Exhibit 10.1

FIRST AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into this 28th day of January, 2019, by and between SILICON VALLEY BANK
(“Bank”) and SIENNA BIOPHARMACEUTICALS, INC., a Delaware corporation
(“Borrower”).

RECITALS

A. Bank and Borrower have entered into that certain Loan and Security Agreement
dated as of June 29, 2018 (as the same may from time to time be further amended,
modified, supplemented or restated, collectively, the “Loan Agreement”).

B. Bank has extended credit to Borrower for the purposes permitted in the Loan
Agreement.

C. Borrower has requested that Bank amend the Loan Agreement to (i) modify the
milestone, and (ii) make certain other revisions to the Loan Agreement as more
fully set forth herein.

D. Bank has agreed to so amend certain provisions of the Loan Agreement, but
only to the extent, in accordance with the terms, subject to the conditions and
in reliance upon the representations and warranties set forth below.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

1. Definitions. Capitalized terms used but not defined in this Amendment shall
have the meanings given to them in the Loan Agreement.

2. Amendments to Loan Agreement.

2.1 Section 2.1.1 (Term Loans). Section 2.1.1(a) of the Loan Agreement hereby is
amended and restated in its entirety and replaced with the following:

“(a) Availability. On the Effective Date, subject to the terms and conditions of
this Agreement, Bank shall make one (1) term loan to Borrower in an aggregate
original principal amount of Fifteen Million Dollars ($15,000,000.00) (the “Term
A Loan”). During the Term B Draw Period, subject to the terms and conditions of
this Agreement, Borrower may request and Bank shall make one (1) term loan to
Borrower in the amount of Fifteen Million Dollars ($15,000,000.00) (the “Term B
Loan” and, together with the Term A Loan, each a “Term Loan,” and collectively,
the “Term Loans”).”

--------------------------------------------------------------------------------

2.2 Section 2.1.1 (Term Loans). Section 2.1.1(c)(i) of the Loan Agreement hereby
is amended and restated in its entirety and replaced with the following:

“(i) Voluntary.

(I) Borrower shall have the option to prepay all, but not less than all of the
Term Loans advanced by Bank under this Agreement, provided Borrower (a) delivers
written notice to Bank of its election to prepay the Term Loans at least five
(5) days prior to such prepayment (or such shorter period as agreed by Bank) and
(b) pays, on the date of such prepayment, (i) all outstanding principal, plus
accrued and unpaid interest with respect to the Term Loans, (ii) the Final
Payment, (iii) the Prepayment Fee and (iv) all other sums, if any, that shall
have become due and payable hereunder in connection with the Term Loans.

(II) Notwithstanding anything herein to the contrary, upon the occurrence of the
Liquidity Trigger, Borrower shall have the option to prepay the Term Loans,
provided Borrower (a) delivers written notice to Bank of its election to prepay
the Term Loans no later than five (5) days after the Liquidity Trigger and at
least five (5) days prior to such prepayment (or such shorter period as agreed
by Bank), (b) prepays such part of the Term Loans in a denomination that is a
whole number multiple of Fifteen Million Dollars ($15,000,000) (or if the total
outstanding Obligations are a lesser amount, then such lesser amount), and
(c) pays, on the date of such prepayment, (i) the portion of outstanding
principal, plus accrued and unpaid interest with respect to the portion of such
Term Loans being prepaid, (ii) the applicable Final Payment with respect to the
portion of such Term Loans being prepaid, (iii) the Prepayment Fee with respect
to the portion of such Term Loans being prepaid; provided, however, that such
Prepayment Fee shall apply pro-rata only to prepaid amounts in excess of Fifteen
Million Dollars ($15,000,000), and (iv) all other sums, if any, that shall have
become due and payable hereunder in connection with respect to the portion of
such Term Loans being prepaid. For the purposes of clarity, any partial
prepayment shall be applied pro-rata to all outstanding amounts under each Term
Loan, and shall be applied pro-rata within each Term Loan tranche to reduce
amortization payments under Section 2.1.1(b) on a pro-rata basis.”

2.3 Section 6.2 (Financial Statements, Reports, Certificates.). Section 6.2 (b)
of the Loan Agreement hereby is amended and restated in its entirety and
replaced with the following:

 

2

--------------------------------------------------------------------------------

“(b) Compliance Certificate. Within thirty (30) days after the last day of each
month, a duly completed Compliance Certificate signed by a Responsible Officer,
certifying that as of the end of such month, Borrower was in full compliance
with all of the terms and conditions of this Agreement, and such other
information as Bank may reasonably request;”

2.4 Section 6.7 (Liquidity Trigger). Section 6.7 of the Loan Agreement hereby is
amended and restated in its entirety and replaced with the following:

“6.7 Liquidity Trigger. If Borrower’s unrestricted cash at Bank falls below
(a) at all times after the First Amendment Effective Date and prior to
February 28, 2019, Thirty Million Dollars ($30,000,000), and (b) at all times on
and after February 28, 2019, the greater of (i) Thirty Million Dollars
($30,000,000) and (ii) the sum of (x) Fifteen Million Dollars ($15,000,000),
plus (y) six (6) times the amount of Borrower’s Cash Burn (tested monthly as of
the last day of each month) (the aforementioned (a) or (b), as appropriate, the
“Liquidity Trigger”), then Borrower shall either (i) prepay the Term Loans in
accordance with Section 2.1.1(c)(i)(II) hereof or (ii) immediately cash secure
not less than the lesser of the outstanding balance or Fifteen Million Dollars
($15,000,000) of the principal balance of all outstanding Indebtedness under the
Term Loans in the Pledged Account (a “Cash Collateralization”). Borrower hereby
authorizes and directs Bank to transfer to the Pledged Account an amount equal
to Fifteen Million Dollars ($15,000,000) if Borrower fails to maintain
compliance with Section 6.7, it being understood that the foregoing
authorization shall constitute an immediate Cash Collateralization, irrespective
of any delay by Bank in effecting such transfer, to the extent that sufficient
Borrower funds are then available for Bank to effect such transfer. Failure to
comply with the Cash Collateralization requirement above shall result in an
immediate Event of Default. For the sake of clarity, upon Borrower taking the
aforementioned steps to prepay the Term Loans or effectuate the Cash
Collateralization, this Section 6.7 shall no longer apply.”

2.5 Section 13 (Definitions). The following terms and their respective
definitions hereby are added or amended and restated in their entirety in
Section 13.1 of the Loan Agreement, as appropriate, as follows:

“Cash Burn” means, as of any date of determination, the amount equal to
Borrower’s total unrestricted cash at Bank as of the first day of the applicable
measuring period minus Borrower’s total cash balance at Bank as of the last day
of the applicable measuring period adjusted to exclude any changes in Borrower’s
total cash balance as a result of debt and/or equity financing activities, and
upfront and milestone payments in connection with joint ventures, strategic
alliances, or out-licensing of Borrowers’ Intellectual Property and measured on
the Applicable Trailing Basis (as set forth in the table below) multiplied by
the Applicable Multiplier (as set forth in the table below).

 

3

--------------------------------------------------------------------------------

Date of Measurement

   Applicable Trailing
Basis      Applicable
Multiplier  

February 28, 2019

     1 month        1  

March 31, 2019

     2 months        1/2  

April 30, 2019 and each month-end thereafter

     3 months        1/3  

“Final Payment Percentage” is six and one half percent (6.50%).

“First Amendment Effective Date” is January 28, 2019.

“Loan Documents” are, collectively, this Agreement and any schedules, exhibits,
certificates, notices, and any other documents related to this Agreement, the
Warrants, the UK Share Pledge Documents, any Bank Services Agreement, any
subordination agreement, any note, or notes or guaranties executed by Borrower
or any Guarantor, and any other present or future agreement by Borrower and/or
any Guarantor with or for the benefit of Bank in connection with this Agreement
or Bank Services, all as amended, restated, or otherwise modified.

“Pledge Agreement” means that certain Bank Services Cash Pledge Agreement
executed by Borrower in favor of Bank as of the Effective Date, as amended by
that certain First Amendment to Bank Services Cash Pledge Agreement executed by
Borrower in favor of Bank as of the First Amendment Effective Date .

“Warrants” are those certain Warrants to Purchase Stock dated as of the First
Amendment Effective Date, or any date theretofore or thereafter, issued by
Borrower in favor of Bank and Life Science Loans II, LLC respectively.

2.6 Section 13 (Definitions). The following terms and their respective
definitions hereby are deleted in their entirety from Section 13.1 of the Loan
Agreement:

“Cash Collateralization Release Milestone”, “Term C Loan”, “Term C Draw Period”,
“Term C Draw Period Milestone 1”, “Term C Draw Period Milestone 2”

2.7 Annex I to the Pledge Agreement is hereby replaced with Annex I attached
hereto.

3. Limitation of Amendments.

3.1 The amendments set forth in Section 2, above, are effective for the purposes
set forth herein and shall be limited precisely as written and shall not be
deemed to (a) be a consent to any amendment, waiver or modification of any other
term or condition of any Loan Document, or (b) otherwise prejudice any right or
remedy which Bank may now have or may have in the future under or in connection
with any Loan Document.

 

4

--------------------------------------------------------------------------------

3.2 This Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.

4. Representations and Warranties. To induce Bank to enter into this Amendment,
Borrower hereby represents and warrants to Bank as follows:

4.1 Immediately after giving effect to this Amendment (a) the representations
and warranties contained in the Loan Documents are true, accurate and complete
in all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct in all material respects as of such date), and (b) no Event of
Default has occurred and is continuing;

4.2 Borrower has the power and authority to execute and deliver this Amendment
and to perform its obligations under the Loan Agreement, as amended by this
Amendment;

4.3 The organizational documents of Borrower delivered to Bank on the Effective
Date remain true, accurate and complete and have not been amended, supplemented
or restated and are and continue to be in full force and effect;

4.4 The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized;

4.5 The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (a) any material law or regulation
binding on or affecting Borrower, (b) any material contractual restriction with
a Person binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding
on Borrower, or (d) the organizational documents of Borrower;

4.6 The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on
either Borrower, except as already has been obtained or made; and

4.7 This Amendment has been duly executed and delivered by Borrower and is the
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of
general application and equitable principles relating to or affecting creditors’
rights.

 

5

--------------------------------------------------------------------------------

5. Counterparts. This Amendment may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.

6. Effectiveness. This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of (i) this Amendment by each party hereto,
(ii) the Warrants, and (iii) updated Borrowing Resolutions, and (b) Bank’s
receipt all fees then due and owing and all invoiced Bank Expenses incurred
through the First Amendment Effective Date.

[Balance of Page Intentionally Left Blank]

 

6

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the date first written above.

 

BANK

 

SILICON VALLEY BANK

 

By: /s/ Anthony Flores                                                         

Name: Anthony Flores

Title: Managing Director

  

BORROWER

 

SIENNA BIOPHARMACEUTICALS, INC.

 

By: /s/ John W. Smither                                                 

Name: John W. Smither

Title: CFO

[Signature Page to First Amendment to Loan and Security Agreement]

 

--------------------------------------------------------------------------------

Annex I to Bank Services Cash Pledge Agreement

This Annex I to Bank Services Cash Pledge Agreement supplements the terms of
that certain Bank Services Cash Pledge Agreement executed by SIENNA
BIOPHARMACEUTICALS, INC., a Delaware corporation (“Applicant”) in favor of
SILICON VALLEY BANK (“Bank”) dated as of June 29, 2018 (as amended from time to
time, the “Pledge Agreement”).

Applicant and Bank are parties to that certain Loan and Security Agreement dated
as of June 29, 2018 (as the same may from time to time be amended, modified,
supplemented or restated, including by that certain First Amendment to Loan and
Security Agreement dated as of January 28, 2019, the “Loan Agreement”).
Capitalized terms used herein but not defined herein have the meaning assigned
such terms in the Loan Agreement

Pursuant to the conditions of the Loan Agreement, if at any time, Borrower’s
unrestricted cash at Bank falls below (a) at all after the First Amendment
Effective Date and prior to February 28, 2019, Thirty Million Dollars
($30,000,000), and (b) at all times on or after February 28, 2019, the greater
of (i) Thirty Million Dollars ($30,000,000) and (ii) the sum of (x) Fifteen
Million Dollars ($15,000,000), plus (y) six (6) times the amount of Borrower’s
Cash Burn (tested monthly as of the last day of each month) (the aforementioned
(a) or (b), as appropriate, the “Liquidity Trigger”), then Borrower shall either
(i) prepay the Term Loans in accordance with Section 2.1.1(c)(i)(II) hereof or
(ii) immediately cash secure not less than the lesser of the outstanding balance
or Fifteen Million Dollars ($15,000,000) of the principal balance of all
outstanding Indebtedness under the Term Loans in the Pledged Account (a “Cash
Collateralization”).

Bank and Applicant hereby agree that (i) Applicant’s execution of the Pledge
Agreement and pledge of the Deposit Account (as defined in the Pledge Agreement)
thereunder shall satisfy the requirements related to the setup and funding of
the Pledged Account set forth in the Loan Agreement once such account has been
fully funded with the amount of unrestricted cash set forth above, (ii) the Loan
Agreement and the other Loan Documents shall be deemed to be “Client Agreements”
and “Documents” referenced in and such terms are defined in the Pledge
Agreement, and (iii) the making by Bank of the Term Loan under the Loan
Agreement shall be the “Bank Services” referenced in the Pledge Agreement.    

 

--------------------------------------------------------------------------------

EXHIBIT B

COMPLIANCE CERTIFICATE

 

TO: SILICON VALLEY BANK    Date: ______________________________

FROM: SIENNA PHARMACEUTICALS, INC., on behalf of Borrower    

The undersigned authorized officer of SIENNA PHARMACEUTICALS, INC. (“Borrower”)
certifies , solely in his/her capacity as an officer of the company and not in
his/her individual capacity, that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”):

(1) Borrower is in complete 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 5.8 of the Agreement;
and (5) no Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank.

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 Covenants

  

Required

  

Complies

Annual financial statement (CPA Audited) + CC    FYE within 90 days    Yes No
Compliance Certificate    Monthly within 30 days    Yes No Quarterly Financial
Statements    Quarterly within 45 days    Yes No 10-Q, 10-K and 8-K    Within 5
days after filing with SEC    Yes No Board approved projections    FYE within 60
days and within seven (7) days of any updates/amendments    Yes No

 

Financial Covenant

  

Required

  

Actual

  

Complies

Liquidity Trigger*   

(i) Before 2/28/2019, $30,000,000, and

(ii) on and at all times after 2/28/2019, greater of (x) $30,000,000 or (y)
$15,000,000 plus 6 times Cash Burn

   $_________    Yes    No

 

*

If Borrower’s unrestricted cash falls below the minimum required amounts, then
Borrower shall either (i) prepay the Term Loans or (ii) immediately cash secure
not less than the lesser of the outstanding balance or Fifteen Million Dollars
($15,000,000) of the principal balance of all outstanding Indebtedness under the
Term Loans in the Pledged Account. If Borrower chooses to prepay the Term Loans
pursuant to Section 2.1.1(c)(i)(II), then the Liquidity Trigger shall no longer
apply or be measured as of the date of prepayment.

--------------------------------------------------------------------------------

Other Matters

 

Have there been any amendments of or other changes to the Operating Documents of
Borrower or any of its Subsidiaries? If yes, provide copies of any such
amendments or changes with this Compliance Certificate.    Yes    No

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

 

 

 

 

 

SIENNA PHARMACEUTICALS, INC., as Borrower      

BANK USE ONLY

 

                   Received by:                                          
                                By:                                          
                                                

AUTHORIZED SIGNER

Name:                                          
                                         Date:
                                         
                                             Title:
                                                                              
               Verified:                                          
                                              

AUTHORIZED SIGNER

      Date:                                          
                                                   Compliance Status:
                Yes                 No

--------------------------------------------------------------------------------

BORROWING RESOLUTIONS

 

LOGO [g673952g0130025100750.jpg]

CORPORATE BORROWING CERTIFICATE

 

BORROWER:    SIENNA BIOPHARMACEUTICALS, INC.    DATE: BANK:    SILICON VALLEY
BANK   

I hereby certify , solely in my capacity as an officer of Borrower and not in my
individual capacity, as follows, as of the date set forth above:

1. I am the Secretary, Assistant Secretary or other officer of Borrower.    My
title is as set forth below.

2. Borrower’s exact legal name is set forth above. Borrower is a corporation
existing under the laws of the State of Delaware.

3. Attached hereto are true, correct and complete copies of Borrower’s
Certificate of Incorporation (including amendments), as filed with the Secretary
of State of the state in which Borrower is incorporated as set forth above. Such
Certificate of Incorporation have not been amended, annulled, rescinded, revoked
or supplemented, and remain in full force and effect as of the date hereof.

4. The following resolutions were duly and validly adopted by Borrower’s Board
of Directors at a duly held meeting of such directors (or pursuant to a
unanimous written consent or other authorized corporate action). Such
resolutions are in full force and effect as of the date hereof and have not been
in any way modified, repealed, rescinded, amended or revoked, and Silicon Valley
Bank (“Bank”) may rely on them until Bank receives written notice of revocation
from Borrower.

RESOLVED, that any one of the following officers or employees of Borrower, whose
names, titles and signatures are below, may act on behalf of Borrower:

 

Name

  

Title

  

Signature

  

    Authorized    
to Add or
Remove
Signatories

 

  

 

  

 

   ☐

 

  

 

  

 

   ☐

 

  

 

  

 

   ☐

 

  

 

  

 

   ☐

RESOLVED FURTHER, that any one of the persons designated above with a checked
box beside his or her name may, from time to time, add or remove any individuals
to and from the above list of persons authorized to act on behalf of Borrower.

RESOLVED FURTHER, that such individuals may, on behalf of Borrower:

--------------------------------------------------------------------------------

Borrow Money. Borrow money from Bank.

Execute Loan Documents. Execute any loan documents Bank requires.

Grant Security. Grant Bank a security interest in any of Borrower’s assets.

Negotiate Items. Negotiate or discount all drafts, trade acceptances, promissory
notes, or other indebtedness in which Borrower has an interest and receive cash
or otherwise use the proceeds.

Apply for Letters of Credit. Apply for letters of credit from Bank.

Enter Derivative Transactions. Execute spot or forward foreign exchange
contracts, interest rate swap agreements, or other derivative transactions.

Issue Warrants. Issue warrants for Borrower’s capital stock.

Further Acts. Designate other individuals to request advances, pay fees and
costs and execute other documents or agreements (including documents or
agreement that waive Borrower’s right to a jury trial) they believe to be
necessary to effect these resolutions.

RESOLVED FURTHER, that all acts authorized by the above resolutions and any
prior acts relating thereto are ratified.

5. The persons listed above are Borrower’s officers or employees with their
titles and signatures shown next to their names.

 

By:  

                                          

Name: Title:

 

 

***

If the Secretary, Assistant Secretary or other certifying officer executing
above is designated by the resolutions set forth in paragraph 4 as one of the
authorized signing officers, this Certificate must also be signed by a second
authorized officer or director of Borrower.

I, the __________________________ of Borrower, hereby certify, solely in my
capacity as an officer of Borrower and not in my individual capacity, as to
paragraphs 1 through 5 above, as of the date set forth above.

 

By:  

                                          

Name: Title: