Loans payable

June

2013,

in conjunction with the lease for approximately

14,500

square feet of office space in Marlborough, Massachusetts, the Company received a payment of

$582,000

from the landlord, representing approximately

80%

of the cost to build-out the facility. In accordance with FASB Accounting Standards Codification

840,

Leases

, this reimbursement was recorded as a liability in loans payable and is being amortized over the life of the lease. At

December

31,

2016,

$71,000

is included in the balance sheet in current portion of loans payable and

$236,000

is included in long-term portion of loans payable.

October

2016,

the Company entered into an agreement with MidCap Financial, or the MidCap agreement, that provides it with

$40

million in debt financing, comprised of both a term loan and a revolving line of credit. The MidCap agreement provides the Company with a term loan of

$30

million, which matures

five

years from closing. The term loan accrues interest at a rate of LIBOR plus

7.60%

with interest only payments for the

first

months, with the ability to extend to

months subject to certain conditions, before the loan begins to amortize. The MidCap agreement also provides the Company with a revolving line of credit of up to

$10

million, which matures

five

years from closing. The revolving line of credit accrues interest at a rate of LIBOR plus

4.45%.

The Company is also required to pay the lenders an unused line fee equal to

0.50%

per annum of the average unused portion of the revolving line of credit. Based on certain conditions, both the term loan and revolving line of credit

may

be increased by an additional

$10

million for a total of

$60

million.

If the credit facility is terminated prior to the end of the term, the Company will pay to the lenders a fee as compensation for the costs of being prepared to make funds available to the Company throughout the term equal to an amount determined by multiplying the revolving line of credit commitment amount by

3.0%

in the

first

year,

2.0%

in the

second

year, and

1.0%

in the

third

year and thereafter.

Upon repayment in full of the loan, the Company is obligated to make a final payment fee equal to

of the aggregate loan amount.

The credit facility is collateralized by a perfected

first

priority security interest in all existing and after-acquired assets of the Company.

Under the Credit Agreement, the Company is subject to affirmative covenants which are customary for financings of this type, including, but not limited to, the obligations of the Company to: (i) deliver financial statements and other reports to MidCap, (ii) maintain insurance, (iii) maintain good standing, (iv) comply with all laws and material contracts, (v) provide certain other information and notices to MidCap, and (vi) protect the Company’s intellectual property.

The Company is also subject to negative covenants customary for financings of this type, including, but not limited to, that without the prior consent of MidCap, the Company

may

not: (i) incur additional indebtedness, (ii) incur liens on the collateral, (iii) declare, order or set apart any distribution without permission, (iv) enter into a merger or consolidation or certain change of control events, or acquire another company, (v) amend material agreements or organizational documents, or (vi) enter into certain transactions with affiliates, in each case subject to certain exceptions provided for in the MidCap agreement.

The Company is also subject to financial covenants customary to financings of this type, which require the Company to achieve quarterly targets based on trailing

months net revenue. As of

December

31,

2016,

the Company was in compliance with all its covenants.

The MidCap Agreement provides that events of default include: (i) failure to make payment of principal or interest when required, (ii) failure to perform obligations under the MidCap agreement and related documents, (iii) defaults in other indebtedness and breaches of material agreements of the Company, (iv) voluntary case or other proceeding by the Company seeking liquidation, reorganization or other relief, (v) if the Company ceases to be a publicly-listed and reporting company and (vi) certain other events, including certain adverse actions taken by the FDA, CMS or other governmental authorities. Upon an event of default, the Company’s obligations under the MidCap agreement

may,

or in the event of insolvency or bankruptcy will automatically, be accelerated.

The balance of the secured term loan due to MidCap as of

December

31,

2016

$30

million, and is recorded in the accompanying consolidated balance sheet, net of unamortized discount and debt issuance costs.

Future minimum payments required under the term loan and the revolving line of credit as of

December

31,

2016

are as follows:

(in thousands)	Term Loan
2017	$	—
2018		1,667
2019		10,000
2020		10,000
2021		8,333
Thereafter		—
Total minimum payments	$	30,000

In addition to the MidCap term loan payments listed above, the Company is required to pay an exit fee of

6.0%

of the aggregate principal amount of all term loan borrowings (currently equal to

$1.8

million). T

exit fee of

$1.8

million is being accreted to interest expense through the maturity of the MidCap loan.

The Company did not borrow under the revolving line of credit during

2016.