Senior Convertible Notes

On November 3, 2014, Synergy closed a private offering of $200 million aggregate principal amount of 7.50% Convertible Senior Notes due 2019, (the "Notes"), including the full exercise of the over-allotment option granted to the initial purchasers to purchase an additional $25 million aggregate principal amount of 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. 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 the original conversion price of $3.11 per share.

Initial purchaser's discounts and offering expenses associated with the sale of 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. The remaining deferred debt costs have been presented as a reduction of the Notes in accordance with the newly adopted ASU No. 2015-3 “Simplifying the Presentation of Debt Issuance Costs”.

On March 18, 2016 Synergy entered into an agreement (the "Exchange") for the exchange of $79.8 million in aggregate principal amount of the Notes, representing approximately 50% of the outstanding aggregate principal amount of Notes, for 35.3 million shares of Synergy's common stock, with a total of 25.6 million shares representing the conversion price of $3.11 pursuant to the existing terms of the Notes. The Company recognized a debt conversion expense of approximately $25.6 million representing 9.6 million shares for the quarter ended March 31,2016.

In November 2016 Synergy exchanged $55.7 million in aggregate principal amount of the Notes, representing approximately 70% of the outstanding aggregate principal amount of Notes, for 20.5 million shares of Synergy's common stock, with a total of 17.9 million shares representing the conversion price of $3.11 pursuant to the existing terms of the Notes. The Company recognized a debt conversion expense of approximately $14.5 million representing 2.6 million shares for the quarter ended December 31, 2016.

On February 28, 2017, Synergy received consents from certain holders of its Notes to enter into a Supplemental Indenture which eliminates certain restrictive covenants from the Indenture related to the Notes. The restrictive covenants eliminated from the Indenture are Limitation on Indebtedness, Future Financing Rights for Certain Investors and Licensing Limitations. On February 28, 2017, Synergy entered into the Supplemental Indenture with Wells Fargo, N.A., as trustee and paid an aggregate of approximately $1.6 million to such holders for the consent. These fees associated with the debt modification were accounted for under Accounting Standards Codification ("ASC") 470-50 and amortized using the effective interest method over the remaining term of the debt.

In March 2017, Synergy exchanged approximately $4.9 million aggregate principal amount of the Notes for approximately 1.8 million shares of its common stock, with approximately 1.6 million shares representing the conversion price of $3.11 pursuant to the existing terms of the Notes. As of March 31, 2017, approximately $18.6 million of the Notes remain outstanding. The Company recognized a debt conversion expense of approximately $1.2 million representing 0.2 million shares for the quarter ended March 31, 2017.

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



	Notes Balance			Deferred Debt Costs			Notes, net of Deferred Debt Costs
Balance December 31, 2015	159,011			7,770			151,241
Less: amortization three months ended March 31, 2016 ⁽¹⁾				(4,153		)	4,153
Conversions	(79,829		)	—			(79,829		)
Balance, March 31, 2016	79,182			3,617			75,565
Less: amortization three months ended June 30, 2016				(253		)	253
Balance, June 30, 2016	79,182			3,364			75,818
Less: amortization three months ended September 30, 2016				(252		)	252
Balance, September 30, 2016	79,182			3,112			76,070
Less: amortization three months ended December 31, 2016 ⁽¹⁾				(2,263		)	2,263
Conversions	(55,668		)	—			(55,668		)
Balance, December 31, 2016	23,514			849			22,665
Deferred financing cost related to debt modification on February 28, 2017				1,591			(1,591		)
Less: amortization three months ended March 31, 2017 ⁽¹⁾				(608		)	608
Conversions	(4,911		)	—			(4,911		)
Balance, March 31, 2017	$	18,603		$	1,832		$	16,771

_____________________

(1) Includes accelerated amortization of deferred debt costs attributable to conversions and exchanges