11. DEBT

In June 2010, the Company entered into a secured promissory note agreement with the lessor of its headquarters under which $265,000 was borrowed to purchase equipment owned by the lessor. The loan is payable in monthly installments of principal and interest with final payment due in January 2015. Interest accrues at 9.0% and the promissory note is collateralized by the purchased equipment. As of September 30, 2011 and December 31, 2010, a principal amount of $196,000 and $229,000, respectively, was outstanding under the note agreement.

On May 11, 2011, the Company entered into a loan and security agreement with Silicon Valley Bank ("the bank") that provided for a $20.0 million credit facility (the "facility") consisting of (i) a $15.0 million term loan (the "term loan") that may be borrowed in one or more increments prior to November 30, 2011 and (ii) a $5.0 million revolving facility (the "revolving facility"). A portion of the revolving facility is available for letters of credit and foreign exchange contracts with the bank. The facility will be used for working capital and other general corporate purposes. The facility is unsecured unless the Company breaches financial covenants that require the Company to maintain a minimum of $30.0 million in unrestricted cash and investments, of which at least $25.0 million are to be maintained in accounts with the bank and its affiliates. This minimum balance requirement is considered a compensating balance arrangement, and would be classified in the condensed consolidated balance sheet as cash and cash equivalents and/or marketable securities as this minimum balance is not restricted as to withdrawal. Interest is charged under the facility at (i) a fixed rate of 5.0% per annum with respect to the term loan and (ii) a floating rate per annum equal to the most recently quoted "Prime Rate" in the Wall Street Journal Western Edition with respect to revolving loans. Upon the event of default or financial covenant default, outstanding obligations under the facility shall bear interest at a rate up to three percentage points (3.00%) above the rates described in (i) and (ii) above. The term loan is payable in 48 equal monthly payments of principal and interest, with the first payment due on December 1, 2011. The maturity date is (i) November 1, 2015 for the term loan and (ii) May 10, 2013 for the revolving loans. The Company has the option to prepay all, but not less than all, of the amounts advanced under the term loan, provided that the Company provides written notice to the bank at least ten days prior to such prepayment, and pays all outstanding principal and accrued interest, plus all other sums, if any, that shall have become due and payable, on the date of such prepayment. In addition to the financial covenant referenced above, the Company is subject to financial covenants and customary affirmative and negative covenants and events of default under the facility including certain restrictions on borrowing. If an event of default occurs and continues, the bank may declare all outstanding obligations under the facility to become immediately due and payable. The outstanding obligations would become immediately due if the Company becomes insolvent. On May 11, 2011, the Company borrowed $15.0 million under the facility.

In March 2011, the Company entered into an agreement to purchase a development and commercial production facility with multiple 128,000-liter fermenters, and an annual oil production capacity of over 2,000,000 liters (1,820 metric tons) located in Peoria, Illinois for $11.5 million. This transaction closed in May 2011, and the Company paid for the aggregate purchase price with available cash and borrowed $5.5 million under a promissory note, mortgage and security agreement from the seller. The Company expects to begin integrated production of microbial oil in the first half of 2012. The principal is payable in two lump sum payments, the first on March 1, 2012 and the second on March 1, 2013. The note is interest-free and secured by the real and personal property acquired from the seller. The assets acquired and the related note payable were recorded based upon the present value of the future payments assuming an imputed interest rate of 3.25%, resulting in a discount of $0.3 million. The $0.3 million loan discount is being recognized as interest expense over the loan term utilizing the effective interest method.

A summary of debt follows (in thousands):


	September 30, 2011			December 31, 2010
Peoria Facility note, due 2013	$	5,314		$	—
Equipment note, due 2015		196			229
Silicon Valley Bank note, due 2015		15,000			—

Subtotal		20,510			229
less: current portion of debt		(4,673	)		(50	)

Total long-term debt	$	15,837		$	179

A summary of debt maturity follows (in thousands):


	September 30, 2011			December 31, 2010
Principal due for the remainder of 2011	$	300		$	50
Principal due in 2012		5,413			54
Principal due in 2013		7,351			59
Principal due in 2014		3,921			66
Principal due in 2015		3,711			—

Subtotal		20,696			229
Less Imputed Interest Discount		(186	)		—

Total Debt	$	20,510		$	229