Item 1.01. Entry into a Material Definitive Agreement.
Loan Modification Agreement.
On December 6, 2017, Vericel Corporation (the Company), a Michigan corporation, entered into a Third Loan Modification Agreement (the Loan Modification Agreement) between the Company, as borrower, and Silicon Valley Bank, in its capacity as Administrative Agent (Agent), and Silicon Valley Bank, MidCap Funding IV Trust, MidCap Funding III Trust, ELM 2016-1 Trust and MidCap Financial Trust as lenders (Lenders). The Loan Modification Agreement modifies certain sections of the Loan and Security Agreement dated as of September 9, 2016, by and between the Company, Agent and Silicon Valley Bank, MidCap Financial Trust, MidCap Funding III Trust and other lenders listed therein as lenders (the Original Loan Agreement), as amended by that certain First Loan Modification Agreement, dated as of December 30, 2016 and by that certain Second Loan Modification Agreement, dated May 9, 2017.
The Loan Modification Agreement replaces the existing facility under the Original Loan Agreement, as amended, which had an outstanding balance of $7 million as of November 30, 2017. The expanded facility under the Loan Modification Agreement provides approximately $8 million of incremental capital (excluding refinancing fees) to the Company and brings the total term loan balance to $15 million. The Company will also retain the current $10 million revolving line of credit with Silicon Valley Bank and MidCap Financial Trust which provides Vericel access to up to $25 million of total capital.
The Loan Modification Agreement sets forth the terms of conditions of the Term Loan 2017 Advances (as defined therein), including terms of default, notice and use of proceeds. In addition, the Loan Modification Agreement modifies certain financial covenants contained in the Original Loan Agreement, as amended.
The foregoing description of the Loan Modification Agreement is qualified in its entirety by reference to the full text of the Loan Modification Agreement a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Warrant.
In connection with the entry into the Loan Modification Agreement, the Company will issue each of MidCap Funding XXVIII Trust and Silicon Valley Bank a warrant (the Warrants) to purchase, at an exercise price of $4.267 per share, an aggregate number of shares of the Companys common stock, equal to the warrant purchase price of $115,000 divided by $4.267, rounded down to the nearest whole number. The Warrants will be exercisable until December 6, 2023.
The foregoing description of the terms of the Warrants is only a summary and is qualified in its entirety by reference to the Form of Warrant, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.