FIFTH AMENDMENT TO NON-NEGOTIABLE SUBORDINATED SECURED PROMISSORY NOTE
Exhibit 10.11
FIFTH AMENDMENT TO NON-NEGOTIABLE SUBORDINATED SECURED PROMISSORY NOTE
THIS FIFTH AMENDMENT TO NON-NEGOTIABLE SUBORDINATED SECURED PROMISSORY NOTE (this "Fifth Amendment") is entered into as of November 16, 2016 between INTERPACE DIAGNOSTICS GROUP, INC., a Delaware corporation formerly known as PDI, INC., a Delaware corporation (“IDG”), INTERPACE DIAGNOSTICS, LLC, a Delaware limited liability company (“Parent”, together with IDG, the “IDG Parties” or “Borrower Parties”) and REDPATH EQUITYHOLDER REPRESENTATIVE, LLC ("Lender").
W I T N E S S E T H:
WHEREAS, the IDG Parties and Lender have entered into that certain Non-Negotiable Subordinated Secured Promissory Note dated October 31, 2014 as amended by that certain Amendment No. 1 to Note dated as of July 30, 2015 as further amended by that certain Limited Waiver, Consent and Amendment No. 2 to the Note dated as of October 30, 2015 as further amended by that certain Third Amendment to Non-Negotiable Subordinated Secured Promissory Note dated as of September 30, 2016 and as further amended by that certain Fourth Amendment to Non-Negotiable Secured Promissory Note dated as of October 31, 2016 (as the same may be further amended, modified, supplemented, extended or restated from time to time, the "Note");
WHEREAS, pursuant to the Note, Lender agreed to extend to the IDG Parties, and the IDG Parties agreed to repay, financing in the original principal amount of $11,000,000.00 which was subsequently reduced to $10,670,000 (the “Loan”).
WHEREAS, repayment of the Loan is secured by, among other things, (1) that certain Guarantee and Collateral Agreement dated as of October 31, 2014 (as amended or modified from time to time, the “Guaranty”) executed by IDG, Parent, Group DCA, LLC, PDI BioPharma, LLC f/k/a Interpace BioPharma, LLC, Interpace Diagnostics Lab Inc. f/k/a JS Genetics, Inc., and Interpace Diagnostics Corporation, successor-by-merger to Redpath Acquisition Sub, Inc. (“Interpace Diagnostics Corporation” and collectively, the “Guaranty Parties”) in favor of Lender, and (2) that certain Intellectual Property Security Agreement dated November 1, 2014 (“IP Security Agreement”) executed by Interpace Diagnostics Corporation in favor of Lender.
WHEREAS, the Note, Guaranty, and IP Security Agreement, together with all other documents relating to or governing the Loan shall be referred to as the “Loan Documents.”
WHEREAS, the IDG Parties have requested that Lender modify terms set forth in the Note, including, among other things, an extension of the due date for the first installment payment due under the Note, and in connection therewith, the IDG Parties and Lender have agreed to amend the Note on the terms and conditions set forth in this Fourth Amendment, in the manner hereinafter set forth;
WHEREAS, the IDG Parties have confirmed to Lender that the IDG Parties have no defenses to or offsets of any kind against any of the indebtedness due under the Note; and
WHEREAS, this Fifth Amendment shall amend and continue to evidence the indebtedness outstanding under the Note but not be a payment, satisfaction, cancellation or novation of the Note.
NOW, THEREFORE, the parties hereto, for good and valuable consideration, the receipt and sufficiency thereof being hereby acknowledged, and intending to be legally bound hereby, covenant and agree as follows, to be effective as of the Effective Date:
1. The Recitals set forth above are hereby incorporated herein by reference.
2. Any initially capitalized terms used in this Fifth Amendment without definition shall have the meanings assigned to those terms in the Note. To the extent that any term or provision of this Amendment is or may be inconsistent with any term or provision in the Note, the terms and provisions of this Fifth Amendment shall control.
3. Amendments to Note.
(a) Section 4 of the Note is amended and restated as follows:
“Payments. Subject to Section 8 of this Note, PDI shall make (8) installment payments of principal, each equal to One Million Three Hundred Thirty-Three Thousand Seven Hundred Fifty Dollars ($1,333,750) together with accrued and unpaid interest thereon as computed under Section 2 herein, if any. The first payment shall be due on December 31, 2016, and subsequent payments shall be made on the first day of each fiscal quarter, beginning on April 1, 2017. If not paid sooner, all principal and accrued interest herein shall be due and payable on October 1, 2018.”
(b) Section 10 of the Note is amended to add a new subpart (g) as follows:
“(g) the PDI Parties (defined below), together with their successors, subsidiaries and affiliates, shall fail at any time to maintain a minimum net, cash balance from operations of no less than $400,000 (excluding proceeds from borrowed money) at the end of every week as reflected on the 13-Week Cash Flow Forecast (as defined below). Notwithstanding the foregoing, so long as an Event of Default does not exist and would not exist under this Note or under that certain Credit and Security Agreement , dated as of September 28, 2016 (the “A/R Line of Credit”), by and between SCM Specialty Finance Opportunities Fund, L.P., a Delaware limited partnership, as lender, the IDG Parties and Interpace Diagnostics Corporation, a Delaware corporation (“IDC” and together with the IDG Parties, collectively, the “PDI Parties”), as borrowers, after giving effect to any draw on the A/R Line of Credit, and the PDI Parties are in compliance with this Section 10(g) at the time of any such draw, the PDI Parties shall have the right to make borrowings under the A/R Line of Credit, provided that the PDI Parties shall provide the Lender with notice of any draw under the A/R Line of Credit at least one business day prior to such draw.”
(c) The Note is hereby amended to add a new Section 21 as follows:
“21. 13-Week Cash Flow Forecast. On or before Tuesday of each week, commencing November 22, 2016, the PDI Parties shall provide the Lender with a rolling 13-week cash flow forecast together with a variance report to budget for the immediately preceding week.”
4. The IDG Parties hereby represent and warrant that all security interests and liens in the collateral as security for the obligations of the IDG Parties to Lender under Note and Loan Documents related thereto, including the liens, security interests, mortgages, and pledges granted by the IDG Parties under the Guaranty and IP Security Agreement, are valid and enforceable and shall continue unimpaired and in full force and effect, and shall continue to cover and secure all of the IDG Parties’ existing and future obligations to Lender, as modified by this Fifth Amendment.
5. Nothing contained herein shall operate to release any Borrower Party, any Guarantor Party or any other person or persons from their liability to keep and perform the provisions, conditions, obligations, and agreements contained in the Note and the related Loan Documents, except as herein modified, and each Borrower Party and each Guarantor Party, by its joinder hereto, hereby reaffirms that each and every provision, condition, obligation, and agreement in the Loan Documents shall continue in full force and effect, except as herein modified. This Fifth Amendment shall not constitute or be construed as a waiver of any Event of Default or event which with the giving of notice or the passage of time or both would constitute an Event of Default by Borrowers under any of the existing Loan Documents or any of Lender's rights and remedies with respect thereto. The validity, priority and perfection of all security interests and other liens granted or created by the Loan Documents is hereby acknowledged and confirmed, and the Loan Documents shall continue to secure the Loans, as amended by this Amendment, without any change, loss or impairment of the priority of such security interests or other liens.
6. This Fifth Amendment may be signed in any number of counterpart copies and by the parties to this Fifth Amendment on separate counterparts, but all such copies shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Fifth Amendment by facsimile or by .pdf transmission shall be effective as delivery of a manually executed counterpart. Any party so executing this Fifth Amendment by facsimile transmission shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile transmission.
7. This Fifth Amendment will be binding upon and inure to the benefit of the IDG Parties and Lender and their respective heirs, executors, administrators, successors and assigns.
8. Guarantor Consent. By executing this Fifth Amendment, the Guarantor Parties expressly consent to the amendments herein and reaffirm all guarantees and security agreements, including, without limitation, the Guaranty and the IP Security Agreement, executed by Guarantor Parties in favor of Lender which are related to debts owed by the IDG Parties to Lender.
[signature pages follow]
IN WITNESS WHEREOF, the parties have caused this Fifth Amendment to be executed by their duly authorized officers as of the date shown above.
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BORROWER PARTIES:
INTERPACE DIAGNOSTICS GROUP, INC., a Delaware corporation, formerly known as PDI, INC., a Delaware Corporation
By: /s/ Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx Title: President & CEO
INTERPACE DIAGNOSTICS, LLC, a Delaware limited liability corporation
By: /s/ Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx Title: President & CEO
GUARANTOR PARTIES:
GROUP DCA, LLC, a Delaware limited liability company
By: /s/ Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx Title: President & CEO
PDI BioPharma, LLC, a New Jersey limited liability company, f/k/a Interpace BioPharma, LLC, a New Jersey limited liability company
By: /s/ Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx Title: President & CEO |
[signatures continued on following page]
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INTERPACE DIAGNOSTICS LAB INC., a Delaware corporation, f/k/a/ JS Genetics, Inc., a Delaware corporation
By: /s/ Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx Title: President & CEO
INTERPACE DIAGNOSTICS CORPORATION, a Delaware corporation, successor-by-merger to Redpath Acquisition Sub, Inc., a Delaware corporation
By: /s/ Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx Title: President & CEO |
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LENDER:
REDPATH EQUITYHOLDER REPRESENTATIVE, LLC, a Delaware LLC
By: /s/ Xxx Xxxxxxxx Name: Xxx Xxxxxxxx Title: CFO |
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