UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): August 20, 2018

 

CANCER GENETICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware   001-35817   04-3462475

(State or Other Jurisdiction
of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

201 Route 17 North 2nd Floor, Rutherford, New Jersey 07070

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s telephone number, including area code (201) 528-9200

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined by Rule 405 of the Securities Act of 1933 (17 §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company [X]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [X]

 

 

 

 
 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

On August 20, 2018, Cancer Genetics, Inc. (the “Company”) and certain wholly-owned subsidiaries of the Company, as borrowers or as guarantors, as applicable, entered into (i) a Waiver and Third Amendment to Amended and Restated Loan and Security Agreement (the “SVB Waiver”), amending the Amended and Restated Loan and Security Agreement, dated as of March 22, 2017, as amended by the Waiver and First Amendment to Amended and Restated Loan and Security Agreement dated as of May 14, 2018 and the Joinder and Second Amendment to Amended and Restated Loan and Security Agreement dated as of June 21, 2018, among the Company, certain of its wholly-owned subsidiaries and Silicon Valley Bank (“Bank”) (as subsequently amended from time to time, the “SVB Amended Loan Agreement”) and (ii) a Waiver and Modification No. 3 to Loan and Security Agreement (the “PFG Waiver” and, together with the SVB Waiver, the “Waivers”), amending the Loan and Security Agreement, dated as of March 22, 2017, as amended by the Conditional Waiver and Modification No. 1 to Loan and Security Agreement dated as of May 14, 2018 and the Joinder and Modification No. 2 to Loan and Security Agreement dated as of June 30, 2018, among the Company, certain of its wholly-owned subsidiaries and Partners for Growth IV, L.P. (“PFG” and, together with Bank, the “Lenders”) (as subsequently amended from time to time, the “PFG Amended Loan Agreement” and, together with the SVB Amended Loan Agreement, the “Amended Loan Agreements”).

 

The Waivers, among other things, (1) waive the Company’s violation of certain financial covenants in each of the Amended Loan Agreements, including minimum adjusted EBITDA and minimum liquidity covenants, as of May 31, 2018 and June 30, 2018, (2) prospectively waive the Company’s expected violation of such financial covenants as of July 31, 2018 and August 31, 2018, (3) waive the Company’s violation under each of the Amended Loan Agreements of a financing condition that was due by June 30, 2018 and (4) require the Company to enter into a binding and enforceable agreement satisfactory to each Lender by August 31, 2018 with respect to a merger or other business combination transaction between the Company and an unrelated third party satisfactory to each Lender. No assurance can be given that the Company will be able to satisfy the Lenders’ conditions.

 

The foregoing description of the SVB Waiver, the PFG Waiver and the Amended Loan Agreements does not purport to be complete and is subject to, and qualified in its entirety by reference to, the SVB Waiver and the PFG Waiver, which are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth above in Item 1.01 of this Report is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

As described above, the following exhibit is furnished as part of this report:

 

Exhibit 10.1 — Waiver and Third Amendment to Amended and Restated Loan and Security Agreement with Silicon Valley Bank, dated as of August 20, 2018.

 

Exhibit 10.2 — Waiver and Modification No. 3 to Loan and Security Agreement with Partners for Growth IV, L.P., dated as of August 20, 2018.

 

 
 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  CANCER GENETICS, INC.
     
  By: /s/ John A. Roberts
  Name: John A. Roberts
  Title: President and Chief Executive Officer
     
Date: August 21, 2018    

 

 
 

 

 

Exhibit 10.1

 

WAIVER AND THIRD AMENDMENT TO

AMENDED AND RESTATED LOAN AND SECURITY agreement

 

This Waiver and Third Amendment to Amended and Restated Loan and Security Agreement (this “ Amendment ”) is entered into this 20th day of August, 2018 by and among (a) SILICON VALLEY BANK , a California corporation (“ Bank ”), and (b) (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 ”).

 

Recitals

 

A. Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of March 22, 2017, as amended by that certain Waiver and First Amendment to Amended and Restated Loan and Security Agreement dated as of May 14, 2018, between Borrower and Bank, and as further amended by that certain Joinder and Second Amendment to Amended and Restated Loan and Security Agreement dated as of June 21, 2018, between Borrower and Bank (the “ Second Amendment ”) (as the same may from time to time be further amended, modified, supplemented or restated, the “ Loan Agreement ”).

 

B. Bank has extended credit to Existing Borrower for the purposes permitted in the Loan Agreement.

 

C. Borrower has requested that Bank amend the Loan Agreement to (i) waive the Stated Defaults (as defined herein) and (ii) make certain other revisions to the Loan Agreement as more fully set forth herein.

 

D. In reliance upon the representations and warranties set forth below, Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent provided in this Amendment, and only in accordance with the terms and subject to the conditions set forth below.

 

Agreement

 

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:

 

1. Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

 

2. Amendments to Loan Agreement.

 

2.1 Section 6.17 (Transaction Event) . The Loan Agreement is amended by inserting the following new provision to appear as Section 6.17 thereof:

 

     

 

 

6.17 Transaction Event . On or before August 31, 2018, provide Bank with evidence in a form and substance acceptable to Bank in all respects that the Transaction Event has occurred.”

 

2.2 Section 13 (Definitions) . The Loan Agreement shall be amended by inserting the following new definition to appear alphabetically in Section 13.1 thereof:

 

““ Transaction Event ” means written confirmation by Bank 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 Bank 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 Bank in its sole and absolute discretion.”

 

3. Limitation of Amendments.

 

3.1 The amendments set forth in Section 2 above are 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 amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

 

3.2 This Amendment 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, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

 

4. Discretionary Advances . Notwithstanding anything to the contrary contained in Section 2.2(a) of the Loan Agreement or otherwise contained in the Loan Agreement or the other Loan Documents, Borrower hereby confirms, acknowledges and agrees, that in consideration for Bank’s agreements hereunder, Bank shall have no obligation to make any Advances pursuant to Section 2.2(a) of the Loan Agreement, and any Advances made under Section 2.2(a) shall be made on a case by case basis in Bank’s sole and absolute discretion. In addition to the foregoing, Borrower hereby confirms, acknowledges and agrees, that in consideration for Bank’s agreements hereunder, from and after the date of this Amendment, (a) the outstanding balance of Advances made under the Revolving Line shall not exceed Three Million Dollars ($3,000,000.00) in the aggregate at any time, and (b) Bank shall have no obligation to make, and Borrower shall have no right to request, any Advance if after giving effect to such Advance the aggregate balance of Advances made under the Revolving Line would exceed Three Million Dollars ($3,000,000.00).

 

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5. Waiver. Bank hereby waives (a) Borrower’s existing defaults under the Loan Agreement by virtue of Borrower’s failure to comply with (i) the Adjusted EBITDA covenant set forth in Section 6.9(a) thereof as of the months ended May 31, 2018 and June 30, 2018 (collectively, the “ Adjusted EBITDA Defaults ”), (ii) the Equity Event affirmative covenant set forth in Section 6.15(b) thereof as of June 30, 2018 (the “ Equity Event Default ”), and (iii) the minimum Liquidity covenant sent forth in Section 6.9(c) thereof as of the months ended May 31, 2018 and June 30, 2018 (collectively, the “ Minimum Liquidity Defaults ”; the Adjusted EBITDA Defaults, the Equity Event Default, and the Minimum Liquidity Defaults are, collectively, the “ Existing Defaults ”) and (b) Borrower’s anticipated defaults under the Loan Agreement by virtue of Borrower’s failure to comply with (i) the Adjusted EBITDA covenant set forth in Section 6.9(a) of thereof for the months ended July 31, 2018 and August 31, 2018 (collectively, the “ Anticipated Adjusted EBITDA Defaults ”) and (ii) the minimum Liquidity covenant set forth in Section 6.9(c) thereof as of the months ended July 31, 2018 and August 31, 2018 (collectively, the “ Anticipated Minimum Liquidity Defaults ”; the Anticipated Adjusted EBITDA Defaults and the Anticipated Minimum Liquidity Defaults are, collectively, the “ Anticipated Defaults ”) (the Existing Defaults and Anticipated Defaults are, collectively, the “ Stated Defaults ”). Bank’s waiver of Borrower’s compliance of the Stated Defaults (other than the Equity Event Default) shall apply only to the foregoing specific periods. Borrower hereby acknowledges and agrees that except as specifically provided herein, nothing in this Section 4 or anywhere in this Amendment shall be deemed or otherwise construed as a waiver by Bank of any of its rights and remedies pursuant to the Loan Documents, applicable law or otherwise.

 

6. Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:

 

6.1 Immediately after giving effect to this Amendment (a) 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 such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;

 

6.2 Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

 

6.3 The organizational documents of (i) Parent and Delaware Subsidiary delivered to Bank on the Effective Date and (ii) Vivo and Australian Borrower delivered to Bank on the 2018 Amendment Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

 

6.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

 

6.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

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6.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made; and

 

6.7 This Amendment has been duly executed and delivered by Borrower and is 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.

 

7. Ratification of Intellectual Property Security Agreements . Parent hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Intellectual Property Security Agreement dated as of March 22, 2017 between Parent and Bank, as amended by that certain First Amendment to Intellectual Property Security Agreement dated as of June 16, 2017 (as amended, the “ Parent IP Security Agreement ”), and acknowledges, confirms and agrees that the Parent IP Security Agreement (a) contains an accurate and complete listing of all Intellectual Property Collateral, as defined in the Parent IP Security Agreement, and (b) shall remain in full force and effect. Delaware Subsidiary hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Intellectual Property Security Agreement dated as of June 16, 2017 between Delaware Subsidiary and Bank (the “ Delaware Subsidiary IP Security Agreement ”), and acknowledges, confirms and agrees that the Delaware Subsidiary IP Security Agreement (a) contains an accurate and complete listing of all Intellectual Property Collateral, as defined in the Delaware Subsidiary IP Security Agreement, and (b) shall remain in full force and effect. Vivo hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Intellectual Property Security Agreement dated as of June 21, 2018 between Vivo and Bank (the “ Vivo IP Security Agreement ”), and acknowledges, confirms and agrees that the Vivo IP Security Agreement (a) contains an accurate and complete listing of all Intellectual Property Collateral, as defined in the Vivo IP Security Agreement, and (b) shall remain in full force and effect. Australian Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Intellectual Property Security Agreement dated as of June 21, 2018 between Australian Borrower and Bank (the “ Australian Borrower IP Security Agreement ”), and acknowledges, confirms and agrees that the Australian Borrower IP Security Agreement (a) contains an accurate and complete listing of all Intellectual Property Collateral, as defined in the Australian Borrower IP Security Agreement, and (b) shall remain in full force and effect.

 

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8. Ratification of Perfection Certificates . Parent hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in the Perfection Certificate dated as of March 22, 2017, as amended in connection with the Second Amendment, delivered by Parent to Bank (the “ Parent Perfection Certificate ”), and acknowledges, confirms and agrees the disclosures and information Parent provided to Bank in said Parent Perfection Certificate have not changed, as of the date hereof. Delaware Subsidiary hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in the Perfection Certificate dated as of March 22, 2017, as amended in connection with the Second Amendment, delivered by Delaware Subsidiary to Bank (the “ Delaware Subsidiary Perfection Certificate ”), and acknowledges, confirms and agrees the disclosures and information Delaware Subsidiary provided to Bank in said Delaware Subsidiary Perfection Certificate have not changed, as of the date hereof. Vivo hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in the Perfection Certificate dated as of June 21, 2018, delivered by Vivo to Bank (the “ Vivo Perfection Certificate ”), and acknowledges, confirms and agrees the disclosures and information Vivo provided to Bank in said Vivo Perfection Certificate have not changed, as of the date hereof. Australian Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in the Perfection Certificate dated as of June 21, 2018, delivered by Australian Borrower to Bank (the “ Australian Borrower Perfection Certificate ”), and acknowledges, confirms and agrees the disclosures and information Australian Borrower provided to Bank in said Australian Borrower Perfection Certificate have not changed, as of the date hereof.

 

9. Integration . This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.

 

10. Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

11. Effectiveness . This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto, and (b) Borrower’s payment to Bank of (i) a fully earned, non-refundable waiver fee in an amount equal to Twenty-Five Thousand Dollars ($25,000.00) and (ii) Bank’s legal fees and expenses incurred in connection with this Amendment.

 

[Signature page follows.]

 

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In Witness Whereof, this Amendment and all documents executed in connection therewith, or relating thereto, have been negotiated, prepared and deemed to be executed by Borrower in the United States of America. In addition, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

 

BANK  
     
SILICON VALLEY BANK  
     
By: /s/ Nathan Meaux  
Name: Nathan Meaux  
Title: Vice President  

 

BORROWER  
     
CANCER GENETICS, INC.  
     
By: /s/ John A. Roberts  
Name: John A. Roberts  
Title: Chief Executive Officer  
     
GENTRIS, LLC  
     
By: /s/ John A. Roberts  
Name: John A. Roberts  
Title: Chief Executive Officer  
     
VIVOPHARM, LLC  
     
By: /s/ John A. Roberts  
Name: John A. Roberts  
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)

 

     

 

 

 

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)