On December 30, 2015, Omeros Corporation (Omeros) entered into a Loan and Security Agreement (the Loan Agreement) with Oxford Finance LLC, as a lender and as collateral agent (Oxford), and East West Bank, as a lender (EWB, and together with Oxford in its capacity as a lender, the Lenders). Omeros initially borrowed an aggregate principal amount of $50.0 million from the Lenders. Omeros may borrow up to an additional $20.0 million in aggregate principal amount in two tranches of $10.0 million each until June 30, 2017, contingent upon the satisfaction of certain conditions including minimum net revenue amounts from Omeros' product Omidria (phenylephrine and ketorolac injection) 1%/0.3%.

Omeros used approximately $27.5 million of the initial loan proceeds to repay all of the amounts owed by Omeros under its existing Loan and Security Agreement with Oxford, Flexpoint MCLS Holdings LLC and Midcap Funding XI, LLC dated March 5, 2014, as amended (the Prior Agreement). Upon the repayment of all amounts owed by Omeros under the Prior Agreement, all commitments under the Prior Agreement were terminated and all security interests granted by Omeros to the lenders under the Prior Agreement were released. The company anticipates recognizing a loss on debt extinguishment of approximately $1.3 million in its financial statements for the fourth quarter of 2015.

Omeros intends to use the remainder of the initial loan proceeds (after deducting loan origination costs) of approximately $22.3 million, as well as any of the additional $20.0 million if borrowed, for general corporate purposes and working capital. During the interest-only period, Omeros' cash debt service obligation will be reduced by $11.4 million as compared to the aggregate principal and interest payments that would have been payable during the same period under the Prior Agreement, which terminated on December 30, 2015. Interest on the amounts borrowed under the Loan Agreement accrues at an annual fixed rate of 9.25%.

Payments due under the Loan Agreement are interest only, payable monthly, in arrears, through July 1, 2017. Beginning August 1, 2017, Omeros will be obligated to make 30 monthly payments of principal and interest. All unpaid principal and accrued and unpaid interest will be due and payable on January 1, 2020 (the Maturity Date).

In connection with the execution of the Loan Agreement, Omeros made a one-time up front facility fee payment to the Lenders of $100,000 and a one-time up front loan syndication fee payment to Oxford of $150,000. In consideration for the Lenders agreeing to provide Omeros with an 18-month period of interest-only payments, Omeros is required to pay the Lenders a final payment fee equal to the sum of 7.50% of the initial $50.0 million principal amount borrowed under the Loan Agreement (i.e., $3.75 million) plus 5.25% of any additional principal amounts borrowed under the Loan Agreement (i.e., up to $1.05 million), less any portion of the fee previously paid in connection with a prepayment. Omeros may prepay all or a portion of the outstanding principal and accrued and unpaid interest under the Loan Agreement at any time upon prior notice to the Lenders and the payment of a fee equal to 1.00% of the prepaid principal amount in addition to the pro rata portion of the final payment fee attributable to the prepaid principal amount.