On January 27, 2017, Miramar Labs, Inc. (“we” or “Company”)
issued subordinated secured convertible promissory notes (the
“Notes”), to the note purchase agreement (the “Note Purchase
Agreement”) dated January 27, 2017 by and among us and certain
accredited investors named therein, including certain of our
stockholders, in the aggregate amount of $2,464,734.90. We may
issue additional Notes in the aggregate amount of up to
$535,265.10 within 30 days of January 27, 2017. The Notes accrue
interest at a rate of 10% per annum and are due upon the earlier
of: (i) January 26, 2018, (ii) an event of default or (iii) upon
liquidation/dissolution of the company (the “Maturity Date”). The
Notes may be prepaid at the election of holders of the Notes
holding a majority of the aggregate principal amount of the Notes
and have the conversion terms described below in connection with
an equity financing or a change of control event, such as a sale
of the company or all or substantially all of its assets.

In the event that we consummate an equity financing with an
aggregate sales price of not less than $10 million prior to the
Maturity Date and a change of control event, the principal amount
together with accrued but unpaid interest (the “Outstanding
Balance”), of each Note will be multiplied by five (5) and
automatically convert into shares of securities issued in such
equity financing at the price per share paid by investors in such
equity financing. In the event that we consummate an equity
financing with an aggregate sales price of less than $10 million
prior to the Maturity Date and a change of control event, at the
election of holders of the Notes holding a majority of the
aggregate outstanding principal amount of the Notes, the
Outstanding Balance of each Note will be multiplied by five (5)
and convert into shares of securities issued in such equity
financing at the price per share paid by investors in such equity
financing.

In the event that we consummate a change of control event and the
Notes have not been repaid or converted in full prior to the
change of control event, (i) in the case of a stock-for-stock
merger, three (3) times the Outstanding Balance of each Note will
automatically convert into shares of the acquiring company at the
price per share as determined by (A) the ten-day average closing
price of the common stock of the acquiring company if it is a
public company or (B) our board of directors in good faith, if it
is a private company, or (ii) in the case of a cash-for-stock
merger or sale of all or substantially all of our assets, holders
of the Notes will be entitled to receive the amount of cash equal
to three (3) times the Outstanding Balance.

The Notes are secured by certain assets of the Company to the
security agreement (the “Security Agreement”) dated January 27,
2017 by and among us and certain investors named therein and
subordinated to our obligations under the loan and security
agreement dated August 7, 2015 to the subordination agreement
(the “Subordinated Agreement”) dated January 27, 2017 by and
among us, Oxford Finance LLC and certain creditors named therein.
As a result, the Notes have a second priority security interest
in our assets behind the security interest held by Oxford Finance
LLC and Silicon Valley Bank. The Notes are also subject to
standard event of default provisions that would accelerate the
Maturity Date.

The foregoing description of the issuance of the Notes and
related transactions does not purport to be complete and is
qualified in its entirety by reference to the complete text of
the (i) Note Purchase Agreement filed as Exhibit 10.1 hereto;
(ii) Security Agreement filed as Exhibit 10.2 hereto; (iii)
Subordination Agreement filed as Exhibit 10.3 hereto and (iv)
form of Note filed as Exhibit 4.1 hereto.

Item 2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.

The disclosure in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item.

Item 3.02. Unregistered Sales of Equity Securities

The disclosure in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item.

As described more fully in Item 1.01 above, the issuance of the
Notes was exempt from registration to Section 4(a)(2) of the
Securities Act of 1933, as amended, and/or Regulation D
promulgated thereunder.