Exhibit 10.1

 

FIRST LOAN MODIFICATION AGREEMENT

 

This First Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of December 30, 2016, by and among (a) SILICON VALLEY BANK, a
California corporation (“SVB”), in its capacity as Administrative Agent
(“Agent”), (b) SVB, as a Revolving Line Lender and as a Term Loan Lender, MIDCAP
FUNDING IV TRUST, a Delaware statutory trust, as a Revolving Line Lender (in
such capacity and together with its successors and assigns, “MidCap Revolving
Line Lender”), MIDCAP FUNDING III TRUST, a Delaware Statutory Trust and ELM
2016-1 TRUST, a Delaware statutory trust, each as a Term Loan Lender (in such
capacity and together with their respective successors and assigns, “MidCap Term
Loan Lender”; SVB, the MidCap Revolving Line Lender and the MidCap Term Loan
Lender are each referred to herein as a “Lender” and collectively, the
“Lenders”), and (c) VERICEL CORPORATION, a Michigan corporation (the
“Borrower”).

 

1.                                      DESCRIPTION OF EXISTING INDEBTEDNESS AND
OBLIGATIONS. Among other indebtedness and obligations which may be owing by
Borrower to the Lenders, Borrower is indebted to the Lenders pursuant to a loan
arrangement dated as of September 9, 2016, evidenced by, among other documents,
a certain Loan and Security Agreement dated as of September 9, 2016, by and
among Borrower, Agent and the Lenders (as amended, the “Loan Agreement”). 
Capitalized terms used but not otherwise defined herein shall have the same
meaning as in the Loan Agreement.

 

2.                                      DESCRIPTION OF COLLATERAL.  Repayment of
the Obligations is secured by the Collateral as described in the Loan Agreement
(together with any other collateral security granted to the Lenders, the
“Security Documents”).

 

Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing
Loan Documents”.

 

3.                                      DESCRIPTION OF CHANGE IN TERMS.

 

A.                                    Modifications to Loan Agreement.

 

1                                         Section 6.9(a) of the Loan Agreement
shall be deleted in its entirety and replaced with the following:

 

(a)  Minimum Revenue.  Achieve minimum net revenue (determined in accordance
with GAAP), measured on a trailing twelve month basis ending as of the date of
measurement, on a consolidated basis of Borrower and its Subsidiaries, in an
amount equal to or greater than the amount listed below for each corresponding
trailing twelve month period:

 

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Trailing Twelve Month Period Ended

 

Minimum Net Revenue

 

August 31, 2016

 

$

52,000,000.00

 

September 30, 2016

 

$

52,000,000.00

 

October 31, 2016

 

$

52,280,500.00

 

November 30, 2016

 

$

50,695,400.00

 

December 31, 2016

 

$

52,000,000.00

 

January 31, 2017

 

$

52,000,000.00

 

February 28, 2017

 

$

52,000,000.00

 

March 31, 2017

 

$

52,000,000.00

 

April 30, 2017

 

$

53,000,000.00

 

May 31, 2017

 

$

53,000,000.00

 

June 30, 2017

 

$

53,000,000.00

 

July 31, 2017

 

$

53,000,000.00

 

August 31, 2017

 

$

53,000,000.00

 

September 30, 2017

 

$

55,250,000.00

 

October 31, 2017

 

$

56,000,000.00

 

November 30, 2017

 

$

58,000,000.00

 

December 31, 2017

 

$

60,000,000.00

 

 

Minimum net revenue financial covenant requirements for the monthly periods
ending after December 31, 2017 will be determined by the Lenders in their
reasonable discretion after consultation with Borrower, no later than
December 31 of the year immediately preceding the each applicable fiscal year,
based on the projections delivered by Borrower to Agent and the Lenders in
accordance with Section 6.2(e) (which for the avoidance of doubt shall be
delivered by Borrower no later than November 30 of the year immediately
preceding each applicable fiscal year); provided that, such minimum net revenue
threshold for any month following December 31, 2017 shall be in an amount equal
to eighty percent (80%) of net revenue set forth with respect to such month in
such projections, but in any event not less than $60,000,000.00 for any monthly
period.

 

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2                                         The definition of “Term Loan Final
Payment” appearing in Section 13.1 of the Loan Agreement shall be deleted in its
entirety and replaced with the following: “Term Loan Final Payment” is a payment
(in addition to and not a substitution for the regular monthly payments of
principal plus accrued interest, and supplemental of all other fees and expenses
due and owing in connection with the Term Loan Advances), in an amount equal to
the aggregate original principal amount of the Term Loan Advances advanced to
Borrower multiplied by five percent (5.00%).

 

3                                   Compliance Certificate.  The Compliance
Certificate attached as Exhibit B to the Loan Agreement is deleted in its
entirety and replaced with Exhibit A attached hereto.

 

4.                                      FEES.  Borrower shall reimburse the
Lenders for all legal fees and expenses incurred in connection with the Existing
Loan Documents and this Loan Modification Agreement.

 

5.                                      RATIFICATION OF PERFECTION CERTIFICATE. 
Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms
and disclosures contained in a certain Perfection Certificate, dated as of
September 9, 2016, as updated from time to time through the date hereof, and
acknowledges, confirms and agrees the disclosures and information above Borrower
provided to the Agent and the Lenders in such Perfection Certificate remains
true and correct in all material respects as of the date hereof.

 

6.                                      AUTHORIZATION TO FILE.  Borrower hereby
authorizes Agent to file UCC financing statements without notice to Borrower,
with all appropriate jurisdictions, as Bank deems appropriate, in order to
further perfect or protect Agent’s interest in the Collateral, including a
notice that any disposition of the Collateral, by either the Borrower or any
other Person, shall be deemed to violate the rights of the Agent under the Code.

 

7.                                      CONSISTENT CHANGES.  The Existing Loan
Documents are hereby amended wherever necessary to reflect the changes described
above.

 

8.                                      RATIFICATION OF LOAN DOCUMENTS. 
Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of
the Loan Agreement, each other Loan Document and all security or other
collateral granted to the Lenders, and confirms that the indebtedness secured
thereby includes, without limitation, the Obligations.

 

9.                                      NO DEFENSES OF BORROWER.  Borrower
hereby acknowledges and agrees that Borrower has no offsets, defenses, claims,
or counterclaims against the Lenders with respect to the Obligations, or
otherwise, and that if Borrower now has, or ever did have, any offsets,
defenses, claims, or counterclaims against any of the Lenders, whether known or
unknown, at law or in equity, all of them are hereby expressly WAIVED and
Borrower hereby RELEASES each of the Lenders from any liability thereunder.

 

10.                               CONTINUING VALIDITY.  Borrower understands and
agrees that in modifying the existing Obligations, each Lender is relying upon
Borrower’s representations, warranties, and agreements, as set forth in the
Existing Loan Documents.  Except as expressly modified pursuant to this Loan
Modification Agreement, the terms of the Existing Loan Documents remain
unchanged and in full force and effect.  The Lenders’ agreement to modifications
to the existing Obligations pursuant to this Loan Modification Agreement in no
way shall obligate any Lender to make any future modifications to the
Obligations.  Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Obligations.  It is the intention of the Agent, each Lender
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by the Agent and the Lenders in writing. 
No maker will be released by virtue of this Loan Modification Agreement.

 

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11.                               RIGHT OF SET-OFF.  In consideration of
Lenders’ agreement to enter into this Loan Modification Agreement, Borrower
hereby reaffirms and hereby grants to Agent for the benefit of the Lenders, a
lien, security interest and right of set off as security for all Obligations
owed to the Lenders, whether now existing or hereafter arising upon and against
all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of Agent or any entity under the
control of Agent or any Lender (including a Subsidiary thereof) or in transit to
any of them.  At any time after the occurrence and during the continuance of an
Event of Default, without demand or notice, Agent may set off the same or any
part thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other collateral securing
the loan.  ANY AND ALL RIGHTS TO REQUIRE ANY LENDER TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS,
PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS
OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.

 

12.                               CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER. 
Section 12 of the Loan Agreement is hereby incorporated by reference in its
entirety.

 

13.                               COUNTERSIGNATURE.  This Loan Modification
Agreement shall become effective only when it shall have been executed by
Borrower, Agent and each Lender.

 

[The remainder of this page is intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Modification
Agreement to be executed as of the date first above written

 

BORROWER:

 

 

 

 

 

VERICEL CORPORATION

 

 

 

 

 

By

/s/ Dominick C. Colangelo

 

 

Name:

Nick Colangelo

 

 

Title:

CEO

 

 

 

 

 

AGENT:

 

 

 

 

 

SILICON VALLEY BANK, as Agent

 

 

 

 

 

By

/s/ Ryan Roller

 

 

Name:

Ryan Roller

 

 

Title:

Vice President

 

 

 

 

TERM LOAN LENDERS:

 

REVOLVING LINE LENDERS:

 

 

 

SILICON VALLEY BANK

 

SILICON VALLEY BANK

 

 

 

By

/s/ Ryan Roller

 

By

/s/ Ryan Roller

Name:

Ryan Roller

 

Name:

Ryan Roller

Title:

Vice President

 

Title:

Vice President

 

 

MIDCAP FUNDING III TRUST

 

MIDCAP FUNDING IV TRUST

 

 

 

By:

Apollo Capital Management, L.P., its investment manager

 

By:

Apollo Capital Management, L.P., its investment manager

 

 

 

By:

Apollo Capital Management GP, LLC, its general partner 

 

By:

Apollo Capital Management GP, LLC, its general
partner 

 

 

 

By:

/s/ Maurice Amsellem

 

By:

/s/ Maurice Amsellem

Name:

Maurice Amsellem

 

Name:

Maurice Amsellem

Title:

Authorized Signatory

 

Title:

Authorized Signatory

 

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TERM LOAN LENDERS:

 

ELM 2016-1 TRUST

 

By:

MidCap Financial Services Capital Management, LLC, as Servicer

 

 

 

 

 

 

By:

/s/ Adam Day

 

 

 

Name:

Adam Day

 

 

 

Title:

Authorized Signatory

 

 

 

 

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Exhibit A to First Loan Modification Agreement

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

TO:

SILICON VALLEY BANK, as Agent

Date:

FROM:

VERICEL CORPORATION

 

 

The undersigned authorized officer of Vericel Corporation (“Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement among
Borrower, SILICON VALLEY BANK, a California corporation (“SVB”), in its capacity
as Administrative Agent (“Agent”), (b) SVB, as a Revolving Line Lender and as a
Term Loan Lender, MIDCAP FUNDING IV TRUST, a Delaware statutory trust, as a
Revolving Line Lender (in such capacity and together with its successors and
assigns, “MidCap Revolving Line Lender”), MIDCAP FUNDING III TRUST, a Delaware
Statutory Trust and ELM 2016-1 TRUST, a Delaware statutory trust, each as a Term
Loan Lender (in such capacity and together with their respective successors and
assigns, “MidCap Term Loan Lender”; SVB, the MidCap Revolving Line Lender and
the MidCap Term Loan Lender are each referred to herein as a “Lender” and
collectively, the “Lenders”) (as amended, the “Loan Agreement”), (1) Borrower is
in compliance for the period ending                 with all required covenants
except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries, if any, relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Agent.  Attached
are the required documents supporting the certification.  The undersigned
certifies that these are prepared in accordance with GAAP consistently applied
from one period to the next except as explained in an accompanying letter or
footnotes.  The undersigned acknowledges that no borrowings may be requested at
any time or date of determination that Borrower is not in compliance with any of
the terms of the Agreement, and that compliance is determined not just at the
date this certificate is delivered.  Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

 

Required

 

Complies

 

 

 

 

 

Monthly financial statements with
Compliance Certificate

 

Monthly within 30 days (for the monthly periods ending March 31, June 30,
September 30 and December 31, no later than forty-five (45) days after the last
day of each such month)

 

Yes   No

 

 

 

 

 

Annual financial statement (CPA Audited) + CC

 

FYE within 90 days

 

Yes   No

 

 

 

 

 

10-Q, 10-K and 8-K

 

Within 5 days after filing with SEC

 

Yes   No

 

 

 

 

 

 

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A/R & A/P Agings, Deferred Revenue report and general ledger

 

Monthly within 30 days

 

Yes   No

 

 

 

 

 

Transaction Reports

 

(i) With each request for an Advance and (ii) within thirty (30) days after the
last day of each month

 

Yes   No

 

 

 

 

 

Projections

 

FYE within 30 days, and as amended/updated

 

Yes   No

 

Financial Covenant

 

Required

 

Actual

 

Complies

 

 

 

 

 

 

 

Maintain as indicated:

 

 

 

 

 

 

Minimum Revenue (monthly, on a trailing 12 month
basis)

 

*

 

$

 

 

Yes  No

 

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* See Section 6.9(a)

 

The following financial covenant analyses and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)

 

 

 

 

Vericel Corporation

 

BANK USE ONLY

 

 

 

 

 

Received by:

 

By:

 

 

AUTHORIZED SIGNER

Name:

 

 

Date:

 

Title:

 

 

 

 

 

Verified:

 

 

 

AUTHORIZED SIGNER

 

 

Date:

 

 

 

 

 

 

Compliance Status:

Yes  No

 

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SCHEDULE 1 TO COMPLIANCE CERTIFICATE

 

FINANCIAL COVENANTS OF BORROWER

 

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall govern.

 

Dated:

 

I.             Minimum Revenue (Section 6.9(a))

 

Required:  Minimum Revenue.  Achieve minimum net revenue (determined in
accordance with GAAP), measured on a trailing twelve month basis ending as of
the date of measurement, on a consolidated basis of Borrower and its
Subsidiaries, in an amount equal to or greater than the amount listed below for
each corresponding trailing twelve month period:

 

9

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Trailing Twelve Month Period Ended

 

Minimum Net Revenue

 

 

 

August 31, 2016

 

$

52,000,000.00

September 30, 2016

 

$

52,000,000.00

October 31, 2016

 

$

52,280,500.00

November 30, 2016

 

$

50,695,400.00

December 31, 2016

 

$

52,000,000.00

January 31, 2017

 

$

52,000,000.00

February 28, 2017

 

$

52,000,000.00

March 31, 2017

 

$

52,000,000.00

April 30, 2017

 

$

53,000,000.00

May 31, 2017

 

$

53,000,000.00

June 30, 2017

 

$

53,000,000.00

July 31, 2017

 

$

53,000,000.00

August 31, 2017

 

$

53,000,000.00

September 30, 2017

 

$

55,250,000.00

October 31, 2017

 

$

56,000,000.00

November 30, 2017

 

$

58,000,000.00

December 31, 2017

 

$

60,000,000.00

 

Minimum net revenue financial covenant requirements for the monthly periods
ending after December 31, 2017 will be determined by the Lenders in their
reasonable discretion after consultation with Borrower, no later than
November 30 of the year immediately preceding the each applicable fiscal year,
based on the projections delivered by Borrower to Agent and the Lenders in
accordance with Section 6.2(e) (which for the avoidance of doubt shall be
delivered by Borrower no later than November of the year immediately preceding
each applicable fiscal year); provided that, such minimum net revenue threshold
for any month following December 31, 2017 shall be in an amount equal to eighty
percent (80%) of net revenue set forth with respect to such month in such
projections, but in any event not less than $60,000,000.00 for any monthly
period.

 

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Actual: all amounts measured on a trailing twelve month basis

 

A.

Aggregate value of net revenue of Borrower and its Subsidiaries

$

 

Is line A equal to or greater than
$                                                       ?

 

 

o  No, not in compliance

o  Yes, in compliance

 

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