Notes Payable

6 Months Ended

Jun. 30, 2020

Notes Payable

Notes payable

8. Notes Payable

The Company entered into a credit and security agreement in 2014 (as amended to date, the “Credit Agreement”) establishing the Company’s credit facility (the “Credit Facility”). The Company has a total borrowing capacity of $25,000 under the Credit Facility which has been fully drawn down as of June 30, 2020.

In December 2018, the Company amended the terms of the Credit Agreement to increase total indebtedness under the Credit Facility to $25,000, which was used primarily to pay-off outstanding balances as of the closing date. The Company is required to make interest-only payments under the Credit Facility until December 2020. Commencing in January 2021, the Company is required to make 36 equal monthly installments of principal in the amount of $694, plus interest, through December 2023.  In the event the Company achieves certain milestones under the Credit Agreement, the Company has the right to extend the interest-only payments through December 21, 2021 and make 24 equal monthly installments of principal in the amount of $1,042, plus interest. The Company has not assumed the achievement of these milestones for purposes of disclosures herein.

Amounts borrowed under the Credit Facility are at LIBOR base rate, subject to 2.00% floor, plus 7.25%. The interest rate on the date of the amendment was 9.76%. In addition, a final payment (exit fee) equal to 3.5% of amounts drawn under the Credit Facility, or $875 based on borrowings of $25,000, is due upon the maturity date of December 21, 2023. The Company is accruing the exit fee through December 21, 2023.

There are no financial covenants associated with the Credit Agreement. However, the Credit Agreement does contain negative covenants restricting the Company’s activities, including limitations on dispositions, mergers or acquisitions; encumbering its intellectual property; incurring indebtedness or liens; paying dividends; making certain investments; and engaging in certain other business transactions.  The Company is not in violation of any of its covenants under the Credit Agreement. The obligations under the Credit Agreement are subject to acceleration upon the occurrence of specified events of default, including a material adverse change in the Company’s business, operations or financial or other condition.  The debt is collateralized by substantially all of the Company’s assets, including its intellectual property.

In accordance with the Credit Agreement, in connection with the Company’s desire to issue and sell the 2026 Convertible Notes, the Company amended the terms of its debt with existing lenders in February 2019. The amendment added to the Credit Agreement, among other provisions, a negative covenant restricting the Company from paying the holders of the 2026 Convertible Notes ahead in priority to the existing lenders, for so long as indebtedness remains outstanding under the Credit Facility, and a cross-default provision to establish that an event of default under the purchase agreement for the 2026 Convertible Notes also constitutes an event of default under the Credit Agreement.

Borrowings outstanding are as follows:

	June 30,		December 31,
	2020		2019
Borrowings outstanding	$	25,000	$	25,000
Accrued exit fee		267		180
Unamortized discount		(151)		(173)
		25,116		25,007
Less: current portion		(4,146)		—
Long-term notes payable	$	20,970	$	25,007

As of June 30, 2020, the annual repayment requirements for the Credit Facility, inclusive of the final payment of $875 due at expiration, were as follows:

			Interest and
Year Ending December 31,	Principal		Final Payment		Total
2020 (July 1 through December 31)	$	—	$	1,247	$	1,247
2021		8,333		2,094		10,427
2022		8,333		1,270		9,603
2023		8,334		1,320		9,654
	$	25,000	$	5,931	$	30,931

Interest paid amounted to $1,176 and $1,227 for the six months ended June 30, 2020 and 2019, respectively.

On April 22, 2020, in accordance with the Credit Agreement, the Company obtained consent from MidCap Financial Trust permitting the Company to secure a loan under the Paycheck Protection Program of the Coronavirus Aid, Relief and Economic Stability Act. The Company received loan proceeds of $3,201 (the “PPP Loan”) on April 23, 2020 pursuant to this program. However, based on updated guidance related to this program, the Company repaid the PPP Loan in full on May 5, 2020.