Exhibit 10.2
 
FIFTH BUSINESS FINANCING MODIFICATION AGREEMENT
 
This Fifth Business Financing Modification Agreement (this “Agreement”) is
entered into as of August 21, 2017, by and among CHROMADEX CORPORATION, a
Delaware corporation, CHROMADEX, INC., a California corporation, CHROMADEX
ANALYTICS, INC., a Nevada corporation, HEALTHSPAN RESEARCH LLC, a Delaware
limited liability company (each, a “Borrower” and collectively, “Borrowers”),
and WESTERN ALLIANCE BANK, an Arizona corporation (“Lender”).
 
Borrower desires to sell certain assets (such assets, defined in the Asset
Purchase Agreement and defined herein, the “Purchased Assets”) pursuant to the
Asset Purchase Agreement by and among COVANCE LABORATORIES INC. (“Purchaser”),
CHROMADEX, INC., CHROMADEX ANALYTICS, INC., and CHROMADEX CORPORATION, dated as
of August 21, 2017 and attached hereto as Exhibit A (the “Asset Purchase
Agreement”, and the transactions contemplated in Asset Purchase Agreement, the
“Asset Sale”). Borrower has requested that Lender consents to (i) Borrower
entering into the Asset Purchase Agreement; and (ii) the Asset Sale by Borrower
to Purchaser. Lender has agreed to such request, subject to the terms and
conditions hereof.
 
1.            
DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrowers to Lender, Borrowers are indebted to Lender pursuant to,
among other documents, a Business Financing Agreement, dated November 4, 2016,
by and among Borrowers and Lender, as may be amended from time to time,
including, without limitation, by that certain First Business Financing
Modification Agreement dated as of February 16, 2017, that certain Second
Business Financing Modification Agreement dated as of March 12, 2017, that
certain Third Business Financing Modification Agreement dated as of April 19,
2017 and that certain Fourth Business Financing Modification Agreement dated as
of July 13, 2017 (collectively, the “Business Financing Agreement”). Capitalized
terms used without definition herein shall have the meanings assigned to them in
the Business Financing Agreement.
 
Hereinafter, all indebtedness owing by Borrowers to Lender under the Existing
Documents (defined herein) shall be referred to as the “Obligations” and the
Business Financing Agreement and any and all other Loan Documents executed by
Borrowers in favor of Lender in connection therewith shall be referred to as the
“Existing Documents.”
 
2.            
CONSENT.
 
A.           Subject to the terms of this Agreement, Lender hereby consents to
(i) Borrower entering into the Asset Purchase Agreement and the Borrower
performing its obligations thereunder; and (ii) the Asset Sale, and the Borrower
performing its obligations thereunder, in each case on the terms and conditions
as set forth in the Asset Purchase Agreement attached hereto in Exhibit A.
Further, Lender agrees that, upon the closing of the Asset Sale, all security
interests of Lender in the Purchased Assets shall immediately terminate with no
further action on the part of Borrower, Lender or the Purchaser. Notwithstanding
the preceding sentence, promptly following Borrower’s notification to Lender of
the consummation of the Asset Sale, Lender shall file an amendment to any UCC-1
Financing Statements filed by Lender with respect to the Collateral to exclude
the Purchased Assets from the collateral description therein. Notwithstanding
Lender’s release of its liens on the Purchased Assets, Lender’s liens on all
other Collateral shall remain in full force and effect. For the avoidance of
doubt, Borrower is not required to prepay any obligations under the Business
Financing Agreement with proceeds received pursuant to the Asset Purchase
Agreement.
 
B.           The consent set forth in this Section 2 is effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (a) be a consent to any other amendment, waiver or modification
of any other term or condition of any Loan Document, or (b) otherwise prejudice
any right or remedy which Lender may now have or may have in the future under or
in connection with any Loan Document
 
 
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3.            
DESCRIPTION OF CHANGE IN TERMS.
 
A.           Modifications to Business Financing Agreement and all Existing
Documents:
 
(i)           Section 12.1 of the Business Financing Agreement hereby is amended
by amending and restating the definition of “Collateral” in its entirety to read
as follows:
 
“Collateral” means all of each Borrower’s rights and interest in any and all
personal property, whether now existing or hereafter acquired or created and
wherever located, and all products and proceeds thereof and accessions thereto,
including but not limited to the following (collectively, the “Collateral”): (a)
all accounts (including health care insurance receivables), chattel paper
(including tangible and electronic chattel paper), inventory (including all
goods held for sale or lease or to be furnished under a contract for service,
and including returns and repossessions), equipment (including all accessions
and additions thereto), instruments (including promissory notes), investment
property (including securities and securities entitlements), documents
(including negotiable documents), deposit accounts, letter of credit rights,
money, any commercial tort claim of a Borrower which is now or hereafter
identified by a Borrower or Lender, general intangibles (including payment
intangibles and software), goods (including fixtures) and all of each Borrower’s
books and records with respect to any of the foregoing, and the computers and
equipment containing said books and records; and (b) any and all cash proceeds
and/or noncash proceeds thereof, including without limitation, insurance
proceeds, and all supporting obligations and the security therefore or for any
right to payment. Notwithstanding the foregoing, the Collateral shall not
include (i) more than sixty-five percent (65.0%) of the presently existing and
hereafter arising issued and outstanding shares of capital stock owned by any
Borrower of any subsidiary not organized under the laws of the United States or
any state or territory thereof or the District of Columbia which shares entitle
the holder thereof to vote for directors or any other matter; and (ii) the
Purchased Assets (as defined in that certain Asset Purchase Agreement by and
among COVANCE LABORATORIES INC., CHROMADEX, INC., CHROMADEX ANALYTICS, INC., and
CHROMADEX CORPORATION, dated as of August 21, 2017).
 
4.            
CONSISTENT CHANGES. The Existing Documents are each hereby amended wherever
necessary to reflect the changes described above.
 
5.            
PAYMENT OF DOCUMENTATION FEE. Borrowers are in compliance with all covenants
under the Business Financing Agreement, and all fees incurred and due to Lender
prior to the date of this Agreement have been satisfied by Borrower. Borrowers
shall pay Lender all out-of-pocket expenses (including but not limited to
reasonable legal fees and due diligence fees (if any) incurred by Lender in
connection with the execution of this Agreement, which fees are estimated to be
$5,000), and which may be debited from any of Borrowers' accounts after the
execution of this Agreement.
 
6.            
NO DEFENSES OF BORROWERS/GENERAL RELEASE. Each Borrower agrees that, as of this
date, it has no defenses against the obligations to pay any amounts presently
due under the Obligations. Each Borrower (each, a “Releasing Party”)
acknowledges that Lender would not enter into this Agreement without Releasing
Party’s assurance that it has no claims against Lender or any of Lender’s
officers, directors, employees or agents. Except for the obligations arising
hereafter under this Agreement, each Releasing Party releases Lender, and each
of Lender’s and entity’s officers, directors and employees from any known or
unknown claims that Releasing Party now has against Lender of any nature,
including any claims that Releasing Party, its successors, counsel, and advisors
may in the future discover they would have now had if they had known facts not
now known to them, whether founded in contract, in tort or pursuant to any other
theory of liability, including but not limited to any claims arising out of or
related to the Agreement or the transactions contemplated thereby. Releasing
Party waives the provisions of California Civil Code section 1542, which states:
 
 
 
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.
 
The provisions, waivers and releases set forth in this section are binding upon
each Releasing Party and its shareholders, agents, employees, assigns and
successors in interest. The provisions, waivers and releases of this section
shall inure to the benefit of Lender and its agents, employees, officers,
directors, assigns and successors in interest. The provisions of this section
shall survive payment in full of the Obligations, full performance of all the
terms of this Agreement and the Business Financing Agreement, and/or Lender’s
actions to exercise any remedy available under the Business Financing Agreement
or otherwise.
 
7.            
CONTINUING VALIDITY. Borrowers understand and agree that in modifying the
existing Business Financing Agreement, Lender is relying upon Borrowers’
representations, warranties, and agreements, as set forth in the Existing
Documents. Except as expressly modified pursuant to this Agreement, the terms of
the Existing Documents remain unchanged and in full force and effect. Lender’s
agreement to modifications to the existing Business Financing Agreement pursuant
to this Agreement in no way shall obligate Lender to make any future
modifications to the Business Financing Agreement. Nothing in this Agreement
shall constitute a satisfaction of the Obligations. It is the intention of
Lender and Borrowers to retain as liable parties all makers and endorsers of
Existing Documents, unless the party is expressly released by Lender in writing.
No maker, endorser, or guarantor will be released by virtue of this Agreement
except in accordance with the terms of this Agreement. The terms of this
paragraph apply not only to this Agreement, but also to any subsequent Business
Financing modification agreements.
 
8.            
REFERENCE PROVISION.
 
A.           In the event the Jury Trial waiver is not enforceable, the parties
elect to proceed under this Judicial Reference Provision.
 
B.           With the exception of the items specified in Section 8(c) below,
any controversy, dispute or claim (each, a “Claim”) between the parties arising
out of or relating to this Agreement or any other document, instrument or
agreement between the undersigned parties (collectively in this Section, the
“Loan Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the California Code of
Civil Procedure (“CCP”), or their successor sections, which shall constitute the
exclusive remedy for the resolution of any Claim, including whether the Claim is
subject to the reference proceeding. Except as otherwise provided in the Loan
Documents, venue for the reference proceeding will be in the state or federal
court in the county or district where the real property involved in the action,
if any, is located or in the state or federal court in the county or district
where venue is otherwise appropriate under applicable law (the “Court”).
 
C.           The matters that shall not be subject to a reference are the
following: (i) nonjudicial foreclosure of any security interests in real or
personal property, (ii) exercise of self-help remedies (including, without
limitation, set-off), (iii) appointment of a receiver and (iv) temporary,
provisional or ancillary remedies (including, without limitation, writs of
attachment, writs of possession, temporary restraining orders or preliminary
injunctions). This reference provision does not limit the right of any party to
exercise or oppose any of the rights and remedies described in clauses (i) and
(ii) or to seek or oppose from a court of competent jurisdiction any of the
items described in clauses (iii) and (iv). The exercise of, or opposition to,
any of those items does not waive the right of any party to a reference pursuant
to this reference provision as provided herein.
 
D.           The referee shall be a retired judge or justice selected by mutual
written agreement of the parties. If the parties do not agree within ten (10)
days of a written request to do so by any party, then, upon request of any
party, the referee shall be selected by the Presiding Judge of the Court (or his
or her representative). A request for appointment of a referee may be heard on
an ex parte or expedited basis, and the parties agree that irreparable harm
would result if ex parte relief is not granted. Pursuant to CCP § 170.6, each
party shall have one peremptory challenge to the referee selected by the
Presiding Judge of the Court (or his or her representative).
 
 
 
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E.           The parties agree that time is of the essence in conducting the
reference proceedings. Accordingly, the referee shall be requested, subject to
change in the time periods specified herein for good cause shown, to (i) set the
matter for a status and trial-setting conference within fifteen (15) days after
the date of selection of the referee, (ii) if practicable, try all issues of law
or fact within one hundred twenty (120) days after the date of the conference
and (iii) report a statement of decision within twenty (20) days after the
matter has been submitted for decision.
 
F.           The referee will have power to expand or limit the amount and
duration of discovery. The referee may set or extend discovery deadlines or
cutoffs for good cause, including a party’s failure to provide requested
discovery for any reason whatsoever. Unless otherwise ordered based upon good
cause shown, no party shall be entitled to “priority” in conducting discovery,
depositions may be taken by either party upon seven (7) days written notice, and
all other discovery shall be responded to within fifteen (15) days after
service. All disputes relating to discovery which cannot be resolved by the
parties shall be submitted to the referee whose decision shall be final and
binding.
 
G.           Except as expressly set forth herein, the referee shall determine
the manner in which the reference proceeding is conducted including the time and
place of hearings, the order of presentation of evidence, and all other
questions that arise with respect to the course of the reference proceeding. All
proceedings and hearings conducted before the referee, except for trial, shall
be conducted without a court reporter, except that when any party so requests, a
court reporter will be used at any hearing conducted before the referee, and the
referee will be provided a courtesy copy of the transcript. The party making
such a request shall have the obligation to arrange for and pay the court
reporter. Subject to the referee’s power to award costs to the prevailing party,
the parties will equally share the cost of the referee and the court reporter at
trial.
 
H.           The referee shall be required to determine all issues in accordance
with existing case law and the statutory laws of the State of California. The
rules of evidence applicable to proceedings at law in the State of California
will be applicable to the reference proceeding. The referee shall be empowered
to enter equitable as well as legal relief, enter equitable orders that will be
binding on the parties and rule on any motion which would be authorized in a
court proceeding, including without limitation motions for summary judgment or
summary adjudication. The referee shall issue a decision at the close of the
reference proceeding which disposes of all claims of the parties that are the
subject of the reference. Pursuant to CCP § 644, such decision shall be entered
by the Court as a judgment or an order in the same manner as if the action had
been tried by the Court and any such decision will be final, binding and
conclusive. The parties reserve the right to appeal from the final judgment or
order or from any appealable decision or order entered by the referee. The
parties reserve the right to findings of fact, conclusions of laws, a written
statement of decision, and the right to move for a new trial or a different
judgment, which new trial, if granted, is also to be a reference proceeding
under this provision.
 
I.           If the enabling legislation which provides for appointment of a
referee is repealed (and no successor statute is enacted), any dispute between
the parties that would otherwise be determined by reference procedure will be
resolved and determined by arbitration. The arbitration will be conducted by a
retired judge or justice, in accordance with the California Arbitration Act §
1280 through § 1294.2 of the CCP as amended from time to time. The limitations
with respect to discovery set forth above shall apply to any such arbitration
proceeding.
 
J.           THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES
AND CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE
AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT)
WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND
VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS
REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR
AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS.
 
9.            
CONDITIONS. The effectiveness of this Agreement is conditioned upon Lender’s
receipt of the following, in form and substance satisfactory to Lender:
 
(a)           this Agreement, duly executed by Borrowers; and
 
(b)           such other documents, and completion of such other matters, as
Lender may reasonably deem necessary or appropriate.
 
10.            
NOTICE OF FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND
AGREES THAT: (A) THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES, (B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND
(C) THIS WRITTEN AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.
 
11.            
COUNTERSIGNATURE. This Agreement shall become effective only when executed by
Lender and Borrowers.
 
[Balance of Page Intentionally Left Blank]
 
 
 
 
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IN WITNESS WHEREOF, Borrowers and Lender have executed this Agreement on the
date and year above written.
 
BORROWERS:
 
CHROMADEX CORPORATION,
 
a Delaware corporation
 
 
 
By: /s/ Frank Jaksch
 
Name: Frank Jaksch
 
Title: Chief Executive Officer
 
 
 
CHROMADEX, INC.,
 
a California corporation
 
 
By: /s/ Frank Jaksch
 
Name: Frank Jaksch
 
Title: Chief Executive Officer
 
 
 
CHROMADEX ANALYTICS, INC.,
 
a Nevada corporation
 
 
By: /s/ Frank Jaksch
 
Name: Frank Jaksch
 
Title: Chief Executive Officer
 
 
 
HEALTHSPAN RESEARCH LLC,
 
a Delaware limited liability company
 
 
By: /s/ Frank Jaksch
 
Name: Frank Jaksch
 
Title: Chief Executive Officer
 
 
 
[Signatures continued on the next page]
 
 
 
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IN WITNESS WHEREOF, Borrowers and Lender have executed this Agreement on the
date and year above written.
 
LENDER:
 
WESTERN ALLIANCE BANK,
 
an Arizona corporation
 
 
By: /s/ Justin Vogel
 
Name: Justin Vogel
 
Title: Vice President
 
 
 
 
 
 
 
 
 
 
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