5. 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 “Notes”), interest payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2015. The net proceeds from the offering were $187.3 million after deducting the initial purchasers’ discounts and offering expenses.

A summary of quarterly interest activity related to the loan is listed below (dollars in thousands):

Interest payable at September 30, 2014	$	—
Accrued interest expense from November 3, 2014 to December 31, 2014	2,500

Interest payable at January 1, 2015	2,500
Accrued interest expense during the 3 months ended March 31, 2015	3,750

Interest payable at March 31, 2015	6,250
Interest payment at May 1, 2015	(7,416		)
Accrued interest expense during the 3 months ended June 30, 2015	3,388

Interest payable as of June 30, 2015	2,222
Accrued interest expense during the 3 months ended September 30, 2015	2,747

Interest payable as of September 30, 2015	4,969
Interest payment at November 1, 2015	(5,963		)
Accrued interest expense during the 3 months ended December 31, 2015	2,982

Interest payable as of December 31, 2015	$	1,988

The Notes will mature on November 1, 2019, unless earlier purchased or converted. 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. During the year ended December 31, 2015, $41.0 million aggregate principal amount of the Notes was converted into 13.2 million shares of Synergy common stock. This brings the principal balance of the Notes to $159.0 million at December 31, 2015 as compared to $200.0 million at December 31, 2014. All conversions were noteholder initiated with no inducement or solicitation on the part of the Company. Transaction costs associated with the Notes of $12.7 million have been deferred and are being recognized as expense over the expected term of the Notes, calculated using the effective interest rate method. Amortization expense, including amortization associated with reduction of the principal due to the conversion of the debentures on a prorated basis for the year ended December 31, 2015 was $4.6 million. Amortization expense for the year ended December 31, 2014 was $0.4 million which represented only two months from the time the notes were issued on November 1, 2014. The remaining transaction costs have been presented as a reduction of the Notes in accordance with the newly adopted Accounting Standards Update (“ASU”) No. 2015-03 “Simplifying the Presentation of Debt Issuance Costs”.

A summary of quarterly activity and balances associated with the Notes and related deferred transaction costs is presented below ($ in thousands):

							Notes, net of
	Notes			Transaction			Transaction
	Balance			Costs			Costs
Balance at issuance November 1, 2014	$	200,000		$	12,747		$	187,253
Less: amortization two months ended December 31, 2014	$	—		$	(411	)	$	411

Balance December 31, 2014	$	200,000		$	12,336		$	187,664

Less: amortization three months ended March 31, 2015	$	—		$	(617	)	$	617

Balance March 31, 2015	$	200,000		$	11,719		$	188,281

Less: amortization three months ended June 30, 2015 (1)	$	—		$	(1,899	)	$	1,899
Conversions	$	(22,213	)	$	—		$	(22,213	)

Balance June 30, 2015	$	177,787		$	9,820		$	167,967

Less: amortization three months ended September 30, 2015 (1)	$	—		$	(1,544	)	$	1,544
Conversions	$	(18,776	)	$	—		$	(18,776	)

Balance September 30, 2015	$	159,011		$	8,276		$	150,735

Less: amortization three months ended December 31, 2015	$	—		$	(506	)	$	506

Balance December 31, 2015	$	159,011		$	7,770		$	151,241

(1) Includes accelerated amortization of deferred financing costs attributable to conversions.