Exhibit 10.5

 

debtor in possession TERM LOAN NOTE

 

$642,900.00 April 1, 2016

 

FOR VALUE RECEIVED, KALOBIOS PHARMACEUTICALS, INC., a Delaware corporation
(“Borrower”), hereby unconditionally promises to pay to the order of CHEVAL
HOLDINGS, LTD., an exempted company organized in the Cayman Islands (together
with its successors and assigns, “Lender”) at the office of Lender at c/o Opus
Equum, Inc., P.O. Box 788, Dolores, Colorado 81323, 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 Six Hundred Forty-Two Thousand Nine Hundred and No/100 Dollars
($642,900.00) or, if less, the aggregate unpaid principal amount of the portion
of the Term Loan made by Lender to Borrower under the terms of that certain
Debtor In Possession Credit and Security Agreement dated as of April 1, 2016 (as
amended, restated, supplemented or otherwise modified from time to time, the
“DIP 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 Debtor In Possession Term Loan Note (this “DIP Note”) as defined in the DIP
Credit Agreement.

 

1.          The outstanding principal balance of the Term Loan evidenced by this
DIP 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 DIP
Credit Agreement.

 

2.          This DIP Note is issued in accordance with the provisions of the DIP
Credit Agreement and is entitled to the benefits and security of the DIP Credit
Agreement, the other Financing Documents, and the Financing Order and reference
is hereby made to the DIP Credit Agreement for a statement of the terms and
conditions under which the Term Loan evidenced hereby were made and are required
to be repaid. In the event of any conflict between the terms of this DIP Note
and the terms of the DIP Credit Agreement, the terms of the DIP Credit Agreement
shall prevail.

 

3.          Borrower promises to pay interest from the date hereof until payment
in full hereof on the unpaid principal balance of the Term Loan evidenced hereby
at the per annum rate or rates set forth in the DIP Credit Agreement. Interest
on the unpaid principal balance of the Term Loan evidenced hereby shall be
payable on the dates and in the manner set forth in the DIP Credit Agreement.
Interest as aforesaid shall be calculated in accordance with the terms of the
DIP Credit Agreement.

 

4.          Upon and after the occurrence and during the continuation of an
Event of Default, and as provided in the DIP Credit Agreement, the Term Loan
evidenced by this DIP 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 Term Loan shall be applied as
provided in the DIP Credit Agreement.

 

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

 

8.          No provision of this DIP 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 DIP Credit Agreement to the extent required under Section 10.15
of the DIP Credit Agreement. No failure or delay on the part of any Lender in
exercising any right, power, or remedy under this DIP Note (including, without
limitation, the right to declare this DIP Note due and payable) shall operate as
a waiver of such right, power, or remedy.

 

9.          THIS DIP 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 DIP 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 DIP 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 DIP 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 DIP 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 DIP Note without the prior written consent of Lenders. This DIP Note
shall inure to the benefit of Lender and its successors and assigns.

 

12.         In addition to and without limitation of any of the foregoing, this
DIP 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 DIP Credit Agreement, mutatis mutandis.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

 2 

 

  

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

 

BORROWER: KALOBIOS PHARMACEUTICALS, INC.         By: /s/ Cameron Durrant   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

 

Signature Page to DIP Term Loan Note