Item 2.03.
Creation of a Direct Financial Obligation or an Obligation under and Off-Balance Sheet Arrangement of a Registrant.
On January 6, 2017 (the effective date), ConforMIS, Inc. (the Company) entered into a loan and security agreement (the term loan facility) with Oxford Finance LLC (Oxford), as a collateral agent, and the lenders party thereto from time to time (the Lenders), pursuant to which the Lenders agreed to make term loans to the Company for working capital and general business purposes, in a principal amount of up to $50 million
. Through the term loan facility with Oxford, the Company initially accessed $15 million of borrowings on January 6, 2017, and an additional funding of $15 million is available to the Company, at its option, through December 2017 and an additional $20 million is available through June 2018, in each case, subject to the satisfaction of certain revenue milestones and customary drawdown conditions.
The credit facility is secured by substantially all of the Companys personal property other than the Companys intellectual property. Under the terms of the credit facility, the Company cannot grant a security interest in its intellectual property to any other party.
The term loan under the credit facility bears interest at a floating annual rate calculated at the greater of 30 day LIBOR or 0.53%, plus 6.47%. The Company is required to make monthly interest only payments in arrears commencing on the second payment date following the funding date of each term loan, and continuing on the payment date of each successive month thereafter through and including the payment date immediately preceding the amortization date of February 1, 2019 (subject to extension to February 1, 2020 if the Borrower draws the second tranche of $15 million loans under the term loan facility). Commencing on the amortization date, and continuing on the payment date of each month thereafter, the Company is required to make consecutive equal monthly payments of principal of each term loan, together with accrued interest, in arrears, to the Lenders. All unpaid principal, accrued and unpaid interest with respect to each term loan, and a final payment in the amount of of 5.0% of the amount of loans advanced, is due and payable in full on the term loan maturity date. The agreement has a term of five years and matures on January 1, 2022.
At the Companys option, the Company may prepay all, but not less than all, of the term loans advanced by the Lenders under the term loan facility, subject to a prepayment fee and an amount equal to the sum of all outstanding principal of the term loans plus accrued and unpaid interest thereon through the prepayment date, a final payment, plus all other amounts that are due and payable, including Lenders expenses and interest at the default rate with respect to any past due amounts.
The credit facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 5.0% and would provide Oxford, as collateral agent with the right to exercise remedies against us and the collateral securing the credit
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