Exhibit 10.4

THIRD LOAN MODIFICATION AGREEMENT

This Third Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of December 20, 2018, by and among (a) SILICON VALLEY BANK, a
California corporation, with its principal place of business at 3003 Tasman
Drive, Santa Clara, California 95054 and with a loan production office located
at 275 Grove Street, Suite 2-200, Newton, Massachusetts 02466 (“Bank”) and
(b)(i) ICAD, INC., a Delaware corporation (“ICAD”), (ii) XOFT, INC., a Delaware
corporation (“Xoft”) and (iii) XOFT SOLUTIONS, LLC, a Delaware limited liability
company (“Xoft Solutions”, and together with ICAD and Xoft, individually and
collectively, jointly and severally, “Borrower”) whose address is 98 Spit Brook
Road, Suite 100, Nashua, New Hampshire 03062.

1.    DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of August 7, 2017,
evidenced by, among other documents, a certain Loan and Security Agreement dated
as of August 7, 2017, between Borrower and Bank, as amended by a certain First
Loan Modification Agreement dated as of March 22, 2018, and as further amended
by a certain Second Loan Modification Agreement dated as of August 13, 2018 (as
amended, the “Loan Agreement”). Capitalized terms used but not otherwise defined
herein shall have the same meaning as in the Loan Agreement.

2.    DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as defined in the Loan Agreement (together with any other agreements
granting a security interest in collateral to Bank, the “Security Documents”).
Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing
Loan Documents”.

3.    DESCRIPTION OF CHANGE IN TERMS.

 

  A.

Modifications to Loan Agreement.

 

  1

The Loan Agreement shall be amended by deleting the following text, appearing in
Section 2.3.1(c) thereof:

“Commencing on October 1, 2019 and continuing on each Payment Date thereafter,
Borrower shall repay the 2018 Term Loan Advance in (i) thirty (30) equal monthly
installments of principal, plus (ii) monthly payments of accrued interest at the
rate set forth in Section 2.5(a).”

and inserting in lieu thereof the following:

“Commencing on October 1, 2019 and continuing on each Payment Date thereafter,
Borrower shall repay the 2018 Term Loan Advance in (i) twenty-three (23) equal
monthly installments of principal, plus (ii) monthly payments of accrued
interest at the rate set forth in Section 2.5(a).”

 

  2

The Loan Agreement shall be amended by inserting the following new text,
appearing at the end of the first paragraph of Section 6.9(b) thereof:

“Notwithstanding the foregoing, if the 2018 Financing Event occurs on or prior
to December 31, 2018, the Detection Revenue covenant set forth in this
Section 6.9(b) shall not be tested for the six (6) month period ending
December 31, 2018.”

 

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  3

The Loan Agreement shall be amended by inserting the following new text,
appearing at the end of the first paragraph of Section 6.9(c) thereof:

“Notwithstanding the foregoing, if the 2018 Financing Event occurs on or prior
to December 31, 2018, the Adjusted EBITDA covenant set forth in this
Section 6.9(c) shall not be tested for the six (6) month period ending
December 31, 2018.”

 

  4

The Loan Agreement shall be amended by inserting the following new Section 6.15,
appearing immediately after Section 6.14 thereof:

“        6.15     Designated Senior Indebtedness. Borrower shall designate all
principal of, interest (including all interest accruing after the commencement
of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in any such proceeding), and all
fees, costs, expenses and other amounts accrued or due under the Loan Documents
as “Designated Senior Indebtedness”, or such similar term, in the 2018
Convertible Debt and in any future Subordinated Debt incurred by Borrower after
the Third LMA Effective Date.”

 

  5

The Loan Agreement shall be amended by deleting the following subsection
appearing in the definition of “Permitted Indebtedness” in Section 13.1 thereof:

“        (g)     extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (f) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.”

and inserting in lieu thereof the following:

“        (g)     unsecured Indebtedness in an aggregate amount not to exceed
Seven Million Five Hundred Thousand Dollars ($7,500,000.00) of (i) ICAD under
that certain 5% Convertible Debenture dated as of December [    ], 2018 and
(ii) Xoft and Xoft Solutions under that certain Subsidiary Guarantee dated as of
December [    ], 2018 with respect to the Indebtedness referred to in (i) ((i)
and (ii) collectively, the “2018 Convertible Debt”); and

(h)    extensions, refinancings, modifications, amendments and restatements of
any items of Permitted Indebtedness (a) through (g) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon Borrower or its Subsidiary, as the case may
be.”

 

  6

The Loan Agreement shall be amended by inserting the following new definitions,
appearing alphabetically in Section 13.1 thereof:

“        “2018 Convertible Debt” is defined in subsection (g) of the definition
of “Permitted Indebtedness”.”

“        “2018 Financing Event” means Bank’s receipt of evidence, on or prior to
December 31, 2018, satisfactory to Bank in Bank’s sole discretion, that Borrower
has received, after the Third LMA Effective Date but on or prior to December 31,
2018, unrestricted net cash proceeds in an amount of at least Four Million Five
Hundred Thousand Dollars ($4,500,000.00) with respect to the 2018 Convertible
Debt.”

 

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“        “Third LMA Effective Date” is [                                ],
2018.” [THE DATE OF THIS AGREEMENT. TO BE COMPLETED AT CLOSE.]

 

  7

The Loan Agreement shall be amended by deleting the following definition,
appearing in Section 13.1 thereof:

“        “2018 Term Loan Maturity Date” is March 1, 2022.”

and inserting in lieu thereof the following:

“        “2018 Term Loan Maturity Date” is August 1, 2021.”

 

  8

The Compliance Certificate appearing as Exhibit B to the Loan Agreement is
hereby deleted and replaced with the Compliance Certificate attached as Schedule
1 hereto.

4.    FEES AND EXPENSES. Borrower shall reimburse Bank for all legal fees and
expenses incurred in connection with this amendment to the Existing Loan
Documents.

5.    RATIFICATION OF PERFECTION CERTIFICATES.

(a)     ICAD hereby ratifies, confirms and reaffirms, all and singular, the
terms and disclosures contained in a certain Perfection Certificate of ICAD
dated as of August 7, 2017 (the “ICAD Perfection Certificate”), and
acknowledges, confirms and agrees that the disclosures and information ICAD
provided to Bank in the ICAD Perfection Certificate have not changed, as of the
date hereof.

(b)     Xoft hereby ratifies, confirms and reaffirms, all and singular, the
terms and disclosures contained in a certain Perfection Certificate of Xoft
dated as of August 7, 2017 (the “Xoft Perfection Certificate”), and
acknowledges, confirms and agrees that the disclosures and information Xoft
provided to Bank in the Xoft Perfection Certificate have not changed, as of the
date hereof.

(c)     Xoft Solutions hereby ratifies, confirms and reaffirms, all and
singular, the terms and disclosures contained in a certain Perfection
Certificate of Xoft Solutions dated as of August 7, 2017 (the “Xoft Solutions
Perfection Certificate”), and acknowledges, confirms and agrees that the
disclosures and information Xoft Solutions provided to Bank in the Xoft
Solutions Perfection Certificate have not changed, as of the date hereof.

6.    CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

7.    RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to Bank, and confirms that the indebtedness secured thereby includes, without
limitation, the Obligations.

8.    NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses, claims, or counterclaims against Bank, whether
known or unknown, at law or in equity, all of them are hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.

 

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9.    CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower’s representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Bank’s agreement to modifications to the existing Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.

10.    COUNTERSIGNATURE. This Loan Modification Agreement shall become effective
only when it shall have been executed by Borrower and Bank.

[The remainder of this page is intentionally left blank]

 

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This Loan Modification Agreement is executed as of the date first written above.

 

BANK: SILICON VALLEY BANK By   /s/ Sam Subila Name:   Sam Subila Title:   Vice
President BORROWER: ICAD, INC. By:   /s/ Michael S. Klein Name:   Michael S.
Klein Title:     XOFT, INC. By:   /s/ Michael S. Klein Name:   Michael S. Klein
Title:     XOFT SOLUTIONS, LLC By:   /s/ Michael S. Klein Name:   Michael S.
Klein Title:    

 

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Schedule 1

EXHIBIT B

COMPLIANCE CERTIFICATE

 

TO:    SILICON VALLEY BANK    Date:                                          
            FROM:    ICAD, INC., XOFT, INC. and XOFT SOLUTIONS, LLC   

The undersigned authorized officer of ICAD, INC., XOFT INC. and XOFT SOLUTIONS,
LLC (individually and collectively, jointly and severally, “Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (1) Borrower is in complete compliance for
the period ending                                  with all required covenants
except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all
material respects on this date except as noted below; provided, however, that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, (4) Borrower, and each of its
Subsidiaries has timely filed all required tax returns and reports, and Borrower
has timely paid all foreign, federal, state and local taxes, assessments,
deposits and contributions owed by Borrower except as otherwise permitted
pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have
been levied or claims made against Borrower, and each of its Subsidiaries
relating to unpaid employee payroll or benefits of which Borrower has not
previously provided written notification to Bank. Attached are the required
documents supporting the certification. The undersigned certifies that these are
prepared in accordance with GAAP consistently applied from one period to the
next except as explained in an accompanying letter or footnotes. The undersigned
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered. Capitalized terms used but not otherwise defined
herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenants

  

Required

 

Complies

Monthly financial statements with Compliance Certificate    Monthly within 30
days   Yes    No Form 10-Q    Quarterly within 45 days (for first 3 quarters of
a fiscal year)   Yes    No Form 10-K    Annually within 90 days of the last
quarter of a fiscal year   Yes    No 10-Q, 10-K and 8-K    Within 5 days after
filing with SEC (if not previously delivered)   Yes    No A/R & A/P Agings,
Deferred Revenue report and Account Debtor listing    Monthly within 30 days  
Yes    No Borrowing Base Reports    (i) with each request for an Advance and
(ii) monthly within 30 days   Yes    No Board approved Projections    Within the
earlier of 30 days of (i) Board approval or (ii) fiscal year end, together with
any period updates   Yes    No

 

Streamline Period

  

Required

    

Actual

    

Eligible

 

Maintain:

        

Adjusted Quick Ratio (at all times, tested monthly)

     > 1.25 : 1.0                     : 1.0        Yes    No  

 

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Financial Covenant

  

Required

   

Actual

    

Complies

 

Maintain as indicated:

       

Minimum Detection Revenue (six month period, tested quarterly)

   $                   *    $                          Yes    No    N/A *** 

Adjusted EBITDA (six month period, tested quarterly)

   $                   **    $                          Yes    No    N/A **** 

 

*

As set forth in Section 6.9(b) of the Agreement.

**

As set forth in Section 6.9(c) of the Agreement.

***

See Section 6.9(b) with respect to the period ending December 31, 2018.

***

See Section 6.9(c) with respect to the period ending December 31, 2018

The following financial covenant analyses and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)

 

ICAD, INC. By:  

                                                               
                           

Name:  

     

Title:  

     

XOFT, INC. By:  

     

Name:  

     

Title:  

     

XOFT SOLUTIONS, LLC By:  

     

Name:  

     

Title:  

     

BANK USE ONLY Received by:                                   
                                                   

AUTHORIZED SIGNER    

Date:                                   
                                                             

Verified:                                   
                                                           

AUTHORIZED SIGNER    

Date:                                   
                                                              Compliance
Status:        Yes    No

 

 

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Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

In the event of a conflict between this Schedule and the Loan Agreement, the
terms of the Loan Agreement shall govern.

Dated:                                         

 

I.

Minimum Detection Revenue (Section 6.9(b)) (six month period, tested quarterly)

Required: Amount set forth below.

 

Six Month Period Ending

      Minimum Detection Revenue March 31, 2018       $8,622,000.00 June 30, 2018
      $7,500,000.00 September 30, 2018       $7,500,000.00 December 31, 2018   
   $8,750,000.00

Levels for 2019 through 2021 to be established in accordance with Section 6.9 of
the Agreement.

Actual:                 $                                

Is the actual amount equal to or greater than the required amount above?

             No, not in compliance                                  Yes, in
compliance

             Not Applicable (See Section 6.9(b) with respect to period ending
December 31, 2018)

 

II.

Adjusted EBITDA (Section 6.9(c)) (six month period, tested quarterly)

Required: Amount set forth below (as calculated on a consolidated basis for
Borrower and its Subsidiaries).

 

Six Month Period Ending

       Adjusted EBITDA March 31, 2018        ($4,500,000.00) June 30, 2018  
     ($3,750,000.00) September 30, 2018        ($1,000,000.00) December 31, 2018
       $1.00

Levels for 2019 through 2021 to be established in accordance with Section 6.9 of
the Agreement.

 

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Actual:                 $                        

 

A.

 

Net Income

   $                        

B.

 

To the extent included in the determination of Net Income

     1.   

Interest Expense

   $                           2.   

Taxes

   $                           3.   

Depreciation

   $                           4.   

Amortization

   $                           5.   

Non-cash stock compensation expense

   $                           6.   

Non-cash impairment of goodwill expense

   $                           7.   

Other non-cash items approved by writing by Bank on a case-by-case basis in

its good faith business discretion

   $                           8.   

The sum of lines 1 through 7

   $                        

C.

 

Adjusted EBITDA (line A plus line B.8)

   $                        

Is the actual amount equal to or greater than the required amount above?

             No, not in compliance                                      Yes, in
compliance

             Not Applicable (See Section 6.9(c) with respect to period ending
December 31, 2018)

 

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