4. Convertible Senior Notes

On November 3, 2014, Synergy closed a private offering of $200 million aggregate principal amount of 7.50% Convertible Senior Notes due 2019 (including the full exercise of the over-allotment option granted to the initial purchasers to purchase an additional $25 million aggregate principal amount of 7.50% Convertible Senior Notes due 2019, the “Note”). The net proceeds from the offering were $187.3 million after deducting the initial purchasers’ discounts and offering expenses.

The Notes are unsecured, senior obligations of Synergy and bear interest at a rate of 7.50% per year, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2015. Accrued interest as of December 31, 2104 was $2.5 million. The Notes will mature on November 1, 2019, unless earlier purchased or converted. The holders of the Notes have the ability to require the Company to repurchase the Notes in whole or in part for cash in the event of a fundamental change, as defined in the indenture agreement. In such case, the repurchase price would generally be 100% of the principal amount of the Notes plus any accrued and unpaid interest.

The Notes are convertible, at any time, into shares of Synergy’s common stock at an initial conversion rate of 321.5434 shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of $3.11 per share. The conversion rate may be subject to adjustment upon the occurrence of certain specified events as provided in the Indenture (the “Indenture”) governing the Convertible Senior Notes, dated November 3, 2014 between Synergy and Wells Fargo Bank, National Association, as trustee. Adjustments to the conversion rate include stock dividends and distributions, splits and reverse splits, as well as the issuance of stock options, rights and warrants. Other adjustments to the conversion rate also include asset distributions and spin offs, and cash dividend and tender offers. Upon conversion of a Senior Convertible Note, the Company will settle the conversion obligation in unregistered shares of the Company’s common stock. Synergy does not have the option to redeem the Notes prior to the Maturity Date.

Without the consent of Holders of 66 2/3% of the aggregate principal amount of Notes outstanding, Synergy shall not permit any of its subsidiaries to incur or repay any debt other than debt permitted by terms of the Indenture, nor declare or pay any dividend and make any equity distributions. The Indenture also provides for customary events of default, including, but not limited to, failure to pay the principal or interest on any Note, pay the fundamental change purchase price or deliver shares of common stock.

In accounting for the Convertible Senior Notes, Synergy concluded that, in accordance with ASC Topic 470, Debt, Subtopic 470-20, specifically Convertible Debt Instruments, as well as ASC Topic 815, Derivatives and Hedging, the embedded conversion option contained within the Notes should not be accounted for separately because the conversion option is indexed to Synergy’s common stock and would be classified within stockholders’ equity, if issued on a standalone basis. Accordingly, Synergy accounted for the Convertible Senior Notes as conventional convertible debt. The Company did not elect the Fair Value option. The Company also determined that there was no beneficial conversion feature.

Transaction costs associated with this financing are $12.7 million. Amortization expense for year ended December 31, 2014 are approximately $0.4 million, which is calculated using the effective interest rate method and recognized over the expected term of the Convertible Senior Notes. A summary of the amortization schedule during the year ended December 31, 2014 is presented below:

($ in thousands)	December 31, 2014
Deferred financing costs at issuance	$	12,747
Less: Accumulated amortization	(411		)

Deferred financing costs, Balance at December 31, 2014	$	12,336