Document:

svra-ex420_592.htm

 

EXHIBIT 4.20

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

WARRANT TO PURCHASE COMMON STOCK

 

Company: SAVARA INC.

Number of Shares of Common Stock: 5,666 

Warrant Price: $8.824

Issue Date: December 4, 2018

Expiration Date:  December 4, 2028See also Section 5.1(b).

	
Credit Facility:
	
This Warrant to Purchase Common Stock (“Warrant”) is issued in connection with that certain Loan and Security Agreement between Silicon Valley Bank and the Company dated April 28, 2017, as amended by that certain First Amendment dated October 31, 2017 and that certain Second Amendment of even date herewith (the “Loan Agreement”).

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK (together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, “Holder”) is entitled to purchase the number of fully paid and non-assessable shares (the “Shares”) of the above-stated common stock (the “Common Stock”) of the above-named company (the “Company”) at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant. Reference is made to Section 5.4 of this Warrant whereby Silicon Valley Bank shall transfer this Warrant to its parent company, SVB Financial Group.

 

SECTION 1.  EXERCISE.

 

1.1Method of Exercise. Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

 

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1.2Cashless Exercise. On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:

 

X = Y(A-B)/A

where:

 

	
 
	
X =
	
the number of Shares to be issued to the Holder;

 

	
 
	
Y = 
	
the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

 

	
 
	
A =
	
the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and

 

	
 
	
B =
	
the Warrant Price.

 

1.3Fair Market Value. If the Company’s Common Stock is then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”), the fair market value of a Share shall be the closing price or last sale price of a share of Common Stock reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company. If the Company’s Common Stock is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

 

1.4Delivery of Certificate and New Warrant. Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.

 

1.5Replacement of Warrant. On receipt of evidence reasonably satisfactory  to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

 

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1.6Treatment of Warrant Upon Acquisition of Company.

 

(a)Acquisition. For the purpose of this Warrant, “Acquisition” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization; or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.

 

(b)Treatment of Warrant at Acquisition. In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), and the fair market value of one Share as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date immediately prior to such Cash/Public Acquisition, and Holder has not exercised this Warrant pursuant to Section 1.1 above as to all Shares, then this Warrant shall automatically be deemed to be Cashless Exercised pursuant to Section 1.2 above as to all Shares effective immediately prior to and contingent upon the consummation of a Cash/Public Acquisition. In connection with such Cashless Exercise, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as the date thereof and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon exercise. In the event of a Cash/Public Acquisition where the fair market value of one Share as determined in accordance with Section 1.3 above would be less than the Warrant Price in effect immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of such Cash/Public Acquisition.

 

(c)Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

 

(d)As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise or convert this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition.

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SECTION 2. ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

 

2.1Stock Dividends, Splits, Etc. If the Company declares or pays a dividend or distribution on the outstanding shares of the Common Stock payable in securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If the Company subdivides the outstanding shares of the Common Stock by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares of the Common Stock are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

 

2.2Reclassification, Exchange, Combinations or Substitution. Upon  any event whereby all of the outstanding shares of the Common Stock are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similar events.

 

2.3Intentionally Omitted.

 

2.4Intentionally Omitted.

 

2.5No Fractional Share. No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.

 

2.6Notice/Certificate as to Adjustments. Upon each adjustment of the Warrant Price, Common Stock and/or number of Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, class and/or number of Shares and facts upon which such adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, class and number of Shares in effect upon the date of such adjustment.

 

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SECTION 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1Representations and Warranties. The Company represents and warrants  to, and agrees with, the Holder as follows: All Shares which may be issued upon the exercise of this Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of securities as will be sufficient to permit the exercise in full of this Warrant.

 

3.2Notice of Certain Events. If the Company proposes at any time to:

 

(a)declare any dividend or distribution upon the outstanding shares of the Company’s stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

 

(b)offer for subscription or sale pro rata to the holders of the outstanding shares any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);

 

(c)effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Common Stock; or

 

(d)effect an Acquisition or to liquidate, dissolve or wind up; then, in connection with each such event, the Company shall give Holder:

(1)in the case of the matters referred to in (a) and (b) above, at least seven (7) Business Days prior written notice of the earlier to occur of the effective date thereof or the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Common Stock will be entitled thereto) or for determining rights to vote, if any; and

 

(2)in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such event giving rise to the notice).

 

Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements.

 

SECTION 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.

 

The Holder represents and warrants to the Company as follows:

 

4.1Purchase for Own Account. This Warrant and the Shares to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that it has not been formed for the specific purpose  of acquiring this Warrant or the Shares. 

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4.2Disclosure of Information. Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity  to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

 

4.3Investment Experience. Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

 

4.4Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

 

4.5The Act. Holder understands that this Warrant and the Shares issuable upon exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144 promulgated under the Act.

 

4.6No Voting Rights. Holder, as a Holder of this Warrant, will not have any voting rights until the exercise of this Warrant.

 

SECTION 5. MISCELLANEOUS.

 

5.1Term and Automatic Conversion Upon Expiration.

 

(a)Term. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Pacific time, on the Expiration Date and shall be void thereafter.

 

(b)Automatic Cashless Exercise upon Expiration. In the event that, upon the Expiration Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares (or such other securities) issued upon such exercise to Holder.

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5.2Legends. The Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:

 

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE COMMON STOCK ISSUED BY THE ISSUER TO SILICON VALLEY BANK DATED DECEMBER 4, 2018, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

5.3Compliance with Securities Laws on Transfer. This Warrant and the Shares issuable upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to SVB Financial Group (Silicon Valley Bank’s parent company) or any other affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act. Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act.

 

5.4Transfer Procedure. After receipt by Silicon Valley Bank of the executed Warrant, Silicon Valley Bank will transfer all of this Warrant to its parent company, SVB Financial Group. By its acceptance of this Warrant, SVB Financial Group hereby makes to the Company each of the representations and warranties set forth in Section 4 hereof and agrees to be bound by all of the terms and conditions of this Warrant as if the original Holder hereof. Subject to the provisions of Section 5.3 and upon providing the Company with written notice, SVB Financial Group and any subsequent Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable directly or indirectly, upon conversion of the Shares, if any) to any transferee, provided, however, in connection with any such transfer, SVB Financial Group or any subsequent Holder will give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable); and provided further, that any subsequent transferee other than SVB Financial Group shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant.

 

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5.5Notices. All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions  of  this Section 5.5. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

 

SVB Financial Group

Attn: Treasury Department

3003 Tasman Drive, HC 215

Santa Clara, CA 95054

Telephone: (408) 654-7400

Facsimile: (408) 988-8317

Email address: derivatives@svb.com

 

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

 

SAVARA INC.

6836 Bee Cave Road, Building III, Suite 200

Austin, TX 78746

Attn: David Lowrance, CFO

Email: dave.lowrance@savarapharma.com

 

With a copy (which shall not constitute notice) to:

 

WILSON SONSINI GOODRICH & ROSATI, P.C.

Attn: J. Robert Suffoletta

900 S. Capital of Texas Highway

Las Cimas IV, Fifth Floor

Austin, TX 78746

Telephone: (512) 338-5400

Facsimile: (512) 338-5499

Email: rsuffoletta@wsgr.com

 

5.6Waiver. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

5.7Attorney’s Fees. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

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5.8Counterparts; Facsimile/Electronic Signatures. This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

 

5.9Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.

 

5.10Headings. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

 

5.11Business Days. “Business Day” is any day that is not a Saturday, Sunday or a day on which Silicon Valley Bank is closed.

 

[Remainder of page left blank intentionally]

[Signature page follows]

 

 

 

9

 

 

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Common Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.

 

	
	
“COMPANY”

	
 

	
SAVARA INC.

 

	
 
	
 
	
 

	
By:
	
 
	
/s/ David Lowrance

	
Name:
	
 
	
David Lowrance

	
 
	
 
	
(Print)

	
Title:
	
 
	
CFO

 

	
	
"HOLDER"

	
 

	
SILICON VALLEY BANK

 

	
 
	
 
	
 

	
By:
	
 
	
/s/ Kevin Fleischman

	
Name:
	
 
	
Kevin Fleischman

	
 
	
 
	
(Print)

	
Title:
	
 
	
Director

 

 

 

[Signature Page to Warrant to Purchase Common Stock]

 

 

APPENDIX 1

NOTICE OF EXERCISE

1.The undersigned Holder hereby exercises its right purchase               shares of the Common Stock of SAVARA INC. (the “Company”) in accordance with the attached Warrant To Purchase Common Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:

	
 
	
[       ]
	
check in the amount of $             payable to order of the Company enclosed herewith

	
 
	
[       ]
	
Wire transfer of immediately available funds to the Company’s account 

	
 
	
[       ]
	
Cashless Exercise pursuant to Section 1.2 of the Warrant

	
 
	
[       ]
	
Other [Describe]                                                                                         

 

2.Please issue a certificate or certificates representing the Shares in the name specified below:

 

	
	
 

	
Holder’s Name

	
 

	
 

	
 

	
 

	
(Address)

 

3.By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Common Stock as of the date hereof.

 

	
	
HOLDER:

 

	
 
	
 
	
 

	
By:
	
 
	
 

	
 
	
 
	
 

	
Name:
	
 
	
 

	
 
	
 
	
 

	
Title:
	
 
	
 

	
 
	
 
	
 

	
(Date):svra-ex1031_244.htm

EXHIBIT 10.31

SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT

This SECOND AMENDMENT to Loan and Security Agreement (this “Amendment”) is entered into this 4th day of December, 2018, 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, 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, (ii) extend the Term Loan Maturity Date, and (iii) 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. 

2.1Section 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 Second 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 A 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 Second Amendment Effective Date) outstanding as of the Second Amendment Effective Date. During the Draw Period, subject to the terms and conditions of this Agreement, Co-Borrowers may request and Bank shall make one (1) term loan available to Co-Borrowers in the amount of Twenty Million Dollars ($20,000,000) (the “Term B Loan” and, together with the Term A Loan, the “Term Loans”).

 

 

(b)Repayment.  The Term Loans 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 twenty-five (25) 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.”

2.2Section 2.3 (Payment of Interest on the Credit Extensions).  Section 2.3(a) of the Loan Agreement hereby are amended and restated in their entirety to read as follows:

“(a)Interest Rate.  Subject to Section 2.3(b), the principal amount outstanding under the Term Loans shall accrue interest at a floating per annum rate equal to three percentage points (3.00%) above the Prime Rate, which interest shall be payable monthly.”

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

“(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 Second Amendment Effective Date) made prior to the Second Amendment Effective Date, in an aggregate amount of Nine Hundred Thousand Dollars ($900,000) (the “Second Amendment Final Payment”), of which (x) Six Hundred Thousand Dollars ($600,000) is due and payable on the Second Amendment Effective Date and (y) Three Hundred Thousand Dollars ($300,000) Bank has agreed to waive. For the sake of clarity, the Second Amendment Final Payment shall not reduce the Final Payment otherwise due in connection with Section 2.4(b)(i) hereto.”

2.4Section 6.7 (Financial Trigger).  Section 6.7 of the Loan Agreement hereby is amended and restated in its entirety to read as follows:

“6.7Financial Trigger.  If Co-Borrowers request and Bank makes the Term B Loan and Parent’s Market Capitalization falls below Two Hundred Million Dollars ($200,000,000) for five (5) consecutive Trading Days, measured at the closing time of the NASDAQ stock exchange, then Co-Borrowers shall immediately provide cash collateral in an amount equal to the lesser of (a) the outstanding balance of the Term Loans and (b) Twenty Million Dollars ($20,000,000) by depositing such cash in the Pledged Account (a “Cash Collateralization”).  Such cash collateral shall be released in full on the date on which Parent’s Market Capitalization has exceeded Three Hundred Million Dollars ($300,000,000) for five (5) consecutive Trading Days, measured at the closing time of the NASDAQ stock exchange.  Co-Borrowers hereby authorize and direct Bank to transfer to the Pledged Account an amount equal to the Cash Collateralization Amount, 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 Co-Borrowers 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.”

 

 

2.5Section 7.11 (Assets in Foreign Subsidiaries).  Section 7.11 of the Loan Agreement hereby is amended and restated in its entirety to read as follows:

“7.11 Assets in Foreign Subsidiaries. (i) Transfer to, or permit Savara Denmark to hold or maintain, at any time tangible assets of an aggregate net value in excess of Five Million Dollars ($5,000,000). (ii) Transfer to, or permit Savara Australia to hold or maintain, at any time tangible assets of an aggregate net value in excess of Five Hundred Thousand Dollars ($500,000). (iii) Transfer to, or permit Foreign Subsidiaries that are not Savara Denmark or Savara Australia to hold or maintain, at any time tangible assets of an aggregate net value in excess of Two Hundred Fifty Thousand Dollars ($250,000). (iv) Transfer to, or permit Domestic Subsidiaries, that are not Co-Borrowers, to hold or maintain, at any time tangible assets of an aggregate net value in excess of Two Hundred Fifty Thousand Dollars ($250,000).”

2.6Section 8.2 (Covenant Default).  Section 8.2(a) of the Loan Agreement hereby is amended and restated in its entirety to read as follows

“(a)Co-Borrowers fail or neglect to perform any obligation in Sections 6.2, 6.4, 6.5, 6.6, 6.7, 6.8(b), 6.10, 6.11, 6.12 or violate any covenant in Section 7; or”

2.7Section 10 (Notices).  The contact information for the Co-Borrowers is amended and restated in its entirety to read as follows:

 

	
“If to Co-Borrowers:
	
 
	
SAVARA INC., on behalf of all Co-Borrowers

	
 
	
 
	
6838 Bee Cave Road, Building III, Suite 200

	
 
	
 
	
Austin, TX 78746

	
 
	
 
	
Attn: David Lowrance, CFO

	
 
	
 
	
Email: dave.lowrance@savarapharma.com”

	
 
	
 
	
 

 

2.8Section 13 (Definitions).  The following terms and their respective definitions hereby are added or amended and restated in their entirety, as applicable, to Section 13.1 of the Loan Agreement as follows:

“Cash Collateralization Amount” shall mean the amount of cash required to be deposited in the Pledged Account pursuant to Section 6.7 hereto.

“Draw Period” is the period of time commencing on the Second Amendment Effective Date and ending on September 30, 2019. 

“Interest-Only Period” means the period commencing on the Effective Date and continuing through October 31, 2020. 

“Market Capitalization” means, with respect to a particular Trading Day, a number equal to (i) the closing price of the Parent’s common stock for a particular Trading Day, as reported by Bloomberg, multiplied by (ii) the total number of outstanding shares of common stock of Parent issued and outstanding on such Trading Day

“Pledge Agreement” means that certain Bank Services Cash Pledge Agreement executed by Co-Borrowers in favor of Bank as of the Second Amendment Effective Date.

 

 

“Pledged Account” means Co-Borrowers’ restricted account number XXXXXX8494 held at Bank.

“Prepayment Fee” is, with respect to any 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 Second Amendment Effective Date through and including the first anniversary of the Second Amendment Effective Date, three percent (3.00%) of the principal amount of the Term Loans prepaid; (ii) for a prepayment made after the date which is the first anniversary of the Second Amendment Effective Date through and including the second anniversary of the Effective Date, two percent (2.00%) of the principal amount of the Term Loans prepaid and (iii) for a prepayment made after the date which is the second anniversary of the Second Amendment Effective Date and before the Term Loan Maturity Date, one percent (1.00%) of the principal amount of the Term Loans prepaid. 

“Savara Australia” is Savara Australia Pty Limited, an entity organized under the laws of Australia.

“Second Amendment Effective Date” means December 4, 2018.

“Term Loan Maturity Date” is November 1, 2022. 

“Trading Day” means a day on which the Nasdaq Stock Market is open for trading.

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

2.9Section 13 (Definitions).  Subpart (g) of the defined term “Permitted Investments” of the Loan Agreement is amended and restated in its entirety to read as follows:

“(g) Investments by (i) a Co-Borrower in Savara Denmark not to exceed Thirty-Five Million Dollars ($35,000,000) in the aggregate in any fiscal year and (ii) by Savara Denmark in its own Subsidiaries; provided that all such Investments are related to clinical development and associated G&A expense;”

2.10Section 13 (Definitions).  The following term and its definition set forth in Section 13.1 is hereby deleted from the Agreement in its entirety:

“Draw Period Milestone”

3.Limitation of Amendments.

3.1The 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.

3.2This 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:

4.1Immediately 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;

4.2Co-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;

4.3The 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;

4.4The 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;

4.5The 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;

4.6The 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

 

 

4.7This 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.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, by each party thereto, of (i) this Amendment, (ii) Borrowing Resolutions for each Co-Borrower, (iii) the Warrants, (iv) the Pledge Agreement, and (b) Co-Borrowers’ payment of (i) the Second 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.

[Balance of Page Intentionally Left Blank]

 

 

 

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/ Kevin Fleischman

	
 
	
 
	
 

	
Name:
	
 
	
Kevin Fleischman

	
 
	
 
	
 

	
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 Second Amendment to Loan and Security Agreement]

 

BORROWING RESOLUTIONS

		
	

	
 

 

CORPORATE BORROWING certificatE

 

			
	
Co-Borrower:  SAVARA INC.
	
Date:
	
December 4, 2018

 

Bank:Silicon Valley Bank

 

I hereby certify as follows, as of the date set forth above:

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

 

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

 

3.Attached hereto are true, correct and complete copies of Co-Borrower’s Certificate of Incorporation (including amendments), as in effect on the date hereof and as certified by the Secretary of State of the State of Delaware.  Such Certificate of Incorporation has 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 Co-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 Co-Borrower.

 

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

 

	
Name
	
 
	
Title
	
 
	
Signature
	
 
	
Authorized

to Add or

Remove

Signatories

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Rob Neville
	
 
	
CEO
	
 
	
/s/ Rob Neville
	
 
	
☑

	
David L. Lowrance
	
 
	
CFO
	
 
	
/s/ David L. Lowrance
	
 
	
☑

	
 
	
 
	
 
	
 
	
 
	
 
	
☐

	
 
	
 
	
 
	
 
	
 
	
 
	
☐

 

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 Co-Borrower.

 

 

 

Resolved Further, that such individuals may, on behalf of Co-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 Co-Borrower’s assets.

Negotiate Items.  Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Co-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 Co-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 Co-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 Co-Borrower's officers with their titles and signatures shown next to their names.

 

	
 
	
 
	
 

	
By:
	
 
	
/s/ David L. Lowrance

	
Name:
	
 
	
David L. Lowrance

	
Title:
	
 
	
CFO

 

 

*** 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 Co-Borrower.

 

 

I, the ____CEO__________________ of Co-Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

 

	
 
	
 
	
 

	
By:
	
 
	
/s/ Rob Neville

	
Name:
	
 
	
Rob Neville

	
Title:
	
 
	
CEO

 

 

 

 

 

 

BORROWING RESOLUTIONS

		
	

	
 

 

CORPORATE BORROWING certificatE

 

			
	
Co-Borrower: ARAVAS INC.
	
Date:
	
December 4, 2018

 

Bank:Silicon Valley Bank

 

I hereby certify as follows, as of the date set forth above:

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

 

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

 

3.Attached hereto are true, correct and complete copies of Co-Borrower’s Certificate of Incorporation (including amendments), as in effect on the date hereof and as certified by the Secretary of State of the State of Delaware.  Such Certificate of Incorporation has 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 Co-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 Co-Borrower.

 

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

 

	
Name
	
 
	
Title
	
 
	
Signature
	
 
	
Authorized

to Add or

Remove

Signatories

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Rob Neville
	
 
	
CEO
	
 
	
/s/ Rob Neville
	
 
	
☑

	
David L. Lowrance
	
 
	
CFO
	
 
	
/s/ David L. Lowrance
	
 
	
☑

	
 
	
 
	
 
	
 
	
 
	
 
	
☐

	
 
	
 
	
 
	
 
	
 
	
 
	
☐

 

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 Co-Borrower.

 

 

 

Resolved Further, that such individuals may, on behalf of Co-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 Co-Borrower’s assets.

Negotiate Items.  Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Co-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 Co-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 Co-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 Co-Borrower's officers with their titles and signatures shown next to their names.

 

	
 
	
 
	
 

	
By:
	
 
	
/s/ David L. Lowrance

	
Name:
	
 
	
David L. Lowrance

	
Title:
	
 
	
CFO

 

 

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

 

 

I, the _____CEO_________________ of Co-Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

 

	
 
	
 
	
 

	
By:
	
 
	
/s/ Rob Neville

	
Name:
	
 
	
Rob Neville

	
Title:
	
 
	
CEO

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