On June 5, 2020, contemporaneously with the completion of the Series B Financing (see Note 9), the Company entered into a Credit Agreement with Perceptive Life Sciences Master Fund LTD., an affiliate of Perceptive Credit Holdings III, LP (“Perceptive”) that provides for an aggregate principal borrowing amount of up to $20.0 million, available in two tranches of $12.5 million and $7.5 million (such arrangement, the “Term Loan”). The Company drew down on the first tranche of $12.5 million in June 2020, bearing interest at a variable rate of 11.25%, which was calculated based on the one-month LIBOR rate, which, per the Credit Agreement, can never be below 1.75%, plus an applicable margin, which was initially determined to be 9.5%. The Term Loan matures on September 5, 2024, unless it is accelerated in accordance with its terms. The Company will make interest-only payments until December 5, 2022, at which point the Company will make payments of principal equal to 2% of the Term Loan until maturity. If the Company pays off the Term Loan prior to the Maturity Date, it will be required to pay a $5.0 million prepayment fee. In connection with the Term Loan, the Company is required to maintain a balance of at least $3.0 million in C4 Therapeutics, Inc. parent companies bank account while the Term Loan is outstanding.

The Credit Agreement allows for prepayment in full of the outstanding principal of the Term Loan at any time. Any prepayment shall be in a minimum principal amount of $0.5 million and in multiples of $0.1 million in excess of that amount, plus accrued interest and a prepayment fee, which would be calculated based on the terms of the Credit Agreement. The Company paid a closing fee of $0.3 million in connection with its entry into the Credit Agreement.

The aggregate principal amount of debt outstanding as of September 30, 2020 was $12.5 million. As of September 30, 2020, the unamortized debt discount was $2.6 million. The carrying value of the long-term debt, net of issuance costs and the debt discount related to the warrants to purchase shares of the Company’s equity securities (as discussed below) that were issued in connection with the entry into the Credit Agreement, was $9.7 million.

In connection with the Term Loan, the Company issued a warrant to purchase up to 2,857,142 shares of the Company’s Series B preferred stock to Perceptive at an exercise price per share of $1.05. The warrants are exercisable at any time prior to the ten-year anniversary of the closing date under the Credit Agreement. The Company determined that the warrant is liability-classified and will be remeasured to fair value each reporting period, with changes recorded in the statement of operations and comprehensive loss. The Company determined the fair value of this warrant to be $5.5 million using the Black-Scholes model based on the following assumptions as of September 30, 2020:

	AS OF SEPTEMBER 30, 2020
Stock price	$	2.26
Exercise price	$	1.05
Expected term (in years)		9.75
Volatility		75	%
Risk-free interest rate		0.69	%
Dividend yield		—