Document:

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.

 

 

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]

 

 

	 	
Very truly yours,

	 
	 	 	 	 
	 	
KALOBIOS PHARMACEUTICALS, INC.

	 
	 	 	 	 
	 	 	 	 
	 	
By:

	
/s/ Cameron Durrant, M.D.

	 
	 	
Name: 

	
Cameron Durrant, M.D.

	 
	 	
Title:

	
Chief Executive Officer

	 

 

 

	
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

	 

 

 

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%

 

 

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.

 

 

          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.

 

 

          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)]

 

 

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.comEMPLOYMENT
AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of July 8, 2017 by and between Mega
Bridge, Inc. (to be known as HypGen, Inc.), a Nevada corporation (the “Company”) and McCoy Moretz (the
“Employee”).

 

A.               
The Company desires to enter into this Agreement to retain the services of the Employee, and the Employee desires to provide services
to the Company.

 

B.                
The Employee is willing to be employed by the Company on the terms and subject to the conditions set forth in this Agreement.

 

THE
PARTIES AGREE AS FOLLOWS:

 

1.                 
Positions and Duties.

 

1.1             
Title. The Employee shall be employed by the Company as its Chief Executive Officer, Chief Financial Officer, Chief
Medical Officer, and Chairman of the Board (the “Board”), and the Company agrees to employ and retain the Employee
in such capacity. The Employee shall report to, and serve at the pleasure of, the Company’s Board of Directors.

 

1.2             
Duties. Employee shall devote such business time, energy, and skill
to the affairs of the Company to perform the duties as requested by the Company hereunder.

 

1.3             
Term of Employment. The term of Employee's employment pursuant to this Agreement commenced on July 8, 2017 (the
“Effective Date”), and shall expire on June 30, 2019, unless renewed or extended by the agreement of
the parties hereto, or terminated earlier as provided herein.

 

		2.	Terms
                                         of Employment.

 

2.1             
Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

 

(a)              
“Accrued Compensation” shall mean any accrued Total Compensation, any benefits under any plan of the
Company in which the Employee is a participant to the full extent of Employee’s rights under such plans, any accrued vacation
pay, and any appropriate business expenses incurred by the Employee in connection with the performance of Employee’s duties
hereunder, all to the extent unpaid on the date of termination. 

 

(b)               “Base
Compensation” shall have the meaning set forth in Sections 3.1 and 3.2 hereof.

 

(c)              
“DeathTermination”shallmeanterminationoftheEmployee’s employment because
of the death of the Employee.

 

(d)              
“Disability Termination” means termination by the Company of the Employee’s employment by
reason of the Employee’s incapacitation due to disability.The Employee shall be deemed to be incapacitated due to
disability if at the end of any month the Employee is unable to perform substantially all of his or her duties under this
Agreement in the normal and regular manner due to illness, injury or mental or physical incapacity, and has been unable so to
perform for either (i) three consecutive full calendar months then ending, or (ii) 90 or more of the normal working days
during the 12 consecutive full calendar months then ending. Nothing in this paragraph shall alter the Company’s
obligations under applicable law, which may, in certain circumstances, result in the suspension or alteration of the
foregoing time periods.

    	 	1	 

    	 	 	 

    

 

(e)              
“Termination For Cause” means termination by the Company of the Employee’s employment by reason
of the Employee’s (i) dishonesty or fraud, (ii) gross negligence in the performance of his or her duties hereunder, (iii)
material breach of this Agreement, (iv) intentional engagement in acts seriously detrimental to the Company’s operations,
(v) conviction of a felony involving moral turpitude, or (vi) failure to comply with any lawful orders or directions of the Board
that are not incompatible with his position with the Company or manifestly unreasonable or unethical, provided that the Board
delivers to Employee a written notification specifying in sufficient detail such order or direction and the Employee has thirty
(30) days within which to comply with such order or direction (or such reasonably shorter period of time if such ordered or directed
task by its nature requires completion in less than thirty

(30)
days)).

 

(f)               
“Termination Other Than For Cause”
means termination by the Company of the Employee’s employment for any reason other than as specified in Sections
2.1(c), (d), (e) or (h) hereof.

 

(g)              
“Total Compensation” shall mean the Employee’s Base Salary (as defined in Section 3.1).

 

(h)              
“Voluntary Termination” means termination of the Employee’s employment by the voluntary action
of the Employee other than by reason of a Disability Termination or a Death Termination.

 

2.2             
Termination For Cause. The Company shall have the right to effect a Termination For Cause as provide in Section
2.1(f). Upon Termination For Cause, the Company shall pay the Employee Accrued Compensation, if any.

 

2.3             
Termination Other Than For Cause. The Company shall have the right to effect a Termination Other Than For Cause
upon thirty (30) days prior notice to the Employee. In the event of a Termination Other Than For Cause before the expiration of
the Employment Agreement, the Company shall pay the Employee all Accrued Compensation, if any.

 

2.4             
Disability Termination. The Company shall have the right to effect a Disability Termination by giving written notice
thereof to the Employee. Upon Disability Termination, the Company shall pay the Employee all Accrued Compensation, if any.

 

2.5              Death
Termination. In the event of the Employee’s death during the term of this Agreement, the
Employee’s employment shall be deemed to have terminated as of the last day of the month during which his or her death
occurs, and the Company shall promptly pay to the Employee’s estate Accrued Compensation, if any.

    	 	2	 

    	 	 	 

    

 

		3.	Compensation
                                         and Benefits.

 

3.1             
Base Salary. As payment for the services to be rendered by the Employee as provided in Section 1 and subject to
the provisions of Section 2 of this Agreement, the Company shall pay the Employee a “Base Salary” of
$240,000.00 per year; provided, however, until such time as Employee receives written confirmation from the Board that his employment
shall be full-time, Employee shall be paid $115.38 an hour (based on an annual salary of

$240,000.00
and 2,080 hours per year) for each hour of work performed for the Company as requested by the Board. All compensation paid to
the Employee hereunder shall be payable on the Company’s normal payroll schedule.

 

3.2             
Equity: Upon the commencement of his engagement with the Company, the EMPLOYEE shall be granted either in
its individual name or the EMPLOYEE’s designated entity, trust and/or holding company shares of the Company that will equal
8,000,000, shares of the Company’s common stock. At all times during the term of this Agreement prior to the $5M Financing
Date, except with respect to the Excepted Issuances (as defined below), if the Company issues any shares of Company common stock,
the EMPLOYEE shall be granted additional shares of the Company’s common stock in an amount equal to 6% of the amount of
the shares of Company common stock issued by the Company. These additional shares shall be issued prior to end of each quarter.
In addition, upon the Company’s successful completion of a capital raise of or exceeding 5 million U.S. dollars ($5,000,000)
(the “$5M Financing Date”), then the EMPLOYEE shall no longer be entitled to receive additional shares of the Company.
The EMPLOYEE shall not receive any additional shares of the Company’s common stock in the event of the Company’s issuance
of the following securities (the “Excepted Issuances”): (i) shares of Company common stock in connection with a debt
or equity financing; (ii) shares of common stock reserved under the Company’s equity incentive/stock option plan; (iii)
the shares, warrants and shares to be issued upon exercise of the warrants and conversion of the convertible notes described in
the Assignment Agreement dated June 28, 2017 between the Company and Richard L. Chang’s Holdings, LLC. Upon the written
or oral request of Employee, the Company shall within twenty-four (24) hours confirm orally and in writing to the Employee the
number of shares of Common Stock then outstanding.

 

In
addition, the EMPLOYEE shall be issued a warrant to acquire 10,000,000 shares of the Company at an exercise price of $0.25. The
warrants shall have a five-year term and anti- dilution protection. The Employee has agreed that they may not sell the Shares
prior to January 5, 2018, or sell any shares resulting from the exercise the Warrants prior to January 5, 2018. 

		3.2	Fringe
                                         Benefits.

 

(a)              
Fringe Benefits. The Employee shall not be eligible to participate in any of the Company’s benefit plans.

    	 	3	 

    	 	 	 

    

(b)              
Expense Reimbursement. The Company agrees to reimburse the Employee for all reasonable, ordinary and necessary travel
and entertainment expenses incurred by the Employee in conjunction with Employee’s services to the Company consistent with
the Company’s standard reimbursement policies. The Company shall pay travel costs incurred by the Employee in conjunction
with his or her services to the Company consistent with the Company’s standard travel policy.

 

(c)              
Vacation. The Employee shall be entitled, without loss of compensation, to two (2) weeks of vacation per year. Unused
vacation may be accrued by the Employee up to a maximum of four (4) weeks, when it will cease accruing until the Employee reduces
the accrued, unused amount through use of vacation time.

 

		3.3	Code
                                         Section 409A; Employee Taxes.

 

(a)              
To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code (together with Department
of Treasury regulations and other official guidance issued thereunder, “Section 409A”). Notwithstanding
any provision of this Agreement to the contrary, in the event that the Company determines in good faith that any compensation
or benefits payable under this Agreement may not be either exempt from or compliant with Section 409A, the Company shall consult
with Employee and, subject to the written consent of Employee, adopt such amendments to this Agreement or adopt other policies
or procedures (including amendments, policies and procedures with retroactive effect), or take any other commercially reasonable
actions necessary or appropriate to (i) preserve the intended tax treatment of the compensation and benefits payable hereunder,
to preserve the economic benefits of such compensation and benefits, and/or to avoid less favorable accounting or tax consequences
for the Company and/or (ii) to exempt the compensation and benefits payable hereunder from Section 409A or to comply with the
requirements of Section 409A and thereby avoid the application of penalty taxes thereunder; provided, however, that
this Section 3.3(a) does not, and shall not be construed so as to, create any obligation on the part of the Company to adopt any
such amendments, policies or procedures or to take any other such actions or to indemnify Employee for any failure to do so.

 

(b)              
Notwithstanding anything herein to the contrary, Employee acknowledges and agrees that in the event that any tax is imposed under
Section 409A in respect to any compensation or benefits payable to Employee, whether under this Agreement or otherwise, then

(i)
the payment of such tax shall be solely Employee’s responsibility, and (ii) neither the Company, or their subsidiaries or
affiliates, nor any of their respective past or present directors, officers, employees or agents shall have any liability for
any such tax.

 

(c)              
Employee shall be solely responsible for the payment of all state and federal income tax related to his compensation under this
Agreement and the Plan award documents for the stock options.

 

		4.	Proprietary
                                         Information. 

                

The Employee shall as of the Effective Date or promptly thereafter
                                         execute and deliver to the Company the Company Employee Confidential Information and
                                         Inventions Agreement.

    	 	4	 

    	 	 	 

    

		5.	Miscellaneous.

 

5.1             
Waiver. The waiver of the breach of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach of the same or other provision hereof.

 

5.2             
Notices. All notices and other communications under this Agreement shall be in writing and shall be given by personal
or courier delivery, facsimile or first class mail, certified or registered with return receipt requested, and shall be deemed
to have been duly given upon receipt if personally delivered or delivered by courier, on the date of transmission if transmitted
by facsimile, or three days after mailing if mailed, to the addresses of the Company and the Employee contained in the records
of the Company at the time of such notice. Any party may Change such party’s address for notices by notice duly given pursuant
to this Section 5.2.

 

5.3             
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California
applicable to contracts entered into and wholly to be performed within the State of California by California residents.

 

5.4             
Survival of Obligations. This Agreement shall be binding upon and inure to the benefit of the executors, administrators,
heirs, successors, and assigns of the parties; provided, however, that except as herein expressly provided, this Agreement shall
not be assignable either by the Company (except to an affiliate or successor of the Company) or by the Employee without the prior
written consent of the other party.

 

5.5             
Counterparts. This Agreement may be executed in one or more counterparts and delivered by facsimile or PDF/electronic
transmission, all of which taken together shall constitute one and the same Agreement.

 

5.6             
Withholding. All sums payable to the Employee hereunder shall be reduced by all federal, state, local, and other
withholdings and similar taxes and payments required by applicable law.

 

5.7             
Enforcement. If any portion of this Agreement is determined to be invalid or unenforceable, such portion shall be
adjusted, rather than voided, to achieve the intent of the parties to the extent possible, and the remainder shall be enforced
to the maximum extent possible.

 

5.8             
Entire Agreement; Modifications. Except as otherwise provided herein or in the exhibits hereto, this Agreement represents
the entire understanding among the parties with respect to the subject matter of this Agreement, and this Agreement supersedes
any and all prior and contemporaneous understandings, agreements, plans, and negotiations, whether written or oral, with respect
to the subject matter hereof. All modifications to the Agreement must be in writing and signed by each of the parties hereto.

    	 	5	 

    	 	 	 

    

 

IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date set forth in the first paragraph.

 

MEGA
BRIDGE, INC. (to be known as

HYPGEN,
INC.)

 

 

By:
/s/ Richard Chang

Richard
Chang

 

 

 

EMPLOYEE

 

/s/
McCoy Moretz

McCoy
Moretz

    	 	6

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