Document:

Exhibit

Exhibit 10.1

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of March 16, 2020 (the “Amendment Effective Date”), is made among Kindred Biosciences, Inc., a Delaware corporation (“Parent”), KindredBio Equine, Inc., a Delaware corporation (“Equine”) and Centaur Biopharmaceutical Services, Inc., a Delaware corporation (“Centaur”), each with offices located at 1555 Bayshore Highway, Suite 200, Burlingame, CA 94010  (Parent, Equine and Centaur, individually and collectively, jointly and severally, “Borrower”), Solar Capital Ltd., a Maryland corporation (“Solar”), in its capacity as collateral agent (together with its successors and assigns in such capacity, “Collateral Agent”) and the Lenders listed on the signature pages hereto (as defined below) or otherwise a party hereto from time to time including Solar in its capacity as a Lender (each a “Lender” and collectively, the “Lenders”).
Borrower, the Lenders and Collateral Agent are parties to a Loan and Security Agreement dated as of September 30, 2019 (as amended, restated, supplemented or modified from time to time, the “Loan and Security Agreement”).  
Borrower has entered into that certain Asset Purchase Agreement, dated as March 16, 2020, by and between Dechra Limited, a private limited company organized under the laws of England and Wales, as purchaser and Parent, as seller, whereby: (a) Parent shall Transfer certain assets as set forth therein and (b) Parent shall receive certain consideration as set forth therein.
Borrower has requested that the Lenders agree to certain amendments to the Loan and Security Agreement.  The Lenders have agreed to such request, subject to the terms and conditions hereof.
Accordingly, the parties hereto agree as follows:
SECTION 1Definitions; Interpretation.
(a)    Terms Defined in Loan and Security Agreement.  All capitalized terms used in this Amendment (including in the recitals hereof) and not otherwise defined herein shall have the meanings assigned to them in the Loan and Security Agreement.
(b)    Interpretation.  The rules of interpretation set forth in Section 1.1 of the Loan and Security Agreement shall be applicable to this Amendment and are incorporated herein by this reference.
SECTION 2    Amendments to the Loan and Security Agreement.
(a)    The Loan and Security Agreement shall be amended as follows effective as of the Amendment Effective Date:
(i)    New Definitions.  The following definitions are added to Section 1.3 in their proper alphabetical order:
“Dechra Asset Purchase Agreement” means that certain Asset Purchase Agreement dated as March 16, 2020, by and between Dechra Limited, a private limited company organized under the laws of England and Wales (“Dechra”), as purchaser and Parent, as seller.
“Dechra Transaction” means the acquisition by Dechra of the Mirataz Assets pursuant to the Dechra Asset Purchase Agreement in exchange for certain consideration not less than the Purchase Price and Royalty Payments (each as defined in the Dechra Purchase Agreement).
“First Amendment” means that certain First Amendment to Loan and Security Agreement, dated as of the First Amendment Effective Date, by and among Borrower, Collateral Agent and Lender.
“First Amendment Effective Date” means March 16, 2020.
“Mirataz Assets” means Mirataz® (mirtazapine transdermal ointment) or AccusorbTM including global rights, certain related intellectual property, inventory, licenses and commercial contracts as set forth in the Dechra Asset Purchase Agreement (as in effect on the First Amendment Effective Date).

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Exhibit 10.1

(ii)    Amended and Restated Definitions.  The following definitions are hereby amended and restated as follows:
“Minimum Cash Amount” is (a) at any time prior to the initial Funding Date of any Term B Loan, Ten Million Dollars ($10,000,000), (b) at all times on and after the initial Funding Date of any Term B Loan and prior to the initial Funding Date of any Term C Loan, Fifteen Million Dollars ($15,000,000) and (c) at all times on and after the initial Funding Date of any Term C Loan, Twenty Million Dollars ($20,000,000).
“Net Product Revenue” means, with respect to Borrower and its Subsidiaries that are Guarantors or co-Borrowers, revenue (determined under GAAP), actually received by Borrower and its Subsidiaries that are Guarantors or co-Borrowers (i.e., net of any deductions, commissions or other fees) with respect to products of Borrower and its Subsidiaries that are Guarantors or co-Borrowers that are actually sold to non-Affiliate third parties (and excluding, for the avoidance of doubt, any payments resulting from collaborations or similar transactions between third parties and Borrower or its Subsidiaries).  Notwithstanding anything to the contrary, Net Product Revenue shall not include any revenue recognized in connection with the Dechra Asset Purchase Agreement (including, without limitation, any Royalty Payments (as defined in the Dechra Asset Purchase Agreement).
(iii)    Section 7.1.  Section 7.1 is hereby amended and restated as follows:
7.1    Dispositions
Convey, sell, lease, transfer, assign, dispose of, license (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 or obsolete Equipment; (c) in connection with Permitted Liens, Permitted Investments and Permitted Licenses; (d) cash or Cash Equivalents pursuant to transactions not prohibited by this Agreement; (e) of Parent’s capital stock to employees, directors and consultants and other issuances of Parent’s capital stock (including, without limitation, in private placements to investors and in public offerings and pursuant to Parent’s stockholder rights agreement and including warrants to purchase such capital stock) that are not prohibited pursuant to clause (c)(ii) of Section 7.2 or any other provision of any Loan Document or (f) of the Mirataz Assets pursuant to the Dechra Asset Purchase Agreement.
(iv)    Section 7.13.  Section 7.13 is hereby amended and restated as follows:
7.13 Financial Covenants
(a) Minimum Liquidity.  Permit, at any time, Qualified Cash to be less than the sum of the applicable Minimum Cash Amount plus the Qualified Cash A/P Amount.
(b) Minimum Cash Raise Requirement.  Fail to receive unrestricted (including not subject to any clawback, redemption, escrow or similar contractual restriction) net cash proceeds of at least Ten Million Dollars ($10,000,000) after the First Amendment Effective Date and prior to December 31, 2021, in each case (i) from the issuance and sale by Borrower of its preferred or common stock or convertible Subordinated Debt, to investors and on terms and conditions satisfactory to Collateral Agent and (ii) excluding, for the avoidance of doubt any proceeds received pursuant to the Dechra Asset Purchase Agreement.
(v)    Section 7.14.  Section 7.14 is hereby amended and restated as follows:
7.14    Material Agreements
Without the consent of Collateral Agent, (a) enter into a Material Agreement (b) materially amend a Material Agreement; provided, however, that Collateral Agent’s consent shall not be required for the entry into, or the amendment of, any agreement that (i) is a 

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Exhibit 10.1

Permitted License, (ii) evidences Permitted Indebtedness or a Permitted Investment, (iii) is a purchase order, sales order or pharmaceutical manufacturing or supply agreement entered into in the ordinary course of Borrower’s business, (iv) is an employment agreement, consulting agreement or director service agreement, (v) is an employee benefit plan (as defined in Securities and Exchange Commission Rule 405), including, without limitation an equity incentive plan and an option, restricted stock or other equity grant agreement, (vi) relates to Borrower’s stockholder rights agreement, (vii) is an underwriting agreement, placement agency agreement, securities purchase agreement or similar agreement relating to an issuance of Parent’s capital stock (including, if applicable, warrants to purchase such capital stock) in a transaction that is not prohibited by Section 7.2(c)(ii), or (vii) evidences a transaction that is permitted pursuant to Section 7.3 or (c) amend the Dechra Asset Purchase Agreement.
(vi)    Compliance Certificate.  Exhibit E of the Loan and Security Agreement, the Compliance Certificate, is hereby amended and restated in its entirety with Annex A hereto.
(b)    References Within Loan and Security Agreement.  Each reference in the Loan and Security Agreement to “this Agreement” and the words “hereof,” “herein,” “hereunder,” or words of like import, shall mean and be a reference to the Loan and Security Agreement as amended by this Amendment.
SECTION 3    Conditions of Effectiveness.  The effectiveness of Section 2 of this Amendment shall be subject to the satisfaction of each of the following conditions precedent:
(a)    Fees and Expenses.  Borrower shall have paid (i) all invoiced costs and expenses then due in accordance with Section 5(e), and (ii) all other fees, costs and expenses, if any, due and payable as of the Amendment Effective Date under the Loan and Security Agreement.
(b)    This Amendment.  Collateral Agent shall have received this Amendment, executed by Collateral Agent, the Lenders and Borrower.
(c)    Dechra Purchase Agreement.  Collateral Agent shall have received a fully-executed copy of the Dechra Purchase Agreement, in form and substance satisfactory to Collateral Agent.
(d)    Representations and Warranties; No Default.  On the Amendment Effective Date, after giving effect to the amendment of the Loan and Security Agreement contemplated hereby:
(i)    The representations and warranties contained in Section 4 shall be true and correct on and as of the Amendment Effective Date as though made on and as of such date; and
(ii)    There exist no Events of Default or events that with the passage of time would result in an Event of Default.
SECTION 4    Representations and Warranties.  To induce the Lenders to enter into this Amendment, Borrower hereby confirms, as of the date hereof, (a) that the representations and warranties made by it in Section 5 of the Loan and Security Agreement and in the other Loan Documents are true and correct in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof, provided, further, that to the extent such representations and warranties by their terms expressly relate only to a prior date such representations and warranties shall be true and correct in all material respects as of such prior date; (b) that there has not been and there does not exist a Material Adverse Change; (c) that the information included in the Perfection Certificate delivered to Collateral Agent on the Effective Date remains true and correct; (d) Lender has and shall continue to have valid, enforceable and perfected first-priority liens, subject only to Permitted Liens, on and security interests in the Collateral and all other collateral heretofore granted by Borrower to Lender, pursuant to the Loan Documents or otherwise granted to or held by Lender; (e) the agreements and obligations of Borrower contained in the Loan Documents and in this Amendment constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors’ rights or by the application of general principles of equity; and (f) the execution, delivery and performance of this Amendment by Borrower will not violate any law, rule, regulation, order, contractual obligation or organizational document of Borrower and will not result in, or require, the creation or imposition of any lien, claim or encumbrance of any kind on any of 

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Exhibit 10.1

its properties or revenues.  For the purposes of this Section 4, each reference in Section 5 of the Loan and Security Agreement to “this Agreement,” and the words “hereof,” “herein,” “hereunder,” or words of like import in such Section, shall mean and be a reference to the Loan and Security Agreement as amended by this Amendment.
SECTION 5    Miscellaneous.
(a)    Loan Documents Otherwise Not Affected; Reaffirmation; No Novation.  
(i)    Except as expressly amended pursuant hereto or referenced herein, the Loan and Security Agreement and the other Loan Documents shall remain unchanged and in full force and effect and are hereby ratified and confirmed in all respects.  The Lenders’ and Collateral Agent’s execution and delivery of, or acceptance of, this Amendment shall not be deemed to create a course of dealing or otherwise create any express or implied duty by any of them to provide any other or further amendments, consents or waivers in the future.  
(ii)    Borrower hereby expressly (1) reaffirms, ratifies and confirms its Obligations under the Loan Agreement and the other Loan Documents, (2) reaffirms, ratifies and confirms the grant of security under Section [4.1] of the Loan and Security Agreement, (3) reaffirms that such grant of security in the Collateral secures all Obligations under the Loan and Security Agreement[, including without limitation any Term Loans funded on or after the Amendment Effective Date, as of the date hereof], and with effect from (and including) the Amendment Effective Date, such grant of security in the Collateral: (x) remains in full force and effect notwithstanding the amendments expressly referenced herein; and (y) secures all Obligations under the Loan and Security Agreement, as amended by this Amendment, and the other Loan Documents, (4) agrees that this Amendment shall be a “Loan Document” under the Loan Agreement and (5) agrees that the Loan Agreement and each other Loan Document shall remain in full force and effect following any action contemplated in connection herewith.
(iii)    This Amendment is not a novation and the terms and conditions of this Amendment shall be in addition to and supplemental to all terms and conditions set forth in the Loan Documents. Nothing in this Amendment is intended, or shall be construed, to constitute an accord and satisfaction of Borrower’s Obligations under or in connection with the Loan and Security Agreement and any other Loan Document or to modify, affect or impair the perfection or continuity of Agent’s security interest in, (on behalf of itself and the Lenders) security titles to or other liens on any Collateral for the Obligations.
(b)    Conditions.  For purposes of determining compliance with the conditions specified in Section 3, each Lender that has signed this Amendment shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless Collateral Agent shall have received notice from such Lender prior to the Amendment Effective Date specifying its objection thereto.
(c)    Release.  In consideration of the agreements of Collateral Agent and each Lender contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, on behalf of itself and its successors, assigns, and other legal representatives, hereby fully, absolutely, unconditionally and irrevocably releases, remises and forever discharges Collateral Agent and each Lender, and its successors and assigns, and its present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent, Lenders and all such other persons being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which Borrower, or any of its successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the day and date of this Amendment, including, without limitation, for or on account of, or in relation to, or in any way in connection with the Loan Agreement, or any of the other Loan Documents or transactions thereunder or related thereto.  Borrower understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.  Borrower agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.  
(d)    No Reliance.  Borrower hereby acknowledges and confirms to Collateral Agent and the Lenders that Borrower is executing this Amendment on the basis of its own investigation and for its own reasons without reliance upon any agreement, representation, understanding or communication by or on behalf of any other Person.

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Exhibit 10.1

(e)    Costs and Expenses.  Borrower agrees to pay to Collateral Agent (i) on or before March 18, 2020 an amendment fee of One Hundred Thousand Dollars ($100,000), which shall be deemed fully earned and non-refundable on the Amendment Effective Date and (ii) within ten (10) days of its receipt of an invoice (or on the Amendment Effective Date to the extent invoiced on or prior to the Amendment Effective Date), the out-of-pocket costs and expenses of Collateral Agent and the Lenders party hereto, and the fees and disbursements of counsel to Collateral Agent and the Lenders party hereto (including allocated costs of internal counsel), in connection with the negotiation, preparation, execution and delivery of this Amendment and any other documents to be delivered in connection herewith on the Amendment Effective Date or after such date.
(f)    Binding Effect.  This Amendment binds and is for the benefit of the successors and permitted assigns of each party.  
(g)    Governing Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER THAN THE LAWS OF THE STATE OF [NEW YORK]), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL.
(h)    Complete Agreement; Amendments.  This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements with respect to such subject matter.  All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents. 
(i)    Severability of Provisions.  Each provision of this Amendment is severable from every other provision in determining the enforceability of any provision.
(j)    Counterparts.  This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Amendment.  Delivery of an executed counterpart of a signature page of this Amendment by facsimile, portable document format (.pdf) or other electronic transmission will be as effective as delivery of a manually executed counterpart hereof.
(k)    Loan Documents. This Amendment and the documents related thereto shall constitute Loan Documents.
(l)    Release of Collateral Agent’s Lien to the Mirataz Assets.  Following effectiveness of this Amendment and concurrently with the consummation of the Dechra Transaction, Collateral Agent (i) is hereby authorized by the Lenders to release the Collateral Agent’s Liens in and to the Mirataz Assets and to take such actions and execute such documents and instruments as are reasonably requested by Borrower (at Borrower’s sole expense) to effect such release, and (b) hereby releases all of Collateral Agent’s Liens in and to the Mirataz Assets, and shall take such actions and execute such documents and instruments as reasonably requested by Borrower (at Borrower’s sole expense), in connection with such release including filing an amendment to Collateral Agent’s UCC filings.  This release is limited solely to the Mirataz Assets and all other liens, security interests, pledges, charges, encumbrances, mortgages and hypothecations by Borrower (other than with respect to the Mirataz Assets) in favor of Lender remain unmodified by this release and do and shall continue in full force and effect. Without limitation of the foregoing, the release of the Mirataz Assets as "Collateral" pursuant hereto is limited to the Mirataz Assets and does not encompass any other Collateral under the Loan and Security Agreement or any of the other Loan Documents.
[Balance of Page Intentionally Left Blank; Signature Pages Follow]

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Exhibit 10.1

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment, as of the date first above written.

	
	
	BORROWER:

	 

	KINDRED BIOSCIENCES, INC.

	 

	By: /s/ Richard Chin

	Name: Richard Chin

	Title: Chief Executive Officer

	

	KINDREDBIO EQUINE, INC.

	 

	By: /s/ Richard Chin

	Name: Richard Chin

	Title: Chief Executive Officer

	 

	CENTAUR BIOPHARMACEUTICAL SERVICES, INC.

	 

	By: /s/ Richard Chin

	Name: Richard Chin

	Title: Chief Executive Officer

 

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Exhibit 10.1

COLLATERAL AGENT AND LENDER:

SOLAR CAPITAL LTD.,
as Collateral Agent and a Lender

By: /s/ Anthony Storino
Name: Anthony Storino
Title: Authorized Signatory

7

Exhibit 10.1

	
			
	LENDERS:
	 
	 

	 
	 
	 

	SUNS SPV LLC

	 
	 
	 

	By: /s/ Anthony Storino
	 
	 

	Name: Anthony Storino
	 
	 

	Title: Authorized Signatory
	 
	 

	 
	 
	 

	SCP PRIVATE CREDIT INCOME FUND SPV LLC
	 
	 

	 
	 
	 

	By: /s/ Anthony Storino
	 
	 

	Name: Anthony Storino
	 
	 

	Title: Authorized Signatory
	 
	 

	 
	 
	 

	SCP PRIVATE CREDIT INCOME BDC SPV LLC
	 
	 

	 
	 
	 

	By: /s/ Anthony Storino
	 
	 

	Name: Anthony Storino
	 
	 

	Title: Authorized Signatory
	 
	 

	 
	 
	 

	SCP PRIVATE CORPORATE LENDING FUND L.P.
	 
	 

	 
	 
	 

	By: /s/ Anthony Storino
	 
	 

	Name: Anthony Storino
	 
	 

	Title: Authorized Signatory
	 
	 

	 
	 
	 

	SCP SF DEBT FUND L.P.
	 
	 

	 
	 
	 

	By: /s/ Anthony Storino
	 
	 

	Name: Anthony Storino
	 
	 

	Title: Authorized Signatory
	 
	 

8

Exhibit 10.1

ANNEX A
EXHIBIT E
Compliance Certificate
	
		
	TO:
	SOLAR CAPITAL LTD., as Collateral Agent and Lender

	FROM:
	Kindred Biosciences, Inc., on behalf of itself and each other Borrower

The undersigned authorized officer (“Officer”) of Kindred Biosciences, Inc. (“Parent”), hereby certifies that in accordance with the terms and conditions of the Loan and Security Agreement dated as of September 30, 2019, by and among Parent, each other Borrower party thereto, Collateral Agent, and the Lenders from time to time party thereto (the “Loan Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings given them in the Loan Agreement),
(a)    Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below;
(b)    There are no defaults or Events of Default, except as noted below;
(c)    Except as noted below, all representations and warranties of Borrower stated in the Loan Documents are true and correct in all material respects on this date and for the period described in (a), above; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date.
(d)    Borrower, and each of Borrower’s Subsidiaries, has timely filed all required tax returns and reports; Borrower, and each of Borrower’s Subsidiaries, has timely paid all foreign, federal, state, and local Taxes, assessments, deposits and contributions owed by Borrower, or Subsidiary, except as otherwise permitted pursuant to the terms of Section 5.8 of the Loan Agreement;
(e)    No Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Collateral Agent and the Lenders.
Attached are the required documents, if any, supporting our certification(s).  The Officer, on behalf of Borrower, further certifies that the attached financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes and except, in the case of unaudited financial statements, for the absence of footnotes and subject to year‐end audit adjustments as to the interim financial statements.  
Please indicate compliance status since the last Compliance Certificate by circling Yes, No, or N/A under “Complies” column.

9

Exhibit 10.1

	
							
	 
	Reporting Covenant
	Requirement
	Actual
	Complies

	1)
	Monthly financial statements
	Monthly within 30 days
	 
	Yes
	No
	N/A

	2)
	Annual (CPA Audited) statements
	Within 90 days after FYE
	 
	Yes
	No
	N/A

	3)
	Annual Financial Projections/Budget (prepared on a monthly basis)
	Annually (within earlier 10 days of approval or February 28), and when revised
	 
	Yes
	No
	N/A

	4)
	A/R & A/P agings
	If applicable
	 
	Yes
	No
	N/A

	5)
	8‐K, 10‐K and 10‐Q Filings
	Within 5 days of filing
	 
	Yes
	No
	N/A

	6)
	Compliance Certificate
	Monthly within 30 days
	 
	Yes
	No
	N/A

	7)
	IP Report
	When required
	 
	Yes
	No
	N/A

	8)
	Total amount of Borrower’s cash and cash equivalents at the last day of the measurement period
	 
	$________
	Yes
	No
	N/A

	9)
	Total amount of Borrower’s Subsidiaries’ cash and cash equivalents at the last day of the measurement period
	 
	$________
	Yes
	No
	N/A

Deposit and Securities Accounts
(Please list all accounts; attach separate sheet if additional space needed)

	
							
	 
	Institution Name
	Account Number
	New Account?
	Account Control Agreement in place?

	1)
	 
	 
	Yes
	No
	Yes
	No

	2)
	 
	 
	Yes
	No
	Yes
	No

	3)
	 
	 
	Yes
	No
	Yes
	No

	4)
	 
	 
	Yes
	No
	Yes
	No

Financial Covenants

Minimum Liquidity

	
			
	1.
	Minimum Cash Amount

•    at any time prior to the initial Funding Date of any Term B Loan, $10,000,000

•    at all times on and after the initial Funding Date of any Term B Loan and prior to the initial Funding Date of any Term C Loan, $15,000,000

•    at all times on and after the initial Funding Date of any Term C Loan $20,000,000
	$____________________

	2.
	Aggregate amount of Borrower’s and its Subsidiaries’ accounts payable that have not been paid within ninety (90) days from the invoice date of the relevant account payable:
	$____________________

	3.
	Line 1 plus Line 2:
	$____________________

	4.
	Qualified Cash:
	$____________________

	8.
	Is Line 4 greater than or equal to Line 3?
	Yes (in compliance)

No (not in compliance)

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Exhibit 10.1

Other Matters

	
				
	1)
	Have there been any changes in Key Persons since the last Compliance Certificate?
	Yes
	No

	 
	 
	 
	 

	2)
	Have there been any transfers/sales/disposals/retirement of Collateral or IP prohibited by the Loan Agreement?
	Yes
	No

	 
	 
	 
	 

	3)
	Have there been any new or pending claims or causes of action against Borrower that involve more than Two Hundred Fifty Thousand Dollars ($250,000.00)?
	Yes
	No

	 
	 
	 
	 

	4)
	Have there been any amendments of or other changes to the capitalization table of Borrower and to the Operating Documents of Borrower or any of its Subsidiaries?  If yes, provide copies of any such amendments or changes with this Compliance Certificate.
	Yes
	No

	 
	 
	 
	 

	5)
	Has Borrower or any Subsidiary entered into or amended any Material Agreement?  If yes, please explain and provide a copy of the Material Agreement(s) and/or amendment(s).
	Yes
	No

	 
	 
	 
	 

	6)
	Has Borrower provided the Collateral Agent with all notices required to be delivered under Sections 6.2(a) and 6.2(b) of the Loan Agreement?
	Yes
	No

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Exhibit 10.1

Exceptions
Please explain any exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions.”  Attach separate sheet if additional space needed.)
Kindred Biosciences, Inc., on behalf of itself and each other Borrower
By:                  
Name:                  
Title:                  
Date:

	
		
	COLLATERAL AGENT USE ONLY

	 
	 

	Received by:             
	Date:        

	 
	 

	Verified by:              
	Date:        

	 
	 

	Compliance Status:   Yes      No   

12Document

DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934

General

As of December 31, 2019, we are authorized to issue up to 180,000,000 shares of stock, including up to 175,000,000 shares of common stock, par value $0.20 per share, and up to 5,000,000 shares of preferred stock, par value $1.00 per share. As of December 31, 2019, we had 55,443,393 shares of common stock and no shares of preferred stock outstanding.

The following is a summary of the key terms and provisions of our equity securities. You should refer to the applicable provisions of our Second Restated Certificate of Incorporation, bylaws and the Delaware General Corporation Law for a complete statement of the terms and rights of our capital stock.

Common Stock

Voting rights.  Each holder of common stock is entitled to one vote per share on each matter submitted to a vote of shareholders. Subject to the rights, if any, of the holders of any series of preferred stock pursuant to applicable law or the provision of the certificate of designation creating that series, all voting rights are vested in the holders of shares of common stock. Holders of shares of common stock have non-cumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of directors can elect 100% of the directors, and the holders of the remaining shares voting for the election of directors will not be able to elect any directors.

Dividends.  Dividends may be paid to holders of common stock when, as and if declared by the board of directors (the “Board”) out of funds legally available for their payment, subject to the rights of holders of any preferred stock. We have not paid dividends on our common stock since the fourth quarter of 2015 and have no current plans to resume common stock dividends.

Rights upon liquidation.  In the event of our voluntary or involuntary liquidation, dissolution or winding up, holders of our common stock will be entitled to share equally, in proportion to the number of shares of common stock held by them, in any of our assets available for distribution after the payment in full of all debts and distributions and after holders of all series of outstanding preferred stock, if any, have received their liquidation preferences in full.

Non-assessable.  All outstanding shares of common stock are fully paid and non-assessable.

Other rights and preferences.  Holders of common stock are not entitled to preemptive, conversion or exchange rights. Our common stock has no sinking fund or redemption provisions. Holders of common stock may act by unanimous written consent.

Listing.  Our outstanding shares of common stock are listed on the New York Stock Exchange under the trading symbol “UNT.”

Preferred Stock

The following description of the terms of the preferred stock sets forth certain general terms and provisions of our authorized preferred stock. If we offer preferred stock, a description will be filed with the Securities and Exchange Commission and the specific designations and rights, as determined by the Board, will be described in such filing, including the following terms:

•the series, the number of shares offered and the liquidation value of the preferred stock;

•the price at which the preferred stock will be issued;
•the dividend rate, the dates on which the dividends will be payable and other terms relating to the payment of dividends on the preferred stock;
•the liquidation preference of the preferred stock;
•the voting rights of the preferred stock, if any;
•whether the preferred stock is redeemable or subject to a sinking fund, and the terms of any such redemption or sinking fund;
•whether the preferred stock is convertible or exchangeable for any other securities, and the terms of any such conversion; and
•any additional rights, preferences, qualifications, limitations and restrictions of the preferred stock.

Except where otherwise set forth in a resolution of the Board providing for the issuance of any series of preferred stock, the number of shares comprising such series may be increased or decreased (but not below the number of shares then outstanding) from time to time by like action of the Board. The shares of preferred stock of any one series shall be identical with the other shares in the same series in all respects except as to the dates from and after which dividends thereon shall cumulate, if cumulative.

The description of the terms of the preferred stock to be set forth in the applicable filing will not be complete and will be subject to and qualified in its entirety by reference to the certificate of designation relating to the applicable series of preferred stock.

Undesignated preferred stock may enable the Board to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and to thereby protect the continuity of our management. The issuance of shares of preferred stock may adversely affect the rights of holders of our common stock. For example, any preferred stock issued may rank prior to our common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. As a result, the issuance of shares of preferred stock may discourage bids for our common stock or may otherwise adversely affect the market price of our common stock or any existing preferred stock.

Any preferred stock will, when issued, be fully paid and non-assessable.

Certain Other Possible Anti-takeover Provisions

Our by-laws, charter and Delaware law contain certain provisions that might be characterized as anti-takeover provisions. These provisions may make it more difficult to acquire control of us or remove our management.

Classified Board of Directors

Our by-laws provides for our board of directors to be divided into three classes of directors serving staggered three-year terms, with the number of directors in each class to be as nearly equal as possible. As a result, and assuming all classes have the same number of directors, only one-third of our directors are elected each year.

Fair Price Provisions

Our charter also contains certain "fair price provisions" designated to provide safeguards for stockholders when an "interested stockholder" (defined as a stockholder owning 5% or more of our voting stock) attempts to effect a "business combination" with us. The term "business combination" includes:

•any merger or consolidation of us involving the interested stockholder;
•certain disposition of our assets;

•any issuance of our securities meeting certain threshold amounts, to the interested stockholder;
•adoption of any plan of liquidation or dissolution of us proposed by the interested stockholder; and
•any reclassification of our securities having the effect of increasing the proportionate share of ownership of the interested stockholder.

In general, a business combination between us and the interested stockholder must be approved by the affirmative vote of 80% of the outstanding voting stock unless the transaction is approved by a majority of the members of the Board of Directors who are not affiliated with the interested stockholder or certain minimum price and form of consideration requirements are satisfied.

Delaware Business Combination Statute

We are incorporated under the laws of the State of Delaware. Section 203 of the Delaware General Corporation Law prevents an "interested stockholder" (defined as a stockholder owning 15% or more of a corporation's voting stock) from engaging in a business combination with that corporation for a period of three years from the date the stockholder became an interested stockholder unless:

•the corporation's board of directors had earlier approved either the business combination or the transaction by which the stockholder became an interested stockholder;
•upon attaining that status, the interested stockholder had acquired at least 85% of the corporation’s voting stock (not counting shares owned by persons who are directors and also officers); or
•the business combination is later approved by the board of directors and authorized by a vote of two-thirds of the stockholders (not including the shares held by the interested stockholder).

Since we have not amended our charter or by-laws to exclude the application of Section 203, its provisions apply to us. Accordingly, Section 203 may inhibit an interested stockholder's ability to acquire additional shares of common stock or otherwise engage in a business combination with us.

Advance Notice for Raising Business or Making Nominations at Meetings

Our by-laws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders and for nominations by stockholders of candidates for election as directors at an annual or special meeting at which directors are to elected.

Only such business may be conducted at an annual meeting of stockholders as has been brought before the meeting by, or at the direction of, the board of directors or by a stockholder who has given to our secretary timely written notice, in proper form, of the stockholder's intention to bring that business before the meeting. Only persons who are nominated by, or at the direction of, the board of directors, or who are nominated by a stockholder who has given timely written notice, in proper form, to the secretary prior to a meeting at which directors are to be elected will be eligible for election as directors. The person presiding at the meeting will have the authority to make determinations whether a stockholder's notice complies with the procedures in our by-laws.

To be timely, notice of business to be brought before an annual meeting or nominations of candidates for election as directors at an annual meeting is generally required to be received by our secretary not later than 90 days nor earlier than 120 days prior to the first anniversary of the prior year’s annual meeting date.

The notice of any nomination for election as a director is required to set forth the information regarding that person required in our by-laws as well as by paragraphs (a), (e), and (f) of Item 401 of regulation S-K adopted by the SEC.

Transfer Agent and Registrar

The Transfer Agent and Registrar for our common stock AST Transfer Services.

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