Finance Obligation

9 Months Ended

Sep. 30, 2014

Finance Obligation.

Finance Obligation

10. Finance Obligation

In connection with a sale-leaseback transaction related to the Company’s primary facility, the Company entered into an agreement pursuant to which the Company leases from the buyer a portion of the premises sold for a term of 15 years.  Liabilities relating to this agreement of $2.4 million and $68,000 have been recorded as finance obligation and current portion finance obligation (other current liabilities), respectively, in the accompanying unaudited consolidated balance sheet as of March 31, 2015.

As part of the terms of the transaction, the Company issued a standby letter of credit to the benefit of the landlord/lessor that can be drawn by the beneficiary in the event of default on the lease. The standby letter of credit totals $500,000 and is 100% collateralized by cash balances of the Company, which are included within restricted cash on the accompanying unaudited consolidated balance sheet. The standby letter is renewable for a period of ten years and can be cancelled in part or in full if certain covenants are met and maintained by the Company.