ADAMIS PHARMACEUTICALS CORPORATION 10-K [admp_10k-123116.htm]

 

 

Exhibit 10.64

 

Loan No. 5000028497

 

SEPTEMBER 2016 AMENDMENT TO COMMERCIAL LINE OF CREDIT
AGREEMENT AND NOTE

 

THIS SEPTEMBER 2016 AMENDMENT TO COMMERCIAL LINE OF CREDIT AGREEMENT AND NOTE
(the “Amendment”) is entered into this 3rd day of November, 2016, with an
effective date of September 30, 2016, by and among BEAR STATE BANK, N.A., a
national banking association and successor in interest to First Federal Bank,
its successors and assigns (“Lender”), US COMPOUNDING, INC., an Arkansas
corporation (“Borrower”), EDDIE GLOVER, an individual, and KRISTEN RIDDLE, an
individual (collectively the “Guarantors”)(Borrower and Guarantors may be
collectively referred to as the “Loan Parties”).

 

WHEREAS, on July 14, 2014, Lender extended a line of credit to Borrower, in the
initial amount of Two Million Five Hundred Thousand and No/100 United States
Dollars ($2,500,000.00) (the “Loan”), as set forth in that certain Commercial
Line of Credit Agreement and Note by and between Lender and Borrower (tile “Loan
Agreement”); and

 

WHEREAS, such indebtedness pursuant to the Loan Agreement is secured by that
certain Commercial Security Agreement by and between Lender and Borrower, dated
July 14, 2014, covering Borrower’s Receivables and Inventory and other property
described therein;

 

WHEREAS, Adamis entered into a merger transaction with Borrower (the “Merger”),
pursuant to that certain Agreement and Plan of Merger dated as of March 28,
2016.

 

WHEREAS, in connection with the Merger, the Lender has requested that the Loan
Parties enter into this Amendment to evidence the following:

 

(a)        The addition of Adamis as a borrower to the Loan, whereby Adamis
shall have, effective as of the date of this Amendment, all rights, duties,
liabilities and obligations under the Loan Agreement, and the acceptance and
assumption of such rights, duties, liabilities and obligations by Adamis; and

 

(b)        The continuation, except as noted below, of each of the Loan Parties’
rights, duties, liabilities and obligations under the Loan Documents [need to
define] as a coborrower, notwithstanding the acceptance and assumption of such
rights, duties, liabilities and obligation by Adamis.

 

WHEREAS, Borrower and Lender desire the Loan Agreement be amended as set forth
in this Amendment, but that all other terms, conditions, and provisions of the
Loan Agreement remain in full force and effect solely except as set forth in
this Amendment;

 

WHEREAS, Borrower and Guarantors, jointly and severally, hereby intend to and by
execution hereof ratify, and affirm Borrower and Guarantors’ unqualified and
unconditional, joint and several liability on all indebtedness of the Loan,
described within the Loan Agreement, as amended, and acknowledges, agrees,
warrants and represents the Loan has a present unpaid principal balance (as of
October 31, 2016) of Two Million Five Hundred Thousand and No/100 United States
Dollars ($2,500,000.00);

 

 

 

 

NOW, THEREFORE, for and in consideration of Lender’s agreement to the amendments
set forth in this Amendment and the covenants, warranties and representations of
Borrower contained herein, Ten Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
all parties, it is agreed as follows:

 

AGREEMENTS

 

The recitals set forth above are not mere recitals of fact but are contractual
in nature and are intended by the parties to be incorporated into this Amendment
by reference, except in the event of a conflict between the incorporated
recitals and the numbered sections of this Amendment, the numbered sections of
this Amendment shall control. Terms and provisions which are not otherwise
defined herein shall have the same meanings as set forth in the Loan Agreement.

 

1.       Maturity Date. The Maturity Date as set forth in the Loan Agreement
shall be amended and extended to September 30, 2017.

 

2.      Addition of Adamis as Co-Borrower under the Loan Agreement. Effective as
of the date hereof, without the necessity of further documentation by the
parties hereto, the Loan Agreement shall be deemed to be amended to add Adamis
as a co-borrower under the Loan, with the intention that, pursuant to such
amendment, Adamis shall assume responsibility as borrower for all obligations,
duties and liabilities under the Loan Agreement, jointly and severally with the
current borrower or borrowers under the Loan. Notwithstanding the foregoing, the
parties expressly agree each of the Loan Parties shall remain, as applicable, a
co-borrower or guarantor under the Loan Agreement as set forth immediately prior
to execution of this Amendment, and accordingly: (a) each of the Loan Parties’
rights under the Loan Agreement shall not be affected, nor shall they be
relieved of their obligations, duties and liabilities thereunder, and (b) each
of the Loan Parties shall continue to be bound by all of the terms, provisions
and conditions contained in the Loan Agreement. Effective as of the date of this
Amendment, the term “Borrower” shall mean collectively USG and Adamis.

 

3.        Assumption. Effective as of the date of this Amendment, Adamis hereby
accepts the foregoing assumption of rights, obligations, duties and liabilities
and assumes and agrees to pay and to perform, jointly and severally with each of
the Loan Parties (as applicable) all of the obligations, duties and liabilities
as an original borrower under the Loan Agreement, whether accruing on or after
the date hereof, and further agrees that Adamis shall hereafter be bound by all
of the terms, provisions and conditions contained in the Loan Agreement.
Notwithstanding the foregoing assumption by Adamis, each respective security
agreement or security interest issued in connection with the Loan will apply
only to the assets of the entity named therein.

 

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4.        Financial and Other Covenants. Borrower shall, at all times during the
terns of this Loan, maintain a Cash Flow Coverage Ratio of not less than 1.20:
1. For the proposes of this Section 5, “Cash Flow Coverage Ratio” shall mean:
(i) the product of the net income plus non-cash expense items including, but not
limited to, depreciation expense, amortization expense and stock option
compensation expense) for the month in which the measurement date occurs times 1
2; divided by (ii) the projected cash required for payments of interest for the
prospective twelve (12) month period and current maturities of principal on all
outstanding debt to any person or entity, including without limitation debt by
Borrower to Lender. The Cash Flow Coverage Ratio shall be measured on the last
day of each December, March, June and September, commencing on December 31,
2016. In lieu of compliance with the foregoing covenant, Borrower shall have the
option, at the time of each quarterly measuring period, of making a principal
reduction in the amount of Two Hundred Fifty Thousand and No/100 United States
Dollars ($250,000.00). Borrower and Lender agree all other financial covenants
with respect to the (A) Business Loan Agreement (as modified, amended or
supplemented, the “4 HIMS Loan Agreement”) dated as of August 8, 2014, entered
into by and between 4 HIMS, as borrower, and Lender, the sections of such
agreement and provisions entitled or related to (i) Business Existence and
Operations, (ii) Fixed Charge Coverage Ratio, and (iii) No Borrowings or
Guarantees; (B) Business Loan Agreement (as modified, amended or supplemented,
the “Tribute Loan Agreement”) dated as of March 21, 2014, entered into by and
between Tribute, as borrower, and Lender, the sections of such agreement and
provisions entitled or related to Borrower Performance; (C) Business Loan
Agreement (as modified, amended or supplemented, the “USC Working Capital Loan
Agreement”) dated as of July 14, 2014, entered into by and between USC, as
borrower, and Lender and that Business Loan Agreement (as modified, amended or
supplemented, the “USC Equipment Loan Agreement”) dated as of July 14, 2014,
entered into by and between USC, as borrower, and Lender, the sections of such
agreement and provisions entitled or related to (i) Fixed Charge Coverage Ratio,
(ii) Funded Debt to EBITDA Ratio, (iii) No Borrowings or Guarantees, (iv)
Quarterly Trend Analysis, and (v) Owner Buyout Note covenants; and (D) the Loan
Agreement or the Note shall be waived for the remainder of the term of the Loan.

 

5.        Estoppel; Waiver; Ratification and Release. For and in consideration
of the maturity extension granted by Lender herein, Ten United States Dollars
($10.00) and other good and valuable consideration, receipt and sufficiency
being acknowledged, Borrower and Guarantors, as evidenced by their respective
signatures below, agree and acknowledge unqualified and unconditional obligation
for the Indebtedness without defense, affirmative defense, counterclaim, right
of setoff` or other impediment to collection, and the same, if existing, being
expressly released and waived by Borrower and Guarantors in consideration for
Lender entering into this Amendment.

 

6.        UCC. Notwithstanding any provisions hereof or execution by Lender,
this Amendment (and all documents executed in connection herewith) shall be
voidable at the option of Lender should any lien searches or other confirmatory
title information regarding the Collateral (to be provided at the expense of
Borrower) reflect any default under the Loan or creation of any adverse claim or
interest regarding the Collateral. In addition, Borrower authorizes Lender to
file any and all initial, amendatory or continuation Uniform Commercial Code
filings deemed necessary by Lender, without necessity of consent by Borrower.

 

7.        Good Standing of Borrower. Notwithstanding any provisions hereof or
execution by Lender, this Amendment (and all documents executed in connection
herewith) shall be voidable at the option of Lender in the event Borrower is not
validly existing and under its state, of formation at the time of execution of
this Amendment.

 

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8.       No Further Modifications. Except as expressly set forth above, the
terms and provisions of the Loan Agreement shall remain in full force and
effect.

 

[Signatures appear on following page.]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment this
3rd day of November, 2016, with an effective date of September 30, 2016.

            BORROWER:       US COMPOUNDING, INC.,
an Arkansas corporation       By: [admp-img_001.jpg]    Name: Eddie Glover  
Title: CEO

 

  GUARANTORS:         [admp-img_001.jpg]   EDDIE GLOVER, individually        
[admp-img_009.jpg]   KRISTEN RIDDLE, individually

            LENDER:       BEAR STATE BANK, N.A.
a national banking association       By:  [admp-img_005.jpg]   Name: Steve Moore
  Title: Executive Vice President

 

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ALLONGE
Loan No. 5000028497

 

Allonge to Commercial Line of Credit Agreement dated July 14, 2014, in the
original principal amount of Two Million Five Hundred Thousand and No/100 United
States Dollars ($2,500,000.00) (the “Note”), made by US COMPOUNDING, an Arkansas
corporation (“Maker”), in favor of BEAR STATE BANK, N.A., a national banking
association (“Holder”). For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, Maker and Holder agree as follows:

 

The parties agree as follows:

 

1.       Maker hereby assigns all of its interest and obligations in the Note to
US COMPOUNDING, an Arkansas corporation, and ADAMIS PHARMACEUTICALS CORPORATION,
a Delaware corporation, jointly and severally.

 

2.       This Allonge shall be and remain attached to and shall constitute an
integral part of the Note from and after the date hereof.

 

3.       All references in the Note to the term “Note” shall mean the Note as
amended by this Allonge.

 

4.       The current outstanding principal balance of the Note is Two Million
Five Hundred Thousand and No/100 United States Dollars ($2,500,000.00).

 

5.       The maturity date under the Note is September 30, 2017.

 

6.       This Allonge shall be an amendment to and not a cancellation or
satisfaction of the Note. Except as modified hereby, all of the terms and
provisions of the Note are hereby ratified and affirmed.

 

[Signature Page to Follow]

 

 

 

 

Signature Page
ALLONGE

 

Dated:      November 3, 2016.

        MAKER:         US COMPOUNDING, INC.,
an Arkansas corporation         By: -s- Eddie Glover [admp-img_001.jpg]    Name:
Eddie Glover   Title: CEO         ADAMIS PHARMACEUTICALS CORPORATION,
a Delaware corporation         By:  -s- Robert O. Hopkins [admp-img_003.jpg]  
Name: Robert O. Hopkins   Title: CFO

 

ACKNOWLEDGED AND AGREED TO BY HOLDER:

 

BEAR STATE BANK, N.A.,
a national banking association

 

By:  -s- Steve Moore [admp-img_005.jpg]   Name: Steve Moore   Title: Executive
Vice President   Date:    

 

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