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Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
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On March 23, 2017, KaloBios Pharmaceuticals, Inc. (the “Company”) issued a press release announcing that it had received proceeds of approximately $5.5 million from an additional loan from its key investors. A copy of the press release is filed as Exhibit 99.1 hereto and incorporated herein by reference.
Amendment to Credit and Security Agreement
On March 21, 2017, the Company entered into an amendment (the “Amendment”) to the Credit and Security Agreement dated December 21, 2016 (the “Credit Agreement”) with Black Horse Capital Master Fund Ltd., as administrative agent and lender (“BHCMF” or “Agent”), Black Horse Capital LP, as a lender (“BHC”), Cheval Holdings, Ltd., as a lender (“Cheval”) and Nomis Bay LTD, as a lender (“Nomis” and, together with BHCMF, BHC and Cheval, the “Lenders”). The Credit Agreement provided for a term loan in the original principal amount of $3,315,217.00 (the “Term Loan”)
The Amendment provides for an additional loan of $5,978,260, less an upfront fee equal to $478,260 (the “Upfront Fee”), and requires the payment by the Company to the Lenders of a commitment fee equal to $275,000 (the “Commitment Fee”), bringing the total amount of the Term Loan to $9,293,477. In accordance with the terms of the Credit Agreement, the Company will use the proceeds from the additional loan for general working capital, the payment of certain fees and expenses owed to the Agent and the Lenders in connection with the Credit Agreement and other costs incurred in the ordinary course of business. Aside from the increase in the principal amount extended, the Amendment did not modify any of the terms under the Credit Agreement, all of which will be applicable to the additional loan extended to the Company by the Lenders.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the copy thereof filed as exhibit 10.1 hereto and incorporated herein by reference.
Promissory Notes
In connection with the Company’s execution of the Amendment, the Company has issued in favor of each Lender a promissory note in an amount equal to each Lender’s additional loan commitment under the Amendment. The new promissory notes are attached hereto as Exhibits 10.2, 10.3, 10.4 and 10.5 and are incorporated herein by reference.