Term Loan

On June 17, 2016, we entered into a loan and security agreement ("Loan Agreement") with Oxford Finance, LLC, ("Oxford"), pursuant to which Oxford agreed to lend us up to $30.0 million, issuable in two separate term loans of $20.0 million (the "Term A Loan") and $10.0 million (the "Term B Loan"). We collectively refer to the Term A Loan and the Term B Loan as Term Loans. On June 22, 2016, we received $20.0 million in proceeds from the Term A Loan, net of debt issuance costs. Under the terms of the Loan Agreement we may, at our sole discretion, borrow $10.0 million under the Term B Loan following the achievement of a defined milestone event until the earlier of 60 days thereafter or March 31, 2017.

All outstanding Term Loans will mature on June 1, 2020 (the “Maturity Date”) and we will have interest-only payments through June 1, 2018, followed by 24 equal monthly payments of principal and unpaid accrued interest. The Term Loans will bear interest at a floating per annum rate equal to (i) 8.51% plus (ii) the greater of (a) the 30 day U.S. Dollar LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue and (b) 0.44%.

We have the option to prepay all, but not less than all, of the borrowed amounts, provided that we will be obligated to pay a prepayment fee equal to (i) 2% of the outstanding principal balance of the applicable Term Loan if prepayment is made prior to the second anniversary of the applicable funding date of the Term Loan, provided no prepayment fee will be due in connection with a prepayment made on or prior to the first anniversary of the applicable funding date of the Term Loan in connection with an acquisition of our company, or (ii) 1% of the applicable Term Loan prepaid thereafter and prior to the Maturity Date. We will be required to make a final payment of 5.5% of the principal balance outstanding, payable on the earlier of (i) the Maturity Date, (ii) acceleration of any Term Loan, or (iii) the prepayment of the Term Loans.

We may use the proceeds from the Term Loans solely for working capital and to fund our general business requirements. Our obligations under the Loan Agreement are secured by a first priority security interest in substantially all of our current and future assets, other than our intellectual property. We have also agreed not to encumber our intellectual property assets, except as permitted by the Loan Agreement.

As of December 31, 2016, we had $20.0 million outstanding under the Term A Loan. The Term A Loan was recorded at its initial carrying value of $20.0 million, less debt issuance costs of approximately $0.2 million. In connection with the Term A Loan, the debt issuance costs have been recorded as a debt discount on our balance sheets, which are being accreted to interest expense over the life of the Term A Loan using an effective interest rate of 8.98%. The exit fee is being accrued over the life of the Term A Loan through interest expense.

As of December 31, 2016, we were in compliance with all covenants under the Loan Agreement.

Future principal payments for the Term A Loan due under the Loan Agreement are as follows (in thousands):



2017	$	—
2018	5,000
2019	10,000
2020	5,000
	$	20,000