Item 1.01. Entry into a Material Definitive Agreement.
Term Loan Credit Agreement and Revolving Credit Agreement
On July 1, 2019, Sientra Inc., a Delaware corporation (Sientra), entered into an Amended and Restated Credit and Security
Agreement (Term Loan), dated as of July 1, 2019 by and among Sientra, certain of Sientras wholly-owned subsidiaries (together with Sientra, the Borrowers), the lenders party thereto from time to time and MidCap Financial
Trust, as administrative agent and collateral agent (Agent) (the Restated Term Loan Credit Agreement). The Restated Term Loan Credit Agreement provided for, among other things, an increase of the lenders term loan
commitment from $40.0 million to $50.0 million, with an additional $15.0 million uncommitted facility available subject to the terms and conditions thereof.
Pursuant to the Restated Term Loan Credit Agreement, the Borrowers converted Sientras $35.0 million of existing indebtedness (the
Existing Loan) under its existing Credit and Security Agreement, dated July 25, 2017, with MidCap Financial Trust (the Existing Term Loan Credit Agreement). The Restated Term Loan Credit Agreement provides for
(i) the Existing Loan, (ii) a $5 million term loan facility available at signing, (iii) at any time after September 30, 2020 to December 31, 2020, a $10.0 million term loan facility (to the extent no default then
exists), and (iv) until December 31, 2020 and upon the consent of Agent and the lenders following a request from Borrowers, an additional $15.0 million term loan facility.
Also on July 1, 2019, Sientra entered in to an Amended and Restated Credit and Security Agreement (Revolving Loan), by and among the
Borrowers, the lenders party thereto from time to time, and the Agent (the Restated Revolving Credit Agreement and, together with the Restated Term Loan Credit Agreement, the Credit Agreements) providing for, among other
things, a revolving loan of up to $10.0 million (the Revolving Loan). Immediately prior to the effectiveness of the Restated Revolving Credit Agreement, Sientra converted the outstanding principal balance of its $4.3 million of
revolving loans under the existing Restated Credit and Security Agreement (Revolving Loan), by and among the Borrowers, the lenders party thereto from time to time, and the Agent (the Existing Revolving Credit Agreement and, together
with the Existing Term Loan Credit Agreement, the Existing Credit Agreements) into the Revolving Loan. The amount of loans available to be drawn under the Revolving Credit Agreement is based on a borrowing base equal to 85% of eligible
accounts, subject to certain adjustments. The Borrowers may make (subject to the applicable borrowing base at the time) and repay borrowings from time to time under the Revolving Credit Agreement until the maturity of the facility on July 1,
2024.
The obligations under each Credit Agreement are guaranteed by Sientra and each of Sientras existing and subsequently acquired
or formed direct and indirect subsidiaries (other than certain foreign subsidiaries). The obligations under the Credit Agreement are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in
(i) all tangible and intangible assets of the Borrowers and the guarantors, except for certain customary excluded property, and (ii) all of the capital stock owned by the Borrowers and guarantors thereunder (limited, in the case of the
stock of
certain non-U.S. subsidiaries
of the Borrowers, to 65% of the capital stock of such subsidiaries). The Borrowers and the guarantors under the Credit Agreements are individually and
collectively referred to herein as a Credit Party and the Credit Parties, as applicable.
The Term Loans are
subject to a commitment fee of 0.5% of the amount of the lenders commitments to make term loans. The Term Loans may be prepaid in full or in part through July 1, 2020 with payment of a 3.5% prepayment premium, after which they may be
prepaid in full or in part through July 1, 2021 with payment of a 2.5% prepayment premium, after which they may be prepaid in full or in part through July 1, 2022 with payment of a 1.5% prepayment premium, after which they may be prepaid
in full or in part with no prepayment premium. An additional 5.0% of the amount of Terms Loans advanced by the lenders will be due upon prepayment or repayment of the Term Loans in full. The Revolving Loan facility is subject to a fee of 0.5% of the
amount of the lenders unused commitments to make Revolving Loans and a minimum balance fee based on a minimum balance of 25% of borrowing base availability, which fee is equal to the then applicable interest rate. The Revolving Loan commitment
may be reduced in full or in part through July 1, 2020 with payment of a 3.5% deferred loan origination fee, after which the commitment may be reduced in full or in part through July 1, 2021 with payment of a 2.5% deferred loan origination
fee, after which the commitment may be reduced in full or in part through July 1, 2022 with payment of a 1.5% deferred loan origination fee, after which the commitment may be reduced in full or in part with no deferred loan origination fee
being payable.
The interest rate applicable to the Term Loans is LIBOR plus 7.50%, and the interest rate applicable to loans incurred
under the Revolving Credit Agreement is LIBOR plus 4.50%, in both cases subject to a LIBOR floor of 2.4%.
Each Credit Agreement requires
that the Borrowers (i) maintain Net Revenue (as defined in each Credit Agreement) in amounts set forth in each Credit Agreement and (ii) at all times, maintain cash and cash equivalents of at least $20.0 million. The Credit Agreements
also contain customary representations and warranties and customary affirmative and negative covenants, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and
dividends and other distributions.
Events of default under each Credit Agreement include: (i) failure by any Borrower to timely make
payments due under each Credit Agreement; (ii) material misrepresentations or misstatements in any representation or warranty by any Credit Party when made; (iii) failure by Sientra or its subsidiaries to comply with the covenants under
each Credit Agreement and other related agreements; (iv) certain defaults under a specified amount of other indebtedness of Sientra or its subsidiaries; (v) insolvency or bankruptcy-related events with respect to Sientra or any