Exhibit 10.1
KaloBios Pharmaceuticals, Inc.
1000 Marina Blvd., Suite 250
Brisbane, CA 94005

July 8, 2017

Blackhorse Capital LP
Blackhorse Capital Master Fund Ltd.
Blackhorse Capital Management LLC
c/o Opus Equum, Inc.
P.O. Box 788
Dolores, Colorado 81323

Cheval Holdings, Ltd.
P.O. Box 309G
Ugland House,
Georgetown, Grand Cayman Islands KY1-1104

Nomis Bay LTD
Penboss Building
50 Parliament Street
 Hamilton, Bermuda HM12

Re:
Amendment to Credit and Security Agreement

Ladies and Gentlemen:

Reference is made to the Credit and Security Agreement, dated as of December 21,
2016, as amended by that certain letter amendment dated March 21, 2017 (the
“First Amendment” and as so amended and as further amended hereby, collectively,
the “Credit Agreement”), by and between KaloBios Pharmaceuticals, Inc.  (the
“Borrower”) and Black Horse Capital LP, Black Horse Capital Master Fund  Ltd.,
Cheval Holdings, Ltd., and Nomis Bay LTD (each a “Lender” and  collectively, the
“Lenders”), pursuant to which the Lenders loaned to the Borrower (i) the
original principal amount of $3,315,217 and (ii) an additional amount of
$5,978,260 pursuant to the First Amendment.  Capitalized terms used but not
defined herein have the meanings given to them in the Credit Agreement.

Pursuant to our prior discussions, the Borrower desires to borrow additional
amounts from time to time (the “Grid Advances”) of up to an aggregate amount of
$5,434,783.00 (the “Maximum Amount”) and the Lenders desire to lend such Grid
Advances to the Borrower on the terms and conditions set forth in the Credit
Agreement and this letter agreement, which terms shall include an upfront fee
equal to eight percent (8%) of each Grid Advance (the “Upfront Fee”) due and
payable at the time of each such advance and a commitment fee of five percent
(5%) of the aggregate amount of Grid Advances made, after deduction of the
Upfront Fee, due and payable on the Maturity Date.
 

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Further Lenders and Borrower hereby agree as follows:

1.          The Borrower may request Grid Advances on a bi-monthly basis from
the Lenders up to the Maximum Amount.

2.          No Lender shall be required to fund any Grid Advance in the event
that (a) the representations and warranties set forth in the Credit Agreement
are not true in all material respects, or (b) any Default or Event of Default
has occurred or is continuing, (c) such request, if funded in its entirety,
would result in the aggregate principal amount of Grid Advances then outstanding
to exceed the Maximum Amount, or (d) if Lender has not approved the bi-monthly
budget proposed by Borrower.

3.          Each Lender’s commitment to fund Grid Advances from time to time
shall be in the amounts and proportions set forth on Exhibit I, attached
hereto.  Each Lender’s proportion of the committed Maximum Amount shall be
evidenced by a promissory note in substantially the form attached hereto as
Exhibit II (the “Promissory Note”).

4.          The outstanding principal balance of the Grid Advances shall bear
interest at the Fixed Rate specified in the Credit Agreement and shall be
subject to the Default Interest Rate upon the occurrence of an Event of Default
as defined in the Credit Agreement.

5.          Except as specifically provided in this amendment and as the context
of this amendment otherwise may require to give effect to the intent and
purposes of this amendment, the Credit Agreement shall remain in full force and
effect without any other amendments or modifications.

6.          This amendment may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement. In the
event that any signature is delivered by facsimile transmission or by e-mail
delivery of a “.pdf” format data file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

7.          This amendment shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of Delaware, without regard to
the principles of conflicts of law thereof.

[Signature Page Follows]
 

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Very truly yours,
           
KALOBIOS PHARMACEUTICALS, INC.
                   
By:
/s/ Cameron Durrant, M.D.
   
Name:
Cameron Durrant, M.D.
   
Title:
Chief Executive Officer
 

 

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ACKNOWLEDGED AND AGREED:
       
BLACK HORSE CAPITAL LP
             
By:
/s/ Dale Chappell
 
Name:
Dale Chappell
 
Title:
Manager of the GP
             
BLACK HORSE CAPITAL MASTER FUND LTD.
             
By:
/s/ Dale Chappell
 
Name:
Dale Chappell
 
Title:
Director
             
CHEVAL HOLDINGS, LTD.
             
By:
/s/ Dale Chappell
 
Name:
Dale Chappell
 
Title:
Director
       
NOMIS BAY LTD
             
By:
/s/ Peter Poole
 
Name:
Peter Poole
 
Title:
Director
 

 

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Exhibit I

Lender Amounts

Lender
Maximum Amount
Grid Advance Percentages
Nomis Bay LTD
$2,717,391.50
50.00%
Black Horse Capital
Master Fund Ltd.
$1,086,956.60
20.00%
Cheval Holdings, Ltd.
$1,164,674.00
21.43%
Black Horse Capital LP
$465,760.90
8.57%
Totals
$5,434,783.00
100%

 

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Exhibit II

Form of Promissory Note

GRID ADVANCE NOTE

 $____________

 ____________, 2017

FOR VALUE RECEIVED, KALOBIOS PHARMACEUTICALS, INC., a Delaware corporation 
(“Borrower”), hereby unconditionally promises to pay to the order of 
_____________, a _____________ (together with its successors and assigns, 
“Lender”) at the office of Lender at ____________________, or at such other
place as Lender may from time to time designate in writing to Borrower, in 
lawful money of the United States of America and in immediately available funds,
the principal sum of up to ________________ and No/100 Dollars ($____________)
or, if less, the aggregate unpaid principal amount of the portion of the Grid
Advances made by Lender to Borrower under the terms of that certain Credit and
Security Agreement, dated as of December 21, 2016 (as amended, restated,
supplemented or  otherwise modified from time to time, the “Credit Agreement”),
by and among  Borrower, Lender, various other lenders as are, or may from time
to time become,  parties thereto as “Lenders” (including without limitation,
Lender) and Black  Horse Capital Master Fund Ltd., individually as a Lender, and
as administrative  agent (in such capacity and together with its successors and
assigns, “Agent”).

All capitalized terms used herein (which are not otherwise specifically defined
herein) shall be used in this Grid Advance Note (this “Note”) as defined in the
Credit Agreement.

           1.         The outstanding principal balance of the Grid Advances
evidenced by this Note shall be due and payable or otherwise satisfied in full
on the Termination Date or the Maturity Date in accordance with the terms of the
Credit Agreement.
 
          2.          This Note is issued in accordance with the provisions of
the Credit Agreement and is entitled to the benefits and security of the Credit
Agreement and the other Financing Documents, and reference is hereby made to the
Credit Agreement for a statement of the terms and conditions under which the
Grid Advances evidenced hereby were made and are required to be repaid.  In the
event of any conflict between the terms of this Note and the terms of the Credit
Agreement, the terms of the Credit Agreement shall prevail.

          3.          Borrower promises to pay interest from the date of each
Grid Advance made pursuant to this Note until payment in full of the unpaid
principal balance of each such Grid Advance evidenced hereby at the per annum
rate or rates set forth in the Credit Agreement.  Interest on the unpaid
principal balance of each Grid Advance evidenced hereby shall be payable on the
dates and in the manner set forth in the Credit Agreement.  Interest as
aforesaid shall be calculated in accordance with the terms of the Credit
Agreement.
 

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          4.          Upon and after the occurrence and during the continuation
of an Event of Default, and as provided in the Credit Agreement, all outstanding
Grid Advances evidenced by this Note may be declared, and shall thereupon
immediately become, due and payable without presentment, demand, protest,
notice, or legal process of any kind whatsoever.

          5.          Payments received in respect of the Grid Advances shall be
applied as provided in the Credit Agreement.

          6.          Presentment, demand, protest and notice of presentment,
demand, nonpayment and protest are each hereby waived by Borrower as provided in
the Credit Agreement.

          7.          No waiver by Agent or any Lender of any one or more
defaults by the undersigned in the performance of any of its obligations under
this Note shall operate or be construed as a waiver of any future default or
defaults, whether of a like or different nature, or as a waiver of any
obligation of Borrower to any other Lender under the Credit Agreement.

          8.          No provision of this Note may be amended, waived or
otherwise modified unless such amendment, waiver or other modification is in
writing and is signed or otherwise approved by Borrower, the Required Lenders
and any other Lender under the Credit Agreement to the extent required under
Section 10.15 of the Credit Agreement.  No failure or delay on the part of any
Lender in exercising any right, power, or remedy under this Note (including,
without limitation, the right to declare this Note due and payable) shall
operate as a waiver of such right, power, or remedy.

          9.          THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.

          10.          Whenever possible each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but in case any provision of or obligation under this Note shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

          11.          Whenever in this Note reference is made to Agent, Lenders
or Borrower, such reference shall be deemed to include, as applicable, a
reference to their respective successors and assigns.  The provisions of this
Note shall be binding upon Borrower and its successors and assigns except that
Borrower may not assign any of its rights or delegate any of its obligations
under this Note without the prior written consent of Lenders.  This Note shall
inure to the benefit of Lender and its successors and assigns.
 

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          12.          In addition to and without limitation of any of the
foregoing, this Note shall be deemed to be a Financing Document and shall
otherwise be subject to all of the general terms and conditions contained in
Article 11 of the Credit Agreement, mutatis mutandis.

 [SIGNATURES APPEAR ON FOLLOWING PAGE(S)]
 

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IN WITNESS WHEREOF, intending to be legally bound, and intending that this Note
constitutes an agreement executed under seal, the undersigned has executed this
Note under seal as of the day and year first hereinabove set forth.

BORROWER:
KALOBIOS PHARMACEUTICALS, INC.

By:
   
Name: 
Dr. Cameron Durrant  
Title: 
Chairman and Chief Executive Officer  

Address for Borrower:
1000 Marina Blvd #250

Brisbane, CA 94005-1878
Attn:  Dr. Cameron Durrant
Facsimile:
E-Mail:  camerondurrant@yahoo.com
 
 
 

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