Exhibit 10.3

U.S. SMALL BUSINESS ADMINISTRATION PAYCHECK PROTECTION PROGRAM

NOTE

 

 

SBA Loan #:

11170071-01

SBA Loan Name:

Paycheck Protection Program Loan

Loan Date:

4/17/2020

Loan Amount:

$3,582,800.00

Interest Rate:

1.00% fixed

Borrower:

Neos Therapeutics, Inc.

Lender:

First Republic Bank

This Note represents the Loan (as defined below) made by Lender pursuant to the
Paycheck Protection Program (the “PPP”). Borrower confirms and agrees that the
Loan is subject in all respects to the Coronavirus Aid, Relief, and Economic
Security Act and the requirements, rules, regulations, procedures and guidance
concerning the PPP in effect as of the date of this Note and as may be
promulgated from time to time after the date of this Note by the U.S. Department
of Treasury and/or SBA (collectively, the “PPP Regulations”), including, without
limitation, all PPP Regulations applicable to permitted uses of loan proceeds
and loan forgiveness.

1.  PROMISE TO PAY

In return for the Loan, Borrower promises to pay to the order of Lender the
amount of $3,582,800.00 Dollars, interest on the unpaid principal balance, and
all other amounts required by this Note.

2.  DEFINITIONS

“Loan” means the loan evidenced by this Note.

“Loan Documents” means the documents related to this Loan signed by Borrower,
including the Borrower Application Form for the Paycheck Protection Program, the
Borrower Certificate executed and delivered by Borrower in connection with this
Note and all other attestations, certificates, agreements and documents
delivered by Borrower to Lender in connection with the Loan.

“SBA” means the Small Business Administration, an Agency of the United States of
America.

3.  PAYMENT TERMS

Borrower must make all payments at the place Lender designates. The payment
terms for this Note are:

Initial Deferment Period: No payments are due on this Loan for 6 months from the
date of first disbursement of this Loan. Interest will continue to accrue during
the deferment period.

Loan Forgiveness: Borrower may apply to Lender for forgiveness of the amount due
on this Loan in an amount equal to the sum of the following costs incurred by
Borrower during the 8-week period beginning on the date of first disbursement of
this Loan:

a.   Payroll costs

b.   Any payment of interest on a covered mortgage obligation (which shall not
include any prepayment of or payment of principal on a covered mortgage
obligation)

c.   Any payment on a covered rent obligation

d.   Any covered utility payment

The amount of Loan forgiveness shall be calculated (and may be reduced) in
accordance with the requirements of the PPP, including the provisions of Section
1106 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (P.L.
116-136). Not more than 25% of the amount forgiven can be attributable to
non-payroll costs. If Borrower has received an EIDL advance, then that amount
shall be subtracted from the loan forgiveness amount.

Maturity: This Note will mature on the date that is two years from date of first
disbursement of this Loan.

Repayment Terms:

Interest Rate: The interest rate on this Note is one percent per year. The
interest rate is fixed and will not be changed during the life of the Loan.

Installment Payments Following Deferment Period: Borrower must pay monthly
principal and interest payments on the outstanding principal balance of the Loan
amortized over the term of the Loan, unless otherwise forgiven in whole or part
in accordance with the PPP Regulations, beginning 7 months from the date of the
first disbursement of this Loan until the maturity date. Payments of principal
and interest must be made on such date as designated by Lender in the months
during which they are due. Any Loan balance remaining following forgiveness
pursuant to the PPP Regulations, if any, will be fully reamortized over the
remaining term of the Loan.

Application of Installment Payments: Lender will apply each installment payment
first to pay interest accrued to the day Lender received the payment, then to
bring principal current, and will apply any remaining balance to reduce
principal.

Payment at Maturity. All remaining principal and accrued interest is due and
payable two years from the date of first disbursement of this Loan.

Loan Prepayment: Notwithstanding any provision in this Note to the contrary:

Borrower may prepay this Note at any time without penalty. Borrower may prepay
20 percent or less of the unpaid principal balance at any time without notice.
If Borrower prepays more than 20 percent and the Loan has been sold on the
secondary market, Borrower must:

a. Give Lender written notice;

b. Pay all accrued interest; and

c. If the prepayment is received less than 21 days from the date Lender receives
the notice, pay an amount equal to 21 days interest from the date Lender
receives the notice, less any interest accrued during the 21 days and paid under
b. of this paragraph.

If Borrower does not prepay within 30 days from the date Lender receives the
notice, Borrower must give Lender a new notice.

Non-Recourse: Lender and SBA shall have no recourse against any individual
shareholder, member or partner of Borrower for non-payment of the Loan, except
to the extent that such shareholder, member or partner uses the Loan proceeds
for an unauthorized purpose.

4.  DEFAULT

Borrower is in default under this Note if Borrower does not make a payment when
due under this Note, or if Borrower:

A.   Fails to do anything required by this Note and other Loan Documents;

B.   Defaults on any other loan with Lender;

C.   Does not disclose, or anyone acting on its behalf does not disclose, any
material fact to Lender or SBA;

D.   Makes, or anyone acting on its behalf makes, (i) a materially false or
misleading representation to Lender or SBA or (ii) a false or incorrect
statement or certification in any certificate, attestation or agreement included
in any Loan Documents;

E.   Defaults on any loan or agreement with another creditor, if Lender believes
the default may materially affect Borrower’s ability to pay this Note;

F.   Fails to pay any taxes when due;

G.   Becomes the subject of a proceeding under any bankruptcy or insolvency law;

H.   Has a receiver or liquidator appointed for any part of their business or
property;

I.    Makes an assignment for the benefit of creditors;

J.    Has any adverse change in financial condition or business operation that
Lender believes may materially affect Borrower’s ability to pay this Note;

K.   Reorganizes, merges, consolidates, or otherwise changes ownership or
business structure without Lender’s prior written consent; or

L.   Becomes the subject of a civil or criminal action that Lender believes may
materially affect Borrower’s ability to pay this Note.

5.  LENDER’S RIGHTS IF THERE IS A DEFAULT

Without notice or demand and without giving up any of its rights, Lender may:

A.   Require immediate payment of all amounts owing under this Note;

B.   Collect all amounts owing from Borrower; or

C.   File suit and obtain judgment.

6.  LENDER’S GENERAL POWERS

Without notice and without Borrower’s consent, Lender may:

A.   Incur expenses to collect amounts due under this Note, enforce the terms of
this Note or any other Loan Document. Among other things, the expenses may
include payments for property taxes, prior liens, insurance, appraisals,
environmental remediation costs, and reasonable attorney’s fees and costs. If
Lender incurs such expenses, it may demand immediate repayment from Borrower or
add the expenses to the principal balance; and

B.   Release anyone obligated to pay this Note.

7.  WHEN FEDERAL LAW APPLIES; GOVERNING LAW AND VENUE

When SBA is the holder, this Note will be interpreted and enforced under federal
law, including SBA regulations. As to this Note, Borrower may not claim or
assert against SBA any local or state law to deny any obligation, defeat any
claim of SBA, or preempt federal law.

When the SBA is not the holder, this Note will be interpreted and enforced under
the laws of the State of California. All judicial proceedings arising in or
under or related to the Loan, this Note or any of the other Loan Documents may
be brought in any state or federal court located in a state where Lender has an
office (each, a “Lender’s State”). By execution and delivery of this Note,
Borrower generally and unconditionally: (a) consents to nonexclusive personal
jurisdiction in each Lender’s State; (b) waives any objection as to jurisdiction
or venue in each Lender’s State; (c) agrees not to assert any defense based on
lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably
agrees to be bound by any judgment rendered thereby in connection with the Loan,
this Loan or the other Loan Documents.

8.  SUCCESSORS AND ASSIGNS

Under this Note, Borrower includes its successors, and Lender includes its
successors and assigns.

Lender may at any time assign to one or more assignees all or a portion of its
rights and obligations under this Note.

9.  OTHER AGREEMENTS AND GENERAL PROVISIONS

A.   Borrower understands and agrees, and waives and releases Lender, as
follows:

a. Forgiveness of the Loan is only available for principal that is used for the
limited purposes that qualify for forgiveness under the PPP Regulations, and
that to obtain forgiveness, Borrower must request it and must provide
documentation in accordance with the PPP Regulations, and certify that the
amounts Borrower is requesting to be forgiven qualify under the PPP Regulations.
Borrower also understands that Borrower shall remain responsible under the Loan
for any amounts not forgiven, and that interest payable under the Loan will not
be forgiven but that the SBA may pay the Loan interest on forgiven amounts.

b. Forgiveness is not automatic and Borrower must request it. Borrower is not
relying on Lender for its understanding of the requirements for forgiveness such
as eligible expenditures, necessary records/documentation, or possible
reductions due to changes in number of employees or compensation. Rather
Borrower will consult the PPP Regulations and SBA’s program materials.

B.   All individuals and entities signing this Note are jointly and severally
liable.

C.   Borrower waives all suretyship defenses.

D.   Borrower must sign all documents necessary at any time to comply with the
Loan Documents.

E.   Lender may exercise any of its rights separately or together, as many times
and in any order it chooses. Lender may delay or forgo enforcing any of its
rights without giving up any of them.

F.   Borrower may not use an oral statement of Lender or SBA to contradict or
alter the written terms of this Note.

G.   If any part of this Note is unenforceable, all other parts remain in
effect.

H.   To the extent allowed by law, Borrower waives all demands and notices in
connection with this Note, including presentment, demand, protest, and notice of
dishonor. Borrower also waives any defenses based upon any claim that Lender did
not obtain any guarantee.

10.  FURTHER ASSURANCES

The Loan and this Note are subject in all respects to the PPP Regulations,
including any PPP Regulations promulgated after the date of this Note. If after
the date of this Note, any further PPP Regulations are promulgated or if the PPP
Regulations mandate a form of or the terms of the note, loan authorization or
other loan documents for PPP loans, Borrower agrees to execute any further
instruments and documents and to take such further actions as Lender requests,
including exchanging this Note for new note, executing an amendment to this
Note, or executing any other loan documents that Lender requests. In the event
of any exchange of or amendment to this Note, the disbursement date applicable
to the Loan (and all related time periods under the PPP Regulations and the
maturity date applicable to this Loan) shall be the same as set forth in this
Note.

11.  BORROWER’S NAME AND SIGNATURE

By signing below, each individual or entity executing this Note as “Borrower”
becomes obligated under this Note as Borrower.

 

 

 

BORROWER:

 

 

 

 

Neos Therapeutics, Inc.

 

 

 

 

By: 

Picture 2 [neos20200331ex1037e87a0001.jpg]

 

 

Richard I. Eisenstadt

 

 

Chief Financial Officer

 

 

 

 

 

4/18/2020

 

 

Date