Term Loan

On June 17, 2016, we entered into a loan and security agreement (“Loan Agreement”) with Oxford Finance, LLC, (“Oxford” or sometimes referred to as the “Lender”), pursuant to which Oxford agreed to lend us up to $30.0 million, issuable in two separate term loans of $20.0 million (the “Term A Loan”) and $10.0 million (the “Term B Loan”). On June 22, 2016, we received $20.0 million in proceeds from the Term A Loan, net of debt issuance costs. The ability to borrow on the Term B Loan expired on March 31, 2017, and no amounts were borrowed under the Term B Loan. We refer to all amounts outstanding under the Loan Agreement as the Term Loan.

The outstanding Term Loan will mature on June 1, 2020 (the “Maturity Date”) and we will have interest-only payments through June 1, 2018, followed by 24 equal monthly payments of principal and unpaid accrued interest. The Term Loan will bear interest at a floating per annum rate equal to (i) 8.51% plus (ii) the greater of (a) the 30 day U.S. Dollar LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue and (b) 0.44%. In March 2018, we entered into an amendment to our Loan Agreement, providing for the modification of the loan amortization period from a 24-month period commencing on July 1, 2018 to a 15-month period commencing on April 1, 2019, subject to our receipt, following the date of the amendment, of unrestricted net cash proceeds of not less than $30.0 million on or prior to June 30, 2018. The ability to modify the loan amortization period under this amendment to the Loan Agreement expired on June 30, 2018, as we did not receive unrestricted net cash proceeds of not less than $30.0 million on or prior to June 30, 2018.

We have the option to prepay all, but not less than all, of the borrowed amount, provided that we will be obligated to pay a prepayment fee equal to (i) 2% of the outstanding principal balance of the Term Loan if prepayment is made prior to the second anniversary of the funding date of the Term Loan, or (ii) 1% of the Term Loan prepaid thereafter and prior to the Maturity Date. We will be required to make a final payment of 5.5% of the principal balance outstanding, payable on the earlier of (i) the Maturity Date, (ii) acceleration of the Term Loan, or (iii) the prepayment of the Term Loan.

We may use the proceeds from the Term Loan solely for working capital and to fund our general business requirements. Our obligations under the Loan Agreement are secured by a first priority security interest in substantially all of our current and future assets, other than our intellectual property and certain assets under capital lease obligations. We have also agreed not to encumber our intellectual property assets, except as permitted by the Loan Agreement. The Loan Agreement includes customary events of default, including instances of a material adverse change in our operations, that may require prepayment of the outstanding Term Loan. All amounts due under the Term Loan have been classified as a current liability as of June 30, 2018 due to the considerations discussed in Note 1 and the assessment that the material adverse change clause under the Term Loan is not within the Company's control. The Company has not been notified of an event of default by the Lender as of the date of the filing of this Form 10-Q.

As of June 30, 2018, we had $20.0 million outstanding under the Term Loan. The Term Loan is recorded at its carrying value of $20.0 million, less debt issuance costs of approximately $0.1 million. In connection with the Term Loan, the debt issuance costs have been recorded as a debt discount in our consolidated balance sheets, which are being accreted to interest expense over the life of the Term Loan using an effective interest rate of 8.98%. The exit fee is being accrued over the life of the Term Loan through interest expense.

As of June 30, 2018, we were in compliance with all covenants under the Loan Agreement.

As of June 30, 2018, future principal payments for the Term Loan due under the Loan Agreement are as follows (in thousands):



2018	$	5,000
2019	10,000
2020	5,000
	$	20,000