Item 1.01.
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Entry into a Material Definitive Agreement.
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Deerfield Facility, Convertible Note and Guaranty
On March 11, 2020, Sientra, Inc., a Delaware corporation (the Company), entered into a Facility Agreement (the
Deerfield Facility Agreement) by and among the Company, as borrower, certain of the Companys subsidiaries party thereto as guarantors (collectively with the Company, the Loan Parties) and Deerfield Partners, L.P.
(Deerfield), as agent for itself and the lenders, providing for the sale by the Company to Deerfield of $60.0 million of principal amount of 4.0% unsecured and subordinated convertible notes (the Convertible
Note) upon the terms and conditions set forth in the Deerfield Facility Agreement (the Deerfield Financing). On the date of the Deerfield Facility Agreement, the Company issued a $60.0 million Convertible
Note to Deerfield, which Convertible Note matures on the fifth anniversary of the issuance date and is convertible into shares of the Companys common stock, par value $0.01 per share (the Common Stock), at an initial
conversion price of $4.10, representing a 35% premium over the Companys closing stock price of $3.04 per share on March 10, 2020. The Convertible Note was sold in a private placement to Deerfield pursuant to an
exemption for transactions by an issuer not involving a public offering under Section 4(2) of the Securities Act of 1933, as amended (the Securities Act), and Rule 506(b) of Regulation D promulgated under
the Securities Act (Regulation D). The Company made this determination based on the representations of Deerfield in the Deerfield Facility Agreement, including that Deerfield is an accredited
investor within the meaning of Rule 501 of Regulation D. The Company plans to use the proceeds from the Convertible Note for continued investment in its commercial activities, strategic growth opportunities, and general
corporate purposes. In connection with the Deerfield Facility Agreement and the Convertible Note issued thereunder, all of the Companys operating subsidiaries (each a Guarantor and, collectively, the
Guarantors) entered into a Guaranty, dated as of March 11, 2020 (the Guaranty), whereby the Guarantors agreed to guarantee the obligations and liabilities of the Company under the Deerfield Facility
Agreement and the Convertible Note.
The Convertible Note bears interest at 4.0% per annum. The Convertible Note is convertible at
any time at the option of Deerfield, provided that Deerfield is prohibited from converting the Convertible Note into shares of Common Stock if, as a result of such conversion, the Holder (together with certain affiliates and group
members) would beneficially own more than 4.985% of the total number of shares of Common Stock then issued and outstanding. Pursuant to the Convertible Note, Deerfield has the option to demand repayment of all outstanding principal, and any unpaid
interest accrued thereon, in connection with a Major Transaction (as defined in the Convertible Note), which shall include, among others, any acquisition or other change of control of the Company; the sale or transfer of assets of the
Company equal to more than 50% of the Enterprise Value (as defined in the Convertible Note) of the Company; a liquidation, bankruptcy or other dissolution of the Company; or if at any time shares of the Companys common stock are not listed on
an Eligible Market (as defined in the Convertible Note). The Convertible Note is subject to specified events of default, the occurrence of which would entitle Deerfield to immediately demand repayment of all outstanding principal and accrued
interest on the Convertible Note. Such events of default include, among others, failure to make any payment under the Convertible Note when due, failure to observe or perform any covenant under the Deerfield Facility Agreement or the other
transaction documents related thereto (subject to a standard cure period), the failure of the Company to be able to pay debts as they come due, the commencement of bankruptcy or insolvency proceedings against the Company, a material judgement levied
against the Company and a material default by the Company under the Convertible Note.
In connection with the Deerfield Financing,
the Company also entered into a Subordination Agreement, by and among Deerfield, the Company, MiraDry Holdings, Inc., MiraDry, Inc. and MiraDry International, Inc. and MidCap Funding IV Trust, pursuant to which the parties thereto
agreed that the obligations of the Company to Deerfield under the Deerfield Facility Agreement and under the Convertible Note shall be subordinate to the Companys obligations to MidCap Funding IV Trust, as agent
for the financial institutions party to that certain Amended and Restated Credit and Security Agreement (Revolving Loan) dated as of July 1, 2019, which agreement the Company, MiraDry Holdings, Inc., MiraDry, Inc. and MiraDry
International, Inc. and MidCap Funding IV Trust are a party to.
In connection with the Deerfield Financing, the Company also entered
into a Subordination Agreement, by and among Deerfield, the Company, MiraDry Holdings, Inc., MiraDry, Inc. and MiraDry International, Inc. and MidCap Financial Trust, pursuant to which the parties thereto agreed that the obligations of the
Company to Deerfield under the Deerfield Facility Agreement and under the Convertible Note shall be subordinate to the Companys obligations to MidCap Financial Trust, as agent for the financial institutions party to
that certain Amended and Restated Credit and Security Agreement (Term Loan) dated as of July 1, 2019 , which agreement the Company, MiraDry Holdings, Inc., MiraDry, Inc. and MiraDry International, Inc. and MidCap Financial Trust are a
party to.
The foregoing description of the Deerfield Facility Agreement, Convertible Note, Guaranty and
the Deerfield Financing does not purport to be complete and is qualified in its entirety by reference to the Deerfield Facility Agreement, the Form of Convertible Note and the Guaranty, a copy of each of which is filed herewith
as Exhibit 10.1, Exhibit 4.1 and Exhibit 10.2, respectively, and incorporated herein by reference.
Registration Rights
Agreement
In connection with the Deerfield Facility Agreement, on March 11, 2020, the Company
and Deerfield entered into a Registration Rights Agreement (the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Company has agreed to prepare and file with the Securities and Exchange
Commission (the SEC) a Registration Statement on Form S-3, or such other form as required to effect a registration of the Common Stock issued or issuable upon conversion of or pursuant to the
Convertible Note (the Registrable Securities), covering the resale of the Registrable Securities and such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of or otherwise pursuant to the
Convertible Note to prevent dilution resulting from certain corporate actions. Such Registration Statement must be filed within 30 calendar days following the date of issuance of the Convertible Note. In the event the SEC does not permit all of the
Registrable Securities to be included in the Registration Statement or if the Registrable Securities are not otherwise included in the Registration Statement filed pursuant to the Registration Rights Agreement, the Company has agreed to file an
additional Registration Statement by no later than the Additional Filing Deadline (as defined in the