MNKD 2017 Annual Report

advance or in effect on the date of default, whichever is greater, plus 5% per annum. All borrowings under The Mann Group Loan Arrangement are unsecured. The Mann Group Loan Arrangement contains no financial covenants. As of December 31, 2017 and 2016, the total principal amount outstanding under The Mann Group Loan Arrangement was $79.7 million and $49.5 million, respectively. As of December 31, 2017 and 2016, the Company had accrued unpaid interest related to the above note of $2.3 million and $9.3 million, respectively. Interest expense for the years ended December 31, 2017, 2016 and 2015 was $3.8 million, $2.9 million, and $2.9 million, respectively. As of December 31, 2017 there were no additional amounts available for future borrowings. As of December 31, 2016 there was $30.1 million available for future borrowings. In May 2015, the Company entered into a sublease agreement with the Alfred Mann Foundation for Scientific Research (the “Mann Foundation”), a California not for-profit corporation. The lease was for approximately 12,500 square feet of office space in Valencia, California, which expired in April 2017 and was renewed on a month-to-month basis at a rate of $20,000 per month until August 31, 2017 when the Company moved into its new corporate headquarters (see Note 14 — Commitments and Contingencies). Lease payments to the Mann Foundation for the years ended December 31, 2017, 2016 and 2015 were $0.2 million, $0.3 million, and $0.2 million, respectively. The Company has entered into indemnification agreements with each of its directors and executive officers, in addition to the indemnification provided for in its amended and restated certificate of incorporation and amended and restated bylaws (see Note 14 — Commitments and Contingencies). On October 10, 2017, the Company entered into securities purchase agreements (the “Purchase Agreements”) with certain institutional investors and a charitable foundation (collectively, the “Purchasers”). Included in this offering were 166,600 shares issued to a charitable foundation associated with the Chairman of the Company’s board of directors. 7. Borrowings Borrowings consist of the following (in thousands): December 31, 2017 2016 Facility Financing Obligation (2019 Notes and Tranche B Notes) Principal amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $54,407 $75,000 Unamortized debt issuance costs and debt discount . . . . . . . . . . . (1,662) (3,661) Net carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $52,745 $71,339 Senior Convertible Notes (2021 Notes) Principal amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23,690 $27,690 Unamortized premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721 426 Unaccreted debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . — (481) Net carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,411 $27,635 Note payable to principal stockholder - net carrying amount . . . . $79,666 $49,521 Facility Financing Obligation (2019 Notes and Tranche B Notes) – As of December 31, 2017, there were $39.4 million principal amount of 2019 notes and $15.0 million principal amount of Tranche B notes outstanding. As of December 31, 2016, there were $55.0 million principal amount of 2019 notes and 99