IN THE UNITED STATES BANKRUPTCY COURT FOR THE … · Marina Blvd #250, Brisbane, CA 94005-1878. 2 Capitalized terms used but not defined herein are defined in the Plan. Case 15-12628-LSS

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re Chapter 11 KALOBIOS PHARMACEUTICALS, INC., Case No. 15-12628 (LSS) Debtor.1

Re: D.I. 434

NOTICE OF FILLING PLAN SUPPLEMENT TO DEBTOR’S SECOND AMENDED PLAN OF REORGANIZATION

PLEASE TAKE NOTICE that KaloBios Pharmaceuticals, Inc. (the “Debtor”) hereby files

this plan supplement (the “Plan Supplement”) in support of the Debtor’s Second Amended Plan of Reorganization, dated May 9, 2016 (D.I. 434) (as may be amended, supplemented or modified from time to time, and including all exhibits thereto, the “Plan”).2

PLEASE TAKE FURTHER NOTICE that the Plan Supplement includes the following documents, as may be modified, amended, or supplemented from time to time:

Exhibit 1 – Example Company Note

Exhibit 2 – Schedule Estimating Number of Shares of New Common Stock, Primary Plan Sponsor New Common Stock, and Remaining New Common Stock to be Issued Under the Plan

Exhibit 3 – Certificate of Incorporation and By-Laws of Reorganized KaloBios

Exhibit 3.1 – Second Amended and Restated Certificate of Incorporation

Exhibit 3.2 – Redline of Second Amended and Restated Certificate of Incorporation

Exhibit 3.3 – Amended and Restated Bylaws

Exhibit 4 – Officers of Reorganized KaloBios

Exhibit 5 – Members of the Board of Directors of Reorganized KaloBios

Exhibit 6 – Schedule of Rejected Executory Contracts and Unexpired Leases

Exhibit 7 – Schedule of Assumed Executory Contracts and Unexpired Leases

Exhibit 8 – Employment Agreements with Employees Becoming Effective on or Prior to the Effective Date and Surviving Consummation of Plan

1 The last four digits of the Debtor’s federal tax identification number are 7236. The Debtor’s address is 1000

Marina Blvd #250, Brisbane, CA 94005-1878. 2 Capitalized terms used but not defined herein are defined in the Plan.

Case 15-12628-LSS Doc 490 Filed 05/31/16 Page 1 of 3

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Exhibit 9 – Specific Retained Causes of Action

Exhibit 10 – Terms of Board Remuneration

PLEASE TAKE FURTHER NOTICE that the documents contained in the Plan Supplement are integral to, and part of, the Plan. If the Plan is approved, the documents in the Plan Supplement will be approved by the Bankruptcy Court pursuant to the Confirmation Order.

PLEASE TAKE FURTHER NOTICE that the Debtor reserves the right to alter, amend, modify, supplement, or withdraw any document in this Plan Supplement as provided by the Plan, provided that if any document in this Plan Supplement is altered, amended, modified, or supplemented in any material respect prior to the date of the Confirmation Hearing, the Debtor will file a redline of such document with the Bankruptcy Court.

PLEASE TAKE FURTHER NOTICE that, pursuant to Article VIII of the Plan, all Executory Contracts and Unexpired Leases shall be deemed assumed and/or assumed and assigned in accordance with the provisions and requirements of Bankruptcy Code sections 365 and 1123 as of the Effective Date, unless such Executory Contract or Unexpired Lease: (a) was previously assumed or rejected by the Debtor; (b) previously expired or terminated pursuant to its terms; (c) is the subject of a motion to assume or reject Filed by the Debtor under Bankruptcy Code section 365 pending as of the Effective Date; or (d) is designated specifically or by category on the Schedule of Rejected Executory Contracts and Unexpired Leases in the Plan Supplement. If an Executory Contract or Unexpired Lease is not listed on Schedule of Assumed Executory Contracts and Unexpired Leases, and is not otherwise subject to the exceptions to assumption listed above, such Executory Contract or Unexpired Lease shall nonetheless be deemed assumed and/or assumed and assigned in accordance with the provisions and requirements of Bankruptcy Code sections 365 and 1123. Unless otherwise indicated on the Schedule of Assumed Executory Contracts and Unexpired Leases attached as Exhibit 7, the proposed Cure Amount for each Executory Contract and Unexpired Lease is zero dollars.

PLEASE TAKE FURTHER NOTICE that the Debtor will seek Confirmation of the Plan at a hearing scheduled to commence on June 14, 2016, at 10:00 a.m. (ET) before the Honorable Laurie Selber Silverstein, at the United States Bankruptcy Court for the District of Delaware, 824 N. Market Street, 6th Floor, Courtroom #2, Wilmington, Delaware 19801.

PLEASE TAKE FURTHER NOTICE that the Court has established June 7, 2016 at 4:00 p.m. (ET) as the deadline for filing and serving objections to the Confirmation of the Plan (the “Plan Objection Deadline”). Any objection to the Plan must: (a) be in writing; (b) conform to the Bankruptcy Rules and the Local Rules; (c) state the name, address, phone number and email address of the objecting party and the amount and nature of the Claim or Interest of such entity, if any; (d) state with particularity the basis and nature of any objection to the Plan and, if practicable, a proposed modification to the Plan that would resolve such objection; and (e) be filed, contemporaneously with a proof of service, with the Court and served so that it is actually received by the undersigned counsel or before the Plan Objection Deadline.

PLEASE TAKE FURTHER NOTICE that copies of the Plan, the Plan Supplement and any other related documents may be obtained at no charge from Prime Clerk LLC (“Prime Clerk”) by: (a) accessing the Debtor’s restructuring website at https://cases.primeclerk.com/kalobios/; (b) writing to Prime Clerk at KaloBios Pharmaceuticals, Inc. Ballot Processing Center, c/o Prime Clerk


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LLC, 830 3rd Avenue, 3rd Floor, New York, NY 10022; or (c) contacting Prime Clerk via telephone at (844) 241-2770 or via email at [email protected].

Dated: May 31, 2016

/s/ Matthew B. Harvey MORRIS, NICHOLS, ARSHT & TUNNELL LLP Eric D. Schwartz (No. 3134) Gregory W. Werkheiser (No. 3553) Matthew B. Harvey (No. 5186) Marcy J. McLaughlin (No. 6184) 1201 N. Market St., 16th Floor P.O. Box 1347 Wilmington, DE 19899-1347 Telephone: (302) 658-9200 Facsimile: (302) 658-3989 Email: [email protected] [email protected] [email protected] [email protected]

HOGAN LOVELLS US LLP Peter Ivanick, Esq. Pieter Van Tol, Esq. John D. Beck, Esq. 875 Third Avenue New York, NY 10022 Telephone: (212) 918-3000 Facsimile: (212) 918-3100 Email: [email protected] [email protected] [email protected]

Counsel for Debtor and Debtor in Possession


Exhibit 1

Example Company Note

Case 15-12628-LSS Doc 490-1 Filed 05/31/16 Page 1 of 5

PROMISSORY NOTE

THE OFFER AND SALE OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS KALOBIOS PHARMACEUTICALS, INC., HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO KALOBIOS PHARMACEUTICALS, INC., AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

Holder: [Holder of Class 2 Claim] Initial Principal Amount: $[50% of Allowed Class 2 Claim]

[Plan Effective Date]

FOR VALUE RECEIVED, KALOBIOS PHARMACEUTICALS, INC., a Delaware corporation (“Borrower”), as reorganized pursuant to its confirmed and effective Second Amended Plan of Reorganization, dated May 9, 2016 (as amended, the “Plan”), hereby issues this Promissory Note (the “Note”) and promises to pay to the order of Holder (as identified above) the Initial Principal Amount (as identified above), or, if less, the aggregate principal amount then outstanding under this Promissory Note (the “Note”) and to pay accrued and unpaid interest on the unpaid principal amount of this Note on the Maturity Date at the interest rate provided for below.

1. Certain Definitions. As used herein, the following terms shall have the following meanings:

(a) “Debtor Relief Law” means the title 11 of the United States Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally

(b) “Final Order” means an order or judgment of the Bankruptcy Court, or other court of competent jurisdiction with respect to the relevant subject matter, that has not been reversed, stayed, modified, or amended, and as to which the time to appeal or seek certiorari has expired or been waived and no appeal or petition for certiorari has been timely taken, or as to which any appeal that has been taken, or any petition for certiorari that has been, or may be, filed has been resolved by the highest court to which the order or judgment was appealed from or which certiorari was sought. The existence of the possibility that a motion under Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed relating to such order will not prevent such order from being a Final Order.

(a) “Maturity Date” means [the last day of 3rd year after Effective Date].

(b) “Person” means and includes any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization,


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association, corporation, institution, entity, party or government (whether national, federal, state, county, city, municipal, or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

Any capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Plan.

2. Interest. Borrower agrees to pay interest on the principal amount of this Note outstanding at a rate per annum (calculated on the basis of a 360-day year) equal to ten percent (10.00%) from the date of this Note set forth above until payment in full hereof. Interest on the outstanding principal amount shall be computed quarterly. Any unpaid interest shall be added to the principal amount of the Note on the date of accrual.

3. Payments. The outstanding principal amount of this Note, plus accrued and unpaid

interest, shall be paid by the Maturity Date. 4. Prepayment. Borrower may prepay this Note in whole or in part at any time prior to the

Maturity Date without premium or penalty. Any prepayment by Borrower will be applied first, to interest under this Note that has accrued but not been paid; and second, to any outstanding principal amount under this Note.

5. Events of Default; Remedies. Each of the following events shall constitute an event of

default (each, an “ Event of Default”) hereunder with specific remedies available as provided:

(a) Payment Default. Borrower’s failure to pay by the Maturity Date all outstanding principal and accrued and unpaid interest on the unpaid principal amount of this Note; or

(b) Insolvency Proceedings, Etc. Borrower institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or

(c) Material Plan Default. The Bankruptcy Court enters a Final Order adjudicating Borrower to be in material default of its obligations to Holder under the Plan.

Upon the occurrence of an Event of Default, (A) the then unpaid principal amount of this Note, without demand, notice or declaration by Holder of any kind, shall automatically and immediately become due and payable; and (B) Holder, at its option, without demand


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or notice of any kind, may exercise any and all other rights and remedies available to it under this Note, the Plan, at law or in equity.

6. General. Any payment hereunder shall be by check delivered to the Holder’s address on the signature page hereto or such other address provided to Borrower by Holder for such purpose. A forbearance of any right or remedy under this Note on any occasion shall not act as a bar to the exercise of the same right or remedy on any subsequent occasion or of any other right or remedy at any time.

7. Assignment; Registration of Transfer. This Note shall be binding on Borrower and its

successors. This Note may be sold, assigned, or otherwise transferred (each a “Transfer”) by Holder in whole or in part, and will inure to the benefit of its successors and assigns. However, this Note may be Transferred only upon its surrender to Borrower for registration of transfer, duly endorsed, accompanied by a duly executed written instrument of transfer in form satisfactory to Borrower, which such instrument of transfer shall include an acknowledgement and agreement by such transferee of the terms of this Note. Thereupon, this Note shall be reissued to, and registered in the name of, the transferee, or a new note for the same principal amount and interest shall be issued to, and registered in the name of, the transferee. The interest and principal amount shall be paid solely to the registered holder of this Note or, following an assignment made in accordance with this Section 7, the new note. Such payment shall constitute full discharge of the Borrower’s obligation to pay such interest and principal.

8. Effect Of Titles And Headings; References. The titles and headings herein are for

convenience only and shall not affect the construction hereof. References herein to paragraphs are to paragraphs of this Note, unless otherwise expressly provided.

9. Counterparts. This Note may be executed in counterparts (including by facsimile

transmission or by e-mail transmission of an Adobe portable document format file (also known as a “PDF” file)), all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by both parties and delivered to the other party.

10. Waiver of Demand. Borrower waives any and all requirements of demand, presentment,

protest, notice of dishonor or further notice of any kind in connection with this Note. 11. WAIVER OF JURY TRIAL. BORROWER AND HOLDER EACH HEREBY

IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A JURY TRIAL IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE.

12. GOVERNING LAW; JURISDICTION. 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. EACH PARTY TO THIS NOTE HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE STATE


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OF DELAWARE OR OF THE UNITED STATES OF AMERICA FOR THE DISTRICT OF DELAWARE AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN INCONVENIENT FORUM.

* * * * *

IN WITNESS WHEREOF, the undersigned has executed this Promissory Note as

of the date first written above.

KALOBIOS PHARMACEUTICALS, INC. By: ___________________________________ Name: Title:

ACKNOWLEDGED AND AGREED [Claim Holder] By: ___________________________________ Name: Title: Address: _______________________________ _______________________________ _______________________________


Exhibit 2

Schedule Estimating Number of Shares of New Common Stock, Primary Plan Sponsor New Common Stock, and Remaining

New Common Stock to be Issued Under the Plan



General Notes and Reservations:

In the event of any conflict between the terms of this Plan Exhibit and the Plan or any other Plan Document the terms of the Plan or other Plan Document, as applicable, shall control.

Nothing in this Plan Exhibit is intended to or shall (a) constitute a waiver or release of any Claim or Causes of Action of Debtor, its Estate or the Reorganized Debtor against any Person or Entity, unless such Claim or Cause of Action is otherwise expressly waived or released pursuant to the Plan or Final Order; (b) prejudice in any manner the rights of the Debtor or the Reorganized Debtor, as applicable, including, without limitation any rights of setoff, recoupment or other offset; or (c) constitute an admission, acknowledgment, offer or undertaking by the Debtor or Reorganized Debtor, as applicable, with respect to any matter.

The estimates of New Common Stock set forth in this Plan Exhibit are subject to revision and change for a variety of reasons, including, but not limited to, events that may implicate anti-dilution rights of the Primary Plan Sponsor and, therefore, may require the issuance of additional Primary Plan Sponsor New Common Stock to the Primary Plan Sponsor in accordance with the terms of the Stalking Horse SPA Documents, the DIP Credit Agreement and the Plan.




Exhibit 3

Certificate of Incorporation and By-Laws of Reorganized KaloBios

(comprising Exhibits 3.1, 3.2 and 3.3)


Exhibit 3.1

Second Amended and Restated Certificate of Incorporation


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SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF KALOBIOS PHARMACEUTICALS, INC.

a Delaware corporation

KaloBios Pharmaceuticals, Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the Delaware General Corporation Law (the “DGCL”), DOES HEREBY CERTIFY: FIRST: That the name of this corporation is KaloBios Pharmaceuticals, Inc. and that this corporation was originally incorporated pursuant to the DGCL on September 19, 2001 under the name Horizon Biotechnologies, Inc. SECOND: The Corporation filed the Debtor’s Second Amended Plan of Reorganization under chapter 11 of title 11 of the United States Code (the “Code”) on May 9, 2016. THIRD: Provision for the filing of this Second Amended and Restated Certificate of Incorporation without the need for Board of Directors or stockholder approval is contained in a decree or order of a court or judge having jurisdiction over a proceeding under the Code. FOURTH: Pursuant to the provisions of Sections 242(a), 245 and 303 of the DGCL, the undersigned Corporation does hereby certify that the text of this Second Amended and Restated Certificate of Incorporation is hereby amended and restated to read as follows:

ARTICLE I

The name of the corporation is KaloBios Pharmaceuticals, Inc. (the “Corporation”).

ARTICLE II

The address of the registered office of this corporation in the State of Delaware is 3500 South DuPont Highway, in the City of Dover, County of Kent, State of Delaware, 19901. The name of its registered agent at such address is Incorporating Services, Ltd.

ARTICLE III

The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

ARTICLE IV


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The Corporation is authorized to issue one class of stock to be designated common stock (“Common Stock”). The number of shares of Common Stock authorized to be issued is Eighty Five Million (85,000,000), par value $0.001 per share. Notwithstanding any other provisions contained herein to the contrary, the Corporation shall not issue nonvoting equity securities for so long as and to the extent prohibited by Section 1123(a)(6) of the Code (11 U.S.C. §1123(a)(6). The prohibition on issuance of nonvoting equity securities is included in this Second Amended and Restated Certificate of Incorporation in compliance with Section 1123(a)(6) of the Code (11 U.S.C. §1123(a)(6)). Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote.

ARTICLE V

The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

A. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Second Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.

B. The directors of the Corporation need not be elected by written ballot unless the

Bylaws so provide.

C. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or the Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine., except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the


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Court of Chancery does not have subject matter jurisdiction. If any provision or provisions of this Article V.C. shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article V.C (including, without limitation, each portion of any sentence of this Article V.C containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.

ARTICLE VI

A. Newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall, unless otherwise provided by law or by resolution of the Board of Directors, be filled only by a majority vote of the directors then in office, though less than a quorum (and not by stockholders), and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office for which they hold expires or until such director’s successor shall have been duly elected and qualified. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

B. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation.

ARTICLE VII A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived any improper personal benefit. If the DGCL is amended after approval by the stockholders of this Article VII to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL as so amended. Any repeal or modification of the foregoing provisions of this Article VII by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.


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ARTICLE VIII

The Board of Directors is expressly authorized to adopt, amend or repeal any or all of the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships.


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In Witness Whereof, the undersigned has duly executed this Second Amended and Restated Certificate of Incorporation. KALOBIOS PHARMACEUTICALS, INC. By: Name: Title:


Exhibit 3.2

Redline of Second Amended and Restated Certificate of Incorporation


SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF

KALOBIOS PHARMACEUTICALS, INC.a Delaware corporation

(Pursuant to Sections 242 and 245 of

KaloBios Pharmaceuticals, Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the Delaware General Corporation Law) (the “DGCL”),

DOES HEREBY CERTIFY:

FIRST: That the name of this corporation is KaloBios Pharmaceuticals, Inc. and that this corporation was originally incorporated pursuant to the DGCL on September 19, 2001 under the name Horizon Biotechnologies, Inc.

SECOND: The Corporation filed the Debtor’s Second Amended Plan of Reorganization under chapter 11 of title 11 of the United States Code (the “Code”) on May 9, 2016.

THIRD: Provision for the filing of this Second Amended and Restated Certificate of Incorporation without the need for Board of Directors or stockholder approval is contained in a decree or order of a court or judge having jurisdiction over a proceeding under the Code.

FOURTH: Pursuant to the provisions of Sections 242(a), 245 and 303 of the DGCL, the undersigned Corporation does hereby certify that the text of this Second Amended and Restated Certificate of Incorporation is hereby amended and restated to read as follows:

ARTICLE I

The name of the corporation is KaloBios Pharmaceuticals, Inc. (the “Corporation”).

ARTICLE II

The address of the registered office of this corporation in the State of Delaware is 3500 South

DuPont Highway, in the City of Dover, County of Kent, State of Delaware, 19901. The name of

its registered agent at such address is Incorporating Services, Ltd.

ARTICLE III

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The nature of the business or purposes to be conducted or promoted is to engage in any lawful act

or activity for which corporations may be organized under the Delaware General Corporation

LawDGCL.

ARTICLE IV

The Corporation is authorized to issue one class of stock to be designated common stock

(“Common Stock”). The number of shares of Common Stock authorized to be issued is Eighty

Five Million (85,000,000), par value $0.001 per share. Notwithstanding any other provisions

contained herein to the contrary, the Corporation shall not issue nonvoting equity securities for so

long as and to the extent prohibited by Section 1123(a)(6) of the Code (11 U.S.C. §1123(a)(6).

The prohibition on issuance of nonvoting equity securities is included in this Second Amended

and Restated Certificate of Incorporation in compliance with Section 1123(a)(6) of the Code (11

U.S.C. §1123(a)(6)).

Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each

matter properly submitted to the stockholders of the Corporation for their vote.

Effective as of 5:00 p.m., Eastern time, on the date this Certificate of Amendment to the

Amended and Restated Certificate of Incorporation is filed with the Secretary of State of the

State of Delaware, each eight (8) shares of the Corporation’s Common Stock, par value $0.001

per share, issued and outstanding shall, automatically and without any action on the part of the

respective holders thereof, be combined and converted into one (1) share of Common Stock, par

value $0.001 per share, of the Corporation. No fractional shares shall be issued and, in lieu

thereof, any holder of less than one (1) share of Common Stock shall be entitled to receive cash

for such holder’s fractional share based upon the closing sales price of the Corporation’s

Common Stock as reported on the Nasdaq Global Market, as of the date this Certificate of

Amendment is filed with the Secretary of State of the State of Delaware.

ARTICLE V

The following provisions are inserted for the management of the business and the conduct of the

affairs of the Corporation and for further definition, limitation and regulation of the powers of the

Corporation and of its directors and stockholders:

A. The business and affairs of the Corporation shall be managed by or under the direction

of the Board of Directors. In addition to the powers and authority expressly conferred upon them

by statute or by this Second Amended and Restated Certificate of Incorporation or the Bylaws of

the Corporation, the directors are hereby empowered to exercise all such powers and do all such

acts and things as may be exercised or done by the Corporation.

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B. The directors of the Corporation need not be elected by written ballot unless the

Bylaws so provide.

C. Unless the Corporation consents in writing to the selection of an alternative forum, the

Court of Chancery in the State of Delaware shall be the sole and exclusive forum for (i) any

derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a

claim of breach of fiduciary duty owed by any director, officer or other employee of the

Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a

claim arising pursuant to any provision of the Delaware General Corporation Law DGCL or the

Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim governed

by the internal affairs doctrine., except for, as to each of (i) through (iv) above, any claim as to

which the Court of Chancery determines that there is an indispensable party not subject to the

jurisdiction of the Court of Chancery (and the indispensable party does not consent to the

personal jurisdiction of the Court of Chancery within ten days following such determination),

which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery,

or for which the Court of Chancery does not have subject matter jurisdiction. If any provision or

provisions of this Article V.EC. shall be held to be invalid, illegal or unenforceable as applied to

any person or entity or circumstance for any reason whatsoever, then, to the fullest extent

permitted by law, the validity, legality and enforceability of such provisions in any other

circumstance and of the remaining provisions of this Article V.EC (including, without limitation,

each portion of any sentence of this Article V.EC containing any such provision held to be

invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and

the application of such provision to other persons or entities and circumstances shall not in any

way be affected or impaired thereby.

ARTICLE VI

A. Newly created directorships resulting from any increase in the authorized number of

directors or any vacancies in the Board of Directors resulting from death, resignation, retirement,

disqualification, removal from office or other cause shall, unless otherwise provided by law or by

resolution of the Board of Directors, be filled only by a majority vote of the directors then in

office, though less than a quorum (and not by stockholders), and directors so chosen shall hold

office for a term expiring at the annual meeting of stockholders at which the term of office for

which they hold expires or until such director’s successor shall have been duly elected and

qualified. No decrease in the authorized number of directors shall shorten the term of any

incumbent director.

B. Advance notice of stockholder nominations for the election of directors and of

business to be brought by stockholders before any meeting of the stockholders of the Corporation

shall be given in the manner provided in the Bylaws of the Corporation.

ARTICLE VII

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A director of the Corporation shall not be personally liable to the Corporation or its stockholders

for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any

breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or

omissions not in good faith or which involve intentional misconduct or a knowing violation of

law, (iii) under Section 174 of the Delaware General Corporation LawDGCL, or (iv) for any

transaction from which the director derived any improper personal benefit. If the Delaware

General Corporation Law DGCL is amended after approval by the stockholders of this Article

VII to authorize corporate action further eliminating or limiting the personal liability of directors,

then the liability of a director of the Corporation shall be eliminated or limited to the fullest

extent permitted by the Delaware General Corporation Law DGCL as so amended.

Any repeal or modification of the foregoing provisions of this Article VII by the stockholders of

the Corporation shall not adversely affect any right or protection of a director of the Corporation

existing at the time of, or increase the liability of any director of the Corporation with respect to

any acts or omissions of such director occurring prior to, such repeal or modification.

ARTICLE VIII

The Board of Directors is expressly authorized to adopt, amend or repeal any or all of the Bylaws

of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the

Board of Directors shall require the approval of a majority of the total number of authorized

directors whether or not there exist any vacancies in previously authorized directorships.

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In Witness Whereof, the undersigned has duly executed this Second Amended and Restated

Certificate of Incorporation.

KALOBIOS PHARMACEUTICALS, INC.

By:

Name:

Title:

Summary report: Litéra® Change Pro 7.5.0.135 Document comparison done on 5/27/2016

11:21:26 AMStyle name: Default StyleIntelligent Table Comparison: ActiveOriginal DMS:iw://DCIMANAGE/WASHINGT/8335897/1Modified DMS: iw://DCIMANAGE/WASHINGT/8335897/2Changes: Add 23Delete 11Move From 2Move To 2Table Insert 0Table Delete 0Table moves to 0Table moves from 0Embedded Graphics (Visio, ChemDraw, Images etc.) 0Embedded Excel 0Format changes 0Total Changes: 38

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Exhibit 3.3

Amended and Restated Bylaws


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AMENDED AND RESTATED

BYLAWS OF

KALOBIOS PHARMACEUTICALS, INC.

A DELAWARE CORPORATION


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TABLE OF CONTENTS

ARTICLE I OFFICES AND RECORDS .....................................................................................1

Section 1.1 Delaware Office .................................................................................................1

Section 1.2 Other Offices ......................................................................................................1

Section 1.3 Books and Records .............................................................................................1

ARTICLE II STOCKHOLDERS ................................................................................................1

Section 2.1 Annual Meeting ..................................................................................................1

Section 2.2 Special Meeting ..................................................................................................1

Section 2.3 Place of Meeting.................................................................................................1

Section 2.4 Notice of Meeting ...............................................................................................1

Section 2.5 Quorum and Adjournment ..................................................................................2

Section 2.6 Proxies ...............................................................................................................2

Section 2.7 Notice of Stockholder Business and Nominations. ..............................................2

Section 2.8 Procedure for Election of Directors.....................................................................6

Section 2.9 Inspectors of Elections........................................................................................6

Section 2.10 Conduct of Meetings. .........................................................................................6

Section 2.11 Consent Procedure ..............................................................................................7

ARTICLE III BOARD OF DIRECTORS ....................................................................................7

Section 3.1 General Powers ..................................................................................................7

Section 3.2 Number, Tenure and Qualifications ....................................................................7

Section 3.3 Regular Meetings ...............................................................................................8

Section 3.4 Special Meetings ................................................................................................8

Section 3.5 Action By Unanimous Consent of Directors .......................................................8

Section 3.6 Notice.................................................................................................................8

Section 3.7 Conference Telephone Meetings .........................................................................8

Section 3.8 Quorum ..............................................................................................................8

Section 3.9 Vacancies ...........................................................................................................8

Section 3.10 Committees. .......................................................................................................9

ARTICLE IV OFFICERS ...........................................................................................................9

Section 4.1 Elected Officers ..................................................................................................9

Section 4.2 Election and Term of Office ...............................................................................9

Section 4.3 Chairman of the Board ..................................................................................... 10

Section 4.4 Chief Executive Officer .................................................................................... 10

Section 4.5 President .......................................................................................................... 10


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Section 4.6 Secretary .......................................................................................................... 10

Section 4.7 Treasurer .......................................................................................................... 10

Section 4.8 Removal ........................................................................................................... 10

Section 4.9 Vacancies ......................................................................................................... 11

ARTICLE V STOCK CERTIFICATES AND TRANSFERS .................................................... 11

Section 5.1 Stock Certificates and Transfers. ...................................................................... 11

ARTICLE VI INDEMNIFICATION ......................................................................................... 11

Section 6.1 Right to Indemnification ................................................................................... 11

Section 6.2 Right to Advancement of Expenses .................................................................. 12

Section 6.3 Right of Indemnitee to Bring Suit ..................................................................... 12

Section 6.4 Non-Exclusivity of Rights ................................................................................ 13

Section 6.5 Insurance .......................................................................................................... 13

Section 6.6 Amendment of Rights ....................................................................................... 13

Section 6.7 Indemnification of Employees and Agents of the Corporation .......................... 13

ARTICLE VII MISCELLANEOUS PROVISIONS .................................................................. 13

Section 7.1 Fiscal Year ....................................................................................................... 13

Section 7.2 Dividends ......................................................................................................... 13

Section 7.3 Seal .................................................................................................................. 13

Section 7.4 Waiver of Notice .............................................................................................. 14

Section 7.5 Audits............................................................................................................... 14

Section 7.6 Resignations ..................................................................................................... 14

Section 7.7 Contracts .......................................................................................................... 14

Section 7.8 Proxies ............................................................................................................. 14

Section 7.9 Fixing Record Date .......................................................................................... 15

ARTICLE VIII AMENDMENTS.............................................................................................. 15

Section 8.1 Amendments .................................................................................................... 15


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ARTICLE I OFFICES AND RECORDS

Section 1.1 Delaware Office. The registered office of the Corporation in the State of Delaware shall be located in the City of Dover, County of Kent.

Section 1.2 Other Offices. The Corporation may have such other offices, either within or without the State of Delaware, as the Board of Directors may designate or as the business of the Corporation may from time to time require.

Section 1.3 Books and Records. The books and records of the Corporation may be kept at the Corporation’s headquarters in South San Francisco, California or at such other locations outside the State of Delaware as may from time to time be designated by the Board of Directors.

ARTICLE II STOCKHOLDERS

Section 2.1 Annual Meeting. The annual meeting of the stockholders of the Corporation shall be held at such date, place and/or time as may be fixed by resolution of the Board of Directors.

Section 2.2 Special Meeting. Special meetings of stockholders of the Corporation may be called by the Chairman of the Board, the Chief Executive Officer, by the Board of Directors acting pursuant to a resolution adopted by a majority of the Whole Board or by the Chairman of the Board or the Chief Executive Officer at the request in writing of stockholders owning at least fifty percent (50%) in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote. For purposes of these Amended and Restated Bylaws, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships.

Section 2.3 Place of Meeting. The Board of Directors may designate the place of meeting for any meeting of the stockholders. If no designation is made by the Board of Directors, the place of meeting shall be the principal office of the Corporation.

Section 2.4 Notice of Meeting. Except as otherwise required by law, written, printed or electronic notice stating the place, day and hour of the meeting and, in the case of a special meeting only, the purposes for which the meeting is called, shall be prepared and delivered by the Corporation not less than ten (10) days nor more than sixty (60) days before the date of the meeting, either personally, by mail, or in the case of stockholders who have consented to such delivery, by electronic transmission (as such term is defined in the Delaware General Corporation Law), to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the U.S. mail with postage thereon prepaid, addressed to the stockholder at his address as it appears on the stock transfer books of the Corporation. Notice given by electronic transmission shall be effective (A) if by facsimile, when faxed to a number where the stockholder has consented to receive notice; (B) if by electronic mail, when mailed electronically to an electronic mail address at which the stockholder has consented to receive such notice; (C) if by posting on an electronic network


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together with a separate notice of such posting, upon the later to occur of (i) the posting or (ii) the giving of separate notice of the posting; or (D) if by other form of electronic communication, when directed to the stockholder in the manner consented to by the stockholder. Any previously scheduled meeting of the stockholders may be cancelled, adjourned or postponed and by resolution of the Board of Directors upon public notice given prior to the time previously scheduled for such meeting of stockholders.

Section 2.5 Quorum and Adjournment. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the voting power of the outstanding shares of the Corporation entitled to vote generally in the election of directors, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series voting separately as a class or series, the holders of a majority of the voting power of the shares of such class or series shall constitute a quorum for the transaction of such business for the purposes of taking action on such business. In the absence of a quorum, such meeting may be adjourned by the chairman of the meeting or upon the approval of a majority of the voting power present, even if less than a quorum. No notice of the time and place of adjourned meetings need be given provided such adjournment is for less than thirty (30) days and further provided that no new record date is fixed for the adjourned meeting and provided further that the time or place of the adjourned meeting is announced at the meeting at which the adjournment is taken.

Section 2.6 Proxies. At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or as may be permitted by law, or by his duly authorized attorney-in-fact. Such proxy must be filed with the Secretary of the Corporation or his representative, or otherwise delivered telephonically or electronically as set forth in the applicable proxy statement, at or before the time of the meeting.

Section 2.7 Notice of Stockholder Business and Nominations.

A. Annual Meetings of Stockholders. (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only (a) by or at the direction of the Board of Directors or any committee thereof or (b) by any stockholder of the Corporation who was a stockholder of record of the Corporation at the time the notice provided for in this Section 2.7 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.7.

(2) For any nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (b) of paragraph (A)(1) of this Section 2.7, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and any such proposed business (other than the nominations of persons for election to the Board of Directors) must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day, nor earlier than the close of business on the one hundred twentieth (120th) day, prior to the first anniversary of the preceding year’s annual meeting (provided, however, that if no proxy


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materials were mailed by the Corporation in connection with the preceding year’s annual meeting, or if the date of the annual meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation). In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth: (a) as to each person whom the stockholder proposes to nominate for election as a director (i) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder, and (ii) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a description of any agreement, arrangement or understanding with respect to the nomination or proposal between or among such stockholder and/or such beneficial owner, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, including, in the case of a nomination, the nominee, (iv) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder and such beneficial owners, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of the Corporation, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner, with respect to securities of the Corporation, (v) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (vi) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (b) otherwise to solicit proxies or votes from stockholders in support of such proposal or nomination, and (vii) any other information relating to such stockholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in


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connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder. The foregoing notice requirements of this Section 2.7 shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified the Corporation of his, her or its intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. The Corporation may require any proposed nominee to furnish such other information as the Corporation may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this Section 2.7 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation at the annual meeting is increased effective after the time period for which nominations would otherwise be due under paragraph (A)(2) of this Section 2.7 and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.7 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

B. Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or any committee thereof or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.7 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this Section 2.7. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (A)(2) of this Section 2.7 shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.


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C. General. (1) Except as otherwise expressly provided in any applicable rule or regulation promulgated under the Exchange Act, only such persons who are nominated in accordance with the procedures set forth in this Section 2.7 shall be eligible to be elected at an annual or special meeting of stockholders of the Corporation to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 2.7. Except as otherwise provided by law, the chairman of the meeting shall have the power and duty (a) to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 2.7 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination or proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies or votes in support of such stockholder’s nominee or proposal in compliance with such stockholder’s representation as required by clause (A)(2)(c)(vi) of this Section 2.7) and (b) if any proposed nomination or business was not made or proposed in compliance with this Section 2.7, to declare that such nomination shall be disregarded or that such proposed business shall not be transacted. Notwithstanding the foregoing provisions of this Section 2.7, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present the nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.7, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

(2) For purposes of this Section 2.7, “public announcement” shall include disclosure in a press release reported by the Dow Jones News Service, Associated Press or other national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

(3) Notwithstanding the foregoing provisions of this Section 2.7, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.7; provided however, that any references in these bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this Section 2.7 (including paragraphs (A)(1)(b) and (B) hereof), and compliance with paragraphs (A)(1)(b) and (B) of this Section 2.7 shall be the exclusive means for a stockholder to make nominations or submit other business (other than, as provided in the penultimate sentence of (A)(2), nominations or other business brought properly under and in compliance with Rule 14a-8 of the Exchange Act, as may be amended from time to time). Nothing in this Section 2.7 shall be deemed to affect any rights of stockholders to request


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inclusion of proposals or nominations in the Corporation’s proxy statement pursuant to applicable rules and regulations promulgated under the Exchange Act.

Section 2.8 Procedure for Election of Directors. Election of directors at all meetings of the stockholders at which directors are to be elected shall be by written ballot, and a plurality of the votes cast thereat shall elect directors. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, all matters other than the election of directors submitted to the stockholders at any meeting shall be decided by a majority of the votes cast affirmatively or negatively.

Section 2.9 Inspectors of Elections. The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives of the Corporation, to act at the meeting and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act, or if all inspectors or alternates who have been appointed are unable to act, at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by the Delaware General Corporation Law.

Section 2.10 Conduct of Meetings.

A. The Chief Executive Officer shall preside at all meetings of the stockholders. In the absence of the Chief Executive Officer, the Chairman of the Board shall preside at a meeting of the stockholders. In the absence of the Chief Executive Officer or the Chairman of the Board, the President shall preside at a meeting of the stockholders. In the absence of each of the Chief Executive Officer, the Chairman of the Board and the President, the Secretary shall preside at a meeting of the stockholders. In the anticipated absence of all officers designated to preside over the meetings of stockholders, the Board of Directors may designate an individual to preside over a meeting of the stockholders.

B. The chairman of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting.

C. The Board of Directors may, to the extent not prohibited by law, adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may to the extent not prohibited by law include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those


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present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof and (v) limitations on the time allotted to questions or comments by participants. Unless, and to the extent, determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 2.11 Consent Procedure. In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within 10 days after the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.

ARTICLE III BOARD OF DIRECTORS

Section 3.1 General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by the Certificate of Incorporation or by these Bylaws, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.

Section 3.2 Number, Tenure and Qualifications. The number of directors shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority of the Whole Board or by the stockholders at the annual meeting of the stockholders. Each director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s prior death, resignation, retirement, disqualification or other removal.


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Section 3.3 Regular Meetings. The Board of Directors may, by resolution, provide the time and place for the holding of regular meetings of the Board of Directors.

Section 3.4 Special Meetings. Special meetings of the Board of Directors shall be called at the request of the Chairman of the Board, the Chief Executive Officer or a majority of the Board of Directors. The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of the meetings.

Section 3.5 Action By Unanimous Consent of Directors. The Board of Directors may take action without the necessity of a meeting by unanimous consent of directors. Such consent may be in writing or given by electronic transmission, as such term is defined in the Delaware General Corporation Law.

Section 3.6 Notice. Notice of any meeting shall be given to each director at his business or residence in writing, or by facsimile transmission, telephone communication or electronic transmission (provided, with respect to electronic transmission, that the director has consented to receive the form of transmission at the address to which it is directed). If mailed, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting. If by facsimile transmission or other electronic transmission, such notice shall be transmitted at least twenty-four (24) hours before such meeting. If by telephone, the notice shall be given at least twelve (12) hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these Bylaws as provided under Section 8.1 of Article VIII hereof. A meeting may be held at any time without notice if all the directors are present (except as otherwise provided by law) or if those not present waive notice of the meeting in writing or by electronic transmission, either before or after such meeting.

Section 3.7 Conference Telephone Meetings. Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

Section 3.8 Quorum. A whole number of directors equal to at least a majority of the Whole Board shall constitute a quorum for the transaction of business, but if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time without further notice. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

Section 3.9 Vacancies. Newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall, unless otherwise provided by law or by resolution of the Board of Directors, be filled only by a majority vote of the directors then in office, though less than a quorum (and not by stockholders), and directors so chosen shall hold office for a term expiring at the annual meeting


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of stockholders at which the term of office to which they have been chosen or until such director’s successor shall have been duly elected and qualified. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

Section 3.10 Committees.

A. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that no committee shall have power or authority in reference to the following matters: (i) approving, adopting or recommending to stockholders any action or matter required by law to be submitted to stockholders for approval or (ii) adopting, amending or repealing any bylaw.

B. Unless the Board of Directors otherwise provides, each committee designated by the Board of Directors may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to these Bylaws.

ARTICLE IV OFFICERS

Section 4.1 Elected Officers. The elected officers of the Corporation shall be a Chief Executive Officer, a President, a Secretary, a Treasurer, and such other officers as the Board of Directors from time to time may deem proper. The Corporation may also have a Chairman of the Board who shall be chosen from the directors. All officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV. Such officers shall also have powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof.

Section 4.2 Election and Term of Office. The elected officers of the Corporation shall be elected annually by the Board of Directors at the regular meeting of the Board of Directors held after each annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as convenient. Subject to Section 4.7 of these Bylaws, each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he or she shall resign.


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Section 4.3 Chairman of the Board. The Chairman of the Board shall preside at all meetings of the Board. If the Company does not have a Chairman of the Board, the Lead Independent Director shall preside at all meetings of the Board. If the Company does not have a Lead Independent Director, the Chief Executive Officer shall preside at all meetings of the Board.

Section 4.4 Chief Executive Officer. The Chief Executive Officer shall be the general manager of the Corporation, subject to the control of the Board of Directors, and as such shall, subject to Section 2.10(A) hereof, preside at all meetings of stockholders, shall have general supervision of the affairs of the Corporation, shall sign or countersign or authorize another officer to sign all certificates, contracts, and other instruments of the Corporation as authorized by the Board of Directors, shall make reports to the Board of Directors and stockholders, and shall perform all such other duties as are incident to such office or are properly required by the Board of Directors.

Section 4.5 President. The President shall be the chief operating officer of the corporation and shall be subject to the general supervision, direction, and control of the Chief Executive Officer unless the Board of Directors provides otherwise.

Section 4.6 Secretary. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors and all other notices required by law or by these Bylaws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the Chairman of the Board, the Chief Executive Officer, the President or by the Board of Directors, upon whose request the meeting is called as provided in these Bylaws. He or she shall record all the proceedings of the meetings of the Board of Directors, any committees thereof and the stockholders of the Corporation in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President. He or she shall have custody of the seal of the Corporation and shall affix the same to all instruments requiring it, when authorized by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President, and attest to the same.

Section 4.7 Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate receipts and disbursements in books belonging to the Corporation. The Treasurer shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositaries as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors the Chairman of the Board, the Chief Executive Officer or the President, taking proper vouchers for such disbursements. The Treasurer shall render to the Chairman of the Board, the Chief Executive Officer, the President and the Board of Directors, whenever requested, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board of Directors shall prescribe.

Section 4.8 Removal. Any officer elected by the Board of Directors may be removed by the Board of Directors whenever, in their judgment, the best interests of the


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Corporation would be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his successor, his death, his resignation or his removal, whichever event shall first occur, except as otherwise provided in an employment contract or an employee plan.

Section 4.9 Vacancies. A newly created office and a vacancy in any office because of death, resignation, or removal may be filled by the Board of Directors for the unexpired portion of the term at any meeting of the Board of Directors.

ARTICLE V STOCK CERTIFICATES AND TRANSFERS

Section 5.1 Stock Certificates and Transfers.

A. Unless the Board of Directors has determined that some or all of any or all classes or series of stock shall be uncertificated shares, the interest of each stockholder of the Corporation shall be evidenced by certificates for shares of stock. The shares of the stock of the Corporation shall be transferred on the books of the Corporation, in the case of certificated shares, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, and with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require.

B. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation by the Chairman or Vice Chairman of the Board of Directors, the Chief Executive Officer or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

ARTICLE VI INDEMNIFICATION

Section 6.1 Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), where the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or


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may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in Section 6.3 hereof with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The Corporation is permitted to enter into indemnification agreements with its directors or officers.

Section 6.2 Right to Advancement of Expenses. The right to indemnification conferred in Section 6.1 shall include the right to be paid by the Corporation the expenses incurred in defending any proceeding for which such right to indemnification is applicable in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section or otherwise.

Section 6.3 Right of Indemnitee to Bring Suit. The rights to indemnification and to the advancement of expenses conferred in Section 6.1 and Section 6.2, respectively, shall be contract rights. If a claim under Section 6.1 or Section 6.2 is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (A) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (B) in any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its directors who are not parties to such action, a


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committee of such directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Section 6.3 or otherwise shall be on the Corporation.

Section 6.4 Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Article VI shall not be exclusive of any other right which any person may have or hereafter acquire under the Certificate of Incorporation, these Amended and Restated Bylaws, or any statute, agreement, vote of stockholders or disinterested directors or otherwise.

Section 6.5 Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

Section 6.6 Amendment of Rights. Any amendment, alteration or repeal of this Article VI that adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.

Section 6.7 Indemnification of Employees and Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the board of directors, grant rights to indemnification, and to the advancement of expenses, to any employee or agent of the Corporation to the fullest extent of the provisions of this Section with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

ARTICLE VII MISCELLANEOUS PROVISIONS

Section 7.1 Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January and end on the thirty-first (31st) day of December of each year.

Section 7.2 Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares, subject to any terms and conditions provided by law and its Certificate of Incorporation.

Section 7.3 Seal. The corporate seal shall have inscribed the name of the Corporation thereon and shall be in such form as may be approved from time to time by the Board of Directors.


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Section 7.4 Waiver of Notice. Whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of the Delaware General Corporation Law, a waiver thereof in writing, signed by the person or persons entitled to such notice, or a waiver by electronic transmission, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders of the Board of Directors need be specified in any waiver of notice of such meeting.

Section 7.5 Audits. The accounts, books and records of the Corporation shall be audited upon the conclusion of each fiscal year by an independent certified public accountant selected by the Board of Directors, and it shall be the duty of the Board of Directors to cause such audit to be made annually.

Section 7.6 Resignations. Any director or any officer, whether elected or appointed, may resign at any time by serving written notice of such resignation on the Chairman of the Board, the Chief Executive Officer or the Secretary, or by submitting such resignation by electronic transmission (as such term is defined in the Delaware General Corporation Law), and such resignation shall be deemed to be effective as of the close of business on the date said notice is received by the Chairman of the Board, the Chief Executive Officer, or the Secretary or at such later date as is stated therein. No formal action shall be required of the Board of Directors or the stockholders to make any such resignation effective.

Section 7.7 Contracts. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, any contracts or other instruments may be executed and delivered in the name and on the behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct. Such authority may be general or confined to specific instances as the Board may determine. The Chairman of the Board, the Chief Executive Officer, the President or any Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed for or on behalf of the Corporation. Subject to any restrictions imposed by the Board of Directors or the Chairman of the Board, the Chief Executive Officer, the President or any Vice President of the Corporation may delegate contractual powers to others under his jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.

Section 7.8 Proxies. Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or any Vice President may from time to time appoint any attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation or other entity, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock and other securities of such other corporation or other entity, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation or other entity, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or


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otherwise, all such written proxies or other instruments as he or she may deem necessary or proper in the premises.

Section 7.9 Fixing Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. The manner of fixing a record date for the determination of stockholders entitled to express consent to corporate action in writing without a meeting shall be as provided for in Article II, Section 2.11.

ARTICLE VIII AMENDMENTS

Section 8.1 Amendments. These Bylaws may be adopted, amended or repealed at any meeting of the Board of Directors by a resolution adopted by a majority of the Whole Board, provided notice of the proposed change was given in the notice of the meeting in a notice given no less than twenty-four (24) hours prior to the meeting. The stockholders shall also have the power to adopt, amend or repeal these Bylaws, provided that notice of the proposed change was given in the notice of the meeting and provided further that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation, the affirmative vote of the holders of at least fifty percent (50%) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of these Bylaws.


Exhibit 4

Officers of Reorganized KaloBios


In re KaloBios Pharmaceuticals, Inc., Case No. 15-12628 (LSS)

Officers of Reorganized KaloBios Dr. Cameron Durrant - Chief Executive Officer Dr. Cameron Durrant was appointed as Chief Executive Officer of KaloBios effective March 1, 2016. Dr. Durrant has been a director and Chairman of the Board of the Company since January 7, 2016. He also serves as the lead independent director of Immune Pharmaceuticals Inc., and as a board member of Bexion Pharmaceuticals, Alcyone Life Sciences and ReliefBand Technologies. He has previously served as CEO of ECR Pharmaceuticals, Founder, Chairman and CEO of PediatRx, CEO of PediaMed Pharmaceuticals and is the Founder of Taran Pharma Limited. He has been a senior executive at Johnson and Johnson, Pharmacia Corporation, GSK and Merck. Dr. Durrant brings to the Company extensive experience as a pharma/biotech entrepreneur, operating executive and board member. Dr. Durrant earned his medical degree from the Welsh National School of Medicine, Cardiff, UK, his DRCOG from the Royal College of Obstetricians and Gynecologists, London, UK, his MRCGP from the Royal College of General Practitioners, London, UK, his DipCH from the Melbourne Academy, Australia and his MBA from Henley Management College, Oxford, UK. Morgan Lam - Chief Operating Officer Morgan Lam was appointed to the position of Chief Operating Officer of KaloBios on February 1, 2016. Mr. Lam joined the Company in 2015 as Head of Clinical Operations and Interim Development Leader. In such positions, he has supervised the Company’s clinical programs and applied his extensive experience in clinical research in the pharmaceutical industry to the Company’s product development. Prior to his employment with the Company, Mr. Lam served as Executive Director, Medical Affairs of Geron Corporation, a biopharmaceutical company, from May 2010 to May 2015.


Exhibit 5

Members of the Board of Directors of Reorganized KaloBios



Initial Members of the Board of Directors of Reorganized KaloBios Dr. Cameron Durrant Dr. Durrant is a senior pharmaceutical/biotech executive, former physician and a pharma company builder and turnaround specialist. Dr. Durrant has previously served in senior roles with blue-chip, global pharma companies and also as a board member, Chairman, CEO, as well as CFO, for both private and public specialty pharma and biotech companies. Ronald Barliant (as designated by the Black Horse Entities) Mr. Barliant, an attorney who is of counsel with the law firm of Goldberg Kohn in Chicago, IL, previously served as a United States bankruptcy judge for the Northern District of Illinois from 1988 to 2002. Mr. Barliant has also served as adjunct faculty at John Marshall Law School and is a frequent lecturer and author on bankruptcy-related matters. Additional Directors to be designated

One director to be designated by the Nomis Bay Entity. Two independent directors to be designated jointly by the Black Horse Entities and the

Nomis Bay Entity.


Exhibit 6

Schedule of Rejected Executory Contracts and Unexpired Leases


SCHEDULE OF REJECTED EXECUTORY CONTRACTS AND UNEXPIRED LEASES

Pursuant to Article VIII of the Debtor’s Second Amended Plan Of Reorganization dated May 9, 2016 (D.I. 434) (as further amended, modified or supplemented from time to time, the “Plan”), KaloBios Pharmaceuticals, Inc. (the “Debtor”) files this Schedule of Rejected Executory Contracts and Unexpired Leases setting forth those Executory Contracts and Unexpired Leases that are intended to be rejected by the Debtor as of the Effective Date. All capitalized terms used, but not otherwise defined herein, shall have the meanings ascribed to them in the Plan.

The Debtor or Reorganized KaloBios, as the case may be, reserves all rights to alter, amend, modify, or supplement this Schedule of Rejected Executory Contracts and Unexpired Leases and all information contained herein, through and including the conclusion of the Confirmation Hearing, including to add any Executory Contract or Unexpired Lease to this Schedule of Rejected Executory Contracts and Unexpired Leases or to remove any Executory Contract or Unexpired Lease from this Schedule of Rejected Executory Contracts and Unexpired Leases and seek to assume or assume and assign such Executory Contract or Unexpired Lease. The Debtor or Reorganized KaloBios, as the case may be, also reserves the right to request assumption or rejection by separate motion on notice to the applicable counterparty and/or to have assumption or rejection adjudicated in a separate contested matter or adversary proceeding.

Notwithstanding the Debtor’s commercially reasonable efforts to properly classify or categorize Executory Contracts and Unexpired Leases, the Debtor may nevertheless have improperly classified, categorized, or omitted certain Executory Contracts and Unexpired Leases due to the complexity and size of the Debtor’s business. Accordingly, the listing of any contract or lease on this Schedule of Rejected Executory Contracts and Unexpired Leases is not an admission that any such contract or lease is an Executory Contract or Unexpired Lease, and the Debtor reserves all of its rights to reclassify, recategorize, add, or delete the contracts and leases listed herein at a later time as is necessary or appropriate as additional information becomes available, including, without limitation, whether contracts or leases listed herein were deemed executory or unexpired as of the Petition Date and remain executory and unexpired postpetition.

Certain of the contracts and leases listed herein may contain renewal options, guarantees of payments, options to purchase, rights of first refusal, rights to lease additional lands, and other miscellaneous rights. Such rights, powers, duties, and obligations are not separately set forth on this Schedule of Rejected Executory Contracts and Unexpired Leases. The Debtor hereby expressly reserves the right to assert that any instrument listed herein is an executory contract within the meaning of section 365 of the Bankruptcy Code. The Debtor reserves all of its rights, claims, and causes of action with respect to claims associated with any contracts and leases listed herein, including its right to dispute or challenge the characterization or the structure of any transaction, document, or instrument related to a creditor’s claim.

Certain of the contracts and agreements listed on this Schedule of Rejected Executory Contracts and Unexpired Leases may consist of several parts, including, purchase orders, amendments, restatements, waivers, letters, schedules and other documents that may not be listed herein or that may be listed as a single entry.



3

STE. 100 Union City, CA 94587

Effective Date 10/16/2013

SCP Consultants, LLC 2727 Sache Street Acton, CA, 93510

SCP Consultants (M.J. Waddell) Consulting Agreement and Amendments -Effective Date 05/06/2013

Stanford University 3172 Porter Drive MC 5469 Palo Alto, CA 94304

Stanford Univ. CTA Novella Site #111 (Greenberg) 02-06-13 KB004-01; Amendments - Effective Date 02/06/2013

Stanford University 1705 El Camino Real Palo Alto, CA 94306

Stanford University MTA EphA3 Antibodies (Greenberg, Fan, Gratzinger) 09-24-12 KB004 - Effective Date 09/24/2012

UCLA - University of Los Angeles

10911 Weyburn Avenue Third Floor Los Angeles, CA 90095

UCLA CTA Schiller 31Jul15 KB004 -Effective Date 07/31/2015

University of California Davis Health System

2315 Stockton Blvd., Sherman Building Suite 2300 Sacramento, CA 95817-2201

UC Davis Health Systems CTA (Jonas) 10 Dec 2014 KB004 01; Amend.1 -Effective Date 12/10/2014

University of Miami 1320 S. Dixie Hwy Suite 650 Coral Gables, FL 33146

University Miami CTA Site #112 (Swords) 03-08- 13 KB004-01; Amend.1 -Effective Date 03/08/2013


Exhibit 7

Schedule of Assumed Executory Contracts and Unexpired Leases


SCHEDULE OF ASSUMED EXECUTORY CONTRACTS AND UNEXPIRED LEASES

Pursuant to Article VIII of the Debtor’s Second Amended Plan Of Reorganization dated May 9, 2016 (D.I. 434) (as further amended, modified or supplemented from time to time, the “Plan”), KaloBios Pharmaceuticals, Inc. (the “Debtor”) files this Schedule of Assumed Executory Contracts and Unexpired Leases setting forth those Executory Contracts and Unexpired Leases that are intended to be assumed and assigned by the Reorganized KaloBios. All capitalized terms used, but not otherwise defined herein, shall have the meanings ascribed to them in the Plan. The Debtor or Reorganized KaloBios shall be deemed to have assumed each of the Executory Contracts and Unexpired Leases listed below.

The Debtor or Reorganized KaloBios, as the case may be, reserves all rights to alter,

amend, modify, or supplement this Schedule of Assumed Executory Contracts and Unexpired Leases, and all information contained herein, through and including the conclusion of the Confirmation Hearing, including to add any Executory Contract or Unexpired Lease to this Schedule of Assumed Executory Contracts and Unexpired Leases or to remove any Executory Contract or Unexpired Lease from this Schedule of Assumed Executory Contracts and Unexpired Leases and seek to reject such Executory Contract or Unexpired Lease. The Debtor or Reorganized KaloBios, as the case may be, also reserves the right to request assumption or rejection by separate motion on notice to the applicable counterparty and/or to have assumption or rejection adjudicated in a separate contested matter or adversary proceeding.

Notwithstanding the Debtor’s commercially reasonable efforts to properly classify, or

categorize Executory Contracts and Unexpired Leases, the Debtor may nevertheless have improperly classified, categorized, or omitted certain Executory Contracts and Unexpired Leases due to the complexity and size of the Debtor’s business. Accordingly, the listing of any contract or lease on this Schedule of Assumed Executory Contracts and Unexpired Leases is not an admission that any such contract or lease is an Executory Contract or Unexpired Lease, and the Debtor reserves all of its rights to reclassify, recategorize, add, or delete the contracts and leases listed herein at a later time as is necessary or appropriate as additional information becomes available, including, without limitation, whether contracts or leases listed herein were deemed executory or unexpired as of the Petition Date and remain executory and unexpired postpetition.

Certain of the contracts and leases listed herein may contain renewal options, guarantees of payments, options to purchase, rights of first refusal, rights to lease additional lands, and other miscellaneous rights. Such rights, powers, duties, and obligations are not separately set forth on this Schedule of Assumed Executory Contracts and Unexpired Leases. The Debtor hereby expressly reserves the right to assert that any instrument listed herein is an executory contract within the meaning of section 365 of the Bankruptcy Code. The Debtor reserves all of its rights, claims, and causes of action with respect to claims associated with any contracts and leases listed herein, including its right to dispute or challenge the characterization or the structure of any transaction, document, or instrument related to a creditor’s claim.

All unexpired confidentiality, non-disclosure and non-compete agreements are hereby assumed by the Debtor, despite their absence from the specific list below. Article VIII of the Plan provides that all Executory Contracts and Unexpired Leases shall be deemed assumed



3

Dublin, Leinster18 Ireland

31Jul15 -Effective Date 07/31/2015

$24,014.00

ICON Development Solutions LLC 1

South County Business Park Leopardstown Dublin 18 Ireland

ICON Cnslt Agreement. 08-17-09 (and 4 amendments) -Effective Date 08/17/2009



"ICON Master S.A. 10-08-10 & W.O. 13-2824 - Effective Date 10/08/2010"



ICON Dev Solns SA 835-0066 (pk analysis) 03- 10-14 KB003 -Effective Date 03/10/2014



ICON Bioanalytical W.O. RFP#13-0631 03-01-13 KB001A-05 -Effective Date 03/19/2013



"ICON (Prevalere) Bio. S.A. RFP#10-2043 08-11-10 KB004 PN 835-050 -Effective Date 08/11/2010"



"ICON W.O. RFP#12-0491 02-21-12 KB003-02 - Effective Date 02/21/2012"



ICON Bioanalytical W.O. RFP#12-2598 (elisa) 09 26-12 KB001-A (and 6 change orders) -Effective Date 09/26/2012



ICON Bioanalytical W.O. RFP#12-0411 (Feasibility) 02-16-12 KB003-04 -Effective Date 02/16/2012


South County Business Park Leopardstown Dublin 18

ICON Bioanalytical W.O. RFP#12-0533 (ELISA) 02-24-12 KB003-04 -Effective Date 02/24/2012


4

Ireland



"ICON Bioanalytical W.O. RFP#12-0996 (ELISA 07-2012) 06-18-12 KB003-04 -Effective Date06/18/2012"



"ICON RFP#11-2167 835-060 10-04-12 KB001-A(and 7 change orders) -Effective Date 10/04/2012"



ICON Dev Solns SA 12-1039 (pk analysis) 05-28- 13 KB001A-05 -Effective Date 05/28/2013

ICON Development Solutions, LLC 2

8282 Halsey Road Whitesboro, NY 13492

ICON Bioanalytical Service Agreement RFP 09-1863 - KB002-05 -Effective Date 09/02/2009



ICON Bioanalytical Service Agreement KB004 -Effective Date 12/18/2009



ICON Bioanalytical Work Order RFP# 10-2282 - KB003-02 -Effective Date 09/15/2010



"ICON Bioanalytical Work Order - RFP#10-2748 - KB003 -Effective Date 11/09/2010"

Icon Laboratory Services, Inc.

Attn: Lisa Dukissis 123 Smith St. Farmingdale, NY 11735 and 8282 Halsey Road Whitesboro, NY 13492

Icon RFP15-0794(v2) Bioanalytical WO 30Jun15 KB003 clinical -Effective Date 06/30/2015

Jackson Laboratory

600 Main St Bar Harbor, ME 04609 and

JAX Services SOW 15Jul15 -Effective Date 07/15/2015

$11,984.00


5

Bank of America/Jackson Laboratory 90260 Collection Center Dr. Chicago, IL 60693

M.D. Anderson Cancer Center (U TX)

1515 Holcombe Blvd Houston, TX 77030-4000

MD Anderson SRA (Cortes) 7-1-11 KB003-03 - Effective Date 07/01/2011

$1,606.25 M.D. Anderson Cancer Center (U TX)

1515 Holcombe Blvd Houston, TX 77030-4000

MD Anderson Material Transfer Agreement - KB003 -Effective Date 08/21/2014

NASDAQ OMX Corporate Solutions, Inc.

One Liberty Plaza 50th Floor 165 Broadway New York, NY 10006-1405

NasDaq OMX MSA -Effective Date 11/20/2012

$45,000.00

NetSuite, Inc. (dba CSC Lawyers Incorporating Service)

2955 Campus Dr Suite 100 San Mateo, CA 94403-2539

NetSuite - License Agreement -Effective Date 11/30/2007

$39,890.56

Pharmaceutical Research Associates, Inc.

Attn: VP of Legal Affairs 4130 ParkLake Ave. Suite 400 Raleigh, NC 27612-4462

Pharmaceutical Research Associates_MSA_9Mar15_Drug Safety Services

$24,862.93

PPD Development 8551 Research Way, Suite 90 Middleton, WI 53562

PPD Development - Contract Laboratory Quality Agreement - Apr 2015 and related Amendments -Effective Date 04/01/2015

$7,220.00


PPD Proposal 059553v.1 (Antigen ELISA) KB004 09-Jan-2015 -Effective Date 01/09/2015


"PPD Proposal 046235 V.2 KB003 04Oct2012 and amendment -Effective Date 10/04/2012"


PPD Proposal 051672v1 (Stability Test) KB004 04Oct2013 and amendment -Effective Date 10/14/2013

PPD Development 8551 Research Way, PPD Proposal 051110 V1


6

Suite 90 Middleton, WI 53562

(Store & Requalification Proced.) KB003 19Aug2013 - Effective Date 08/19/2013


PPD ID Testing of KB004 Proposal 062335v2 5May15 -Effective Date 05/05/2015


PPD Development Proposal 062310v1 23Apr15 Effective Date 04/21/2015


PPD BC#06550 -Effective Date 09/08/2015

Regents of the University of California

1111 Franklin Street 12th Floor Oakland, CA 94607-5200

UCSF Regents License 04-06-04 KB001 - Effective Date 04/06/2004

$74,443.02 Regents of the University of California

1111 Franklin Street 12th Floor Oakland, CA 94607-5200

UCSF Letter Agreement. re Sanofi Sublicense Royalties 05-10-11 -Effective Date 05/10/2011

Thesaurus Information and Stratagies a/k/a ThesIS

243 Third Street Los Altos, CA 94022

ThesIS MSA 10Jul15; SOW; MNDA -Effective Date 07/10/2015

$8,982.00

Zoomedia, Inc

1620 Montgomery Street Suite 250 San Francisco, CA 94111-1027

Zoomedia MSA Consulting Agreement - Effective Date 10/27/2012

$4,358.75


Exhibit 8

Employment Agreements with Employees Becoming Effective on or Prior to the Effective Date

and Surviving Consummation of Plan


SUMMARY OF DR. CAMERON DURRANT EMPLOYMENT TERMS

On March 3, 2016, the Board of Directors (the “Board”) of KaloBios Pharmaceuticals, Inc. (the “Company”) appointed Dr. Cameron Durrant, age 55, to the position of Chief Executive Officer (“CEO”) of the Company, effective March 1, 2016. Dr. Durrant currently serves as CEO of the Company in addition to his role as Chairman of the Board. Dr. Durrant has been a director and Chairman of the Board of the Company since January 7, 2016. He also serves as the lead independent director of Immune Pharmaceuticals Inc., and as a board member of Bexion Pharmaceuticals, Alcyone Life Sciences and ReliefBand Technologies. He has previously served as CEO of ECR Pharmaceuticals, Founder, Chairman and CEO of PediatRx, CEO of PediaMed Pharmaceuticals and is the Founder of Taran Pharma Limited. He has been a senior executive at Johnson and Johnson, Pharmacia Corporation, GSK and Merck. Dr. Durrant brings to the Company extensive experience as a pharma/biotech entrepreneur, operating executive and board member. Dr. Durrant earned his medical degree from the Welsh National School of Medicine, Cardiff, UK, his DRCOG from the Royal College of Obstetricians and Gynecologists, London, UK, his MRCGP from the Royal College of General Practitioners, London, UK, his DipCH from the Melbourne Academy, Australia and his MBA from Henley Management College, Oxford, UK. In connection with his appointment as Chief Executive Officer, Dr. Durrant and the Company entered into a letter agreement (the “Letter Agreement”) setting forth the terms of Dr. Durrant’s employment with the Company. Pursuant to the Letter Agreement, Dr. Durrant is entitled to receive compensation in the amount of $50,000 per month. During his service as CEO of the Company, Dr. Durrant will not be eligible to receive compensation for his service as a director of the Company, nor any other compensation under the terms of the Letter Agreement. The Letter Agreement does not specify the length of Dr. Durrant’s term of employment with the Company, and either the Company or Dr. Durrant may terminate his employment at any time and for any reason.


Exhibit 9

Specific Retained Causes of Action



Retained Causes of Action

Reference is made to the Debtor’s Second Amended Plan of Reorganization, dated May 9, 2016 (D.I. 434) (as may be amended, modified, and/or supplemented, the “Plan”). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Plan.

Except as otherwise expressly provided in the Plan, the Confirmation Order or in any document, instrument, release or other agreement entered into in connection with the Plan or approved by order of the Bankruptcy Court, in accordance with section 1123(b) of the Bankruptcy Code, the Debtor, its Estate and the Reorganized Debtor, as applicable, shall retain and may enforce all rights to commence and pursue in any court with jurisdiction, in its sole discretion, any and all Causes of Action, whether arising before or after the Petition Date, including, without limitation, (i) the Avoidance Actions, (ii) all Causes of Action to subordinate any Claims or Interests (whether pursuant to sections 510(a), 510(b) or 510(c) of the Bankruptcy Code, or otherwise), (iii) all Causes of Action against the Non-Released Parties, to the extent not released pursuant to Section 10.3(a) or 10.3(c) of the Plan, including, without limitation, Avoidance Actions, breach of contract, breach of fiduciary duty, fraud, professional malpractice, and related or similar Causes of Action, including without limitation, the Former Counsel Claim and any related Causes of Action against Evan Greebel, and (iv) all Causes of Actions identified in the Plan Supplement as Causes of Action retained pursuant to this Section 10.5(a) (collectively, the “Retained Causes of Action”), and the Reorganized Debtor’s rights to commence, prosecute, or settle such Retained Causes of Action shall be preserved notwithstanding the occurrence of the Effective Date; provided that no Causes of Action released pursuant to Section 10.3(a) of the Plan shall vest in the Reorganized Debtor. No Entity may rely on the absence of a specific reference in the Plan, the Plan Supplement, the Disclosure Statement, or the Confirmation Order to any Retained Cause of Action against them as any indication that the Debtor or the Reorganized Debtor will not pursue any and all available Retained Causes of Action against them. The Debtor and the Reorganized Debtor expressly reserve all rights to prosecute any and all Retained Causes of Action against any Entity, except as otherwise expressly provided in the Plan.

Without in any way limiting the generality of the foregoing, the Retained Causes of Action specifically include the following:

1. Any and all claims and Causes of Action against the following non-exclusive list of individuals, including, without limitation: (i) claims or Causes of Action related to their status, actions, or omissions as equity holders, independent contractors, employees, agents, officers, or directors of the Debtor; (ii) claims or Cause of Action for negligence, misrepresentation, fraud, breach of contract, breach of fiduciary duty, breach of the duty of loyalty, breach of the duty of care, breach of the implied covenant of good faith and fair dealing, mandatory subordination, equitable subordination, equitable disallowance, or recharacterization; claims or Causes of Action for injunctive or other equitable relief; and any and all other claims and Causes of Action:


2

a. Martin Shkreli;

b. Marek Biestek;

c. Christopher Thorn;

d. Tom Fernandez;

e. Tony Chase;

f. Edward H. Painter;

g. David Pritchard;

h. Ronald Martell;

i. Bryan Lawlis;

j. Geoffrey Yarranton;

k. Charles Democko;

l. Donald Jospeh;

m. Jeanne Jew;

n. Nestor Molfino;

o. Ann Hagey;

p. Gil Divincenzi;

q. Mark G. Camarena;

r. Herb Cross;

s. Ted W. Love;

t. Denise Gilbert;

u. Laurie Smaldone Alsup;

v. Gary Lyons;

w. James I. Healy;

x. Robert A. Baffi; and

y. Raymond M. Withy.

2. Any and all claims and Causes of Action against the following non-exclusive list of former professionals of the Debtor, including, without limitation, claims and Causes of Action for professional malpractice, negligence, misrepresentation, fraud, breach of contract, breach of fiduciary duty, breach of the duty of loyalty, breach of the duty of care, breach of the implied covenant of good faith and fair dealing, and any and all other claims and Causes of Action:


3

a. Kaye Scholer LLP (including, without limitation, any Related Person);

b. Evan Greebel;

c. Chardan Capital Markets, LLC (including, without limitation, any Related Person); and

d. Marcum LLP (including, without limitation, any Related Person).

3. Any and all claims, Causes of Action, and rights arising out of or relating in any to intellectual property, intellectual property rights, know-how, and/or trade secrets of the Debtor, whether such intellectual property, intellectual property rights, know-how, and/or trade secrets are owned in whole or part or licensed, including, without limitation, claims and Causes of Action for infringement, invalidity, cancellation, breach of contract, breach of license, and any and all other claims, Causes of Action, rights or other legal challenges or proceedings.

4. Except as expressly waived, relinquished, released, compromised or settled in the Plan or any other Final Order, the general categories of claims and defenses and types of Causes of Actions expressly reserved and preserved include, without limitation and to the extent permitted under applicable law, defenses and Causes of Action against any Person or Entity for:

a. overpayments, back charges, duplicate payments, improper holdbacks, deposits, warranties, guarantees, indemnities, recoupment, or setoff;

b. wrongful or improper termination, suspension of services or supply of goods, or failure to meet other contractual or regulatory obligations;

c. failure to fully perform or to condition performance on additional requirements under contracts or leases with the Debtor or the Reorganized Debtor;

d. payments, deposits, holdbacks, reserves, or other amounts owed by any creditor, utility, supplier, vendor, insurer, surety, factor, lender, lessor, or other party;

e. counter-claims and defenses related to any contract or lease obligations;

f. turnover and recovery actions under sections 542, 543 and 550 of the Bankruptcy Code;

g. fraud, constructive trust, conversion, embezzlement, concealment, misappropriation, and close dealing;

h. breach of fiduciary duty;

i. breach of the implied covenant of good faith and fair dealing;


4

j. violations of applicable corporate law, including illegal dividends, diversion of corporate opportunities, or corporate waste;

k. alter ego and piercing the corporate veil;

l. recharacterization, subordination, and equitable subordination under section 510 of the Bankruptcy Code, contract or other applicable law;

m. unfair competition, interference with contract or potential business advantage, breach of contract, infringement of intellectual property, or any business tort;

n. claims arising out of or relating to Executory Contracts and Unexpired Leases; and

o. any other claim, right or cause of action existing at law or in equity or arising under any applicable statute, rule or regulation.

5. All claims, Causes of Action, and other rights under all D&O Insurance Policies or other insurance policies.

6. Any and all claims, Causes of Action, and rights, including, without limitation, for injunctive or equitable relief, specific performance or other performance under any collaboration agreement, confidentiality agreement, non-disclosure agreement, joint development agreement, trade secret agreement, know-how agreement, intellectual asset management agreement, collaborative R&D agreement, licensing agreement, employment agreement, severance agreement, release agreement, independent contractor agreement, or non-competition agreement.

In addition, nothing in the Plan shall release, waive discharge, or be deemed to release, waive or discharge, or otherwise prohibit the Reorganized Debtor from asserting and enforcing:

1. with respect to any Entity, any obligation under the Plan, Confirmation Order, Plan Documents (including, without limitation, the Plan Sponsor Documents and the Savant Acquisition Agreement), or Restructuring Transactions;

2. with respect to Savant, any obligation, right, claim or Cause of Action, including, without limitation, with respect to the binding letter of intent between the Debtor and Savant dated February 26, 2016, and executed on February 29, 2016.

3. with respect to any Entity, any Claims or Causes of Action unknown to the Debtor as of the Petition Date and arising out of gross negligence, willful misconduct, fraud or criminal acts of such Entity;

4. without limiting the foregoing, with respect to any Stalking Horse Entity or Related Person, any obligation arising under or relating to any of the Stalking Horse SPA Documents;


5

5. without limiting the foregoing, with respect to any Stalking Horse Entity or Related Person, any obligation arising under the DIP Credit Agreement to accept repayment of the DIP Facility Obligations through conversion to New Common Stock;

6. with respect to any current or former employee, director or officer of the Debtor, any Claims or Causes of Action arising out of or relating to (a) any confidentiality obligation owed to the Debtor or Reorganized Debtor, (b) any misappropriation or infringement of trade secrets, patents, copyrights or other intellectual property of the Debtor or Reorganized Debtor, (c) any contractual obligation of such Person for money owed to the Debtor or the Reorganized Debtor, or (d) any contractual non-compete or similar obligation owed by such Person to the Debtor or Reorganized Debtor;

7. with respect to any Non-Released Party, any Claim or Cause of Action;

8. with respect to any PIPE Plaintiff, any obligation under the PIPE Settlement or the Plan; or

9. with respect to any Non-Released Party, any Claim or Cause of Action.

Unless any Causes of Action against an Entity are expressly waived, relinquished, exculpated, released, compromised, or settled in the Plan or a Final Order, the Reorganized Debtor expressly reserves all Retained Causes of Action, for later adjudication, and, therefore no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, estoppel (judicial, equitable or otherwise), or laches, shall apply to such Retained Causes of Action upon, after, or as a consequence of the confirmation or consummation of the Plan. In accordance with section 1123(b)(3) of the Bankruptcy Code, any Retained Causes of Action that the Debtor may hold against any Entity shall vest in the Reorganized Debtor. The Reorganized Debtor may pursue such Retained Causes of Action, or decline to do any of the foregoing, as appropriate, in accordance with the best interests of the Reorganized Debtor and without further notice to or action, order or approval of the Bankruptcy Court.

The use of the defined term “Non-Released Parties” in the Plan and the provisions of Article X of the Plan are without prejudice to the ability of the Debtor, during the period prior to the Effective Date of the Plan, in its sole discretion to modify the Plan definition of “Non-Released Parties” to exclude any Entity from the “Non-Released Parties” definition or to otherwise release any Entity, whether pursuant to amendment or modification to the Plan or by separate request for relief to the Bankruptcy Court. The Debtor and the Reorganized Debtor reserve and preserve the right to assign, compromise, settle, abandon, relinquish, waive or release any of the Retained Causes of Action. Except as expressly required or provided in the Plan, the Confirmation Order, or other Final Order of the Bankruptcy Court, pursuit or prosecution of the Retained Causes of Action shall be in the sole discretion of the Debtor and the Reorganized Debtor, and the Debtor not have any obligation to pursue the Retained Causes of Action.


Exhibit 10

Terms of Board Remuneration



Terms of Board Remuneration See attached Debtor’s Motion for Entry of an Order Approving One-Time Equity Award

for Its Board Members and Chief Executive Officer, which was filed with the Bankruptcy Court

on May 25, 2015.




Objection Deadline: June 7, 2016, at 4:00 p.m. (ET) Hearing Date: June 14, 2016, at 10:00 a.m. (ET)

DEBTOR’S MOTION FOR ENTRY OF AN ORDER APPROVING ONE-TIME EQUITY

AWARD FOR ITS BOARD MEMBERS AND CHIEF EXECUTIVE OFFICER

KaloBios Pharmaceuticals, Inc., as debtor and debtor in possession (the “Debtor” or

“KaloBios”) in the above-captioned chapter 11 case hereby moves (the “Motion”), pursuant to

applicable Delaware law and sections 105(a), 363(b), 503(c)(3), 1123, and 1129(a)(4) and (5) of

title 11 of the United States Code (the “Bankruptcy Code”) for entry of an order, substantially in

the form attached hereto as Exhibit A (the “Proposed Order”), approving the one-time Equity

Award (as described and defined herein) to the current members (the “Directors”) of the

Debtor’s board of directors (the “Board”) and the Debtor’s Chief Executive Officer (“CEO”) for

their extraordinary efforts and dedication in this chapter 11 case. In support of this Motion, the

Debtor respectfully states as follows:

PRELIMINARY STATEMENT2

1. This has been an extraordinary chapter 11 case at every stage—beginning, middle

and end. In the two months before the Petition Date, the Debtor went from announcing it was

1 The last four digits of the Debtor’s federal tax identification number are 7236. The Debtor’s

address is 1000 Marina Blvd #250, Brisbane, CA 94005-1878.

2 Capitalized terms used but not defined in this Preliminary Statement are defined later in the Motion.


2

winding up its affairs, to experiencing a change in control (including a full turnover in

management and directors), to seeing its then-chief executive officer and board chair indicted

and arrested (leading to a complete loss of executive management and several directors), to then

having several lawsuits or legal actions commenced or threatened against the Debtor. These

events forced the Debtor to file for chapter 11 protection on a true emergency basis, without the

aid of meaningful prepetition planning, a financial advisor, or other preparations typical to a

complex chapter 11 case.

2. On the Petition Date, only two members of the former board of directors

remained—one director being David Moradi3—and the Debtor had no executive management

other than a recently named part-time restructuring officer. Since this case began, Mr. Moradi

has spent, and continues to spend, countless hundreds of hours of his days, nights and weekends

dedicated to the Debtor and its efforts to successfully reorganize.

3. Scarcely a week into the chapter 11 case, the Debtor was hit with a lawsuit

seeking to sequester and return nearly all of its cash to certain investors. This lawsuit threatened

the Debtor’s ability to pursue a chapter 11 restructuring and its very ability to survive as a viable

enterprise. At the same time, the Debtor had just completed its search for additional,

independent directors, and Dr. Cameron Durrant and Mr. Ronald Barliant were appointed to the

Board on the same day that the PIPE Litigation was initiated.

4. Dr. Durrant and Mr. Barliant joined the Debtor at substantial reputational risk to

themselves due to the potential for the public and the market to associate them with the Debtor’s

former chief executive who had been indicted and arrested. Yet, despite this risk, the pending

litigation, and all of the other uncertainties encircling the Debtor, they joined the Board, and Mr. 3 The other remaining director at the Petition Date was Michael Harrison, who resigned

from the Debtor’s board of directors on January 7, 2016.


3

Moradi continued on, because they saw great promise in the Debtor and its potential to help

thousands of individuals with its drug treatments.

5. This exceptional and challenging chapter 11 case has placed extraordinary and

unprecedented demands on Debtor’s Directors. The Debtor’s Board has been actively and

continually engaged in, among other things, managing the Debtor’s day-to-day affairs, dealing

with litigation and disputes on multiple fronts, developing the Debtor’s business, and securing

financing. The active, hands-on, and day-to-day involvement of the Board went far and above

the duties, responsibilities and work of a typical corporate Board. And, although the Debtor and

the Directors certainly anticipated that this would be a challenging reorganization, no one could

have anticipated the unprecedented burdens this Board has shouldered.

6. Moreover, it is only due to the unique qualifications and dedication of each of the

Directors that the Debtor has been able to repeatedly overcome the exceptional challenges in this

case and arrive at what the Debtor anticipates will be a successful reorganization. Among other

examples, the Directors played key and invaluable roles in keeping the Savant Transaction alive

through the early days of this case, maintaining key employee relationships, securing financing,

reaching a settlement with the PIPE Plaintiffs and engaging the Class Action plaintiff in active

settlement discussions.

7. Accordingly, and for the additional reasons discussed herein, the Debtor seeks

entry of an order approving the payment of the Equity Award to Dr. Durrant, Mr. Barliant and

Mr. Moradi.

JURISDICTION

8. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and

1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2), and the


4

Court may enter a final order consistent with Article III of the United States Constitution. Venue

is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

9. The statutory bases for the relief requested herein are sections 105(a), 363(b),

503(c)(3), 1123, and 1129(a)(4) and (5) of the Bankruptcy Code.

BACKGROUND

10. On December 29, 2015 (the “Petition Date”), the Debtor filed a voluntary petition

for relief under chapter 11 of the Bankruptcy Code. The Debtor continues to operate its business

as debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No

trustee, examiner or committee has been appointed in this chapter 11 case.

A. Events Leading to the Chapter 11 Case

11. The Debtor is a publicly traded biopharmaceutical research and development

company. After failed trials of certain of its drug candidates, the Debtor shifted its focus to

oncology treatment research in early 2015. By the fall of 2015, however, the Debtor had been

unable raise sufficient capital to fund this work. Therefore, on November 5, 2015, the Debtor

announced that its then-board approved a restructuring plan that would reduce the company’s

workforce by 61%, as part of an effort to reduce operating costs. The restructuring plan also

focused the company’s efforts on the ongoing development of KB003 or lenzilumab in CMML,

while pausing enrollment in Phase 2 of a clinical study of KB004. The restructuring plan

provided that the company would pursue strategic alternatives, such as a potential sale of the

company or assets, a corporate acquisition or further restructuring efforts.

12. On November 13, 2015, the Debtor announced that after discussions of various

strategic alternatives, the company concluded that it was highly unlikely that a viable transaction

could be reached within the time frame allowed by the company’s limited cash resources.


5

Therefore, the company announced that it was discontinuing studies of KB003 and KB004 and

that it had repaid in its entirety its $6.6 million secured loan to MidCap Financial. Furthermore,

the Debtor announced that it engaged The Brenner Group to assist in the wind-down of

operations and liquidation of the company’s assets.

13. On November 18, 2015, an investor group comprising Martin Shkreli and others

acquired more than 50% of the outstanding shares of the Debtor in open market transactions.

Mr. Shkreli was appointed Chief Executive Officer and Chairman of the Debtor’s board, and

David Moradi, Tony Chase, Marek Biestek, Tom Fernandez and Michael Harrison were

appointed members of the Debtor’s board of directors.

14. In a filing with the U.S. Securities and Exchange Commission (the “SEC”) on

December 9, 2015, the Debtor announced that it had entered a Securities Purchase Agreement

with certain investors (the “PIPE Investors”) for the purchase and sale of the Debtor’s common

stock in a private placement in public equity transaction (the “PIPE Transaction”), and on

December 16, 2015, the Debtor announced that the PIPE Transaction had been consummated.

15. On December 17, 2015, Mr. Shkreli was arrested following a federal indictment,

charging him with multiple counts of securities fraud, securities fraud conspiracy and wire fraud

conspiracy. According to the U.S. Department of Justice’s press release announcing the

indictment, the indictment relates to Mr. Shkreli’s tenure as CEO of Retrophin, Inc., a

biopharmaceutical company that trades under the ticker symbol RTRX, and as founder and

managing member of hedge funds MSMB Capital Management LP (MSMB Capital) and MSMB

Healthcare Management LP (MSMB Healthcare).

16. Mr. Shkreli was terminated as CEO of the Debtor and resigned from the board of

directors on December 17, 2015, after serving in those capacities for less than one month.


6

17. In addition, on December 17, 2015, Tony Chase resigned from the Board of

Directors. Also, in a filing with the SEC on December 23, 2015, the Debtor announced that its

independent registered public accounting firm, Marcum LLP, resigned, and its Interim Chief

Financial Officer, Christopher Thorn, submitted his resignation.

18. On December 28, 2015, the Debtor announced that Tom Fernandez and Marek

Biestek resigned as members of the board of directors of the Debtor on December 27, 2015,

leaving David Moradi and Michael Harrison as the only remaining directors of the Debtor.

19. Meanwhile, in December 2015, three putative class action lawsuits under federal

securities laws were filed in the Northern District of California against KaloBios and certain

former officers or directors relating to the investigation Mr. Shkreli and its potential negative

effect on KaloBios’ stock prices due to alleged materially false and misleading statements of the

company prior to Mr. Shkreli’s indictment. All three putative class actions were consolidated

with lead plaintiffs and legal counsel appointed in April 2016 (such consolidated action, the

“Class Action”).

20. In addition, certain of the PIPE Investors had engaged counsel and were

threatening a lawsuit against the Debtor for return of the funds from the PIPE Transaction.

21. As a result of these events and other challenges facing the Debtor, the Debtor

sought chapter 11 protection on December 29, 2015.

B. The Current Board

22. From the Petition Date until January 7, 2016, Mr. Moradi was one of only two

directors. During this time period, Mr. Moradi played a crucial and invaluable role in preserving

the Debtor. At points in the beginning of this chapter 11 case, there were multiple significant

threats to the Debtor’s continued existence, potential to reorganize and recovery to creditors.

Mr. Moradi guided the Debtor successfully through these tumultuous first few weeks to now,


7

where the Debtor has proposed a Plan (as defined below) that would see general unsecured

creditors paid in full over time and anticipates emerging from bankruptcy in slightly over one

month.

23. Shortly after the Petition Date, the Debtor undertook an emergency search for

potential additional, independent Board members. The Debtor focused its efforts on candidates

with restructuring or pharmaceutical experience. The search presented unique challenges

because of the circumstances that led the Debtor to file for bankruptcy protection, including the

arrest and indictment of its former chief executive, who remained a significant shareholder of the

company. Any potential candidate would have to accept the typical risks associated with joining

a critically distressed enterprise, but also the substantial reputational risks unique to this Debtor.

24. As a result of this search, the Board of Directors selected Dr. Cameron Durrant

and Mr. Ronald Barliant as potential independent directors. On January 7, 2016, Dr. Durrant and

Mr. Barliant were elected as independent directors, and Michael Harrison resigned from the

Board. Dr. Durrant was also appointed as Chairman of the Board. Thus, since January 7, 2016,

the Debtor’s Board of Directors has been composed of Dr. Cameron Durrant, Ronald Barliant

and David Moradi.

25. Dr. Durrant brought extensive pharmaceutical experience to the company as a

senior pharmaceutical and biotech executive, former physician and a pharma company builder

and turnaround specialist, with experience in infectious disease, pediatrics and oncology. Dr.

Durrant has previously served in senior roles with blue-chip, global pharma companies and also

as a board member, Chairman, CEO, as well as CFO, for both private and public specialty

pharma and biotech companies. Dr. Durrant holds a medical degree (Bachelor of Medicine,

Bachelor of Surgery, which is the British equivalent to the American M.D. degree) from the


8

Welsh National School of Medicine in Cardiff, United Kingdom. In addition, Dr. Durrant earned

a Diploma of the Royal College of Obstetricians and Gynecologists, is a member of the Royal

College of General Practitioners, London, United Kingdom, and holds an M.B.A. from the

Henley Management College in Oxford, United Kingdom.

26. Mr. Barliant, an attorney who is Of Counsel with the law firm of Goldberg Kohn

Ltd. in Chicago, Illinois, previously served as a United States bankruptcy judge for the Northern

District of Illinois from 1988 to 2002. Mr. Barliant has also served as adjunct faculty at John

Marshall Law School and is a frequent lecturer and author on bankruptcy-related matters. Mr.

Barliant holds a J.D. from Stanford University School of Law and a B.A. from Roosevelt

University.

27. Mr. Moradi is the founder, managing member and portfolio manager of Anthion

Management LLC. He has 20 years of investment experience, in all aspects of capital structure,

including turnarounds and reorganizations. He was also previously a portfolio manager at

Pequot Capital Management and Soros Fund Management.

28. From December 17, 2015, to March 1, 2016, the Debtor did not have a CEO; thus,

unlike a regular corporate board, the Debtor’s Board was managing the company’s day-to-day

operations. On March 3, 2016, the Board appointed Dr. Durrant to the position of CEO,

retroactively effective to March 1, 2016. In addition to the role of CEO, Dr. Durrant continues to

serve as a Director and Chairman of the Board.

29. As this Court has recognized, each Director has a unique area of expertise and

brings substantial experience in their fields to the Debtor—Dr. Durrant has vast pharmaceutical

and executive experience, Mr. Barliant is a restructuring and legal expert, and Mr. Moradi has

significant business and investment experience. Furthermore, they have each risked serious


9

harm to their reputations and careers based on the Debtor’s connection to Martin Shkreli. When

Dr. Durrant and Mr. Barliant decided to join the Board, and Mr. Moradi decided to continue as a

director, the Debtor was viewed by many in the pharmaceutical and business world as

“untouchable” because of the deluge of negative publicity about the Debtor and its former chief

executive. The Board, however, took on that risk and transformed the Debtor into a viable

pharmaceutical development company on the verge of a successful reorganization.

C. Efforts of Board of Directors Throughout this Chapter 11 Case

30. The Board was required to quickly get up to speed on the complex issues in the

Debtor’s case, requiring extensive time and effort due to the lack of legacy knowledge remaining

with the Debtor. Since January 7, 2016, the Board has dealt with an extraordinary number of

issues, the majority of which were highly disruptive to the Debtor’s business and reorganization

process, including without limitation:

Familiarizing themselves with background facts and history of the company, including its business, legal, and financial situations;

Addressing bankruptcy case issues;

Addressing issues related to Martin Shkreli’s equity position;

Salvaging and negotiating the Savant Transaction to acquire rights to benznidazole;

Addressing the hotly contested PIPE Litigation and leading months-long settlement discussions that resulted in a Court-approved settlement;

Negotiating with the Class Action plaintiff;

Addressing personnel and operational issues;

Creating budgets and business plans;

Financing the exit from bankruptcy;

Working on and reviewing SEC filings;

Retaining auditors and assisting with an audit of the Debtor’s financial statements for public company reporting purposes;

Creating and implementing a media relations strategy to improve the Debtor’s public image and reputation; and


10

Investigating claims against the Debtor’s former professionals and others.

31. In dealing with the numerous issues that have arisen in this case, the Board has

received and responded to thousands of emails, reviewed hundreds of key documents, and

participated in an estimated 200 conference calls, many lasting an hour or longer. The Board

spends days, night, weekends, and family vacations working on and dedicated to the Debtor and

its reorganization. The Directors estimate that they have each spent at least 500 hours, if not

more, working for the Debtor since January 2016, not including travel to the Debtor’s

headquarters, Wilmington and New York for settlement negotiations, court hearings and other

meetings.

32. Outlined below in more detail are some of the most crucial events from this

chapter 11 case and the Board’s invaluable contributions to these events.

The Savant Transaction

33. Prior to Mr. Shkreli’s indictment, the ensuing events, and the Debtor’s

bankruptcy, the Debtor announced that it had entered into a non-binding letter of intent with

Savant Neglected Diseases, LLC (“Savant”) to acquire the rights to the benznidazole program for

the treatment of Chagas disease (the “Savant Transaction”). Mr. Shkreli’s indictment, the related

events, and the bankruptcy case put the prospect of reaching a binding letter of intent with

Savant in peril.

34. After their election to the Board, Dr. Durrant and Mr. Barliant, along with Mr.

Moradi, began the extensive and delicate processing of negotiating with Savant and were able to

reach, enter into, and receive Court approval of a binding letter of intent (the “Letter of Intent”)

for the acquisition of the worldwide rights to Savant’s benznidazole program.


11

35. On February 26, 2016, the Court entered an order (D.I. 211) authorizing the

Debtor to execute and enter into the Letter of Intent, and on February 29, 2016, the Debtor and

Savant executed the Letter of Intent.

36. Without the Savant Transaction, the Debtor would have lost significant value and

may not have been able to pursue its current reorganization. It is unquestionable that the

exceptional qualifications and reputation of Dr. Durrant played an integral role in the success of

the Savant Transaction, as testified to by the CEO of Savant, Steven Hurst, when he said: “[Dr.

Durrant] has unique qualifications and a skill set that is very important to this project [the Savant

Transaction].” Case No. 15-12628 (LSS), Hr’g Tr., 46 (Feb. 4, 2016). Thus, without Dr.

Durrant’s and the Board’s role in negotiations with Savant, the Letter of Intent and the Debtor’s

business plan would not have been realized.

PIPE Litigation

37. On January 7, 2016, an adversary complaint was filed (A.D.I. 1; Adv. Case No.

16-50001) (the “PIPE Litigation”) against the Debtor, relating to the PIPE Transaction. The

plaintiffs (the “PIPE Plaintiffs”) sought, among other things, a declaration that the Debtor held in

a resulting or constructive trust for the benefit of the PIPE Plaintiffs the approximately

$6,899,946.86 (the “Funds”) that the PIPE Plaintiffs paid to the Debtor in the PIPE Transaction.

38. The Funds from the PIPE Transaction represented the vast majority of the

Debtor’s available cash. Therefore, the PIPE Litigation threatened the Debtor’s ability to

continue with a chapter 11 reorganization and posed the risk of wiping out or greatly reducing

recoveries to unsecured creditors, not to mention shareholders.

39. Although there were considerable disputes in the PIPE Litigation, the Board

engaged in extensive settlement discussions beginning in February 2016, including an all-day


12

meeting attended by the full Board, either in-person or telephonically, in New York. Further, in

March 2016, the parties began formal mediation conducted by the Honorable Kevin J. Carey,

United States Bankruptcy Judge for the District of Delaware. An initial mediation conference

was held on March 14, 2016, in Wilmington, Delaware and was attended by Mr. Barliant. As

this initial mediation conference was unsuccessful, the parties continued to engage in settlement

negotiations throughout March and April 2016, which were led by Mr. Barliant with the advice,

assistance and concurrence of the full Board.

40. The Board was intimately involved in all stages of the PIPE Litigation, including

strategy, reading and commenting on pleadings, and mediation and settlement negotiations.

41. Through these extensive settlement negotiations and the Board’s efforts, the

parties were able to reach mutually agreeable terms to resolve the PIPE Litigation and their other

disputes. The PIPE Litigation settlement further benefits the Debtor’s restructuring efforts

because it also includes a provision requiring the PIPE Plaintiffs to support the Plan as long as

the Plan aligns with the terms of the settlement.

42. On May 9, 2016, the Court entered an order (A.D.I. 63; D.I. 419) approving the

settlement with the PIPE Plaintiffs, pending the Plan going effective.

Chapter 11 Trustee Motion

43. On February 1, 2016, less than one month after Dr. Durrant and Mr. Barliant

joined the Board, the U.S. Trustee filed an emergency motion to appoint a Chapter 11 trustee, or,

in the alternative, convert the case to Chapter 7 liquidation (the “Trustee Motion”) (D.I. 106).

Like the PIPE Litigation, the Debtor was again faced with an existential threat and “bet the

company” litigation for the second time in less than thirty days. The U.S. Trustee sought to

shorten notice of the Trustee Motion to have it heard on an expedited basis, and the Debtor


13

requested that the Trustee Motion be heard even earlier because it threatened the Debtor’s

existence, reputation and the delicate negotiations with, among others, Savant.

44. On February 3, 2016, the Debtor filed an objection to the Trustee Motion (D.I.

133), which was supported by declarations of Dr. Durrant (D.I. 144) and Mr. Barliant (D.I. 127).

45. Dr. Durrant and Mr. Barliant traveled to Wilmington, Delaware for a hearing on

the Trustee Motion on February 4, 2016, where Dr. Durrant and Mr. Barliant were both key

testifying witnesses. Dr. Durrant testified to, among other things, the Debtor’s potential value

upon emergence from bankruptcy, both financially to stakeholders as well as beneficially to

patients. Case No. 15-12628 (LSS), Hr’g Tr., 59–68 (Feb. 4, 2016), and Mr. Barliant testified as

to, among other things, the Debtor’s appropriate corporate governance measures. Id. at 70–75.

46. Ruling from the bench, the Court denied the Trustee Motion finding that there

was no cause to appoint a chapter 11 trustee because appropriate corporate governance had been

established and the Directors were acting in the best interest of the Debtor and its stakeholders.

Id. at 139–41. In denying the Trustee Motion, the Court made specific factual findings

recognizing the atypical and extraordinary duties being handled by the Board, including

managing the company in the absence of a full suite of executive officers:

The evidence admitted is that current management consists of the Board, Mr. Barliant and Dr. Durrant, both of whom are disinterested directors, and Mr. Moradi, who is an investor.

While Mr. Moradi was brought into the company by Mr. Shkreli, there was no evidence that he is controlled by or beholden to Mr. Shkreli, and in fact, Mr. Barliant testified that Mr. Moradi is acting in the best interests of the Debtor and its stakeholders.

Each member of the Board brings different expertise. Mr. Barliant, a former bankruptcy judge, is leading the restructuring efforts and working with the legal professionals.


14

Dr. Durrant brings his medical and business acumen to the Debtors, which includes commercialization expertize in the pharmaceutical industry and with start-up pharma companies. He also appears to bring a Rolodex of contacts that are serving the Debtors well. He has been instrumental in the negotiations with Savant and is knowledgeable about the Debtors’ existing drug programs.

Mr. Moradi is a hedge fund manager and has been leading oversight of the Debtor’s efforts to raise new capital.

* * * Appropriate corporate governance has been established,

and Mr. Shkreli is not involved with the company. While he continues to be a stockholder, Mr. Barliant testified regarding corporate measures put in place in regard to stockholder action, to stem Mr. Shkreli’s participation in the Debtor.

Id. at 140–41. The Court’s findings and observations were as prescient as they were accurate

and astute. Mr. Barliant’s legal and restructuring expertise has been crucial to key events such

as, among other things, the PIPE Litigation and PIPE Settlement. Dr. Durrant’s reputation and

Rolodex of contacts have produced great value in the form of, among other things, the Savant

Transaction and developing other business opportunities. And Mr. Moradi has, among other

things, led the successful effort to raise substantial new capital to allow the Debtor to be in a

position to successfully exit chapter 11.

The DIP Financing and Exit Financing

47. As alluded to above, Mr. Moradi led the search for additional capital for the

Debtor. In January 2016, he was aided in his efforts through the assistance of Dr. Durrant and

the Debtor’s financial advisor. Mr. Moradi and Dr. Durrant inquired upon approximately 190

potential investors and partners—strategic and financial—and held multiple in-person meetings,

in an attempt to locate financing, partnerships or other paths forward.

48. Dr. Durrant and Mr. Moradi are also responsible for bringing Black Horse Capital

LP, Black Horse Capital Master Fund Ltd. and Cheval Holdings, Ltd. (collectively, “Black


15

Horse”), the Debtor’s debtor-in-possession and exit financing lender, to the table. Even prior to

the Debtor’s retention of a financial advisor, Dr. Durrant and Mr. Moradi had already had

multiple calls and meetings with the director of Black Horse.

49. As a direct result of the Board’s efforts, the Debtor was able to secure debtor-in-

possession financing facility of $3 million (the “DIP Facility”)4 and an exit facility of $11

million (the “Exit Facility”) to facilitate consummation of the Savant Transaction as well as

consummation of the Plan (as defined below). Without this critical financing, the Debtor very

likely would not be on the verge of a successful reorganization.

Plan and Disclosure Statement

50. The Board was also extensively involved in formulating the initial plan and

disclosure statement in this case, which culminated in the Debtor filing on April 7, 2016, the

Debtor’s Plan of Reorganization (D.I. 318) (as may be amended, modified or supplemented, the

“Plan”) and related Disclosure Statement with Respect to the Plan of Reorganization of KaloBios

(D.I. 319) (as may be amended, modified or supplemented, the “Disclosure Statement”).

51. Prior to the hearing on the Disclosure Statement, the Board again provided

substantial review, input, information and comments for the Debtor’s amended Plan and

Disclosure Statement. The Debtor believes that the Board’s direct involvement in this process

was far more rigorous and active than a typical board of directors.

52. On May 9, 2016, the Court entered an order (D.I. 420), approving the Disclosure

Statement (D.I. 435) as containing adequate information under section 1125 of the Bankruptcy

Code and authorizing the Debtor to solicit votes with regard to the acceptance or rejection of the

Plan (D.I. 434).

4 On April 29, 2016, the Court approved the DIP Facility (D.I. 388).


16

53. The Plan represents an extraordinary achievement. At the outset of this case, the

Debtor had no financing and faced the prospect of losing access to substantially all of its liquid

assets. Through the Board’s unprecedented efforts, the Debtor is now in a position—scarcely six

months later—to exit bankruptcy through its Plan that pays creditors in full over time, preserves

and creates value for existing equity, and preserves jobs and promising treatments for rare and

neglected diseases, including fatal juvenile diseases.

54. Additionally, the Plan and Disclosure Statement specifically contemplated the

Debtor’s intention to seek in connection with confirmation of the Plan, by the Plan Supplement

and/or by separate motion, approval of appropriate remuneration for the Directors in recognition

of their extraordinary efforts in this case and that such remuneration may be in the form of

equity.5 Plan at 13; Disclosure Statement at 7, 94. Notice of the Plan and Disclosure Statement

was served upon all of the Debtor’s shareholders.

D. Independent Expert’s Equity Award Analysis

55. An independent expert, Farient Advisors LLC (“Farient”), was engaged to

provide a recommendation as to appropriate compensation for the Board based on comparable

companies and recognition of the unprecedented contributions, dedication, time and sacrifices of

the Board. Farient is an independent executive compensation and performance consultant firm.

A biography of Robin A. Ferracone, the lead Farient expert handling the Equity Award Analysis

for the Debtor, is attached hereto as Exhibit B and is incorporated fully herein by reference. A

copy of Farient’s analysis (the “Equity Award Analysis”) summarizing its recommendation is

attached hereto as Exhibit C and is incorporated fully herein by reference.

5 The Debtor intends to set forth in the Plan Supplement the details of and support for the relief

sought in this Motion.




19

of review that may apply for compensation awards of this type, whether reviewed under business

judgment, entire fairness or the facts and circumstances of the case.

I. The Standard of Review.

A. Business Judgment and Entire Fairness under Sections 105(a) and 363(b) of the Bankruptcy Code.

62. The Debtor seeks entry of an order approving payment of the Equity Award

pursuant to sections 105(a) and 363(b) of the Bankruptcy Code. Section 363(b)(1) provides, in

relevant part, that the trustee or debtor in possession, “after notice and a hearing, may use, sell, or

lease, other than in the ordinary course of business, property of the estate . . . .” 11 U.S.C. §

363(b)(1). Further, pursuant to section 105(a) of the Bankruptcy Code, the “court may issue any

order, process, or judgment that is necessary or appropriate to carry out the provisions of this

title.” 11 U.S.C. § 105(a).

63. If a debtor’s proposed use of its assets pursuant to section 363(b) of the

Bankruptcy Code represents a reasonable business judgment on the part of the debtor, such use

may be approved. In re Del. & Hudson Ry. Co., 124 B.R. 169, 175–76 (D. Del. 1991) (adopting

the “sound business purpose” test to evaluate motions brought pursuant to section 363(b)); In re

Montgomery Ward Holding Corp., 242 B.R. 147, 153 (D. Del. 1999) (same). The business

judgment rule “is a presumption that in making a business decision the directors of a corporation

acted on an informed basis, in good faith and in the honest belief that the action taken was in the

best interest of the company.” Official Comm. of Subordinated Bondholders v. Integrated Res.,

Inc. (In re Integrated Res., Inc.), 147 B.R. 650, 656 (S.D.N.Y. 1992) (quoting Smith v. Van

Gorkom, 488 A.2d 858, 872 (Del. 1985)).

64. While business judgment is generally the appropriate standard for transactions

pursuant to section 363(b) of the Bankruptcy Code, some courts have held that if the transaction


20

is self-interested, then review under an “entire fairness” or “heightened scrutiny” standard may

be necessary. See, e.g., In re Residential Capital, LLC, 2013 WL 3286198, at *19 (Bankr.

S.D.N.Y. June 27, 2013) (“[I]n interested party transactions, an entire fairness/heightened

scrutiny analysis applies. In applying heightened scrutiny, courts are concerned with the integrity

and entire fairness of the transaction at issue, typically examining whether the process and price

of a proposed transaction not only appear fair but are fair and whether fiduciary duties were

properly taken into consideration.”) (internal citations and quotations omitted).

65. Under Delaware law, the entire fairness standard places the burden upon the

company to prove that a self-interested or self-dealing transaction was fair to the company, by

demonstrating a fair price and fair dealing. Weinberger v. UOP, Inc., 457 A.2d 701, 710–11

(Del. Supr. 1983). Furthermore, the Delaware Supreme Court explained that fair price and fair

dealing “must be examined as a whole since the question is one of entire fairness.” Id.

B. Section 503(c)(3) and “Justified By the Facts and Circumstances of the Case.”

66. Section 503(c)(3) of the Bankruptcy Code states:

(c) Notwithstanding subsection (b), there shall neither be allowed, nor paid—

*** (3) other transfers or obligations that are outside the ordinary course of business and not justified by the facts and circumstances of the case, including transfers made to, or obligations incurred for the benefit of, officers, managers, or consultants hired after the date of the filing of the petition.

11 U.S.C. § 503(c)(3). Thus, non-ordinary course transfers or obligations covered by section

503(c)(3) can be made if the transfer is “justified by the facts and circumstances of the case . . . .”

Id.

67. Courts have generally used a form of the business judgment standard for

approving transactions under section 363(b) of the Bankruptcy Code to determine whether the


21

section 503(c)(3) “facts and circumstances” standard has been satisfied. See, e.g., In re Nobex

Corp., No. 05-20050 (CSS), Hr’g Tr. at 67 (Bankr. D. Del. Jan. 12, 2006) (noting that the section

503(c)(3) standard is “nothing more than a reiteration of the standard under 363 . . . the business

judgment of the debtor”); In re Velo Holdings Inc., 472 B.R. 201, 212 (Bankr. S.D.N.Y. 2012)

(stating that “the ‘facts and circumstances’ language of section 503(c)(3) creates a standard no

different than the business judgment standard under section 363(b)”) (citation omitted)).

II. Payment of the Equity Award is Within the Debtor’s Reasonable Judgment, is Entirely Fair and is Justified Based on the Facts and Circumstances of this Case.

68. The Debtor submits that the process utilized to determine the Equity Award, the

total amount of the Equity Award, and the extraordinary dedication and hard work of the

Directors and CEO satisfy all of the potential standards that apply to the grant of this Equity

Award.

69. As discussed above, the Board has devoted hundreds of hours to the Debtor and

its reorganizing efforts and has done so for lower than average compensation. The Board’s

services provided invaluable benefits to the Debtor’s estate, for example through negotiations

with Savant and the PIPE Plaintiffs and securing financing. Furthermore, the Board has

accomplished these significant milestones in only approximately six months with the company

and under significant duress and with substantial risk to their professional reputations and careers

at stake. Given the numerous complex issues that the Board has addressed, often on an

accelerated timetable and primarily resolved in a manner favorable to the Debtor and its

shareholders and creditors, the Debtor submits that Directors and CEO have preserved and added

value to the Debtor that should be reflected by the grant of this Equity Award.

70. After multiple discussions with the Board and a review of several potential

independent experts, Debtor’s counsel retained Farient to evaluate the level of compensation for


22

CEOs and board members of comparable companies. After completing its Equity Award

Analysis, Farient presented its findings to the Board. The Board then closely reviewed the

Equity Award Analysis over several days and lengthy conference calls, including a review of the

underlying bases, the intense demands upon the Directors in a compressed timeframe, their

current level of compensation, the successful outcomes in this complex case that have been

directly influenced and achieved by the Directors’ hard work and dedication to the Debtor, and

relevant market factors. Thus, the Debtor’s determination that the Equity Award should be

approved was an exercise of reasonable business judgment by the Board and also a product of

fair dealing in how the process was initiated, timed, structured and negotiated, and disclosed,

considered and approved by the Directors.

71. The Equity Award Analysis upon which the Board relied in determining the

amount of the Equity Award substantiates the Equity Award as a “fair price” under the entire

fairness standard. The Equity Award Analysis evaluated a number of factors in order to

determine the Equity Award’s comparability to the market, and the Equity Award Analysis’s

ultimate Equity Award recommendation is within the market range for similar equity grants,

particularly when considering the truly extraordinary circumstances of this case and the unique

and unprecedented efforts by the Directors.

72. The Equity Award Analysis demonstrates that the 25th, 50th, 75th percentiles and

average of equity interests as a part of normal director compensation for pre-IPO stage

companies are approximately 0.30%, 0.40%, 0.60% and 1.4%, respectively. The same

percentiles and average for normal compensation for board chairman are 0.40%, 0.70%, 2.0%

and 5.4%, respectively, or 2 to 3 times as much as a regular director. Thus, the Equity Award

Analysis’s recommendation is that Messrs. Barliant and Moradi, as directors, receive a 0.60%


23

normal equity grant,8 which is the 75th percentile for normal director compensation. This award

will be prorated for the six months of service, for an actual award of 0.30% for each of Messrs.

Barliant and Moradi. Because Dr. Durrant was a director and Chairman of the Board for two

months prior to his appointment as CEO, the Equity Award Analysis recommends a normal

equity grant of 0.30%. This figure is arrived at by multiplying the normal equity grant (0.30% as

described above for Messrs. Barliant and Moradi) by three to reflect the market rate for a board

chair, and then dividing by three to reflect Dr. Durrant’s two month service as director and

Chairman prior to becoming CEO.

73. The Equity Award Analysis also evaluates the market-level for one-time special

compensation awards to directors of companies that have undergone special or extreme

situations, such as bankruptcy, mergers and acquisitions, litigation or other periods of

significantly increased workload. The 75th percentile of special director compensation for such

special situations is approximately $300,000 in value, with this compensation primarily paid in

equity. To recognize the extraordinary efforts, time commitment, dedication, and reputational

and career risks of the Board in this case—even when compared to other special situations—the

Equity Award Analysis recommends a one-time special equity grant at the 75th percentile:

$300,000 for Messrs. Barliant and Moradi and $100,000 for Dr. Durrant (based on prorating for

his two months of service solely as a director and Chairman of the Board).

74. With regard to the market comparison of interim CEO compensation, the Equity

Award Analysis demonstrates that interim CEO compensation tends to be more cash-oriented

than equity-oriented. Interim CEO cash salaries are typically $450,000 to $600,000, plus a 75th

8 All equity provided to the Board would vest upon issuance of the shares, but would not be

marketable for one year. A grant of restricted shares aligns with typical grants of director equity in the marketplace, where either options or restricted shares are most often employed.


24

percentile for equity grants to interim CEOs being approximately 1.5%. Due to, among other

things, Dr. Durrant’s dedication, reputational risk, hard work, and value added to the Debtor, the

Equity Award Analysis recommends an interim CEO equity grant to Dr. Durrant of 1.5%,

prorated based on his four months of service as CEO, for a total one-time interim CEO grant of

0.50% of equity.

75. In total, the Equity Award equals 1.4% of the Debtor’s equity for normal

expected equity compensation for directors in comparable companies, plus $700,000 in target

equity value in a one-time special equity grant for the Directors’ extraordinary service in this

case.

76. Based on the Equity Award Analysis, each component of the Equity Award is

within the market range for director and interim CEO compensation for both normal and special

situations. Accordingly, given the complex issues in this case, the extraordinary time and effort

spent by each Dr. Durrant and Messrs. Barliant and Moradi, and the value that each of the

Directors and CEO has provided to KaloBios, the Debtor respectfully submits that the amount

and approval of the Equity Award satisfies the business judgment, entire fairness and “facts and

circumstances” standards.

III. The Equity Award Comports with the Requirements of Sections 1129(a)(4) & (5) and 1123(a)(5)(J) of the Bankruptcy Code.

77. As described above, the Debtor previously disclosed in its Disclosure Statement

that it would be filing this Motion and/or including a Board remuneration package in its Plan

Supplement. In addition to complying with Delaware law and sections 105(a) and 363(b) of the

Bankruptcy Code, the Equity Award comports with the confirmation and plan-related

requirements of sections 1123(a)(5)(J) and 1129(a)(4) and (5) of the Bankruptcy Code.

78. Section 1129(a)(4) and (5) of the Bankruptcy Code provide that:


25

(a) The court shall confirm a plan only if all of the following requirements are met:

(4) Any payment made or to be made by the proponent, by the debtor, or by a person issuing securities or acquiring property under the plan, for services or for costs and expenses in or in connection with the case, or in connection with the plan and incident to the case, has been approved by, or is subject to the approval of, the court as reasonable.

(5) (A)

(i) The proponent of the plan has disclosed the identity and affiliations of any individual proposed to serve, after confirmation of the plan, as a director, officer, or voting trustee of the debtor, an affiliate of the debtor participating in a joint plan with the debtor, or a successor to the debtor under the plan; and

(ii) the appointment to, or continuance in, such office of such individual, is consistent with the interests of creditors and equity security holders and with public policy; and

(B) the proponent of the plan has disclosed the identity of any insider that will be employed or retained by the reorganized debtor, and the nature of any compensation for such insider.

11 U.S.C. § 1129(a)(4)(5).

79. Additionally, Section 1123(a)(5)(J) of the Bankruptcy Code provides:

(a) Notwithstanding any otherwise applicable nonbankruptcy law, a plan shall—

***

(5) provide adequate means for the plan’s implementation, such as—

***

(J) issuance of securities of the debtor, or of any entity referred to in subparagraph (B) or (C) of this paragraph, for cash, for property, for existing securities, or in exchange for claims or interests, or for any other appropriate purpose . . . .

11 U.S.C. § 1123(a)(5)(J).


26

80. Based on the prior disclosures in the Plan and Disclosure Statement of the

Debtor’s intent to seek the approval sought herein in connection with confirmation of the Plan,

and as will be supplemented by the Plan Supplement, the Debtor respectfully submits that, to the

extent applicable, sections 1129(a)(4) and (5) and section 1123(a)(5)(J) of the Bankruptcy Code

are satisfied. In particular, section 1129(a)(4) is satisfied because the Equity Award is subject to

approval by the Court as reasonable pursuant to this Motion. Likewise, section 1129(a)(5) is

satisfied, to the extent applicable, because the nature and amount of the Equity Award is

disclosed herein and will be again described in the Plan Supplement. In addition, to the extent

applicable, section 1123(a)(5)(J) is satisfied because the securities of the debtor issued under the

Plan pursuant to the Equity Award is for an “appropriate purpose” as required by that section.

NOTICE

81. Notice of this Motion has been served by overnight delivery upon the following:

(a) the Office of the United States Trustee for the District of Delaware; (b) counsel to the

Stalking Horse Entities; (c) counsel to the PIPE Plaintiffs; (d) counsel to the Class Action

plaintiff; (e) counsel to each of Martin Shkreli, Marek Biestek, and Christopher Thorn; (f) the

SEC; (g) Internal Revenue Service; (h) record holders of the Debtor’s common stock and The

Depository Trust Company for distribution to the Debtor’s common stockholders for whom such

record holder acts as an intermediary; (i) the parties included on the Debtor’s list of twenty (20)

largest unsecured creditors; and (j) all parties who have requested notice under Bankruptcy Rule

2002. The Debtor submits that, under the circumstances, no other or further notice is required.

WHEREFORE, the Debtor respectfully requests that the Court (i) grant this Motion and

the relief requested herein; (ii) enter the Proposed Order attached as Exhibit A hereto approving


27

the Equity Award described herein to the Debtor’s Directors and CEO; and (iii) grant such other

and further relief as it deems just and proper.

Dated: May 25, 2016 MORRIS, NICHOLS, ARSHT & TUNNELL LLP Wilmington, Delaware /s/ Marcy J. McLaughlin

Eric D. Schwartz (No. 3134) Gregory W. Werkheiser (No. 3553) Matthew B. Harvey (No. 5186) Marcy J. McLaughlin (No. 6184) 1201 N. Market St., 16th Floor PO Box 1347 Wilmington, DE 19899-1347 Telephone: (302) 658-9200 Facsimile: (302) 658-3989 E-mail:[email protected] [email protected]

[email protected] [email protected]

- and - Peter Ivanick, Esq. (admitted pro hac vice)

Pieter Van Tol, Esq. (admitted pro hac vice) John D. Beck, Esq. (admitted pro hac vice) HOGAN LOVELLS US LLP 875 Third Avenue New York, NY 10022 Telephone: (212) 918-3000 Facsimile: (212) 918-3100 E-mail:[email protected] [email protected] [email protected] Counsel to the Debtor and Debtor in Possession

10096049.7


Exhibit A

Proposed Order




Re: D.I. ________

ORDER APPROVING ONE-TIME EQUITY AWARD FOR DEBTOR’S BOARD MEMBERS AND CHIEF EXECUTIVE OFFICER

Upon the motion (the “Motion”)2 of KaloBios Pharmaceuticals, Inc., as debtor and debtor

in possession (the “Debtor” or “KaloBios”), pursuant to applicable Delaware law and sections

105(a), 363(b), 503(c)(3), 1123, and 1129(a)(4) and (5) of title 11 of the United States Code (the

“Bankruptcy Code”), for entry of an order approving the one-time equity award as described in

the Motion to the Debtor’s Directors and Chief Executive Officer for their extraordinary efforts

and dedication in this chapter 11 case; and adequate notice of the Motion having been given as

set forth in the Motion; and it appearing that no other or further notice is necessary; and the

Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28

U.S.C. §§ 157 and 1334; and the Court having determined that consideration of the Motion is a

core proceeding pursuant to 28 U.S.C. § 157(b)(2); and the Court having determined that the

Debtor exercised its reasonable business judgment in approving the Equity Award; and the Court

having determined that the Equity Award satisfies entire fairness and is justified based on the

facts and circumstances of this case; and the legal and factual bases set forth in the Motion

1 The last four digits of the Debtor’s federal tax identification number are 7236. The Debtor’s

address is 1000 Marina Blvd #250, Brisbane, CA 94005-1878

2 Capitalized terms used but not defined herein are defined in the Motion.


2

establish just cause for the relief requested in the Motion; and upon the record in this proceeding;

and after due deliberation;

IT IS HEREBY ORDERED THAT:

1. The Motion is GRANTED as set forth herein.

2. Payment of a one-time equity award in the amount of 0.30% plus an additional

equity grant with a target equity value of $300,000 to Ronald Barliant as a member of the

Debtor’s Board of Directors is approved.


equity grant with a target equity value of $300,000 to David Moradi as a member of the Debtor’s

Board of Directors is approved.


equity grant with a target equity value of $100,000 to Dr. Durrant as the Debtor’s Board Chair

and Interim CEO is approved.

5. The Debtor is authorized and empowered to take all actions necessary to

implement the relief granted in this Order.

6. The Court retains jurisdiction with respect to all matters arising from or related to

the implementation of this Order.

Dated: _______________, 2016 Wilmington, Delaware

______________________________________________ THE HONORABLE LAURIE SELBER SILVERSTEIN UNITED STATES BANKRUPTCY JUDGE


Exhibit B

Biography of Robin A. Ferracone


Biography for Robin A. Ferracone

ROBIN A. FERRACONE Chief Executive Officer, Farient Advisors LLC [email protected] New York: (646) 626-6931; Los Angeles: (626) 799-2700

Ms. Ferracone is founder and Chief Executive Officer of Farient Advisors (Farient), a compensation and performance advisory firm. Farient helps clients make performance-enhancing and defensible decisions that are in the best interests of their shareholders. Ms. Ferracone provides compensation and performance advisory services to public and private companies.

From March 2005 to March 2007, Ms. Ferracone was President of the Human Capital business of Mercer, a business which includes talent and

compensation consulting, software, and data services globally. Prior to that, Ms. Ferracone was Chairman of the U.S. West Region for Mercer’s parent company, Marsh & McLennan Companies, market leader and Worldwide Partner at Mercer, and President and Chairman of SCA Consulting, a firm she co-founded in 1985 and sold to Mercer in 2001.

With over 30 years of consulting experience, Ms. Ferracone has advised clients in the areas of business and talent strategies, executive compensation, organization, value management, and performance measurement. She is the author of the book entitled, “Fair Pay Fair Play: Aligning Executive Performance and Pay.” Her work has focused on providing high-impact decision-making support and organizational solutions based on strategic and market insights. In addition, Ms. Ferracone has authored numerous articles and has been quoted often in national publications. She is currently a regular contributor to Forbes.com and Directorship Magazine. She has been a frequent presenter for prominent organizations, such as the Council of Institutional Investors, Society for Corporate Secretaries and Governance Professionals, the National Association of Corporate Directors (NACD), and The Conference Board.

Ms. Ferracone currently serves as the Vice-Chairman for the Board of Trustees of Duke University, the Board of Directors of Trupanion, a public company, the Board of Trustees of Oaktree Capital Funds, and the Board of Directors of Enlight, a company that delivers strategically relevant, independent information to boards though an easy-to-use software application. She is also a member of Women Corporate Directors, Committee for Economic Development, NACD, The Committee of 200, and the World Presidents’ Organization. For the past five years, Ms. Ferracone has been named to the NACD Directorship 100, the prestigious list of the most influential people in corporate governance and the boardroom. In 2014, Ms. Ferracone was selected as one of EY’s Entrepreneurial Winning Women, a competition that annually recognizes female entrepreneurs.

Ms. Ferracone received an M.B.A. from the Harvard Business School, where she was a Baker Scholar and a B.A. summa cum laude in Management Science and Economics from Duke University, where she was elected to Phi Beta Kappa


Exhibit C

Equity Award Analysis



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Farient was retained by KaloBios to recommend appropriate compensation for the Company’s current Directors, one of whom also is the interim CEO, during a highly disruptive reorganization process Between January and June of 2016, KaloBios underwent a major financial

reorganization- Filed for Chapter 11 protection in Delaware on December 29, 2015- Preserved key talent to continue to drive development- Protected assets- Appointed an interim CEO, Cameron Durrant, MD, MBA, with potential to continue

following emergence from Chapter 11

Currently, the Company is preparing for emergence from bankruptcy (anticipated for June)- Raised financing to exit and continue to finance drug development (Lenzilumab and

Benznidazole)- Resolving litigation threats- Preparing to list on a stock exchange

The Company’s current three members of KaloBios’ Board of Directors (Mr. Barliant, Mr. Moradi, and Dr. Durrant) have steered the Company through the Chapter 11 process and are responsible for preserving most if not all of the equity value the Company is expected to have upon emergence from bankruptcy



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All three Board members report that they have been working virtually full time on KaloBios since January 2016. Moreover, each assumed significant reputational risk, and in the case of Dr. Durrant, career risk, in taking on their Board roles The time required of all three

Directors has been virtually full time with calls, email correspondence, and meetings. Directors report:- Receiving/sending over 2,000 emails- Participating in well over 100

substantial meetings- Participating in more than 200

conference calls, usually lasting over an hour apiece

- Devoting significant time to preparing for meetings

- Frequent travel

Items worked on pertain to:- Gaining an understanding of the background facts

and history of the Company- Dealing with legal issues: Bankruptcy case issues Issues related to Martin Shkreli’s equity position Litigation with the PIPE investors The class action suit Claim against KaloBios’ former attorneys

- Company strategic, operating, and financial issues Medical and clinical duties Personnel Financial, including exit financing Budgeting SEC filings Appointment of the auditor Public relations Office relocation The transaction with Savant to acquire rights to

Benznidazole Seeking buyers of non-core assets



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In order to determine appropriate compensation for the Directors and interim CEO, Farient:

Conducted an initial discussion with the Company to determine study scope and deliverables

Collected and analyzed data regarding KaloBios before and during the bankruptcy filings, and proposed objectives following the filing

Analyzed the role of the Board and effort/workload during the transitionary time Evaluated standard Director compensation and CEO compensation for private and pre-

IPO/startup companies primarily in the Life Science industry Identified and conducted an assessment of special Director compensation (cash and

equity) in companies where there was significant demands on Director time and expertise (for example, during a proxy battle)

Interviewed three professionals experienced in conducting Board searches for healthcare-related companies

Identified companies where there was an interim CEO appointed, and conducted an assessment of total direct compensation, including salary, target short-term incentives, and long-term incentives (including equity compensation) for the interim CEOs

Analyzed KaloBios’ valuation history and potential valuation outcomes following emergence from bankruptcy to assess potential value of equity compensation

Recommended a special compensation package for the Directors and interim CEO, including equity amounts and restrictions


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Board of Director Compensation



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Companies often pay at the 75th %ile in situations in which significant effort is required and results are achieved. Directors of companies in a pre-IPO stage of development typically receive 0.6% of equity at the 75th %ile; Board Chairs can receive a premium of 2 to 3x this amount. Percentages do not vary with the form of equity, which can be either options or restricted shares

Market Director CompensationEquity % at Hire (Options or Restricted Shares)

Note: Farient used the most relevant and specific survey cut when possible; larger cuts were used when there was no other data available

Sources:CompStudy Private Company Compensation Data (Park Square Executive Search in partnership with Harvard Business School), 2015 (Life Sciences and Healthcare)

Valuation/ Sample Equity At Hire % (Fully Diluted)Position Source Outside Invest Size 25th %ile 50th %ile 75th %ile Average

DirectorIndependent Director CompStudy $50MM - $100MM 11 0.3% 0.4% 0.6% 1.4%ChairIndependent Chairperson CompStudy All 30 0.4% 0.7% 2.0% 5.4%




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Interim CEO Compensation



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Recommendations



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Appendix


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Special Director Compensation – Sorted By RationaleCompany Name Rationale

Fiscal Year

Revenue - Last completed FY

Current Market Cap (as of 5/17/2016) Sector

# Options Granted or Estimated

Value of Options Granted or Estimated

# Special Stock Granted or Estimated

Value of Stock Granted or Estimated

Target Equity Value (Stock + Options)

Total Stock Grant and Options as % Equity

PCM, Inc. Acquisition 2010 $1,662 $117 Information Technology 10,000 $57,070 -- -- $57,070 0.08%Imagenetix, Inc. Bankruptcy 2011 $0 $1 Consumer Staples 25,000 $8,192 -- -- $8,192 0.21%Eastman Kodak Company Bankruptcy 2015 $1,798 $502 Information Technology -- -- 5,981 $75,000 $75,000 0.01%Warren Resources, Inc. CEO Issues 2012 $88 $9 Energy 30,000 $38,382 -- -- $38,382 0.04%Oncothyreon Inc. CEO Issues 2011 $0 $109 Health Care -- -- 25,000 $173,000 $173,000 0.07%Carriage Services, Inc. Increased Workload 2013 $243 $388 Consumer Discretionary -- -- 80,000 $620,800 $620,800 0.45%Strattec Security Corporation Increased Workload 2011 $411 $176 Consumer Discretionary -- -- 600 $12,678 $12,678 0.02%Steel Excel Inc. Increased Workload 2013 $133 $103 Energy -- -- 55,500 $292,638 $292,638 0.44%ZaZa Energy Corporation Increased Workload 2012 $11 $1 Energy -- -- 119,000 $2,439,500 $2,439,500 1.21%Customers Bancorp, Inc. Increased Workload 2012 $203 $683 Financials -- -- 2,646 $33,340 $33,340 0.02%Home Properties, Inc. Increased Workload 2012 $9 $15 Financials -- -- 549 $35,000 $35,000 0.00%Ladenburg Thalmann Financial Services Inc. Increased Workload 2015 $1,142 $427 Financials 200,000 $348,627 -- -- $348,627 0.11%National Bank Holdings Corporation Increased Workload 2011 $165 $575 Financials 8,000 $40,880 2,500 $46,150 $87,030 0.02%WSFS Financial Corporation Increased Workload 2013 $247 $1,008 Financials -- -- 5,563 $274,089 $274,089 0.02%Palatin Technologies, Inc. Increased Workload 2011 $13 $39 Health Care 90,000 $99,936 -- -- $99,936 0.45%Raptor Pharmaceutical Corp. Increased Workload 2011 $94 $402 Health Care 90,000 $306,674 -- -- $306,674 0.28%Aerojet Rocketdyne Holdings, Inc. Increased Workload 2014 $1,708 $1,105 Industrials 43,546 $454,961 8,685 $145,040 $600,000 0.09%Willis Lease Finance Corporation Increased Workload 2014 $200 $171 Industrials -- -- 2,500 $54,750 $54,750 0.03%Demand Media, Inc. Increased Workload 2013 $126 $110 Information Technology -- -- 15,000 $432,750 $432,750 0.08%EMCORE Corporation Increased Workload 2014 $82 $137 Information Technology -- -- 8,787 $50,000 $50,000 0.03%Move, Inc. Increased Workload 2011 $227 $0 Information Technology -- -- 7,500 $60,225 $60,225 0.02%Pixelworks, Inc. Increased Workload 2011 $60 $48 Information Technology -- -- 24,000 $58,080 $58,080 0.15%SeaChange International, Inc. Increased Workload 2013 $107 $114 Information Technology -- -- 11,592 $129,251 $129,251 0.04%Smith Micro Software, Inc. Increased Workload 2014 $40 $32 Information Technology -- -- 10,000 $9,700 $9,700 0.02%Flotek Industries, Inc. Increased Workload 2012 $334 $603 Materials -- -- 10,000 $122,000 $122,000 0.02%Sutor Technology Group Ltd Increased Workload 2011 $405 $3 Materials -- -- 10,000 $12,700 $12,700 0.12%Container Store Group, Inc., The IPO 2013 $795 $265 Consumer Discretionary 13,603 $100,000 -- -- $100,000 0.46%Del Frisco's Restaurant Group, Inc. IPO 2013 $332 $354 Consumer Discretionary 18,000 $151,844 -- -- $151,844 0.08%Taylor Morrison Home Corp. IPO 2012 $2,977 $443 Consumer Discretionary -- -- 800,000 $512,000 $512,000 0.11%Tumi Holdings, Inc. IPO 2011 $548 $1,803 Consumer Discretionary 6,233 $112,194 -- -- $112,194 0.01%Fairway Group Holdings Corp. IPO 2014 $798 $3 Consumer Staples -- -- 97,282 $1,304,025 $1,304,025 0.24%Roundy's, Inc. IPO 2011 $3,855 $0 Consumer Staples -- -- 8,984 $76,364 $76,364 0.03%Armada Hoffler Properties, Inc. IPO 2013 $252 $561 Financials -- -- 2,174 $25,000 $25,000 0.01%Aviv REIT, Inc. IPO 2013 $177 $146 Financials -- -- 28,125 $135,000 $135,000 0.21%Cyrusone Inc. IPO 2013 $399 $3,799 Financials -- -- 4,702 $105,000 $105,000 0.02%Excel Trust, Inc. IPO 2010 $198 $110 Financials -- -- 7,143 $95,002 $95,002 0.01%Marcus & Millichap, Inc. IPO 2013 $689 $918 Financials -- -- 54,665 $814,506 $814,506 0.14%OneMain Holdings, Inc. IPO 2013 $19 $40 Financials -- -- 425,532 $200,000 $200,000 0.33%Patriot National, Inc. IPO 2015 $210 $211 Financials 16,493 $25,000 -- -- $25,000 0.06%GlycoMimetics, Inc. IPO 2013 $20 $123 Health Care 15,401 $94,408 -- -- $94,408 1.29%KYTHERA Biopharmaceuticals, Inc. IPO 2012 $0 $0 Health Care 5,672 $58,011 -- -- $58,011 0.12%Zogenix, Inc. IPO 2011 $27 $232 Health Care 50,000 $106,695 -- -- $106,695 0.94%Facebook, Inc. IPO 2011 $17,928 $335,657 Information Technology -- -- 20,000 $764,600 $764,600 0.00%Five9, Inc. IPO 2014 $129 $447 Information Technology -- -- 25,000 $175,000 $175,000 0.07%Restaurant Brands International Inc. Merger 2015 $4,052 $9,373 Consumer Discretionary 32,520 $500,000 -- -- $500,000 0.01%Forest Oil Corporation Merger 2012 $337 $2 Energy -- -- 7,003 $75,000 $75,000 0.01%Northeast Bancorp Merger 2011 $44 $106 Financials 21,601 $176,159 -- -- $176,159 0.74%CTI BioPharma Corp. Merger 2013 $16 $125 Health Care 150,000 $213,705 -- -- $213,705 0.13%MRV Communications, Inc. Merger 2012 $88 $67 Information Technology -- -- 8,750 $90,125 $90,125 0.11%MRV Communications, Inc. Merger 2011 $88 $67 Information Technology -- -- 175,000 $3,010,000 $3,010,000 2.22%Trulia, Inc. Merger 2013 $13,773 $0 Information Technology -- -- 20,000 $833,400 $833,400 0.01%Universal Detection Technology Merger 2011 $0 $0 Information Technology -- -- 15,000 $60,000 $60,000 5.97%Communications Sales & Leasing, Inc. Spin-Off 2014 $714 $3,665 Financials -- -- 12,887 $300,000 $300,000 0.01%HC2 Holdings, Inc. Transactional 2012 $1,121 $142 Industrials -- -- 32,000 $347,840 $347,840 0.23%Codexis, Inc. 2013 $42 $137 Materials -- -- 43,103 $60,344 $60,344 0.11%

90th %ile $1,762 $1,066 108,000 $380,527 101,626 $818,285 $707,080 0.63%75th %ile $618 $445 48,387 $204,318 30,063 $323,920 $303,337 0.22%Median $200 $137 23,301 $103,348 11,592 $122,000 $106,695 0.08%25th %ile $52 $40 14,053 $57,305 7,073 $59,040 $59,040 0.02%Mean $1,075 $6,649 45,893 $160,708 56,224 $360,510 $308,230 0.32%Prevalence 33% 33% 71% 71%


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Interim CEOs receive significant portion of compensation in cash, with ~60% also receiving a share of equity ranging from 0.4% to 1.4%

Interim CEO Compensation (Companies <$1B Market Cap)

Note: Data gathered from 8-Ks stating interim CEO agreements

Company Name Sector

Revenue - Last

completed FY

Current Market Cap

(as of 5/17/2016)

Annualized Salary

STI + Disc Bonus STI% Salary STC LTI Value TC Stock # Options # % of CSO

EVINE Live Inc. Consumer Discretionary $693 $57 $625,000 -- -- $625,000 -- $625,000 --Turbine Truck Engines Inc. Consumer Discretionary $0 $3 n/a -- -- n/a $105,000 $105,000 1,500,000 6.9%Winnebago Industries, Inc. Consumer Discretionary $977 $560 $492,385 -- -- $492,385 -- $492,385 --Arcadia Biosciences, Inc. Consumer Staples $5 $53 $400,000 -- -- $400,000 -- $400,000 --Sipup Corporation Consumer Staples $0 $1 $24,000 -- -- $24,000 $37,280 $61,280 500,000 12.5%Delta International Oil & Gas Inc. Energy $0 $3 $80,000 $20,000 25% $100,000 -- $100,000 --RigNet, Inc. Energy $271 $231 $415,000 $415,000 100% $830,000 $600,000 $1,430,000 33,689 0.2%Crawford & Company Financials $1,170 $409 $660,000 $90,000 14% $750,000 -- $750,000 --Hampton Roads Bankshares Inc. Financials $93 $291 $600,000 -- -- $600,000 $394,000 $994,000 200,000 0.1%Silver Bay Realty Trust Corp. Financials $114 $512 $840,000 -- -- $840,000 -- $840,000 --TheStreet, Inc. Financials $68 $39 $429,996 -- -- $429,996 -- $429,996 --Bone Biologics, Corp. Health Care $0 $189 $179,605 -- -- $179,605 -- $179,605 --ContraFect Corporation Health Care $0 $67 $525,000 $131,250 25% $656,250 $188,969 $845,219 75,000 0.3%Interpace Diagnostics Group, Inc. Health Care $9 $6 $300,000 $150,000 50% $450,000 -- $450,000 --Lpath Inc. Health Care $2 $5 $450,000 -- -- $450,000 $43,800 $493,800 15,000 0.1%NovaBay Pharmaceuticals, Inc. Health Care $4 $26 $400,000 -- -- $400,000 $78,532 $478,532 4,673 0.1%Pernix Therapeutics Holdings, Inc. Health Care $176 $25 $610,008 -- -- $610,008 $83,145 $693,153 210,000 0.4%Sparton Corp. Industrials $382 $186 $600,000 -- -- $600,000 -- $600,000 --CÜR Media, Inc. Information Technology $0 $7 $250,000 -- -- $250,000 $130,680 $380,680 50,000 2.2%Imation Corp. Information Technology $529 $60 $600,000 -- -- $600,000 $1,165,220 $1,765,220 574,000 1.5%Northsight Capital, Inc. Information Technology $0 $12 $300,000 -- -- $300,000 $92,000 $392,000 1,150,000 1.0%United Online, Inc. Information Technology $151 $163 $660,000 -- -- $660,000 $500,000 $1,160,000 45,496 0.3%Viscount Systems Inc. Information Technology $6 $1 $200,000 -- -- $200,000 $20,000 $220,000 1,000,000 0.8%Vivint Solar, Inc. Utilities $64 $270 $530,448 $150,000 28% $680,448 $1,130,000 $1,810,448 500,000 0.5%

75th %ile $600,000 $150,000 45% $640,625 $473,500 $841,305 1.36%Median $450,000 $140,625 27% $492,385 $117,840 $493,093 0.41%25th %ile $300,000 $100,313 25% $350,000 $79,685 $389,170 0.22%

Mean $442,237 $159,375 40% $483,813 $326,330 $654,013 1.91%Prevalence 96% 25% 96% 58% 29% 29%
