On December 31, 2018, Otonomy, Inc. entered into a Loan and Security Agreement (the “Loan Agreement”), among the company, Oxford Finance LLC, as collateral agent, and the lenders party thereto from time to time. The Loan Agreement provides for a $15.0 million secured term loan credit facility (the “Term Loan”). The proceeds of the Term Loan may be used for working capital and general corporate purposes. The company has the right to prepay the Term Loan in whole or in part at any time, subject to a prepayment fee of 3.00% if prepaid on or prior to the first anniversary of the Closing Date, 2.00% if prepaid after the first anniversary of the Closing Date and on or prior to the second anniversary of the Closing Date, and 1.00% thereafter. Amounts prepaid or repaid under the Term Loan may not be reborrowed. The Term Loan was fully funded on the Closing Date and matures on December 1, 2023 (the “Maturity Date”). The Company paid a facility fee of 0.75% and customary closing fees. The Term Loan bears interest at a floating rate equal to the greater of 5.25% and the prime rate as reported in the Wall Street Journal from time to time, plus 3.75%. Interest on the Term Loan is payable monthly in arrears. The Company is permitted to make interest-only payments on the Term Loan for the twenty-four (24) months following the Closing Date. The interest-only period can be extended by an additional twelve (12) months subject to the achievement of a certain clinical trial milestone. The outstanding principal amount of the Term Loan, together with accrued and unpaid interest, is due on December 1, 2023. The Company is also obligated to make a final payment of 4.00% of the aggregate original principal amount of the Term Loan upon any prepayment or on the Maturity Date.