Item
1.01. Entry into a Material Definitive Agreement.
Loan
from Atlas Sciences, LLC
On
October 21, 2019, Cancer Genetics, Inc. (the “Company” or “CGIX”) entered into a Note Purchase Agreement
(the “Purchase Agreement”) pursuant to which the Company issued a promissory note (the “Note”) to Atlas
Sciences, LLC, an institutional accredited investor (the “Investor”) in the initial principal amount of $1,347,500.
The Investor gave consideration of $1,250,000, reflecting original issue discount of $87,500 and expenses payable by the Company
of $10,000. The Company has used all of the proceeds from the Note for partial repayment of the past due convertible promissory
note dated July 17, 2018 (the “Iliad Note”) from Iliad Research and Trading, L.P., an affiliate of the Investor.
The
Note is the general unsecured obligation of the Company. Interest accrues on the outstanding balance of the Note at 10% per annum,
and the Note has a 12-month term. Upon the occurrence of an event of default, interest accrues at the lesser of 22% per annum
or the maximum rate permitted by applicable law. The Note contains customary default provisions, including provisions for potential
acceleration.
The
Investor may redeem any portion of the Note, at any time after six months from the issue date upon three business days’
notice, subject to a maximum monthly redemption amount of $300,000. The Company may prepay the outstanding balance of the Note,
in part or in full without penalty.
The
foregoing description is qualified in its entirety by reference to the full text of the Note and the Purchase Agreement, a copy
of each of which is filed as Exhibit 4.1 and Exhibit 10.1 hereto, and each of which is incorporated herein by reference.
Settlement
Agreement with NovellusDx Ltd.
In
connection with the signing on September 18, 2018 of a merger agreement (the “Merger Agreement”) with NovellusDx Ltd.
(“NDX”), the Company on such date also entered into a Credit Agreement (the “Credit Agreement”) with NDX,
pursuant to which NDX made a loan to the Company in the amount of $1,500,000, evidenced by a promissory note dated the same date
(the “NDX Note”).
The
Credit Agreement was the general unsecured obligation of the Company, carried an interest rate of 10.75% per annum and provided
that amounts owed by the Company to NDX under the Credit Agreement must be repaid if the Merger Agreement was terminated in accordance
with its terms (or 90 days thereafter in the case of certain causes for such termination). The Merger Agreement was terminated
in December 2018. Thereafter, the Company did not repay the amounts owed under the Credit Agreement when due.
On
October 21, 2019, the Company and NDX entered into a Settlement Agreement (the “Settlement Agreement”), pursuant to
which the Company (a) paid NDX $100,000 upon entering into the Settlement Agreement, (b) agreed to pay NDX $1,000,000 on the fifth
business day after the Company receives at least $5,000,000 from Interpace Diagnostics Group, Inc. (“IDXG”) pursuant
to the Excess Consideration Note issued by IDXG to the Company in connection with its acquisition of the Company’s BioPharma
business (the date such payment of $1,000,000 is made, the “One Million Payment Date”), and (c) agreed to pay NDX
$50,000 per month for nine months ($450,000 in the aggregate) commencing one month after the One Million Payment Date.
In
addition, pursuant to the Settlement Agreement, upon the One Million Payment Date, the Credit Agreement and the NDX Note will
be amended, among other things, to reduce the total amount due thereunder to the abovementioned $450,000 obligation, to be interest
free, to mature nine months after the One Million Payment Date, to provide for the conversion feature described below and otherwise
as provided in the Settlement Agreement. Upon a default by the Company in any payment against the $450,000 obligation, NDX has
the right to convert all, but not less than all, unpaid amounts under the amended Credit Agreement and NDX Note to common stock
of the Company at a price of $0.15 per share.
Additionally,
upon the Company’s making the $1,000,000 payment, each party will release the other from all claims under the Credit Agreement,
the NDX Note, the Merger Agreement and related documents other than the Company’s obligation to make the payments against
the $450,000 obligation.
The
foregoing description is qualified in its entirety by reference to the full text of the Settlement Agreement, a copy of which
is filed as Exhibit 10.2 hereto, and which is incorporated herein by reference.