FIFTH BUSINESS FINANCING MODIFICATION AGREEMENT
Exhibit 10.2
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/ Xxxxx
Xxxxxx
Name:
Xxxxx
Xxxxxx
Title:
Chief Executive
Officer
CHROMADEX, INC.,
a
California corporation
By:
/s/ Xxxxx
Xxxxxx
Name:
Xxxxx
Xxxxxx
Title:
Chief Executive
Officer
CHROMADEX ANALYTICS, INC.,
a
Nevada corporation
By:
/s/ Xxxxx
Xxxxxx
Name:
Xxxxx
Xxxxxx
Title:
Chief Executive
Officer
HEALTHSPAN RESEARCH LLC,
a
Delaware limited liability company
By:
/s/ Xxxxx
Xxxxxx
Name:
Xxxxx
Xxxxxx
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/ Xxxxxx
Xxxxx
Name:
Xxxxxx
Xxxxx
Title:
Vice
President
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