connection with the Escalate Term Loan, the Company issued to Escalate 295,000 shares of common stock (the “Escalate Shares”) at a purchase price of $0.01 per share on October 1, 2012. The shares were valued at $611,000 using the October 1, 2012, stock price of $2.08 less the purchase price; and this value was reflected as a debt discount to the Escalate Term Loan. The debt discount was being amortized over the term of the Escalate Term Loan. The unamortized debt discount as of December 31, 2012 was $580,000. In March 2013, the Company entered into an amendment of the Comerica Loan Agreement which required the consent of Escalate. In consideration of Escalate's consent to this amendment, the Company issued 100,000 shares of its common stock to Escalate. The shares were valued at $147,000 using the March 28, 2013 stock price of $1.47; and this value was reflected as an additional debt discount to the Escalate Term Loan. On October 17, 2013, the Escalate Term Loan and $300,000 Escalate Fee were paid in full in connection with entry into the Main Street Loan Agreement.

Unamortized financing costs related to our debt agreements of $363,000 and $651,000 are included in other assets in the accompanying consolidated balance sheets as of December 31, 2013 and 2012, respectively. The financing costs are amortized using the effective interest method over the term of each loan through each maturity date. During the years ended December 31, 2013 and 2012, there was $976,000 and $122,000 respectively, of amortization of financing costs, and $727,000 and $31,000 respectively, of amortization of debt discount. As a result of the payoff of the Comerica Term Loan, Comerica Revolver and Escalate Term Loan, the Company charged to interest and other expense in the three months ended December 31, 2013: (i) the remaining unamortized portion of the debt financing costs from the Comerica Loans and Escalate Term Loan as of the payoff date, which totaled $710,000 and (ii) the remaining unamortized portion of the debt discount from the Escalate Term Loan, which was $619,000 as of the payoff date.

On October 1, 2012, in connection with the Affinity acquisition, the Company issued a promissory note (the “SRS Note”) to Shareholder Representative Services LLC ("SRS"), in favor of the prior stockholders of Affinity, in original principal amount of $2,330,000, due and payable on December 31, 2014. The principal amount of the SRS Note accrued interest at a rate of 8% per annum, and such interest is payable in arrears in quarterly payments, which commenced on April 1, 2013. The Company is required to make monthly principal payments in the amount of $50,000 in the event the Company's trailing three month Adjusted EBITDA exceeds $1,500,000. The Company is required to make additional payments on the principal amount on each of December 31, 2013, June 30, 2014 and December 31, 2014 in an amount equal to 40% of the Company’s trailing six month Adjusted EBITDA less $3,000,000. As of December 31, 2013, the Company has not made any principal payments on the SRS Note. During the year ended December 31, 2013, the principal amount of the SRS Note was reduced by $240,000 in accordance with the terms of the SRS Note in connection with severance obligations the Company incurred related to the acquisition of Affinity resulting in an equal and offsetting reduction in goodwill. Approximately $134,000 of these severance obligations remain payable and are recorded in accrued expenses in the accompanying consolidated balance sheet as of December 31, 2013.

In February 2014, the Company amended and restated the SRS Note. The amended note, which was effective as of December 31, 2013 (i) reduced the principal amount of the SRS Note by $203,000 to $1,885,000, (ii) increased the interest rate from 8% to 10% per annum and (iii) extended the maturity date from December 31, 2014 to January 4, 2016. The Company concluded that this amendment was a debt modification and not an extinguishment in accordance with ASC Topic 470-50 “Debt - Modifications and Extinguishments”. The Company recorded the $203,000 reduction of the SRS Note as follows: i) a $40,000 decrease to general and administrative expenses relating to reimbursement of certain expenses, ii) a $60,000 increase in accrued expenses and iii) a $103,000increase to other income (see Note 17).

As of December 31, 2013, the current portion of long-term debt recorded on the Company's balance sheet was $950,000, which reflects the sum of the following principal payments the Company expects to pay in 2014: $450,000 on the Main Street Term Loan, $300,000 on the Main Street Revolver and $200,000 on the SRS Note. As discussed above, principal payments in 2014 on the Main Street Term Loan and SRS Note are based on a percentage of Excess Cash Flow and achievement of certain Adjusted EBITDA levels, respectively. The principal payments related to these debt agreements are estimates and actual results may vary. Future maturities of long-term debt, assuming principal payments on the Main Street Term Loan and SRS Note for 2015 through 2018 approximate amounts estimated for 2014, are as follows (in thousands):



2014	$	950
2015	1,050
2016	1,535
2017	450
2018	7,200
	$	11,185