On December 14, 2018, Vericel Corporation (the “Company”) provided notice to prepay in full all outstanding indebtedness under and to terminate the Loan and Security Agreement dated as of September 9, 2016, by and between the Company, Silicon Valley Bank as 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 (the “First Modification Agreement”), that certain Second Loan Modification Agreement, dated May 9, 2017 (the “Second Modification Agreement”) and that certain Third Loan Modification Agreement, dated December 6, 2017 (the “Third Modification Agreement”, and together with the Original Loan Agreement, the First Modification Agreement, and the Second Modification Agreement, the “SVB Loan Agreement”), which termination was effective December 19, 2018.
The SVB Loan Agreement provided for a term loan facility up to $15 million and a $10 million revolving line of credit with Silicon Valley Bank and MidCap Financial Trust. The SVB Loan Agreement included terms and conditions, including customary events of default, such as non-payment of principal or interest, violations of covenants, bankruptcy and material judgments. Under the SVB Loan Agreement, the Company’s obligations to the lenders were secured by substantially all of the Company’s assets, excluding intellectual property. A further description of the SVB Loan Agreement can be found in the Company’s Current Reports on Form 8-K filed with the Securities and Exchange Commission on September 14, 2016, December 30, 2016, May 9, 2017 and December 8, 2017, which descriptions are incorporated herein by this reference. The foregoing description of the SVB Loan Agreement is only a summary and is qualified in its entirety by reference to the Original Loan Agreement, a copy of which is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 14, 2016, the First Modification Agreement, a copy of which is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 30, 2016, the Second Modification Agreement, a copy of which is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed on June 2, 2017 and the Third Modification Agreement, a copy of which is filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 8, 2017.
As of the date of termination, the Company had $17,083,333 in outstanding borrowings and $92,701 in outstanding interest and fees under the SVB Loan Agreement, which were repaid in full at the time of termination. In connection with the termination of the SVB Loan Agreement, the Company paid an additional prepayment premium in the amount of $225,000, which represents 1.50% of the original principal amount of the term loan and a final payment in the amount of $540,000, which represents 3.60% of the aggregate original principal amount of the term loan commitment. The Company did not incur any other early termination penalties in connection with the termination of the SVB Loan Agreement or the prepayment of indebtedness thereunder.
