Exhibit 10.2

 

WAIVER AND MODIFICATION NO. 3 TO

LOAN AND SECURITY AGREEMENT

 

This Third Modification and Modification No. 3 under Loan and Security Agreement
(this “Third Modification”) is entered into as of August 20, 2018 (the “Third
Modification Effective Date”), by and between Partners for Growth IV, L.P.
(“PFG”), as lender, and each of (i) CANCER GENETICS, INC., a Delaware
corporation (“Parent”), (ii) GENTRIS, LLC, a Delaware limited liability company
(“Delaware Subsidiary”), (iii) VIVOPHARM, LLC, a Delaware limited liability
company (“Vivo”), and (iv) RDDT A VIVOPHARM COMPANY PTY LTD, a company
incorporated under the laws of Australia (“Australian Borrower”, and together
with Parent, Delaware Subsidiary, and Vivo, jointly and severally, individually
and collectively, “Borrower”). Capitalized terms used but not defined in this
Third Modification shall have the meanings given them in the Loan Agreement.

 

Recitals

 

WHEREAS, PFG and Borrower entered into that certain Loan and Security Agreement
dated as of March 22, 2017 (as amended and restated from time to time, the “Loan
Agreement”) and the other Loan Documents pursuant to which PFG has made
available to Borrower the principal amount of $6,000,000, all of which is
outstanding on the Third Modification Effective Date.

 

WHEREAS, Borrower has failed to comply with the terms of the Loan Agreement
including (inter alia) (1) failure to comply with the Minimum EBITDA financial
covenant set forth in Section 5 of the Schedule for the reporting months ending
May 31, 2018 and June 30, 2018, (2) Borrower’s anticipated Defaults by failure
to comply with the Minimum EBITDA financial covenant set forth in Section 5 of
the Schedule for the reporting months ending July 31, 2018 and August 31, 2018,
(3) Borrower’s failure to comply with the Minimum Liquidity covenant set forth
in Section 5 of the Schedule for the months ended and ending May 31, 2018 and
June 30, 2018, (4) Borrower’s anticpated Deaults by failure to comply with the
Minimum Liquidity covenant set forth in Section 5 of the Schedule for the months
ended and ending July 31, 2018 and August 31, 2018, (5) Borrower’s failure to
comply with the Financing Condition set forth in Section 10(a) of the Joinder
and Modification No. 2 to Loan and Security Agreement dated June 30, 2018 (the
“Financing Condition Default”) ((1) through (5), above, collectively, the
“Existing Defaults”), and (6) Borrower’s failure to comply with the terms of the
Senior Debt Documents (the “Cross-Default”), (the Cross-Default, together with
the Existing Defaults, the “Specified Defaults”);

 

WHEREAS, subject to Borower’s compliance with the terms of this Third
Modification, PFG is willing to waive the Specified Defaults;

 

NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

 

 

 

 

Agreement

 

1. EFFECTIVENESS. The terms of this Third Modification shall become effective
upon the Third Modification Effective Date, but shall continue to be subject to
Borrower’s satisfaction of the conditions set forth in Section 6 of this Third
Modification.

 

2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral, as described in the Loan Agreement, in that certain Intellectual
Property Security Agreement and related Collateral Agreements and Notices of
even date with the Loan Agreement (the “IPSA”) and the other Loan Documents
entered into on the date of the Loan Agreement.

 

3. CONTINUING VALIDITY. Borrower understands and agrees that in executing and
delivering this Third Modification, PFG is relying upon Borrower's
representations, warranties and agreements as set forth in this Third
Modification and the Loan Documents. Except as expressly modified pursuant to
this Third Modification, the terms of the Loan Documents remain unchanged and in
full force and effect. PFG’s execution and delivery of this Third Modification
in no way shall obligate PFG to give any future consents or waivers or make any
future modifications to the Loan Documents as modified hereby. Nothing in this
Third Modification shall constitute a satisfaction of the Obligations or a
waiver of any Default or Event of Default under the Loan Documents, except as
set forth in Section 5 in respect of the Specified Defaults (only). It is the
intention of PFG and Borrower to retain as liable parties all makers, endorsers
and guarantors, if any, the Loan Documents. Unless expressly released herein, no
maker, endorser, or guarantor will be released by virtue of this Third
Modification.

 

4. ACKNOWLEDGMENT OF SPECIFIED DEFAULTS; WAIVER. Borrower acknowledges that it
is currently in default under the Loan Agreement due to the Specified Defaults.
If no Default or Event of Default has occurred and is continuing under the Loan
Agreement, other than the Specified Defaults, and Borrower timely satisfies the
conditions set forth in Section 6 hereof, then PFG shall be deemed to have
forever waived the Specified Defaults. PFG’s waiver of Borrower’s compliance of
the Specified Defaults (other than the Financing Condition Default) shall apply
only to the foregoing specific periods. Borrower hereby acknowledges and agrees
that except as specifically provided this Third Modification, nothing in this
Section 4 or elsewhere in this Third Modification shall be deemed or otherwise
construed as a waiver by PFG of any of its rights and remedies pursuant to the
Existing Loan Documents, applicable law, or otherwise. The waiver of the
Specified Defaults set forth in this Third Modification shall be limited
precisely as written and, except as expressly provided in this Third
Modification, shall not be deemed (a) to be a forbearance, waiver or
modification of any other term or condition of the Loan Agreement or of any
other instrument or agreement referred to therein or to prejudice any right or
remedy which PFG may now have or may have in the future under or in connection
with the Loan Agreement, the other Loan Documents or any instrument or agreement
referred to therein; (b) to be a consent to any future amendment or
modification, forbearance or waiver to any instrument or agreement the execution
and delivery of which is consented to hereby, or to any waiver of any of the
provisions thereof; or (c) to limit or impair PFG’s right to demand strict
performance of all terms and covenants as of any date, subject to this Third
Modification. The Loan Agreement, as amended, shall continue in full force and
effect. This Third Modification shall be construed in connection with and as
part of the Loan Documents and all terms, conditions, representations,
warranties, covenants and agreements set forth in the Loan Documents are hereby
ratified and confirmed and shall remain in full force and effect.

 

 

 

 

5. Borrowers’ Representations And Warranties. Borrower represents and warrants
to PFG that:

 

(a) immediately upon giving effect to this Third Modification: (i) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent qualified in the updated Representations delivered to PFG on or
before the Third Modification Effective Date), and (ii) no Event of Default has
occurred and is continuing, other than the Specified Defaults;

 

(b) Borrower has the corporate power and authority to execute and deliver this
Third Modification and to perform its obligations under the Loan Documents, as
modified by this Third Modification;

 

(c) the Constitutional Documents of Borrower delivered to PFG remain true,
accurate and complete and have not been amended, supplemented or restated and
are and continue to be in full force and effect;

 

(d) this Third Modification has been duly authorized, executed and delivered by
Borrower and (i) constitutes the binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors’ rights; (ii) does not conflict with any law or
regulation or judgment or the Constitutional Documents of Borrower, or any
agreement or document to which Borrower is a party or which is binding upon it
or any of its assets; and (iii) does not require any authorization, approval,
consent (including stockholder or member consent) of any Person, or any license
or registration in any jurisdiction, for its lawful authorization, execution,
performance, validity or enforceability, except to the extent such
authorization, approval, consent (including stockholder or member consent) of
any Person, license or registration is secured on or prior to the Third
Modification Effective Date and provided to PFG;

 

(e) as of the date hereof, with Knowledge that PFG is relying on Borrower’s
representations and warranties herein (including the Representations) as a basis
for entering into this Third Modification at Borrower’s request, Borrower has no
defenses against its obligation to repay the Obligations and it has no claims of
any kind against PFG. Borrower acknowledges that PFG has acted in good faith and
has conducted its relationship with Borrower in a commercially reasonable
manner, including in connection with this Third Modification and in connection
with the Loan Documents;

 

 

 

 

(f) with respect to any Loan Documents binding upon a Person not party to this
Third Modification, each such Person has been apprised of this Third
Modification, has consented to Borrower’s execution and delivery of this Third
Modification and, to the extent not executed concurrently with this Third
Modification (or as a condition subsequent hereto), has agreed if so requested
by PFG to promptly execute and deliver to PFG a reaffirmation of its obligations
under any Loan Documents to which it is a party or is bound;

 

(g) the IPSA, the Collateral Agreements and Notices and their respective
Schedules, taken as a whole and as last amended and delivered to PFG, contain an
accurate, complete and current listing of all Collateral that consists of
Intellectual Property;

 

(h) Borrower hereby ratifies, confirms and reaffirms, all and singular, the
terms and disclosures contained in the Representations dated as of the Third
Modification Effective Date; and

 

(i) Except as expressly stated in this Third Modification, neither PFG nor any
agent, employee or representative of PFG has made any statement or
representation to Borrower regarding any fact relied upon by Borrower in
entering into this Third Modification, (ii) Borrower has made such investigation
of the facts pertaining to this Third Modification and all of the matters
appertaining thereto, as it deems necessary, and (iii) the terms of this Third
Modification are contractual and not a mere recital.

 

Borrower understands and acknowledges that PFG is entering into this Third
Modification in reliance upon, and in partial consideration for, the above
representations and warranties, and agrees that such reliance is reasonable and
appropriate.

 

6. CONDITIONS. The effectiveness of this Third Modification is conditioned upon
satisfaction of each of the following, with the consequence of a failure to meet
the following conditions as set forth in the proviso at the end of this Section
6:

 

(a) Execution and Delivery. Borrower shall have duly executed and delivered to
PFG a counterpart of this Third Modification;

 

(b) Lender Expenses; PFG Waiver Fee. Borrower shall have paid, within 1 Business
Day of receipt of PFG invoice, (i) all unpaid fees and Lender Expenses incurred
pursuant to or in connection with this Third Modification, and (ii) a fully
earned, non-refundable waiver fee in an amount equal to Twenty-Five Thousand
Dollars ($25,000);

 

(c) Waiver of Senior Lender. Borrower shall have provided PFG with a true and
correct copy of the waiver of like Specified Defaults under the Senior Debt
Documents by the Senior Lender.

 

For the avoidance of doubt, the failure of any of the foregoing conditions shall
constitute an immediate Event of Default (i.e., without the application of any
otherwise applicable cure periods under the Loan Agreement).

 

 

 

 

7. MODIFICATIONS TO LOAN AGREEMENT. The Loan Agreement is amended as of the
Third Modification Effective Date as follows:

 

(a) Definitions. Section 7 of the Loan Agreement is amended to add the following
definition:

 

“Transaction Event” means confirmation by PFG that Borrower and an unrelated
third party have executed and delivered, on or prior to August 31, 2018, a
binding and enforceable agreement with respect to a merger or other business
combination transaction between Borrower and such third party, which third party
shall be satisfactory to PFG in its sole and absolute discretion and which
binding and enforceable agreement shall be in form and substance (including,
without limitation, as to the structure of such merger or other business
combination transaction described in or contemplated under such agreement)
satisfactory to PFG in its sole and absolute discretion.”

 

(b) Schedule. A new Section 8(d) is added to the Schedule as follows:

 

  “(d) Transaction Event. On or before August 31, 2018, provide PFG with
evidence in a form and substance acceptable to PFG in all respects that the
Transaction Event has occurred.”

 

8. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of the Loan Documents as modified hereby and
all security and other collateral granted to PFG thereunder, and confirms that
the Indebtedness secured thereby includes, without limitation, the Obligations.
Without limiting the foregoing, (i) Borrower hereby ratifies, confirms and
reaffirms, all and singular, the terms and conditions of the Intellectual
Property Security Agreements (and related Collateral Agreements and Notices)
(each, an “IPSA”) entered into between PFG and Borrower and that, as of the
Third Modification Effective Date, each IPSA contains an accurate and complete
listing of all Intellectual Property and Domain Rights of each Borrower and that
each such IPSA remains in full force and effect, and (ii) Borrower hereby
ratifies, confirms and reaffirms, all and singular, the Representations
delivered in connection with the Joinder and Modification No. 2 to Loan and
Security Agreement and that the information disclosed therein remains true,
correct, accurate and complete in all respects as of the Third Modification
Effective Date.

 

9. Further Assurances. Borrower agrees to execute such further documents and
instruments and to take such further actions as PFG may request in its good
faith business judgment to carry out the purposes and intent of this Third
Modification.

 

 

 

 

10. NO CLAIMS; RELEASE. As of the Third Modification Effective Date, Borrower
represents, warrants and covenants that it has no defenses against its
obligation to repay the Obligations and it has no claims of any kind against
PFG. Borrower acknowledges that PFG has acted in good faith and has conducted in
a commercially reasonable manner its relationship with such Borrower in
connection with this Third Modification and in connection with the Loan
Documents. Borrower voluntarily and knowingly releases PFG, its owners,
affiliates and agents from all possible, claims, counterclaims, demands,
actions, causes of action, costs, expenses and liabilities whatsoever, known or
unknown, contingent or condition, whether at law or in equity, from any cause
and under any legal theory, that it may have on or before or arising out of
circumstances on or prior to the Third Modification Effective Date. Borrower
waives the benefits of any law, including Section 1542 of the California Civil
Code which provides in substance: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY IT MUST HAVE MATERIALLY AFFECTED ITS
SETTLEMENT WITH THE DEBTOR.” By entering into this release, Borrower recognizes
that no facts or representations are ever absolutely certain and it may
hereafter discover facts in addition to or different from those which it
presently knows or believes to be true, but that it is the intention of Borrower
hereby to fully, finally and forever settle and release all matters, disputes
and differences, known or unknown, suspected or unsuspected. Accordingly, if
Borrower should subsequently discover that any fact that it relied upon in
entering into this release was untrue, or that any understanding of the facts
was incorrect, Borrower shall not be entitled to set aside this release by
reason thereof, regardless of any claim of mistake of fact or law or any other
circumstances whatsoever. Borrower acknowledges that it is not relying upon and
has not relied upon any representation or statement made by PFG with respect to
the facts underlying this release or with regard to any of such party’s rights
or asserted rights. Borrower acknowledges that (i) this release may be pleaded
as a full and complete defense and/or as a cross-complaint or counterclaim in
any action, suit, or other proceeding that may be instituted, prosecuted or
attempted in breach of this release, and (ii) Borrower acknowledges that the
release contained herein constitutes a material inducement to PFG to enter into
this Third Modification, and that PFG would not have done so but for PFG’s
expectation that such release is valid and enforceable in all events. Borrower
hereby represents and warrants to and covenants with PFG, and PFG is relying
thereon, as follows: (1) except as expressly stated in this Third Modification,
neither PFG nor any agent, employee or representative of PFG has made any
statement or representation to Borrower regarding any fact relied upon by
Borrower in entering into this Third Modification; (2) Borrower has made such
investigation of the facts pertaining to this Third Modification and all of the
matters appertaining thereto, as it deems necessary; (3) the terms of this Third
Modification are contractual and not a mere recital; and (4) this Third
Modification has been carefully read by Borrower, the contents hereof are known
and understood by Borrower, and this Third Modification is signed freely, and
without duress, by Borrower; (5) Borrower is the sole and lawful owner of all
right, title and interest in and to every claim and every other matter which it
releases herein, and that it has not heretofore assigned or transferred, or
purported to assign or transfer, to any person, firm or entity any claims or
other matters herein released. Borrower shall indemnify PFG, defend and hold it
harmless from and against all claims based upon or arising in connection with
prior assignments or purported assignments or transfers of any claims or matters
released herein.

 

11. ADVICE OF COUNSEL. PFG and Borrower have prepared this Third Modification
and all documents, instruments, and agreements incidental hereto with the aid
and assistance of their respective counsel. Accordingly, all of them shall be
deemed to have been drafted by PFG and Borrower and shall not be construed
against either PFG or Borrower.

 

 

 

 

12. INTEGRATION; CONSTRUCTION; ETC. This Third Modification, the Joinder and
Modification No. 2 to Loan and Security Agreement, the Waiver and Modification
No. 1 to Loan and Security Agreement (to the extent not inconsistent with a
later modification), the Loan Agreement and the other Loan Documents (each as
modified by this Third Modification) and any documents executed in connection
herewith or pursuant hereto contain the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings, offers and negotiations, oral or written, with respect thereto
and no extrinsic evidence whatsoever may be introduced in any judicial or
arbitration proceeding, if any, involving this Third Modification; provided,
however, that any financing statements or other agreements or instruments filed
by PFG with respect to Borrower shall remain in full force and effect. The
quotation marks around modified clauses set forth herein and any differing font
styles in which such clauses are presented herein are for ease of reading only
and shall be ignored for purposes of construing and interpreting this Third
Modification. This Third Modification is subject to the General Provisions of
Section 8 of the Loan Agreement. The Loan Documents are hereby amended wherever
necessary to reflect the modifications set forth in this Third Modification. The
Recitals are incorporated herein by reference.

 

13. Governing Law; Venue. THIS THIRD MODIFICATION SHALL BE GOVERNED BY AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA. Borrower and PFG submit to the exclusive jurisdiction of the State
and Federal courts in Santa Clara County, California, in connection with any
proceeding or dispute arising in connection herewith.

 

[Signature Page Follows]

 

 

 

 

PFG   BORROWER Partners for Growth IV, L.P.   CANCER GENETICS, INC.          
By: /s/ Phil Lawson   By: /s/ John A. Roberts Name Phil Lawson, Manager   Name:
John A. Roberts Title:

Partners for Growth IV, LLC, its

General Partner

  Title:

Chief Executive Officer

          BORROWER:   BORROWER:           VIVOPHARM, LLC   GENTRIS, LLC        
  By: /s/ John A. Roberts   By:

/s/ John A. Roberts

Name:

John A. Roberts

  Name:

John A. Roberts

Title: Chief Executive Officer   Title:

Chief Executive Officer

 

Executed by RDDT A VIVOPHARM COMPANY PTY LTD in accordance with Section 127 of
the Corporations Act 2001           /s/ John A. Roberts   /s/ Ralf Brandt
Signature of director  

Signature of director/company secretary

 

(Please delete as applicable)

      John A. Roberts   Ralf Brandt Name of director (print)   Name of
director/company secretary (print)