Convertible Promissory Note Purchase Agreement – Transgenomic Inc.
CONVERTIBLE PROMISSORY NOTE PURCHASE
AGREEMENT
THIS CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT (this
“Agreement“) is made as of this 30th day of December, 2011, by and among
Transgenomic, Inc., a Delaware corporation (the “Company“), and the
Persons listed on Schedule A attached to this Agreement
(each individually a “Purchaser” and collectively, the
“Purchasers“)).
WHEREAS, upon the terms and conditions set forth in this Agreement, the
Company proposes to issue and sell to the Purchasers, and the Purchasers propose
to purchase, convertible promissory notes, the form of which is attached to this
Agreement as Exhibit A (each a “Note”
and collectively, the “Notes“), in the aggregate principal amount of
$3,000,000.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and conditions set forth herein, and for good and valuable
consideration the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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1.1 |
Definitions. |
In addition to the terms defined elsewhere herein, when used herein, the
following terms shall have the meanings indicated hereunder:
“Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC thereunder.
“Affiliate” means, with respect to any Person, any other Person who
controls, is controlled by or is under common control with such Person.
“Agreement” means this Convertible Promissory Note Purchase Agreement
as the same may be amended, supplemented or modified in accordance with the
terms hereof.
“Board of Directors” means the Board of Directors of the Company.
“Business Day” means any day other than a Saturday, Sunday or other
day on which commercial banks in the State of Delaware are authorized or
required by law or executive order to close.
“Bylaws” means the Company153s Bylaws, as the same may have been amended
and as in effect as of the Closing Date.
“Capital Stock” means all of the Company153s issued and outstanding
equity securities.
“Certificate of Incorporation” means the Third Amended and Restated
Certificate of Incorporation of the Company, as the same may have been amended
and as in effect as of the Closing Date.
“Claims” has the meaning set forth in Section 3.5 of this Agreement.
“Closing” has the meaning set forth in Section 2.2(a) of this
Agreement.
“Closing Date” has the meaning set forth in Section 2.2(a) of this
Agreement.
“Code” means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
“Common” or “Common Stock” means Common Stock, $0.01 par value
per share, of the Company, or any other Capital Stock into which such stock is
reclassified or reconstituted.
“Company” has the meaning assigned to such term in the recitals to
this Agreement.
“Compensation Plans” means, without limitation, plans, arrangements or
practices that provide for severance pay, deferred compensation, incentive,
bonus or performance awards and stock ownership or stock options.
“Contractual Obligation(s)” means as to any Person, any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other instrument to
which such Person is a party or by which it or any of its property is bound.
“Conversion Securities” means equity securities of the Company
issuable upon conversion of the Notes in accordance with its terms, those being
equity securities of the same class(es) and series as the equity securities of
the Company sold in the Qualified Financing which, for the avoidance of doubt,
shall include any warrant(s) or other securities convertible into or exercisable
for capital stock of the Company issued in the Qualified Financing.
“Copyright(s)” means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
“Environmental Laws” means federal, state, local and foreign laws,
principles of common law, civil law, regulations and codes, as well as orders,
decrees, judgments or injunctions issued, promulgated, approved or entered
thereunder relating to pollution, protection of the environment or public health
and safety.
“ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended,
or any similar successor federal statute and the rules and regulations
thereunder, as the same shall be in effect from time to time.
“Financial Statements” has the meaning set forth in Section 3.11 of
this Agreement.
“GAAP” means U.S. generally accepted accounting principles in effect
from time to time.
“Governmental Authority(ies)” when used in the singular, means any
federal, state or local governmental or quasi-governmental instrumentality,
agency, board, commission or department or any regulatory agency, bureau,
commission or authority and, when used in the plural, means all such entities.
– 2 –
“Indebtedness” means, as to any Person, (a) all obligations of such
person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers153
acceptances, whether or not matured), (b) all obligations of such person
evidenced by notes, bonds, debentures or similar instruments, (c) all
obligations of such person to pay the deferred purchase price of property or
services, except trade accounts payable and accrued commercial or trade
liabilities arising in the ordinary course of business, (d) all interest rate
and currency swaps, caps, collars and similar agreements or hedging devices
under which payments are obligated to be made by such Person, whether
periodically or upon the happening of a contingency, (e) all indebtedness
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (f) all obligations of
such Person under leases which have been or should be, in accordance with GAAP,
recorded as capital leases and (g) all indebtedness secured by any Lien (other
than Liens in favor of lessors under leases other than leases included in clause
(f)) on any property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person or is
non-recourse to the credit of that Person.
“Intellectual Property Rights” means Copyrights, Patents, Trade
Secrets, Trademarks, Internet Assets, Mask Works, software (excluding “off the
shelf” software) and other proprietary rights in intellectual property existing
under Requirements of Law.
“Internet Assets” mean any internet domain names and other computer
user identifiers and any rights in and to sites on the worldwide web, including
rights in and to any text, graphics, audio and video files and html or other
code incorporated in such sites.
“Lien” means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or preference, priority,
right or other security interest or preferential arrangement of any kind or
nature whatsoever (excluding preferred stock and equity related preferences),
including, without limitation, those created by, arising under or evidencing
substantially the same economic effect as any of the foregoing.
“Losses” means all losses, Claims, or written threats thereof,
damages, expenses (including reasonable fees, disbursements and other charges of
counsel incurred) or other liabilities.
“Mask Works” means any mask works and registrations and applications
for registrations thereof.
“Material Adverse Effect” means, subject to any applicable cure or
grace periods, a material adverse effect upon any of (a) the financial
condition, operations, business or properties of the Company, except to the
extent resulting from (i) changes in general local, domestic, foreign, or
international economic conditions (except to the extent such change has a
materially disproportionate effect on the Company as compared to other similarly
situated Persons in the industry in which the Company operates), (ii) changes
affecting generally the industry or industries in which the Company operates
(except to the extent such change has a materially disproportionate effect on
the Company as compared to other similarly situated Persons in the industry in
which the Company operates), (iii) acts of war, sabotage or terrorism, military
actions or the escalation thereof, (iv) any changes in applicable laws or
accounting rules or principles, including, without limitation, changes in GAAP,
(v) any action required by this Agreement or (vi) the announcement of this
Agreement or the transactions contemplated hereby, (b) the ability of the
Company to perform its material obligations under this Agreement or any of the
Transaction Documents or (c) the legality, validity or enforceability of this
Agreement or any of the Transaction Documents.
“Material Company IP” has the meaning set forth in Section 3.21(b).
“Notes” has the meaning assigned to such term in the recitals to this
Agreement
– 3 –
“Obligations” means, collectively, all of the Company153s Indebtedness,
liabilities and Contractual Obligations.
“Orders” has the meaning set forth in Section 3.2 of this Agreement.
“Qualified Financing” means the Company153s first sale or issuance of
its equity securities after the date hereof in one transaction or a series of
related transactions (which, for the avoidance of doubt, may include warrant(s)
or other securities convertible into or exercisable for capital stock of the
Company) for an aggregate purchase price paid in cash (not including the
aggregate dollar amount of unpaid principal and accrued interest under the Notes
converted pursuant to Section 2 thereof) of at least $3,000,000.
“Patent(s)” means any foreign or United States patents and patent
applications, including any divisionals, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted.
“Person” means any individual or group of individuals, firm,
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company, limited liability company, Governmental
Authority or other entity of any kind, and shall include any successor (by
merger or otherwise) of such entity.
“Permits” has the meaning set forth in Section 3.6(b) of this
Agreement.
“Purchasers” has the meaning assigned to such term in the recitals to
this Agreement.
“Requirements of Law” means, as to any Person, any law, statute,
treaty, rule, regulation, license or franchise or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable or binding
upon such Person or any of its property or to which such Person or any of its
property is subject or pertaining to any or all of the transactions contemplated
or referred to herein.
“SEC” means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Act.
“SEC Documents” has the meaning set forth in Section 3.11 of this
Agreement.
“Securities Filings” means any filing required to be filed with the
SEC under the Act and with any state in respect of the Company153s issuance of the
Notes.
“Taxes” has the meaning set forth in Section 3.12 of this Agreement.
“Trade Secrets” means any scientific or technical information, design,
process, procedure, formula or improvement that derives independent economic
value from not being generally known, and not being readily ascertainable
through proper means, to the Company153s competitors or other persons who can
obtain economic value from its use. To the fullest extent consistent with the
foregoing, and otherwise lawful, Trade Secrets shall include, without
limitation, information and documentation pertaining to the design,
specifications, testing, validation, implementation and customizing techniques
and procedures concerning the Company153s present and future products and
services.
– 4 –
“Trademarks” means any foreign or United States trademarks, service
marks, trade dress, trade names, brand names, designs and logos, corporate
names, product or service identifiers, whether registered or unregistered, and
all registrations and applications for registration thereof.
“Transaction Documents” means, collectively, this Agreement and the
Notes.
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1.2 |
Accounting Terms; Financial Statements. |
All accounting terms used herein not expressly defined in this Agreement
shall have the respective meanings given to them in accordance with sound
accounting practice. The term “sound accounting practice” shall mean such
accounting practice as, in the opinion of the independent certified public
accountants regularly retained by the Company, conforms at the time to GAAP
applied on a consistent basis except for changes with which such accountants
concur.
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1.3 |
Knowledge of the Company. |
All references to “Knowledge of the Company” or any similar phrase means the
actual knowledge of Craig Tuttle, Chad Richards, Brett Frevert and Katherine
Richardson (collectively, the “Key Employees“), or knowledge any such
person would be reasonably expected to have given their position with the
Company.
ARTICLE II
PURCHASE AND SALE OF NOTES
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2.1 |
Purchase and Sale of the Notes. |
Subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to each Purchaser, and each Purchaser agrees that it will
purchase from the Company, on the Closing Date, a Note in the amount set forth
opposite such Purchaser153s name on Schedule A attached
hereto, for an aggregate purchase price of Three Million Dollars
($3,000,000.00).
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2.2 |
Closing. |
The closing of the sale and purchase of the Notes (the “Closing“)
shall take place at the offices of Husch Blackwell LLP at 1620 Dodge Street,
Suite 2100, Omaha, Nebraska 68102, at 10:00 a.m., local time, on December 30,
2011, or at such other time, place and date that the Company and the Purchasers
may agree in writing (the “Closing Date“). On the Closing Date, the
Company shall deliver the Notes being acquired by each Purchaser upon receipt by
the Company of payment of the purchase price therefor, as set forth on
Schedule A hereto, by or on behalf of each Purchaser to
the Company by certified check or by wire transfer of immediately available
funds to an account designated in writing by the Company.
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2.3 |
Reservation of Securities. |
The Company hereby covenants that, in connection with soliciting board and/or
stockholder approval with respect to the Qualified Financing while the Notes
remain outstanding, the Company shall reserve a sufficient number of shares of
its capital stock for issuance upon conversion of the Notes and the exercise
and/or conversion of the Conversion Securities, as applicable, and a sufficient
number of shares of Common Stock for issuance upon conversion of such shares of
capital stock, if applicable. In connection therewith, (i) such shares of the
Company153s capital stock shall be duly authorized and, when issued or delivered
upon (x) conversion of the Notes in accordance with the terms of the Notes or
(y) exercise or conversion of the Conversion Securities in accordance with their
terms, shall be validly issued, fully paid and non-assessable, and (ii) if
applicable, such shares of Common Stock, when issued or delivered upon the
exercise or conversion of such capital stock in accordance with the terms of the
Company153s Certificate of Incorporation, shall be validly issued, fully paid and
non-assessable.
– 5 –
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2.4 |
Use of Proceeds. |
The Company shall use the proceeds from the sale of the Notes for general
corporate purposes.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY
The Company hereby represents, warrants and covenants to each Purchaser as
follows:
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3.1 |
Corporate Existence and Power. |
The Company (a) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware; (b) has all requisite
corporate power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently, or is currently proposed to be, engaged; (c) is licensed and in good
standing under the laws of each jurisdiction to which its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except to the extent the failure to do so would not have a
Material Adverse Effect; and (d) has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and each of
the other Transaction Documents.
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3.2 |
Authorization; No Contravention. |
The execution, delivery and performance by the Company of this Agreement and
each of the other Transaction Documents and the transactions contemplated hereby
and thereby, including, without limitation, the sale, issuance and delivery of
the Notes (a) have been duly authorized by all necessary corporate action of the
Company; (b) do not contravene the terms of the Certificate of Incorporation or
the Bylaws; and (c) do not violate, conflict with or result in any breach or
contravention of, or the creation of any Lien under, any Contractual Obligation
or the judgment, injunction, writ, award, decree or order of any nature
(collectively, “Orders“) of any Governmental Authority against, or
binding upon, the Company, in each case in this clause (c), individually or in
the aggregate, as would have a Material Adverse Effect.
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3.3 |
Governmental Authorization; Third Party Consents. |
Except for filing of the Securities Filings, no approval, consent, exemption,
authorization or other action by, or notice to, or filing with, any Governmental
Authority or any other Person in respect of any Requirement of Law, and no lapse
of a waiting period under a Requirement of Law, is necessary or required in
connection with the execution, delivery or performance (including, without
limitation, the sale, issuance and delivery of the Notes) by, or enforcement
against the Company of this Agreement and the other Transaction Documents or the
transactions contemplated hereby and thereby.
– 6 –
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3.4 |
Binding Effect. |
This Agreement and each of the other Transaction Documents have been duly
executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting the enforcement of creditors153 rights
generally or by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).
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3.5 |
Litigation. |
There are no actions, suits, proceedings, claims, complaints, disputes,
arbitrations or investigations (collectively, “Claims“) pending or, to
the Knowledge of the Company, threatened, at law, in equity, in arbitration or
before any Governmental Authority against the Company. To the Knowledge of the
Company, there is no fact, event or circumstance that is likely to give rise to
any Claim. The Company has not received notice of any Order and no Order has
been issued by any court or other Governmental Authority against the Company
purporting to enjoin or restrain the execution, delivery or performance of this
Agreement or any of the other Transaction Documents to which it is a party.
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3.6 |
Compliance with Laws. |
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(a) |
The Company is in compliance in all respects with all Requirements of Law and |
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(b) |
The Company has all licenses, permits, orders and approvals of any |
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(c) |
No material expenditure is presently required by the Company to comply with |
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(d) |
None of the Company, any subsidiary or any director, officer, or employee of, |
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3.7 |
Capitalization; Validity of Notes and Conversion Securities. |
On the Closing Date, the authorized Capital Stock shall consist of (a)
100,000,000 shares of Common, of which 49,289,672 will be outstanding and
issued; and (b) 15,000,000 shares of Series A Preferred, of which 2,586,205
shares are outstanding and issued (the “Series A Shares“). The Notes are
duly authorized, and, assuming the accuracy of the representations and
warranties of the Purchasers set forth in Article IV, when issued to the
Purchasers pursuant to the terms of this Agreement, will be validly issued, and,
assuming the accuracy of the representations and warranties of the Purchasers in
Sections 4.5, 4.6, and 4.7 hereof, will be issued in compliance with (or
pursuant to exemptions under) the registration and qualification requirements of
all applicable securities laws, and will be free and clear of any and all Liens
except as set forth in this Agreement, the Notes or as otherwise created by
Purchasers. The shares of capital stock of the Company issuable upon conversion
of the Notes and the exercise and/or conversion of the Conversion Securities, as
applicable, assuming the accuracy of the representations and warranties of the
Purchasers set forth in the Notes and the Conversion Securities, as applicable,
when issued to the Purchasers pursuant to the terms of the Notes, will be
validly issued, fully paid and nonassessable, and, assuming the accuracy of the
representations and warranties of the Purchasers in the Notes and the Conversion
Securities, as applicable, will be issued in compliance with (or pursuant to
exemptions under) the registration and qualification requirements of all
applicable securities laws, and will be free and clear of any and all Liens
except as set forth in this Agreement, the Notes or as otherwise created by
Purchasers. The shares of Common issuable upon conversion of such capital stock
of the Company, if applicable, when issued to the Purchasers pursuant to the
terms of the Certificate of Incorporation, will be validly issued, fully paid
and nonassessable, and, assuming the accuracy of the representations and
warranties of the Purchasers in Sections 4.5, 4.6, and 4.7 hereof, will be
issued in compliance with (or pursuant to exemptions under) the registration and
qualification requirements of all applicable securities laws, and will be free
and clear of any and all Liens except as set forth in this Agreement, the Notes
or as otherwise created by Purchasers. If at any time after the date hereof, the
Company does not have a sufficient number of shares of its capital stock
authorized and available for issuance of, or exercise or conversion of, the
Conversion Securities, the Company and the Purchasers will jointly cooperate
with one another in obtaining the necessary stockholder approval to increase the
number of authorized shares of capital stock at the Company153s next annual
meeting of stockholders; provided, however, that if the Purchasers so request in
writing, in lieu of waiting until the next annual meeting of stockholders, the
Company shall call and hold a special meeting of its stockholders within sixty
(60) days of the date such writing is given by the Purchasers for the sole
purpose of increasing the number of authorized shares of the Company153s capital
stock (such meeting, a “Special Meeting“), and the Company and the
Purchasers will jointly cooperate with one another in obtaining the necessary
stockholder approval at such Special Meeting. The outstanding shares of Capital
Stock of the Company are all duly authorized, validly issued, fully paid and
nonassessable, and were issued in compliance with (or pursuant to exemptions
under) the registration and qualification requirements of all applicable
securities laws. The Company does not own directly or indirectly, nor has it
made any investment in, any Capital Stock of or ownership interest in any other
Person.
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3.8 |
No Default or Breach; Contractual Obligations. |
The Company has not received notice of, and is not in default under, or with
respect to, any Contractual Obligation in any respect, which, individually or
together with all such defaults, would have a Material Adverse Effect. All
Contractual Obligations of the Company are valid, in full force and effect and
binding upon the Company, and to the Knowledge of the Company, the other parties
thereto except in each case, individually or in the aggregate, as would not have
a Material Adverse Effect. To the Knowledge of the Company, no other party to
any such Contractual Obligation is in default thereunder, nor does any condition
exist that with notice or lapse of time or both would constitute a default
thereunder, except in each case, individually or in the aggregate, as would not
have a Material Adverse Effect.
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3.9 |
Title to Real Property. |
The Company has good, record and marketable title in fee simple to, or holds
interests as lessee under leases in full force and effect in, all real property
used in connection with its business or otherwise owned or leased by it, except
for such defects in title as would not, individually or in the aggregate, have a
Material Adverse Effect.
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3.10 |
FIRPTA. |
The Company is not a “foreign person” within the meaning of Section 1445 of
the Code.
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3.11 |
SEC Documents; Financial Statements. |
The Common is registered pursuant to Section 12(b) of the Exchange Act.
During the two-year period preceding the Closing Date, the Company has timely
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the
Exchange Act (the “SEC Documents“). At the times of their respective
filings, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such documents. At the times of their respective
filings, the SEC Documents did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company currently meets the Registrant
Requirements set forth in Section I.A. of the general instructions to SEC Form
S-3. As of their respective dates, the financial statements of the Company
included in the SEC Documents (the “Financial Statements“) complied in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
GAAP (except (i) as may be otherwise indicated in such financial statements or
the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary
statements), and fairly present in all material respects the consolidated
financial position of the Company as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
– 9 –
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3.12 |
Taxes. |
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(a) |
The Company has paid all federal, state, county, local, foreign and other |
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(b) |
the Company has timely filed returns for Taxes that it is required to file on |
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(c) |
with respect to all Tax returns of the Company, (i) there is no unassessed |
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(d) |
the Company has neither agreed to nor is required to make any adjustments |
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(e) |
all liabilities for Taxes of the Company attributable to periods prior to the |
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3.13 |
Changes |
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Except as disclosed in the SEC Documents, since December 31, 2010 there has
not been:
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(a) |
any change in the assets, liabilities, financial condition or operating |
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(b) |
any damage, destruction or loss, whether or not covered by insurance, causing |
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(c) |
any waiver or compromise by the Company of a valuable right or of a material |
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(d) |
any satisfaction or discharge of any Lien by the Company, except in the |
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(e) |
any material change or amendment to an Obligation, except in the ordinary |
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(f) |
receipt of notice that there has been a loss of, or material order |
– 10 –
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(g) |
any Lien, created by the Company, with respect to any of its material |
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(h) |
any loans or guarantees made by the Company to or for the benefit of its |
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(i) |
any resignation or termination of employment of any Key Employee; |
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(j) |
any declaration, setting aside or payment or other distribution in respect of |
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(k) |
any binding agreement or commitment by the Company to do any of the things |
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3.14 |
Investment Company. |
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The Company is not an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.
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3.15 |
Private Offering. |
No form of general solicitation or general advertising was used by the
Company or its representatives in connection with the offer or sale of the
Notes. Assuming the accuracy of the representations and warranties of the
Purchasers, no registration of the Notes, pursuant to the provisions of the Act
or any state securities or “blue sky” laws, will be required by the offer, sale
or issuance of the Notes.
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3.16 |
Employee Matters. |
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(a) |
To the Company153s Knowledge, no Employee is a party to or is otherwise bound |
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(b) |
No unwritten amendments have been made, whether by oral communication, |
– 11 –
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(c) |
None of the Key Employees has any plans to terminate his or her employment |
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3.17 |
Labor Relations. |
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(a) |
The Company is not engaged in any unfair labor practice under any Requirement |
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(b) |
there is (i) no grievance or arbitration proceeding arising out of or under |
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(c) |
the Company is not a party to any collective bargaining agreement or |
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(d) |
there is no union representation question existing with respect to the |
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(e) |
to the Knowledge of the Company, no union organizing activities are taking |
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3.18 |
Employee Benefit Plans. |
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Each employee benefit plan subject to any provision of ERISA maintained,
established or sponsored by the Company, or in which any employee of the Company
participates, or to which the Company contributes (collectively, the
“Plans“) is in compliance with all applicable Requirements of Law except
to the extent that noncompliance with such Requirements of Law would not have a
Material Adverse Effect. No Plan (a) is subject to Title IV of ERISA, or is
otherwise a Defined Benefit Plan, or is a multiple employer plan (within the
meaning of Section 413(c) of the Code); or (b) provides for post-retirement
welfare benefits except to the extent any such benefits are required by law or a
“parachute payment” (within the meaning of Section 280G(b) of the Code). The
execution and delivery of this Agreement and each of the other Transaction
Documents, the purchase and sale of the Notes and the consummation of the
transactions contemplated hereby and thereby will not result in any prohibited
transaction by the Company within the meaning of Section 406 of ERISA or Section
4975 of the Code.
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3.19 |
Title to Assets. |
The Company owns and has good and valid title to all of its properties and
assets used in its business and reflected as owned in the Financial Statements
(collectively, the “Assets“), in each case free and clear of all Liens,
except for (a) Liens specifically described in the notes to the Financial
Statements, (b) Liens that would not, individually or in the aggregate, have a
Material Adverse Effect, or (c) Liens for Taxes that have not yet become
delinquent.
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3.20 |
Liabilities. |
The Company has no material liabilities other than (i) liabilities fully and
adequately reflected or reserved against in the Financial Statements, (ii)
liabilities not required by GAAP to be set forth in the Financial Statements and
(iii) liabilities incurred since December 31, 2010 in the ordinary course of
business and that will not have a Material Adverse Effect.
– 12 –
|
3.21 |
Intellectual Property. |
|||
|
(a) |
The Company is the owner of or has the license or right to use, sell, license |
|||
|
(b) |
Schedule 3.21(b) attached to this Agreement sets |
|
|
(c) |
With respect to all licenses, sublicenses and other agreements under which |
|
(d) |
To the Knowledge of the Company none of the Material Company IP currently |
|
|
(e) |
No litigation is pending and no Claim has been made against the Company or, |
|
(f) |
To the Knowledge of the Company, no Person is infringing upon or otherwise |
|
|
(g) |
No former employer of any Employee, and no current or former client of any |
|
(h) |
To the Knowledge of the Company, no Employee is in material violation of any |
– 13 –
|
(i) |
None of the Company153s Trade Secrets has been disclosed to any Person other |
|||
|
3.22 |
Potential Conflicts of Interest. |
|||
Except as disclosed in the SEC Documents, during the two-year period
preceding the Closing Date, no event has occurred that would be required to be
reported by the Company pursuant to Item 404(d)(1) of Regulation S-K promulgated
by the SEC.
|
3.23 |
Trade Relations. |
There exists no actual or, to the Knowledge of the Company, threatened
termination, cancellation or material limitation of, or any adverse modification
or change in, the business relationship of the Company, or the business of the
Company, with any customer or any group of customers whose purchases are
individually or in the aggregate material to the Company, or with any material
supplier of the Company, and, to the Knowledge of the Company, there exists no
present condition or state of fact or circumstances that would have a Material
Adverse Effect or prevent the Company from conducting such business
relationships or such business with any such customer, such group of customers
or such material supplier substantially in the same manner as heretofore
conducted by the Company.
|
3.24 |
Insurance. |
The Company maintains insurance with insurance companies in such amounts and
covering such risks as are usually and customarily carried by Persons engaged in
the business conducted by the Company. Such policies and binders are valid and
enforceable in accordance with their terms and are in full force and effect.
None of such policies will be affected by, or terminate or lapse by reason of,
any transaction contemplated by this Agreement or any of the other Transaction
Documents.
|
3.25 |
Minute Records. |
All minutes and written consents since January 1, 2009 of the Board of
Directors and stockholders of the Company have been provided or made available
to the Purchasers. The minutes and written consents contain a complete summary
of all meetings of the Board of Directors and stockholders since January 1, 2009
and reflect all transactions referred to in such minutes and written consents
accurately in all material respects.
|
3.26 |
Environmental Matters. |
The Company is and has been in compliance in all respects with all applicable
Environmental Laws except for failures to be in compliance that would not,
individually or in the aggregate, have a Material Adverse Effect. There is no
Claim pending or, to the Knowledge of the Company, threatened against the
Company pursuant to Environmental Laws that would reasonably be expected to
result in a fine, penalty or other obligation, cost or expense that would have a
Material Adverse Effect; and, there are no past or present events, conditions,
circumstances, activities, practices, incidents, agreements, actions or plans
which may prevent compliance with, or which have given rise to or will give rise
to liability under, Environmental Laws except in each case, individually or in
the aggregate, as has not had or would not have a Material Adverse Effect.
– 14 –
|
3.27 |
Broker153s, Finder153s or Similar Fees. |
There are no brokerage commissions, finder153s fees or similar fees or
commissions payable by the Company in connection with the transactions
contemplated hereby based on any agreement, arrangement or understanding with
the Company or any action taken by any such Person.
|
3.28 |
Accountants. |
McGladrey & Pullen, LLP, whose report on the financial statements of the
Company is filed with the SEC in the Company153s Annual Report on Form 10-K for
the year ended December 31, 2010, were, at the time such report was issued,
independent registered public accountants as required by the Act. Except as
described in the SEC Documents and as preapproved in accordance with the
requirements set forth in Section 10A of the Exchange Act, to the Knowledge of
the Company, McGladrey & Pullen, LLP has not engaged in any non-audit
services prohibited by subsection (g) of Section 10A of the Exchange Act on
behalf of the Company.
|
3.29 |
Internal Controls. |
The Company has established and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management153s general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management153s general
or specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
|
3.30 |
Disclosure Controls. |
The Company has established and maintains disclosure controls and procedures
(as such term is defined in Rules 13a-15 and 15d-15 under the Exchange Act).
Since the date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls or in
other factors that could significantly affect internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses. The Company is in compliance in all material respects with all
provisions currently in effect and applicable to the Company of the
Sarbanes-Oxley Act of 2002, and all rules and regulations promulgated thereunder
or implementing the provisions thereof.
|
3.31 |
Corporate Governance. |
The Board of Directors meets the independence requirements of, and has
established an audit committee that meets the independence requirements of, the
rules and regulations of the SEC. The Audit Committee has reviewed the adequacy
of its charter within the past 12 months.
– 15 –
|
3.32 |
No Undisclosed Events or Circumstances. |
Except as disclosed in the SEC Documents, since December 31, 2010, except for
the consummation of the transactions contemplated herein, to the Company153s
Knowledge, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or financial
condition, which, under any Requirement of Law, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed.
|
3.33 |
Application of Takeover Provisions. |
The issuance of the Notes and the Conversion Securities pursuant hereto and
thereto and the Purchasers153 ownership thereof is not prohibited by the business
combination statutes of the state of Delaware or the Certificate of
Incorporation. The Company has not adopted any stockholder rights plan, “poison
pill” or similar arrangement that would trigger any right, obligation or event
as a result of the issuance of the Notes and/or the Conversion Securities and
the Purchasers153 ownership of such securities and there are no similar
anti-takeover provisions under the Certificate of Incorporation. In addition,
the Company covenants and agrees that, from and after the Closing Date, it will
not adopt any such anti-takeover provisions, whether under its Certificate or
otherwise, that would be applicable to the Purchasers or any of their respective
Affiliates.
|
3.34 |
No Stockholder Approval. |
Except for the approval of the Series A Shares as required pursuant to the
Certificate of Designation for the Series A Shares filed with the Secretary of
State of the State of Delaware no approval of the stockholders of the Company is
required under law or otherwise for the Company to issue and deliver to the
Purchasers the Notes and the Conversion Securities as contemplated hereby and
thereby.
|
3.35 |
Disclosure. |
|||
|
(a) |
Agreement and Other Documents. This Agreement and the documents and |
|||
|
(b) |
Material Adverse Effects. To the Knowledge of the Company, there is no |
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS
Each Purchaser hereby represents and warrants to the Company as follows:
|
4.1 |
Existence and Power. |
The Purchaser is duly organized, validly existing and in good standing under
the laws of the Commonwealth of Virginia and has the power and authority to
execute, deliver and perform its obligations under this Agreement and each of
the other Transaction Documents.
– 16 –
|
4.2 |
Authorization; No Contravention. |
The execution, delivery and performance by the Purchaser of this Agreement
and each of the other Transaction Documents to which it is a party and the
transactions contemplated hereby and thereby, including, without limitation, the
purchase of the Notes, (a) have been duly authorized by all necessary action,
(b) do not contravene the terms of the Purchaser153s organizational documents, or
any amendment thereof, and (c) do not violate, conflict with or result in any
breach or contravention of or the creation of any Lien under, any Contractual
Obligation of the Purchaser, or any Orders of any Governmental Authority or
Requirement of Law applicable to the Purchaser in each case, individually or in
the aggregate, as would have a material adverse effect on (i) the ability of the
Purchaser to perform its material obligations under this Agreement or any of the
other Transaction Documents or (ii) the legality, validity or enforceability of
this Agreement or any of the other Transaction Documents.
|
4.3 |
Governmental Authorization; Third Party Consents. |
No approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority or any other person with respect
to any Requirement of Law, and no lapse of a waiting period under any
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the purchase of the
Notes) by, or enforcement against, the Purchaser of this Agreement and each of
the other Transaction Documents to which the Purchaser is a party or the
transactions contemplated hereby and thereby.
|
4.4 |
Binding Effect. |
This Agreement and each of the other Transaction Documents to which the
Purchaser is a party have been duly executed and delivered by the Purchaser and
constitute the legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors153 rights generally or by equitable
principles relating to enforceability (regardless of whether considered in a
proceeding at law or in equity).
|
4.5 |
Purchase for Own Account. |
The Notes and the Conversion Securities issuable upon conversion thereof that
are being acquired by the Purchaser pursuant to this Agreement are being or will
be acquired for its own account and with no intention of distributing or
reselling such securities or any part thereof in any transaction that would be
in violation of the securities laws of the United States of America, or any
state, without prejudice, however, to the rights of the Purchaser at all times
to sell or otherwise dispose of all or any part of such securities under an
effective registration statement under the Act, or under an exemption from such
registration available under the Act. If the Purchaser should in the future
decide to dispose of any of such securities, the Purchaser understands and
agrees that it may do so only in compliance with the Act and applicable state
securities laws, as then in effect.
– 17 –
|
4.6 |
Restricted Securities. |
The Purchaser understands that the Notes and the Conversion Securities will
not be registered at the time of their issuance under the Act for the reason
that the sale provided for in this Agreement is exempt pursuant to Section 4(2)
of the Act and that the reliance of the Company on such exemption is predicated
in part on the Purchaser153s representations set forth herein. The Purchaser
represents that it is experienced in evaluating companies such as the Company,
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment and has the ability
to suffer the total loss of its investment. The Purchaser further represents
that it has had the opportunity to ask questions of and receive answers from the
Company concerning the terms and conditions of the offering and to obtain
additional information to the Purchaser153s satisfaction.
|
4.7 |
Accredited Investor Status. |
The Purchaser is an “accredited investor” as that term is defined by Rule 501
of Regulation D promulgated under the Act.
|
4.8 |
Litigation. |
There are no Claims pending or, to the knowledge of the Purchaser,
threatened, at law, in equity, in arbitration or before any Governmental
Authority against the Purchaser that, individually or in the aggregate, would
have a material adverse effect on (i) the ability of the Purchaser to perform
its material obligations under this Agreement or any of the other Transaction
Documents or (ii) the legality, validity or enforceability of this Agreement or
any of the other Transaction Documents. No Order has been issued by any court or
other Governmental Authority against the Purchaser purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any of the
other Transaction Documents.
|
4.9 |
Broker153s, Finder153s or Similar Fees. |
There are no brokerage commissions, finder153s fees or similar fees or
commissions payable by the Purchaser, in connection with the transactions
contemplated hereby based on any agreement, arrangement or understanding with
the Purchaser or any action taken by the Purchaser.
|
4.10 |
Inquiries and Access; No Reliance. |
The Company has provided the Purchaser the opportunity to ask questions of
the Company and has provided full access to its facilities and personnel in
response to any request therefor that the Purchaser and his or its purchaser
representative(s), if any, have made, concerning the Company and its activities,
and all other matters relating to the operations of the Company and the offering
and sale of the Notes. The Purchaser acknowledges that he or it is not relying
upon any other investor or any officer, director, stockholder, employee, agent,
partner or Affiliate of any such investor in making his or its investment, or
decision to invest, in the Company or in monitoring such investment. In
addition, the purchase of the Notes and the consummation of the transactions
contemplated hereunder by the Purchaser are not done in reliance upon any
warranty or representation by, or information from, the Company of any sort,
oral or written, except the warranties and representations specifically set
forth in this Agreement (including the exhibits hereto) and in any certificates
required to be delivered to the Purchaser by the Company hereunder and
thereunder. Such purchase and consummation are instead done entirely on the
basis of the Purchaser153s own investigation, analysis, judgment and assessment of
the present and potential value and earning power of the Company as well as
those representations and warranties by the Company specifically set forth in
this Agreement (including the exhibits hereto) and in any certificates required
to be delivered to the Purchaser by the Company hereunder and thereunder. In no
respect does this Section 4.10 limit the representations and warranties
contained in Article III of this Agreement.
– 18 –
ARTICLE V
CONDITIONS TO THE OBLIGATION OF THE PURCHASERS TO
CLOSE
The obligation of each of the Purchasers (i) to purchase the Notes pursuant
to the terms of this Agreement and (ii) to perform any obligations hereunder
with respect to the Closing shall be subject to the satisfaction as reasonably
determined by, or waiver by, each of the Purchasers of the following conditions
on or before the Closing Date.
|
5.1 |
Representations and Warranties. |
The representations and warranties of the Company contained in Article III
hereof shall be true and correct at and on the Closing Date as if made at and on
such date.
|
5.2 |
Compliance with this Agreement. |
The Company shall have performed and complied with all of its agreements and
conditions set forth herein that are required to be performed or complied with
by the Company on or before the Closing Date.
|
5.3 |
Secretary153s Certificate. |
The Secretary of the Company shall deliver to each of the Purchasers a
certificate certifying from the Company, in form and substance satisfactory to
the Purchasers, dated the Closing Date and signed by the Secretary of the
Company, certifying (a) as to the Certificate of Incorporation and Bylaws, (b)
that the resolutions of the Board of Directors approving this Agreement and each
of the other Transaction Documents to which the Company is a party and the
transactions contemplated hereby and thereby, are all true, complete and correct
and remain unamended and in full force and effect and (c) as to the incumbency
and specimen signature of each officer of the Company executing this Agreement,
each other Transaction Document and any other document delivered in connection
herewith on behalf of the Company.
|
5.4 |
Consents and Approvals. |
Except for the Securities Filings, all consents, exemptions, authorizations,
or other action by, or notices to, or filings with, Governmental Authorities and
other Persons required in respect of all Requirements of Law and with respect to
those Contractual Obligations of the Company that are necessary in connection
with the execution, delivery or performance by, or enforcement against, the
Company of this Agreement and each of the other Transaction Documents shall have
been obtained and be in full force and effect, and each of the Purchasers shall
have been furnished with appropriate evidence thereof.
|
5.5 |
No Application of Anti-Takeover Provisions. |
The Company153s Board of Directors, to the extent permissible under Delaware
law, shall have taken all necessary action such that any provisions contained in
the Certificate of Incorporation or Delaware law that may apply to business
combinations or other transactions with affiliated stockholders or impact the
voting rights of affiliated stockholders shall not apply to the Purchasers or
any of their respective Affiliates, including but not limited to Section 203 of
the Delaware General Corporation Law. The Company shall not have adopted any
stockholder rights plan, “poison pill” or similar arrangement, or any
anti-takeover provisions under its charter documents, that would trigger any
right, obligation or event as a result of the issuance of the Notes or the
Conversion Securities pursuant hereto and thereto to the Purchasers or the
Purchasers153 ownership of such securities, or the accumulation of Company
securities acquired in the market by the Purchasers or their respective
Affiliates.
– 19 –
|
5.6 |
No Material Judgment or Order. |
There shall not be on the Closing Date any Order of a court of competent
jurisdiction or any ruling of any Governmental Authority or any condition
imposed under any Requirement of Law that, in the reasonable judgment of the
Purchasers, would prohibit the purchase of the Notes or subject the Purchasers
to any penalty or other onerous condition under or pursuant to any Requirement
of Law if the Notes were to be purchased hereunder.
|
5.7 |
No Litigation. |
No action, suit proceeding, claim or dispute shall have been brought or
otherwise arisen at law, in equity, in arbitration or before any Governmental
Authority against the Company that, if adversely determined, would have,
individually or in the aggregate, a material adverse effect on (i) the ability
of the Company to perform its material obligations under this Agreement or any
of the other Transaction Documents or (ii) the legality, validity or
enforceability of this Agreement or any of the other Transaction Documents.
|
5.8 |
Preemptive Rights. |
All stockholders of the Company having any preemptive, first refusal or other
rights with respect to the issuance of the Notes shall have irrevocably waived
the same in writing.
|
5.9 |
No Suspension of Trading. |
Trading in the Common shall not have been suspended by the SEC or otherwise.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO
CLOSE
The obligation of the Company to issue and sell the Notes and the obligation
of the Company to perform its other obligations hereunder shall be subject to
the satisfaction as reasonably determined by, or written waiver by, the Company
of the following conditions on or before the Closing Date.
|
6.1 |
Representations and Warranties. |
The representation and warranties of each of the Purchasers contained in
Article IV hereof shall be true and correct at and on the Closing Date as if
made at and on such date.
|
6.2 |
Compliance with this Agreement. |
Each of the Purchasers shall have performed and complied with all of the
agreements and conditions set forth herein that are required to be performed or
complied with by such Purchaser on or before the Closing Date.
– 20 –
|
6.3 |
No Material Judgment or Order. |
There shall not be on the Closing Date any Order of a court of competent
jurisdiction or any ruling of any Governmental Authority or any condition
imposed under any Requirement of Law that, in the reasonable judgment of the
Company, would prohibit the sale of the Notes or subject the Company to any
penalty or other onerous condition under or pursuant to any Requirement of Law
if the Notes were to be purchased hereunder.
|
6.4 |
No Litigation. |
No action, suit proceeding, claim or dispute shall have been brought or
otherwise arisen at law, in equity, in arbitration or before any Governmental
Authority against the Purchasers that, if adversely determined, would have,
individually or in the aggregate, a material adverse effect on (i) the ability
of the Purchasers to perform their respective material obligations under this
Agreement or any of the other Transaction Documents or (ii) the legality,
validity or enforceability of this Agreement or any of the other Transaction
Documents.
|
6.5 |
Consents and Approvals. |
Except for the Securities Filings, all consents, exemptions, authorizations,
or other action by, or notices to, or filings with, Governmental Authorities and
other Persons required in respect of all Requirements of Law and with respect to
those Contractual Obligations of the Purchasers that are necessary in connection
with the execution, delivery or performance by, or enforcement against, the
Purchasers of this Agreement shall have been obtained and be in full force and
effect, and the Company shall have been furnished with appropriate evidence
thereof.
ARTICLE VII
MISCELLANEOUS
|
7.1 |
Survival of Representations and Warranties. |
All of the representations and warranties made herein shall survive the
execution and delivery of this Agreement and expire twenty-four (24) months
after the Closing Date, except for (a) Sections 3.1 , 3.2,
3.4, 3.7, 4.1, 4.2, 4.4, and 4.5
which representations and warranties shall survive indefinitely, and (b)
Section 3.12 , which shall survive until the later to occur of (i) the
lapse of the statute of limitations with respect to the assessment of any Tax to
which such representation and warranty related (including any extensions or
waivers thereof) and (ii) 60 days after the final administrative or judicial
determination of the Taxes to which such representation and warranty relates,
and no Claim with respect to Section 3.12 may be asserted thereafter with
the exception of Claims arising out of any fact, circumstance, action or
proceeding to which the party asserting such Claim shall have given notice to
the other parties to this Agreement prior to the termination of such period of
reasonable belief that a tax liability will subsequently arise therefrom.
|
7.2 |
Notices. |
All notices, demands and other communications provided for or permitted
hereunder shall be made in writing and shall be by registered or certified
first-class mail, return receipt requested, telecopier, courier service or
personal delivery:
– 21 –
|
(a) |
if to the Company: |
Transgenomic, Inc.
12325 Emmet Street
Omaha, Nebraska 68164
Attention: Craig J. Tuttle
Facsimile: 402-452-5461
with a copy to:
Husch Blackwell LLP
1620 Dodge Street; Suite 2100
Omaha, Nebraska 68102
Attention: David E. Gardels, Esq.
Facsimile: 402-964-5050
and
|
(b) |
if to the Purchasers: |
c/o Third Security, LLC
1881 Grove Avenue
Radford, Virginia 24141
Attention: Tad Fisher
Facsimile: 540-633-7939
with a copy to:
Troutman Sanders LLP
Troutman Sanders Building
1001 Haxall Point
Richmond, Virginia 23219
Attention: John Owen Gwathmey, Esq.
Facsimile: 804-698-5174
All such notices and communications shall be deemed to have been duly given
when delivered by hand, if personally delivered; when delivered by courier, if
delivered by commercial courier service; five (5) Business Days after being
deposited in the mail, postage prepaid, if mailed; and when receipt is
mechanically acknowledged, if telecopied.
|
7.3 |
Successors and Assigns; Third Party Beneficiaries. |
This Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the parties hereto. Subject to applicable
securities laws the Purchasers may assign any of their rights under any of the
Transaction Documents to any of their respective Affiliates. The Company may not
assign any of their rights under this Agreement without the written consent of
the Purchasers. No person other than the parties hereto and their successors are
intended to be beneficiaries of the provisions of this Agreement.
– 22 –
|
7.4 |
Amendment and Waiver. |
|||
|
(a) |
No failure or delay on the part of the Company or Purchasers in exercising |
|||
|
(b) |
Any amendment, supplement or modification of or to any provision of this |
|||
|
7.5 |
Counterparts; Facsimile. |
|||
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement, and may be delivered to the other parties hereto by
facsimile or similar electronic means.
|
7.6 |
Headings. |
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
|
7.7 |
Governing Law. |
This Agreement shall be governed by and construed in accordance with the laws
of the State of Delaware, without regard to the principles of conflicts of law
thereof.
|
7.8 |
Severability. |
If any one or more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions hereof shall
not be in any way impaired, unless the provision held invalid, illegal or
unenforceable shall substantially impair the benefits of the remaining
provisions hereof.
|
7.9 |
Rules of Construction. |
Unless the context otherwise requires, references to sections or subsections
refer to sections or subsections of this Agreement.
– 23 –
|
7.10 |
Entire Agreement. |
This Agreement, together with the exhibits and schedules hereto, and the
other Transaction Documents are intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
representations, warranties or undertakings, other than those set forth or
referred to herein or therein. This Agreement, together with the exhibits
hereto, and the other Transaction Documents supersede all prior agreements and
understandings between the parties with respect to such subject matter.
|
7.11 |
Publicity; Confidentiality. |
None of the parties hereto shall issue a publicity release or public
announcement or otherwise make any disclosure concerning this Agreement or the
transactions contemplated hereby or the Purchasers without prior approval by the
other parties hereto; provided, however, that nothing in this Agreement
shall restrict the Purchasers or the Company from disclosing information (a)
that is already publicly available, (b) that was known to the Purchasers on a
non-confidential basis prior to its disclosure by the Company, (c) that may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation, provided that the parties will use reasonable
efforts to notify the other party in advance of such disclosure so as to permit
such party to seek a protective order or otherwise contest such disclosure, and
such other party will use reasonable efforts to cooperate, at the expense of the
party trying to prevent such disclosure, with such party in pursuing any such
protective order, (d) to the Purchasers153 or the Company153s officers, directors,
agents, employees, members, partners, controlling persons, auditors or counsel,
(e) to Persons from whom releases, consents or approvals are required, or to
whom notice is required to be provided, pursuant to the transactions
contemplated by the Transaction Documents or (f) to the prospective transferee
in connection with any contemplated transfer of any of the Notes or the
Conversion Securities or the capital stock of the Company issuable upon the
conversion or exercise thereof. If any announcement is required by law or the
rules of any securities exchange or market on which shares of Common are traded
to be made by any party hereto, prior to making such announcement such party
will deliver a draft of such announcement to the other party and shall give the
other party reasonable opportunity to comment thereon.
|
7.12 |
Further Assurances. |
Each of the parties shall execute such documents and perform such further
acts, at the expense of the requesting party, (including, without limitation,
obtaining any consents, exemptions, authorizations or other action by, or giving
any notices to, or making any filings with, any Governmental Authority or any
other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
|
7.13 |
Qualified Financing. |
The Purchasers covenant and agree that, at the closing of the Qualified
Financing, they will execute and deliver to the Company, as an “investor”
thereunder, such stock purchase agreement, investors153 rights agreement and/or
any other agreements as are entered into by the investors in the Qualified
Financing generally; provided that the Company agrees that such
agreements shall be in a form acceptable to the Purchasers acting reasonably.
– 24 –
|
7.14 |
Expenses. Each party hereto shall be responsible for its own fees and |
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
– 25 –
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers hereunto duly authorized on
the date first above written.
|
COMPANY: |
TRANSGENOMIC, INC. |
|
|
By: |
/s/ Craig J. Tuttle |
|
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Craig J. Tuttle |
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Chief Executive Officer and President |
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PURCHASERS: |
THIRD SECURITY SENIOR STAFF 2008 LLC |
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By: |
Third Security, LLC, Manager |
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By: |
/s/ Randal J. Kirk |
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Randal J. Kirk, Manager |
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THIRD SECURITY STAFF 2010 LLC |
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By: |
Third Security, LLC, Manager |
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By: |
/s/ Randal J. Kirk |
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Randal J. Kirk, Manager |
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THIRD SECURITY INCENTIVE 2010 LLC |
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By: |
Third Security, LLC, Manager |
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By: |
/s/ Randal J. Kirk |
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Randal J. Kirk, Manager |
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[Signature Page to Convertible Promissory Note Purchase
Agreement]
– 26 –
SCHEDULE A
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1. |
Third Security Senior Staff 2008 LLC : $1,200,000.00 |
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2. |
Third Security Staff 2010 LLC : $1,200,000.00 |
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3. |
Third Security Incentive 2010 LLC : $600,000.00 |
SCHEDULE 3.21(b)
EXHIBIT A
FORM OF NOTE
NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT“), OR UNDER THE SECURITIES LAWS OF APPLICABLE
STATES. THIS NOTE AND SUCH SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THIS NOTE AND ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER
TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ALL APPLICABLE STATE SECURITIES LAWS.
CONVERTIBLE PROMISSORY NOTE
TRANSGENOMIC, INC.
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Principal Amount: ____________ |
Issue Date: |
December 30, 2011 |
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Maturity Date: |
March 31, 2012 |
For value received, Transgenomic, Inc., a Delaware
corporation (the “Company“), with principal offices at
12325 Emmet Street, Omaha, Nebraska 68164, hereby promises to pay in lawful
money of the United States to ______________________, or
permitted registered assigns (“Registered Holder“),
the principal amount set forth above, together with simple interest on the
unpaid principal balance at a rate equal to sixteen percent (16%) per annum,
computed on the basis of the actual number of days elapsed and a year of 365
days from the “Issue Date” of this Note set forth
above, until the principal amount and all interest accrued thereon are paid.
Provided that this Note has not been earlier converted into Conversion
Securities pursuant to the terms and conditions of Section 2, the unpaid
principal amount of this Note, together with any then unpaid accrued interest
(collectively, the “Note Amount“), shall be due and
payable by the Company on the Maturity Date or such earlier time as provided for
in Section 2; provided, further, however, that notwithstanding the foregoing or
the provisions of Section 2, the Note Amount shall be due and payable upon the
occurrence of an Event of Default (as defined below).
This Note is executed and delivered by the Company pursuant to the terms and
conditions of that certain Convertible Promissory Note Purchase Agreement by and
among the Company, Registered Holder and certain other parties specified
therein, dated as of the date hereof (as amended, restated, amended and
restated, supplemented or otherwise modified from time to time, the
“Purchase Agreement“), and is subject to the terms and
conditions of the Purchase Agreement. The following, together with the Purchase
Agreement, is a statement of the rights of Registered Holder and the conditions
to which this Note is subject, and to which Registered Holder hereof, by the
acceptance of this Note, agrees:
1. DEFINITIONS. The following definitions shall apply
for all purposes of this Note:
(a) “Common Stock” means shares of the Company153s
common stock, $0.01 par value per share.
(b) “Conversion Price” means the
per equity security price paid by the investors for the Company153s equity
securities issued in the Qualified Financing.
(c) “Conversion Securities” means equity securities of the
Company of the same class(es) and series as the equity securities of the Company
sold in the Qualified Financing which, for the avoidance of doubt, shall include
any warrant(s) and/or other securities convertible into or exercisable for
capital stock of the Company issued in the Qualified Financing.
(d) “Maturity Date” means March 31, 2012.
(e) “Qualified Financing” means the Company153s first
sale or issuance of its equity securities after the date hereof in one
transaction or a series of related transactions (which, for the avoidance of
doubt, may include warrant(s) or other securities convertible into or
exercisable for capital stock of the Company) for an aggregate purchase price
paid in cash (not including the Note Amount converted pursuant to Section 2) of
at least $3,000,000.
(f) “Note” means this Convertible Promissory Note
(and all Convertible Promissory Notes issued in exchange, transfer or
replacement hereof).
2. CONVERSION, PAYMENT AND TERMINATION OF
RIGHTS.
(a) Conversion or Payment
(i) Qualified Financing. At the closing of the
Qualified Financing the Note Amount shall automatically, and without further
action or consent of Registered Holder, convert into that number of Conversion
Securities that results from dividing the Note Amount by the applicable
Conversion Price (plus, for the avoidance of doubt, any warrant(s) and/or other
equity securities convertible into or exercisable for capital stock of the
Company that would be issuable in connection with an investment in the Qualified
Financing of the Note Amount). Registered Holder will deliver the original Note
to the Company and will execute and deliver to the Company at the closing as an
“investor” thereunder such stock purchase agreement, investors153 rights agreement
and/or any other agreements as are entered into by the investors in the
Qualified Financing generally; provided that the Company agrees such agreements
shall be in a form acceptable to Registered Holder acting reasonably.
(ii) Maturity Date. Provided that this Note has not
previously been converted or paid pursuant to Section 2.1(a), the Note Amount
shall be due and payable by the Company on the Maturity Date.
(iii) Termination of Rights. All rights with respect
to this Note shall terminate upon the issuance of the Conversion Securities to
Registered Holder upon conversion of the Note Amount, whether or not this Note
has been surrendered and whether or not all stock purchase, investors153 rights,
co-sale, voting or other agreements have been executed and delivered by
Registered Holder to the Company. Notwithstanding the foregoing, Registered
Holder agrees to surrender this Note to the Company for cancellation as soon as
is possible following conversion of this Note. Registered Holder shall not be
entitled to receive the stock certificate and/or other instruments representing
the Conversion Securities to be issued upon conversion of this Note until the
original of this Note is surrendered to the Company or an affidavit of loss is
executed and provided to the Company and the agreements referenced in this
Section 2 have been executed and delivered to the Company.
3. ISSUANCE OF CONVERSION SECURITIES. Subject
to Section 2, as soon as practicable after conversion of this Note, the Company
at its expense will cause to be issued in the name of and delivered to
Registered Holder, a stock certificate or stock certificates and/or additional
instruments for the Conversion Securities to which Registered Holder shall be
entitled upon such conversion (bearing such legends as may be required by
applicable United States and state and federal securities laws in the reasonable
opinion of legal counsel of the Company, by the Company153s Certificate of
Incorporation or Bylaws, or by any agreement between the Company and Registered
Holder). Such conversion shall be deemed to have been made on the date of the
closing of the Qualified Financing and Registered Holder shall be treated for
all purposes as the record holder of such Conversion Securities as of such date.
No fractional shares will be issued upon conversion of this Note. If upon any
conversion of this Note, a fraction of a share would otherwise result, then in
lieu of such fractional share the Company will pay the cash value of that
fractional share, calculated on the basis of the applicable Conversion Price.
4. NO RIGHTS AS STOCKHOLDER. This Note does
not entitle Registered Holder to any voting rights or other rights as a
stockholder of the Company, unless and until (and only to the extent that) this
Note is actually converted into Conversion Securities in accordance with its
terms. In the absence of conversion of this Note, no provisions of this Note,
and no enumeration herein of the rights or privileges of Registered Holder,
shall cause Registered Holder to be a stockholder of the Company for any
purpose.
5. DEFAULT.
(a) An “Event of Default” will be deemed to have
occurred upon any of the following events:
(i) the Company153s failure to pay to Registered Holder any amount of principal
or interest when and as due under this Note, upon receipt of written notice of
such failure from Registered Holder;
(ii) a receiver is appointed for any material part of the Company153s property,
the Company makes a general assignment for the benefit of creditors, the Company
voluntarily initiates an action under the U.S. Bankruptcy Code as a debtor, or
the Company is involuntarily made the subject (as a debtor or alleged debtor) of
an action under the U.S. Bankruptcy Code or becomes the subject of any other
bankruptcy or similar proceeding for the general adjustment of its debts, which
involuntary action is not terminated or otherwise disposed of without a judgment
against the Company within thirty (30) days of its initiation; or
(iii) the Company breaches any material representation, warranty, covenant or
other term or condition of this Note or the Purchase Agreement, except, in the
case of a breach of a covenant which is curable, only if such breach continues
for a period of at least fifteen (15) calendar days.
(b) From and after the occurrence of an Event of Default, the Note Amount
shall bear simple interest at a rate equal to twenty percent (20%) per annum,
until the Note Amount shall have been paid in full. Upon the occurrence of any
Event of Default, Registered Holder may, at such Registered Holder153s sole
option, declare all or any portion of the Note Amount due and payable in full;
provided, that in the event of an Event of Default under Section 5.1(b) above,
the Note Amount and all other sums payable hereunder shall become and be
immediately due and payable in full without any action on the part of Registered
Holder.
6. NO PREPAYMENT. The Company may not, at any time
prior to conversion of this Note under Section 2, prepay in whole or in part the
unpaid balance of this Note, without the prior written consent of Registered
Holder.
7. WAIVERS. No failure or delay on the part of
Registered Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. To the maximum extent permitted by law,
the Company and all endorsers of this Note hereby waive demand, notice,
presentment, protest, notice of dishonor, and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note.
8. TRANSFER. This Note, any Conversion Securities
issued upon conversion of this Note and any capital stock of the Company
issuable upon the conversion or exercise thereof may be offered, sold, assigned
or transferred by Registered Holder without the consent of the Company, subject
only to applicable securities laws. The rights and obligations of the Company
and Registered Holder under this Note shall be binding upon and benefit their
respective permitted successors, assigns, heirs, administrators and transferees.
9. Representations and Warranties of the Company. The
Company hereby represents and warrants to Registered Holder as follows:
(a) The Company (a) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware; (b) has all requisite
corporate power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently, or is currently proposed to be, engaged; and (c) has the corporate
power and authority to execute, deliver and perform its obligations under this
Note.
(b) The execution, delivery and performance by the Company of this Note (a)
have been duly authorized by all necessary corporate action of the Company; (b)
do not contravene the terms of the Company153s Certificate of Incorporation or the
Bylaws; and (c) do not violate, conflict with or result in any breach or
contravention of, or the creation of any lien under, any contractual obligation
or the judgment, injunction, writ, award, decree or order of any nature of any
governmental authority against, or binding upon, the Company, in each case in
this clause (c), individually or in the aggregate, as would have a material
adverse effect on the Company.
10. Representations and Warranties of Registered
Holder. Registered Holder hereby represents and warrants to the
Company as follows:
(a) This Note, and the Conversion Securities issuable upon conversion thereof
are being or will be acquired for its own account and with no intention of
distributing or reselling such securities or any part thereof in any transaction
that would be in violation of the securities laws of the United States of
America, or any state, without prejudice, however, to the rights of Registered
Holder at all times to sell or otherwise dispose of all or any part of such
securities under an effective registration statement under the Act, or under an
exemption from such registration available under the Act. If Registered Holder
should in the future decide to dispose of any of such securities, Registered
Holder understands and agrees that it may do so only in compliance with the Act
and applicable state securities laws, as then in effect.
(b) Registered Holder understands that this Note and the Conversion
Securities will not be registered at the time of their issuance under the Act
for the reason that the sale provided for in this Agreement is exempt pursuant
to Section 4(2) of the Act and that the reliance of the Company on such
exemption is predicated in part on Registered Holder153s representations set forth
herein. Registered Holder represents that it is experienced in evaluating
companies such as the Company, has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its
investment and has the ability to suffer the total loss of its investment.
Registered Holder further represents that it has had the opportunity to ask
questions of and receive answers from the Company concerning the terms and
conditions of the offering and to obtain additional information to such
Registered Holder153s satisfaction.
(c) Registered Holder is an “accredited investor”
as that term is defined by Rule 501 of Regulation D promulgated under the Act.
11. PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER
COSTS. If (a) this Note is placed in the hands of an attorney for
collection or enforcement or is collected or enforced through any legal
proceeding or Registered Holder otherwise takes action to collect amounts due
under this Note or to enforce the provisions of this Note, or (b) there occurs
any bankruptcy, reorganization, receivership of the Company or other proceedings
affecting Company creditors153 rights and involving a claim under this Note, then
the Company shall pay the reasonable costs incurred by Registered Holder for
such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including but not limited to
reasonable attorneys fees and disbursements.
12. RESERVATION OF STOCK ISSUABLE UPON CONVERSION.
The Company hereby agrees that, in connection with soliciting board and/or
stockholder approval with respect to the Qualified Financing while this Note
remains outstanding, the Company shall reserve a sufficient number of shares of
its capital stock for issuance upon conversion of this Note and the exercise
and/or conversion of the Conversion Securities, as applicable, and a sufficient
number of shares of Common Stock for issuance upon conversion of such shares of
capital stock, if applicable. In connection therewith, (i) such shares of the
Company153s capital stock shall be duly authorized and, when issued or delivered
upon (x) conversion of this Note in accordance with the terms of this Note or
(y) exercise or conversion of the Conversion Securities in accordance with their
terms, shall be validly issued, fully paid and non-assessable, and (ii) if
applicable, such shares of Common Stock, when issued or delivered upon the
conversion of such capital stock in accordance with the terms of the Company153s
Certificate of Incorporation, shall be validly issued, fully paid and
non-assessable.
13. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with, and governed by, the internal laws of the State
of Delaware, excluding that body of law applicable to conflicts of laws.
14. NOTICES. Any and all notices required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (i) at the time of personal delivery, if delivered in person;
(ii) at the time of transmission by facsimile, addressed to the other party at
its facsimile number specified herein (or hereafter modified by subsequent
notice to the parties hereto), with confirmation of receipt made by printed
confirmation sheet verifying successful transmission of the facsimile; (iii) at
the time of transmission by electronic mail, with confirmation of receipt; (iv)
one business day after deposit with an express overnight courier for United
States deliveries, or two business days after deposit with an international
express air courier for deliveries outside of the United States, with proof of
delivery from the courier requested; or (v) three business days after deposit in
the United. States mail by certified mail (return receipt requested) for United
States deliveries.
All notices not delivered personally or by facsimile will be sent with
postage and/or other charges prepaid and properly addressed to the party to be
notified at the address or facsimile number as follows, or at such other address
or facsimile number as such other party may designate by one of the indicated
means of notice herein to the other parties hereto as follows:
(i) if to Registered Holder:
with a copy to:
(ii) if to the Company:
Transgenomic, Inc.
12325 Emmet Street
Omaha, Nebraska 68164
Attention: Craig J. Tuttle
Facsimile: 402-452-5461
with a copy to:
Husch Blackwell LLP
1620 Dodge Street; Suite 2100
Omaha, Nebraska 68102
Attention: David E. Gardels, Esq.
Facsimile: 402-964-5050
15. AMENDMENTS AND WAIVERS. Any term of this Note may
be amended and the observance of any term of this Note waived (either generally
or in a particular instance and either retroactively or prospectively),
including without limitation an amendment to extend the Maturity Date, by
Registered Holder and the Company. Any amendment or waiver effected in
accordance with this section shall be binding upon any future Registered Holder
of this Note, regardless of whether or not such person consents thereto.
16. SEVERABILITY. If one or more provisions of this
Note are held to be unenforceable under applicable law, such provision(s) shall
be excluded from this Note and the balance of this Note shall be interpreted as
if such provision(s) were so excluded and shall be enforceable in accordance
with its terms.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has caused this Convertible
Promissory Note to be signed in its name as of the date first written above.
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THE COMPANY: |
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TRANSGENOMIC, INC. |
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By: |
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Craig J. Tuttle, Chief Executive Officer |
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ACKNOWLEDGED AND AGREED:
HOLDER:
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By: |
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