| Item 1.01 | Entry into a Material Definitive Agreement. |
On April 1, 2022 (the “Closing Date”), Viridian Therapeutics, Inc. (the “Company”) entered into a Loan and Security Agreement (the “Loan Agreement”) among the Company, certain of its subsidiaries from time to time party thereto (together with the Company, collectively, the “Borrower”), the several banks and other financial institutions or entities from time to time party thereto (the “Lenders”), and Hercules Capital, Inc., as administrative agent and collateral agent for itself and the Lenders (in such capacity, the “Agent”).
The Loan Agreement provides for a term loan facility of up to $75.0 million (the “Term Loan”), consisting of: (1) an initial tranche of $25.0 million, available through June 15, 2023; (2) a second tranche of $10.0 million, subject to the achievement of certain regulatory milestones, available through June 15, 2023; (3) a third tranche of $15.0 million, subject to the achievement of certain regulatory milestones, available through March 15, 2024; and (4) a fourth tranche of $25.0 million, subject to approval by the Lenders’ investment committee(s), available through December 15, 2024.
The obligations of the Borrower under the Loan Agreement are secured by certain assets of the Borrower, including substantially all of the assets of the Borrower, but excluding the Borrower’s intellectual property.
The loan will bear interest at the greater of either (i) the prime rate as reported in The Wall Street Journal plus 4.20% or (ii) 7.45%; provided that the interest rate shall not exceed a per annum rate of 8.95%.
The Term Loan matures on October 1, 2026. The Company is entitled to prepay the Term Loan in whole at its option, subject to a prepayment charge on the amount so prepaid equal to (i) in the first 12 months following the Closing Date, 3.0%, (ii) on or after 12 months but prior to 24 months following the Closing Date, 2.0%, (iii) on or after 24 months but prior to 36 months following the Closing Date, 1.0%, and (iv) thereafter, 0.0%. Upon full repayment of the Term Loan, the Company is obligated to pay an end-of-term charge equal to 6.00% of the principal amount of the Term Loan actually borrowed.
The proceeds of borrowings under the Loan Agreement are expected to be used for working capital and general corporate purposes. Under the terms of the Loan Agreement, the Company drew an initial amount of $5.0 million at the closing of the Loan Agreement on April 1, 2022.
The Loan Agreement also contains customary affirmative and negative covenants that, among other things, limit the ability of the Borrower or its subsidiaries, subject to certain exceptions, to incur indebtedness, grant liens, enter into a merger or consolidation, enter into transactions with affiliates, or sell all or a portion of their property, business or assets.
The Loan Agreement contains customary events of default. Upon the occurrence and continuation of an event of default, all amounts due under the Loan Agreement become (in the case of an insolvency or bankruptcy event), or may become (in the case of all other events of default and at the option of the Agent), immediately due and payable.
The foregoing descriptions of the Loan Agreement do not purport to be complete and are qualified in their entirety by reference to the complete text of the Loan Agreement filed as Exhibit 10.1 attached hereto.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 above regarding the Loan Agreement is incorporated by reference into this Item 2.03.
