Exhibit 10.1

THIRD AMENDMENT TO

LOAN AND SECURITY AGREEMENT

THIS THIRD AMENDMENT to Loan and Security Agreement (this “Amendment”) is
entered into as of January 31, 2020, by and among SILICON VALLEY BANK, a
California corporation (“Bank”), SAVARA INC. f/k/a MAST THERAPEUTICS, INC., a
Delaware corporation (“Parent”), and ARAVAS INC. f/k/a SAVARA INC., a Delaware
corporation (each a “Co-Borrower” and collectively “Co-Borrowers”).

RECITALS

A.    Bank and Co-Borrowers have entered into that certain Loan and Security
Agreement dated as of April 28, 2017 (as the same may from time to time be
further amended, modified, supplemented or restated, including by that certain
First Amendment to Loan and Security Agreement dated as of October 31, 2017, and
that certain Second Amendment to Loan and Security Agreement dated as of
December 4, 2018, collectively, the “Loan Agreement”).

B.    Bank has extended credit to Co-Borrowers for the purposes permitted in the
Loan Agreement.

C.    Co-Borrowers have requested that Bank amend the Loan Agreement to
(i) extend additional credit, 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) and Section 2.1.1(b) of the
Loan Agreement hereby are amended and restated in their entirety to read as
follows:

“(a)    Availability. On the Third Amendment Effective Date, subject to the
terms and conditions of this Agreement, Bank shall make one (1) term loan to
Co-Borrowers in the amount of Twenty-Five Million Dollars ($25,000,000) (the
“Term Loan”), the proceeds of which shall be used, in part, to refinance all
Indebtedness owing from Co-Borrowers to Bank under the Term Loans (as defined
prior to the Third Amendment Effective Date) outstanding as of the Third
Amendment Effective Date.

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(b)    Repayment. The Term Loan shall be “interest only” during the
Interest-Only Period, with interest due and payable on the first day of each
month. Beginning on the Amortization Start Date, and continuing on the first day
of each month thereafter, Co-Borrowers shall repay the Term Loans in equal
monthly installments of principal plus interest (each, a “Term Loan Payment”)
with a repayment schedule equal to eighteen (18) months; provided, however, if
the conditions for the Amortization Trigger are not in effect, then the
repayment schedule shall be equal to twenty-four (24) months. Co-Borrowers’
final Term Loan Payment, due on the Term Loan Maturity Date, shall include all
outstanding principal and accrued and unpaid interest under the Term Loans and
the Final Payment. Once repaid, the Term Loans may not be reborrowed.”

2.2    Section 2.3 (Payment of Interest on the Credit Extensions).
Section 2.3(a) is amended in its entirety and replaced with the following:

“(a)    Interest Rate. Subject to Section 2.3(b), the principal amount
outstanding under the Term Loan shall accrue interest at a floating per annum
rate equal to the greater of (i) three percentage points (3.00%) above the Prime
Rate or (ii) seven and three quarters of one percentage point (7.75%), which
interest shall be payable monthly.”

2.3    Section 2.4 (Fees). Section 2.4(a) and (b) of the Loan Agreement hereby
are amended and restated in their entirety to read as follows:

“(a)    Prepayment Fee.

(i)    The Prepayment Fee, when due hereunder pursuant to the terms of
Section 2.1.1(c); and

(ii)     A fully-earned, non-refundable prepayment fee, in connection with the
Term Loans (as defined prior to the Third Amendment Effective Date) made prior
to the Third Amendment Effective Date, in an aggregate amount of Five Hundred
Thousand Dollars ($500,000) (the “Third Amendment Prepayment Fee”), of which
Five Hundred Thousand Dollars ($500,000) Bank has agreed to waive. For the sake
of clarity, the Third Amendment Prepayment Fee shall not reduce the Prepayment
Fee otherwise due in connection with Section 2.4(a)(i) hereto.

(b)    Final Payment.

(i)    The Final Payment, when due hereunder; and

(ii)    A fully-earned, non-refundable final payment, in connection with the
Term Loans (as defined prior to the Third Amendment Effective Date) made prior
to the Third Amendment Effective Date, in an aggregate amount of One Million
Five Hundred Thousand Dollars ($1,500,000) (the “Third Amendment Final
Payment”), of which (x) Five Hundred Thousand Dollars ($500,000) is due and
payable on the Third Amendment Effective Date and (y) One Million Dollars
($1,000,000) Bank has agreed to waive. For the sake of clarity, the Third
Amendment Final Payment shall not reduce the Final Payment otherwise due in
connection with Section 2.4(b)(i) hereto.”

 

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2.4    Section 3.2 (Post-Closing Items). Section 3.2 of the Loan Agreement
hereby is amended and restated in its entirety to read as follows:

“3.2    Intentionally Omitted.”

2.5    Section 6.2 (Financial Statements, Reports, Certificates). With respect
to Section 6.2, the “and” at the end of subsection (g) is hereby deleted, the
period (“.”) at the end of subsection (h) is hereby replaced by a semi-colon
(“;”) followed by the word “and”, and new subsection (i) is hereby added to the
Loan Agreement to read in its entirety as follows:

“(i)    Beneficial Ownership. Prompt written notice of any changes to the
beneficial ownership information set out in Addendum 1 to the Perfection
Certificate. Co-Borrowers understand and acknowledge that Bank relies on such
true, accurate and up-to-date beneficial ownership information to meet Bank’s
regulatory obligations to obtain, verify and record information about the
beneficial owners of its legal entity customers.”

2.6    Section 6.6 (Operating Accounts). New Section 6.6(c) hereby is added to
the Loan Agreement in its entirety to read as follows:

“(c)    In addition, Co-Borrowers shall obtain any business credit card, letters
of credit and cash management services exclusively from Bank.”

2.7    Section 6.7 (Equity Milestone). Section 6.7 of the Loan Agreement hereby
is amended and restated in its entirety to read as follows:

“6.7    Equity Milestone. Co-Borrowers shall deliver evidence, reasonably
satisfactory to Bank, that Co-Borrowers have received, after the Third Amendment
Effective Date but on or prior to June 30, 2021, at least Twenty-Five Million
Dollars ($25,000,000) in gross cash proceeds from the exercise of warrants
issued pursuant to the Securities Purchase Agreement dated December 20, 2019 by
and among Parent and the Investors identified on Exhibit A attached thereto or
from the sale of Parent’s equity securities to investors and on terms and
conditions reasonably acceptable to Bank.”

2.8    Section 6.11 (Formation or Acquisition of Subsidiaries). Section 6.11 of
the Loan Agreement hereby is amended and restated in its entirety to read as
follows:

“6.11    Formation or Acquisition of Subsidiaries. Notwithstanding and without
limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, at the
time that a Co-Borrower forms any direct or indirect Subsidiary or acquires any
direct or indirect Subsidiary after the Effective Date (including, without
limitation, pursuant to a Division), such Co-Borrower shall (a) cause such new
Domestic Subsidiary to provide to Bank a joinder to the Loan Agreement to cause
such Domestic Subsidiary to become a Co-Borrower hereunder, together with such
appropriate financing statements and/or Control Agreements, all in form and
substance reasonably satisfactory to Bank (including being sufficient to grant
Bank a first priority Lien (subject to Permitted Liens) in and to the Collateral
of such newly formed or acquired Subsidiary), (b) provide to Bank appropriate
certificates and powers and financing statements, pledging all of the direct or
beneficial ownership interest in such new Subsidiary (or sixty five percent
(65%) thereof for any Subsidiary that is a Foreign Subsidiary or FSHCO), in form
and substance reasonably satisfactory to Bank, and (c) provide to Bank all other
documentation reasonably requested by Bank in form and substance reasonably
satisfactory to Bank, including one or more opinions of counsel satisfactory to
Bank, which in its opinion is

 

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appropriate with respect to the execution and delivery of the applicable
documentation referred to above. Any document, agreement, or instrument executed
or issued pursuant to this Section 6.11 shall be a Loan Document. For the
avoidance of doubt, the foregoing provisions of this Section shall not apply to
any of the Co-Borrowers’ existing Subsidiaries in existence as of the date
hereof.”

2.9    Section 7.1 (Dispositions). Section 7.1 of the Loan Agreement hereby is
amended and restated in its entirety to read as follows:

“7.1    Dispositions. Convey, sell, lease, transfer, assign, or otherwise
dispose of (including, without limitation, pursuant to a Division)
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, except for Transfers (a) of Inventory
in the ordinary course of business; (b) of worn out, surplus or obsolete
Equipment that is, in the reasonable judgment of Co-Borrower, no longer
economically practicable to maintain or useful in the ordinary course of
business of Co-Borrower; (c) consisting of Permitted Liens and Permitted
Investments; (d) Transfers not to exceed One Hundred Thousand ($100,000) in the
aggregate in any fiscal year; (e) consisting of Co-Borrower’s use or transfer of
money or Cash Equivalents in a manner that is not prohibited by the terms of
this Agreement or the other Loan Documents; (f) of non-exclusive licenses for
the use of the property of Co-Borrower or its Subsidiaries in the ordinary
course of business and licenses that could not result in a legal transfer of
title of the licensed property but that may be exclusive in respects other than
territory and that may be exclusive as to territory only as to discreet
geographical areas outside of the United States; (g) the surrender or waiver of
contractual rights or the settlement, release or surrender of contractual
rights, obligations of customers or suppliers or other litigation claims in the
ordinary course of business; (h) the abandonment of Intellectual Property that
is, in the reasonable judgment of the Co-Borrower, no longer economically
practicable or commercially desirable to maintain or that is not material to the
conduct of the business of Co-Borrower and its Subsidiaries; (i) Transfers
permitted by Section 7.3, Section 7.7 or Section 7.11; and (j) made pursuant to
the LifeRaft Asset Purchase Agreement.”

2.10    Section 7.3 (Mergers or Acquisitions). Section 7.3 of the Loan Agreement
hereby is amended and restated in its entirety to read as follows:

“7.3    Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person (including, without limitation, by
the formation of any Subsidiary or pursuant to a Division) other than a
Permitted Investment. Notwithstanding the foregoing, a Subsidiary may merge or
consolidate into another Subsidiary or into Co-Borrower.”

2.11    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:

“Amortization Trigger” means Co-Borrowers delivery of evidence, satisfactory to
Bank in its sole discretion, that on or prior to March 31, 2021, Co-Borrowers
have (i) an ongoing phase 3 or, if a Biologics License Application has been
submitted to the Food and Drug Administration, phase 4 clinical trial evaluating
Molgradex for the treatment of autoimmune pulmonary alveolar proteinosis, and
(ii) the first patient in connection with such phase 3 or phase 4 clinical trial
has been dosed.

 

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“Division” means, in reference to any Person which is an entity, the statutory
division of such Person into two (2) or more separate Persons, with the dividing
Person either continuing or terminating its existence as part of such division,
including, without limitation, as contemplated under Section 18-217 of the
Delaware Limited Liability Company Act for limited liability companies formed
under Delaware law, or any analogous action taken pursuant to any other
applicable law with respect to any corporation, limited liability company,
partnership or other entity.

“Interest-Only Period” means the period commencing on the Effective Date and
continuing through June 30, 2022; provided, however, if the conditions for the
Amortization Trigger are not in effect by March 31, 2021, then the Interest-Only
Period shall be reduced to end on March 31, 2021.

“Prepayment Fee” is, with respect to the Term Loan subject to prepayment prior
to the Term Loan Maturity Date, whether by mandatory or voluntary prepayment,
acceleration or otherwise, an additional fee payable to Bank in an amount equal
to: (i) for a prepayment made on or after the Third Amendment Effective Date
through and including the first anniversary of the Third Amendment Effective
Date, three percent (3.00%) of the principal amount of the Term Loan prepaid;
(ii) for a prepayment made after the date which is the first anniversary of the
Third Amendment Effective Date through and including the second anniversary of
the Third Amendment Effective Date, two percent (2.00%) of the principal amount
of the Term Loan prepaid and (iii) for a prepayment made after the date which is
the second anniversary of the Third Amendment Effective Date and before the Term
Loan Maturity Date, one percent (1.00%) of the principal amount of the Term Loan
prepaid.

“Term Loan Maturity Date” is December 1, 2023; provided, however, if the
conditions for the Amortization Trigger are not in effect by March 31, 2021,
then the Term Loan Maturity Date is March 1, 2023.

“Third Amendment Effective Date” means January 31, 2020.

“Warrants” are those certain Warrants to Purchase Common Stock (i) dated as of
the Effective Date (as amended by that certain Amendment to Warrant to Purchase
Common Stock dated as of June 26, 2017, and that certain Second Amendment to
Warrant to Purchase Common Stock dated as of January 31, 2020), (ii) dated as of
June 26, 2017 (as amended by that certain First Amendment to Warrant to Purchase
Common Stock dated as of January 31, 2020), and (iii) dated as of the Second
Amendment Effective Date (as amended by that certain First Amendment to Warrant
to Purchase Common Stock dated as of January 31, 2020), or any date theretofore
or thereafter, issued by Parent in favor of Bank and Life Science Loans, LLC.

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

“Cash Collateralization Amount”, “Draw Period”, “Draw Period Milestone”, “Market
Capitalization”, “Term A Loan”, “Term B Loan”, “Trading Day”

 

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2.13    New Addendum 1 is hereby added to the Perfection Certificate in the form
attached hereto.

2.14    Exhibit B of the Loan Agreement hereby is replaced by Exhibit B 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.

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, each Co-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 and correct 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 as of such date), and (b) no Event of Default has occurred and
is continuing;

4.2    Co-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 Co-Borrower delivered to Bank on or prior
to the date of this Amendment 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 Co-Borrower of this Amendment and the
performance by Co-Borrower of its obligations under the Loan Agreement, as
amended by this Amendment, have been duly authorized;

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

4.6    The execution and delivery by Co-Borrower of this Amendment and the
performance by Co-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 Co-Borrower, except any filings by Parent as may be
required with the Securities and Exchange Commission and as already has been
obtained or made; and

 

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4.7    This Amendment has been duly executed and delivered by Co-Borrower and is
the binding obligation of Co-Borrower, enforceable against Co-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.    Ratification of Perfection Certificate. Each Co-Borrower hereby ratifies,
confirms and reaffirms, all and singular, the terms and disclosures contained in
a certain Perfection Certificate dated on or prior to the Effective Date and
acknowledges, confirms and agrees that the disclosures and information that each
Co-Borrower provided to Bank in such Perfection Certificate have not changed, as
of the date hereof, with the exception of inclusion of Addendum 1 to the
Perfection Certificate attached hereto.

6.    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.

7.    Effectiveness. This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank, by each party thereto, of (i) this Amendment,
(ii) an updated Corporate Borrowing Certificate for each Co-Borrower in the form
attached hereto, (iii) an Amendment to Warrant for each Warrant executed prior
to the date hereof, and an (iv) Addendum 1 to Perfection Certificate for each
Co-Borrower in the form attached hereto, and (b) Co-Borrowers’ payment of
(i) Five Hundred Thousand Dollars ($500,000) in connection with the Third
Amendment Final Payment, and (ii) to the extent that an invoice therefor has
been provided by Bank to Co-Borrowers, all fees then due and owing and all Bank
Expenses incurred through the date of this Amendment, which may be debited from
any of Co-Borrowers’ accounts at Bank.

[Balance of Page Intentionally Left Blank]

 

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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/ Igor DaCruz

Name:   Igor DaCruz Title:   Director CO-BORROWER SAVARA INC. By:  

/s/ David L. Lowrance

Name:   David L. Lowrance Title:   CFO CO-BORROWER ARAVAS INC. By:  

/s/ David L. Lowrance

Name:   David L. Lowrance Title:   CFO

 

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