Silicon Valley Bank Loan and Security Agreement

In May 2018, the Company entered into a third amendment to its Amended and Restated Loan and Security Agreement with Silicon Valley Bank (the 2018 Amended SVB Loan) under which the Company borrowed $7.0 million, all of which was immediately used to repay the Company’s then existing loan with SVB (the 2017 Amended SVB Loan).  

The 2018 Amended SVB Loan matured in June 2022 and in accordance with its terms, the Company paid a final payment of $0.3 million associated with the payoff of the 2018 Amended SVB Loan. In August 2022, the Company terminated the Amended and Restated Loan and Security Agreement with SVB.

At September 30, 2022, the Company had the following exercisable outstanding warrants for the purchase of common stock issued in connection with the Company’s loan agreements with SVB:

Runway Growth Finance Corp. Loan and Security Agreement

In September 2022, the Company entered into a loan and security agreement with Runway Growth Finance Corp. (the RGC Loan Agreement). The RGC Loan Agreement is a long-term debt facility that provides a term loan commitment in an aggregate principal amount of up to $35.0 million in three tranches: (i) a Term A loan in an aggregate principal amount of $10.0 million, with the full amount funded in a single disbursement on closing of the RGC Loan Agreement; (ii) a Term B loan in an aggregate principal amount of up to $15.0 million to be funded in one or more disbursements at the request of the Company on or prior to June 30, 2024, subject to certain conditions being met; and (iii) a Term C loan in an aggregate principal amount of up to $10.0 million that may be disbursed in a single disbursement in the lender’s sole discretion upon the Company’s request at any time from closing of the RGC Loan Agreement through and including December 31, 2024.

Borrowings under the term loan facility bear interest at a variable annual rate equal to the sum of (i) the greater of (a) the rate of interest noted in The Wall Street Journal, Money Rates section, as the “Prime Rate” or (b) 3.5%, plus (ii) 5.0%. The Company is obligated to make interest-only payments monthly in arrears through and including September 30, 2024 and thereafter monthly payments in arrears through the maturity date of September 1, 2026 equal to 1/24^th of all outstanding principal plus accrued and unpaid interest.

The Company is obligated to pay a closing fee in the amount of (i) $50,000, which was paid upon the funding of the Term A loan, and (ii) an amount equal to 0.50% of the Term B loan and the Term C loan advanced to the Company, if any, due and payable on the applicable funding date of such Term B loan and Term C loan.

The Company is also obligated to pay a final payment fee equal to 4.25% of the aggregate principal amount of the funded term loans at the earlier to occur of (i) the maturity date, (ii) acceleration of the term loans and (iii) prepayment under the RGC Loan Agreement. The closing fee, other related debt issuance costs, and the final payment fee were recorded as a component of the total debt discount and will be recognized as interest expense over the term of the RGC Loan Agreement using the effective interest method.

The Company has the option to prepay all, but not less than all, of the amounts of outstanding principal, accrued and unpaid interest and any other amounts due and payable under the RGC Loan Agreement, including a final payment fee. If the Company exercises its right to prepay the term loan(s) prior to the maturity date, it is obligated to pay a prepayment fee equal to (a) 3.0% of the outstanding principal amount of the applicable term loan(s) prepaid at the time of such prepayment if it occurs on or prior to the first anniversary date, (b) 2.0% of the outstanding principal amount of the applicable term loan(s) prepaid at the time of such prepayment if it occurs after the first anniversary date but on or prior to the second anniversary date and (c) 1.0% of the outstanding principal amount of the applicable term loan(s) prepaid at the time of such prepayment if it occurs after the second anniversary date but prior to the maturity date.

The Company’s obligations under the RGC Loan Agreement are collateralized by a first priority security interest in substantially all of its assets other than the intellectual property of the Company. The RGC Loan Agreement also contains customary representations, warranties and covenants that limit, among other things, the ability of the Company to (i) incur indebtedness, (ii) incur liens on its property, (iii) pay dividends or make other distributions, (iv) sell its assets, (v) make certain loans or investments, (vi) merge or consolidate, (vii) voluntarily repay or prepay certain indebtedness and (viii) enter into transactions with affiliates, in each case subject to certain exceptions. Upon the occurrence and during the continuance of an event of default, a default interest rate of an additional 5.0% per annum may be applied to the outstanding loan balances, and the lender may declare all outstanding obligations immediately due and payable and exercise all of its rights and remedies as set forth in the RGC Loan Agreement and under applicable law, including, without limitation, termination of its obligations to extend credit to the Company. The RGC Loan Agreement contains customary representations, warranties and covenants, including financial covenants, and also includes customary events of default, including payment defaults, breaches of covenants, change in control and a material adverse effect default. As of September 30, 2022, the Company was in compliance with all covenants and conditions of the RGC Loan Agreement.

In connection with the funding of the Term A loan, the Company issued Runway Growth Finance Corp. warrants to purchase 150,753 shares of its common stock (the RGC Term A Warrants) at an exercise price of $1.99 per underlying share of the Company’s common stock. The RGC Term A Warrants are fully exercisable in whole or in part at the option of the holder, payable in cash or on a cashless basis according to the formula set forth in the RGC Term A Warrants, and expire September 2, 2032. The fair value of the warrant at the grant date was determined utilizing a Black-Scholes pricing model, recorded as a component of the total debt discount and stockholders’ equity (deficit) within additional paid-in capital on the consolidated balance sheets, and will be amortized to interest expense using the effective interest method over the term of the debt. In addition, in connection with the RGC Loan Agreement, additional warrants will be issued upon funding of the other term loan tranches, if any.

Long-term debt and unamortized debt discount balances were as follows (in thousands):

Future minimum principal and interest payments under the RGC Loan Agreement, including the final payment, as of September 30, 2022 are as follows (in thousands):