UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

   

FORM 8-K

 

   

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 2, 2017

 

 

 

Transgenomic, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware

(State or Other Jurisdiction

of Incorporation)

001-36439

(Commission File Number)

91-1789357

(IRS Employer

Identification No.)

 

12323 Emmit Street, Omaha, NE 68164

(Address of Principal Executive Offices) (Zip Code)

 

(402) 452-5400

(Registrant’s telephone number, including area code)

 

N/A

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

 

 

 

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

 

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

 

 

 

 

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

Amendment to Merger Agreement

 

As previously reported on October 13, 2016, Transgenomic, Inc. (“Transgenomic”), New Haven Labs Inc., a wholly-owned subsidiary of Transgenomic (“Merger Sub”), and Precipio Diagnostics, LLC (“Precipio”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Precipio will become a wholly-owned subsidiary of Transgenomic (the “Merger”), on the terms and subject to the conditions set forth in the Merger Agreement. Following the Merger, Transgenomic will change its name to Precipio, Inc. (“New Precipio”).

 

On February 2, 2017, Transgenomic, Merger Sub and Precipio entered into a First Amendment to Agreement and Plan of Merger (the “Merger Agreement Amendment”) which provided for, among other things, the following: (a) the authorization of a line of credit up to $250,000 provided by Precipio to Transgenomic pursuant to an unsecured promissory note (as discussed below); (b) the revision of the exchange ratio set forth in the Merger Agreement to provide that issued and outstanding common units of Precipio prior to the effective time of the Merger will be converted into the right to receive an amount of shares of New Precipio common stock (“New Precipio common stock”) equal to 80% of the issued and outstanding shares of New Precipio common stock (not taking into account the issuance of shares of convertible preferred stock of New Precipio (“New Precipio preferred stock”) in the Merger or related private placement); (c) the waiver as a condition to the closing of the Merger of the continual listing of the existing shares of Transgenomic’s common stock on the NASDAQ Capital Market; (d) the extension of the deadline pursuant to which a “shelf” registration statement on Form S-3 or other appropriate form is required to be filed by New Precipio with the Securities Exchange Commission to June 1, 2017; (e) the authorization for certain indebtedness of New Precipio to remain outstanding as of the effective date of the Merger; (f) the authorization of certain actions taken by each of Transgenomic and Precipio since the date the Merger Agreement; and (g) the removal from the Merger Agreement of certain conditions to closing of the Merger.

 

When the Merger is completed, (i) the outstanding common units of Precipio will be converted into the right to receive approximately 160.6 million shares of New Precipio common stock, together with cash in lieu of fractional units, which will result in Precipio common unit holders owning approximately 53% of the issued and outstanding shares of New Precipio common stock on a fully diluted basis, taking into account the issuance of shares of New Precipio preferred stock in the Merger and the related private placement as discussed below (the “fully diluted New Precipio common stock”) and (ii) the outstanding preferred units of Precipio will be converted into the right to receive approximately 24.1 million shares of New Precipio preferred stock with an aggregate face amount equal to $3 million (based upon the purchase price of the new preferred stock of New Precipio in the new preferred stock financing), which will result in the Precipio preferred unit holders owning approximately 8% of the fully diluted New Precipio common stock.

 

In connection with the Merger, at the effective time of the Merger, in addition to the New Precipio preferred stock to be issued to holders of preferred units of Precipio, New Precipio also will issue shares of New Precipio preferred stock and New Precipio common stock in a related private placement, whereby:

 

· Holders of certain secured indebtedness of Transgenomic will receive in exchange for such indebtedness, approximately 24.1 million shares of New Precipio preferred stock in an amount equal to $3 million, which represents approximately 8% of the fully diluted New Precipio common stock, and approximately 9.8 million shares of New Precipio common stock, which represents approximately 3% of the fully diluted New Precipio common stock; and

 

· New Precipio will issue for cash up to approximately 56.2 million shares of New Precipio preferred stock for $7 million to investors in a private placement, which represents approximately 18% of the fully diluted New Precipio common stock.

 

The foregoing description of the Merger Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement Amendment, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

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Amendment to Loan Agreement

 

On February 2, 2017, Transgenomic entered into the Termination and Tenth Amendment (the “Loan Agreement Amendment”) to its Loan and Security Agreement, dated March 13, 2013, with Third Security Senior Staff 2008 LLC, as administrative agent and a lender, and the other lenders party thereto (collectively, the “Lenders”), as amended, for a revolving line of credit and a term loan (as so amended, the “Loan Agreement”). The Loan Agreement Amendment, among other things, (i) provides that the Lenders will waive specified events of default under the terms of the Loan Agreement until the effective time of the Merger (or the termination of the Merger Agreement in accordance with its terms), (ii) provides for the conversion of all outstanding indebtedness owed to the Lenders under the Loan Agreement (the “Outstanding Indebtedness”) into shares of Transgenomic common stock and preferred stock (collectively, the “Conversion Shares”) effective as of the closing date of the Merger and (iii) the termination of the Loan Documents (as defined in the Loan Agreement) and the termination and release of all security interests and liens of the Lenders in the Collateral (as defined in the Loan Agreement) in each case immediately following the conversion of the Outstanding Indebtedness into Conversion Shares.

 

The effectiveness of certain provisions in the Loan Agreement Amendment, including provisions relating to conversion of the Conversion Shares and termination of the Loan Documents, is conditioned on, among other things, the consummation of the Merger, and, in the event that the Merger is not consummated, these provisions in the Loan Agreement Amendment will terminate.

 

As noted above, in connection with the Loan Agreement Amendment, the Lenders have agreed to convert the outstanding principal and accrued interest under the Loan Agreement into (i) approximately 9.8 million shares of New Precipio common stock immediately prior to the effectiveness of the Merger at a price equal to $0.50 per share and (ii) 24.1 million shares of New Precipio preferred stock. As of December 31, 2016, the outstanding amount owed under the Loan Agreement was $7.243 million of principal and $556,642 of accrued interest. The issuance of the Conversion Shares is subject to the approval of the Transgenomic stockholders in accordance with NASDAQ Capital Market listing rules.

 

The Lenders are affiliates of Third Security, LLC, whose affiliates hold more than 10% of the outstanding voting stock of Transgenomic. Additionally, Doit L. Koppler II, a director of the Company, is affiliated with Third Security, LLC and its affiliates.

 

The foregoing description of the Loan Agreement Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

Promissory Note

 

As noted above, in connection with the Merger, Precipio and Transgenomic entered into a promissory note (the “Note”), dated February 2, 2017, pursuant to which Precipio agreed to offer a line of credit to Transgenomic up to a principal sum of $250,000. All outstanding amounts under the Note accrue interest at a rate of 10% per annum and are due and payable upon the earlier to occur of (a) the date that is 90 days following the date of the Note or (b) the closing of the Merger (the “Maturity Date”). Any amounts outstanding under the Note on the earliest of (x) the occurrence of an Event of Default (as defined in the Note) and the passage of any applicable cure period or (y) ten days after the Maturity Date, to the extent permitted by applicable law, will accrue interest at a rate of 12% per annum, compounded daily.

 

The foregoing description of the Note does not purport to be complete and is qualified in its entirety by reference to the full text of the Note, which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.

 

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

 

Amendment to Loan Agreement

 

The information disclosed under the heading “Amendment to Loan Agreement” in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.  

 

Promissory Note

 

The information disclosed under the heading “Promissory Note” in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.  

 

Item 3.02. Unregistered Sales of Equity Securities

 

The information disclosed under the headings “Amendment to Merger Agreement” and “Amendment to Loan Agreement” in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Certain statements in this Current Report on Form 8-K constitute “forward-looking statements” of the Company within the meaning of the Private Securities Litigation Reform Act of 1995, which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. The known risks, uncertainties and other factors affecting these forward-looking statements are described from time to time in the Company’s filings with the SEC, including in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on April 14, 2016, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the SEC on November 14, 2016. Any change in such factors, risks and uncertainties may cause the actual results, events and performance to differ materially from those referred to in such statements. Accordingly, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 with respect to all statements contained in this Current Report on Form 8-K. All information in this Current Report on Form 8-K is as of the date of this report and the Company does not undertake any duty to update this information, including any forward-looking statements, unless required by law.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

See the Exhibit Index immediately following the signature page hereto, which is incorporated herein by reference.

 

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SIGNATURES 

 

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

 

 

Date: February 2, 2017

 

  Transgenomic, Inc.  
       
       
       
  By: /s/ Paul Kinnon  
    Paul Kinnon  
    President and Chief Executive Officer  

 

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EXHIBIT INDEX

 

Exhibit
Number
      Description  
       
   2.1   First Amendment to Agreement and Plan of Merger, dated as of February 2, 2017, by and among Transgenomic, Inc., New Haven Labs Inc. and Precipio Diagnostics, LLC
       
  10.1   Termination and Tenth Amendment to Loan and Security Agreement, dated as of February 2, 2017, by and among Third Security Senior Staff 2008 LLC, as administrative agent and a lender, the other lenders party thereto and Transgenomic, Inc.
       
  10.2   Promissory Note, dated February 2, 2017, between Transgenomic, Inc. and Precipio Diagnostics, LLC
         

 

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Exhibit 2.1

 

First Amendment to Agreement and Plan of Merger

 

This First Amendment to Agreement and Plan of Merger (this “ Amendment ”), dated as of February 2, 2017, is entered into by and among Transgenomic, Inc. (“ Parent ”), a Delaware corporation, New Haven Labs Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“ Merger Sub ”), and Precipio Diagnostics, LLC, a Delaware limited liability company (the “ Company ”).

 

Whereas , Parent, Merger Sub and the Company are parties to that Agreement and Plan of Merger, dated as of October 12, 2016 (the “ Agreement ”);

 

Whereas , Parent, Merger Sub and the Company desire to amend the Agreement on the terms and conditions set forth herein;

 

Whereas , Section 8.10 of the Agreement provides that prior to the Effective Time, subject to applicable Law (including the DGCL and DLLCA) and Section 8.11 of the Agreement, the Agreement may be amended or modified only by a written agreement executed and delivered by duly authorized officers of Parent, Merger Sub and the Company; and

 

Whereas , the respective Boards of Directors of the parties to the Agreement have approved this Amendment prior to the Effective Time.

 

Now, Therefore , in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:

  

1. Definitions . Capitalized terms used and not otherwise defined herein (including in the recitals hereto) shall have the meanings given to them in the Agreement.

 

2. Amendments .

 

a.                    Section 1.01 of the Agreement is hereby amended as follows:

 

i. The definition of “ Parent Closing Indebtedness ” is deleted in its entirety and replaced with the following:

 

Parent Closing Indebtedness ” means all Indebtedness of Parent except for (i) accounts payable to trade creditors and accrued expenses in the ordinary course of business, (ii) the Parent Stockholder Indebtedness and (iii) Unsecured Noteholder Indebtedness.”

 

ii. The following definitions are added to Section 1.01 :

 

Alternative Financing ” means a financing that is consummated on terms substantially similar to the terms and conditions set forth on the New Preferred Stock Financing, but with different Investors.”

 

Merger Shares ” means 160,585,422 shares of Parent Common Stock representing the total number of shares of Parent Common Stock to be issued in the Merger.”

 

Unsecured Noteholder Indebtedness ” means the $125,000 Unsecured Convertible Promissory Note dated as of January 20, 2015, and amended as of January 17, 2017, held by MAZ Partners LP and including all accrued and unpaid interest thereon.”

 

 

 

 

b.                   Section 2.02 of the Agreement is hereby amended by deleting the term “Article VII” set forth therein and inserting the term “Article VI”.

 

c.                    Section 2.09 of the Agreement is deleted in its entirety.

 

d.                   Section 5.16(a) of the Agreement is deleted in its entirety and replaced with the following:

 

“(a) Parent agrees to promptly file with the SEC a “shelf” registration statement on Form S-3 or other appropriate form in connection with the registration under the Securities Act of the Registrable Securities (the “ Registration Statement ”) as soon as practicable following the Effective Time, but in no event later than June 1, 2017. Parent shall maintain the effectiveness of such Registration Statement thereafter for a period of two years after such Registration Statement is declared effective by the SEC.”

 

e.                    Section 5.12(c) of the Agreement is deleted in its entirety and replaced with the following:

 

“(c) At the Effective Time, the Company’s Directors and Officers Insurance (the “ D&O Policy ”) shall be amended to cover the D&O Indemnified Parties for claims arising from and after the Effective Time with respect to matters for which the D&O Indemnified Parties may be entitled to indemnification by the Company as set forth in Section 5.12(a) . Such D&O Policy shall provide insurance coverage with at least the same coverage and amounts and containing terms and conditions that are not less advantageous to the directors and officers of Parent as Parent’s existing policies with respect to claims arising out of or relating to events which occurred before or at the Effective Time (including in connection with the transactions contemplated by this Agreement) and Parent and the Company agree and covenant to maintain such D&O Policy for a period of not less than six years on behalf of the D&O Indemnified Parties.”

 

f.                    Section 5.01(a) of the Company Disclosure Schedule is hereby amended by adding the following events:

 

4. The issuance of convertible promissory notes to new and existing Company investors in the aggregate principal amount of $300,000 (which amount may be increased upon the Company’s determination).

 

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g.                   Section 5.01(c) of the Parent Disclosure Schedule is hereby amended by adding the following events:

 

8. Issuance of warrants to holder of Unsecured Noteholder Indebtedness.

 

9. Unsecured letter of credit issued by the Company to the Parent on February 2, 2017.

 

10. Issuance of Parent common stock upon conversion of Indebtedness held by affiliates of Third Security, LLC as contemplated by that certain Termination and Tenth Amendment to Loan and Security Agreement dated as of February 2, 2017, among Parent, Third Security Senior Staff 2008 LLC and the other lenders party thereto.

 

h.                   Section 6.01(d) of the Agreement is deleted in its entirety.

 

i.                     Section 6.01(e) of the Agreement is deleted in its entirety and replaced with the following:

 

“(c) The New Preferred Stock Financing shall have been consummated; provided that; such condition shall be deemed to be satisfied in the event that the New Preferred Stock Financing has not been consummated within two Business after the Parent Stockholder Approval has been obtained and an Alternative Financing is consummated within 60 days of the date that the Parent Stockholder Approval has been obtained.”

 

j.                     Section 6.02(e) of the Agreement is deleted in its entirety and replaced with the following:

 

“(e) Parent shall have obtained the consent of the lenders parties to Parent’s outstanding secured debt.”

 

k.                   Section 6.02(l) of the Agreement is deleted in its entirety and replaced with the following:

 

“(l) Parent shall not have sold or issued, or entered into any agreement, commitment or arrangement to sell or issue, any New Preferred Stock except for (i) the New Preferred Stock issuable upon the conversion of Parent Stockholder Indebtedness, (ii) the New Preferred Stock sold and issued in the New Preferred Stock Financing, and (iii) an Alternative Financing in the event that the New Preferred Stock Financing has not been consummated within two Business after the Parent Stockholder Approval has been obtained.”

 

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l.                     Each of Section 6.02(g), Section 6.02(m) and Section 6.03(g) of the Agreement is deleted in its entirety.

 

m.                 Section 7.01(b) of the Agreement is deleted in its entirety and replaced with the following:

 

“(b) by either the Company or Parent, if the Merger has not been consummated by June 30, 2017, or such other date, if any, as the Company and Parent shall agree upon in writing (the “ Termination Date ”); provided, however , that the right to terminate this Agreement under this Section 7.01(b) shall not be available to any party whose breach under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date;”

 

3. Waivers . The parties desire to waive certain terms and conditions of the Merger Agreement as follows:

 

a. Acknowledge and Waiver of Potential Delisting from the NASDAQ Capital Market . The Company hereby acknowledges that Parent is currently not in compliance with the listing requirements for the NASDAQ Capital Market and that Parent has received permission from the NASDAQ Capital Market’s Nasdaq Hearing Panel (the “NASDAQ Panel”) to continue its listing on the NASDAQ Capital Market to allow Parent to close the Merger. The NASDAQ Panel has granted Parent’s request to extend its continued listing on the NASDAQ Capital Market until February 19, 2017 on the condition that the Merger must be closed on or before February 19, 2017. The Company hereby acknowledges that the Merger will not close on February 19, 2017 and that Parent may become delisted from the NASDAQ Capital Market on February 19, 2017 if it is otherwise unable to obtain another extension of its continued listing beyond February 19, 2017 (the “Delisting”). Parent will use its commercially reasonable efforts to maintain its continued listing on the NASDAQ Capital Market, including commercially reasonable efforts to obtain from the NASDAQ Panel another extension of its continued listing beyond February 19, 2017. The Company hereby acknowledges the possibility of a Delisting and hereby waives (i) any breach of Section 5.10 of the Agreement, (ii) the fulfillment of the condition set forth in Section 6.01(f) of the Agreement and (iii) any Company termination right pursuant to Section 7.01 of the Agreement, in each case to the extent such breach, failed condition or termination right is triggered solely by the Delisting.

 

4. Effect of Amendment . The provisions of the Agreement are amended and modified by the provisions of this Amendment. If any provision of the Agreement is materially different from or inconsistent with any provision of this Amendment, the provision of this Amendment shall control, and the provision of the Agreement shall, to the extent of such difference or inconsistency, be disregarded.

 

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5. Single Agreement . This Amendment and the Agreement, as amended and modified by the provisions of this Amendment, shall constitute and shall be construed as a single agreement. The provisions of the Agreement, as amended and modified by the provisions of this Amendment, are incorporated herein by this reference and are ratified and affirmed. The term “Agreement” as used in the Agreement shall be deemed to refer to the Agreement as amended hereby.

 

6. Headings . The underlined headings herein are for convenience only and shall not affect the interpretation of this Amendment.

 

7. Governing Law; Jurisdiction . This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.

 

8. Counterparts . This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or scanned pages shall be effective as delivery of a manually executed counterpart to this Amendment.

 

9. Entire Agreement . The Agreement, as amended and modified by this Amendment, constitutes the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to its subject matter.

 

 

{Signature Page to Follow}

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

 

  PRECIPIO DIAGNOSTICS, LLC  
       
  By: /s/ Ilan Danieli  
    Ilan Danieli  
    Chief Executive Officer  
       
       
  TRANSGENOMIC, INC.  
       
  By: /s/ Paul Kinnon  
    Paul Kinnon  
    President and Chief Executive Officer  
       
       
  NEW HAVEN LABS INC.  
       
  By: /s/ Paul Kinnon  
    Paul Kinnon  
    President  

 

 

 

 

 

Exhibit 10.1

 

 

TERMINATION AND TENTH AMENDMENT TO

LOAN AND SECURITY AGREEMENT

(TERM LOAN AND REVOLVING LINE)

 

This TERMINATION AND TENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “ Amendment ”), dated as of February 2, 2017 (the “ Amendment Date ”), is entered into by and among THIRD SECURITY SENIOR STAFF 2008 LLC , as administrative agent (the “ Agent ”), and a lender, the other lenders party hereto (collectively, the “ Lenders ”), and TRANSGENOMIC, INC. , a Delaware corporation (the “ Borrower ”).

 

WHEREAS , the Borrower, the Agent and the Lenders are parties to that certain Loan and Security Agreement (Term Loan and Revolving Line), dated as of March 13, 2013 (as amended, restated, supplemented, or otherwise modified from time to time, the “ Loan Agreement ”), whereby the Lenders have extended to the Borrower a loan facility pursuant to the Loan Agreement on the terms and subject to the conditions contained therein;

 

WHEREAS , as of the date hereof, the aggregate principal amount outstanding, including all accrued and unpaid interest thereon, owed to Lenders under both the Term Loan and Revolving Line is $7,881,211 (“ Amendment Date Amount ”);

 

WHEREAS , on October 12, 2016, the Borrower entered into an Agreement and Plan of Merger (the “ Merger Agreement ”) with New Haven Labs Inc. ( “Merger Sub”), which is a wholly owned subsidiary of the Borrower, and Precipio Diagnostics, LLC, ( “Precipio ”). In accordance with the Merger Agreement, at the effective time of the merger (the “ Merger ”), Merger Sub will merge with and into Precipio, with Precipio as the surviving entity. As a result, Precipio will become a wholly owned subsidiary of the Borrower. Following the Merger, the Borrower will change its name to Precipio, Inc. (“ New Precipio ”);

 

WHEREAS , in accordance with the Merger Agreement, on the closing date of the Merger (the “ Merger Closing Date ”), (i) each outstanding common unit of Precipio will be converted into the right to receive an amount of shares of common stock of New Precipio (“ New Precipio Common Stock ”) based on an exchange ratio set forth in the merger agreement and (ii) each outstanding preferred unit of Precipio will be converted into the right to receive shares of convertible preferred stock of New Precipio (“ New Precipio Preferred Stock ”) in an aggregate amount equal to $3 million;

 

WHEREAS , in connection with the Merger, the Lenders have agreed, subject to the terms and conditions set forth in this Amendment, to convert the Amendment Date Amount and all accrued and unpaid interest on such Amendment Date Amount that has accrued from the Amendment Date to the Merger Closing Date (such accrued and unpaid interest together with the Amendment Date Amount, the “ Outstanding Indebtedness ”) into shares of New Precipio Preferred Stock and shares of New Precipio Common Stock (collectively, the “ Conversion Shares ”) in exchange for all amounts owed to Lenders pursuant to the Loan Agreement under the Term Loan and the Revolving Line;

 

WHEREAS , an Events of Default also exist under (i) Section 8.1 of the Loan Agreement as a result of the Borrower’s failure to make the required payments of interest when due in the aggregate amount of $625,256, such interest having accrued since June 6, 2016 to the date hereof (the “ Payment Event of Default ”), and (ii) Section 8.2(a) of the Loan Agreement as a result of the Borrower’s failure to: (A) timely provide Monthly Financial Statements for the months of July 2016, August 2016, September 2016, October 2016, November 2016 and December 2016 in accordance with Section 6.2(a) of the Loan Agreement and (B) timely provide a Compliance Certificate for the months of July 2016, August 2016, September 2016, October 2016, November 2016 and December 2016 in accordance with Section 6.2(b) of the Loan Agreement (collectively, with the Payment Event of Default, the “ Specified Events of Default ”);

 

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WHEREAS , the Borrower has requested that the Lenders terminate the Loan Agreement and the related Loan Documents and release their respective security interests in and liens on the Collateral once the Outstanding Indebtedness has been converted to the Conversion Shares in accordance with this Amendment, and the Lenders have agreed to do so to the extent and on the terms set forth in this Amendment; and

 

WHEREAS , the Borrower has requested that the Agent and the Lenders, and the Agent and the Lenders have agreed to, subject to the extent and on the terms set forth in this Amendment, (i) waive the Specified Events of Default and (ii) amend certain provisions of the Loan Agreement, in each case, effective as of the Amendment Date.

 

NOW, THEREFORE , in consideration of the foregoing premises, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.        Definitions . Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in the Loan Agreement

 

2.        Limited Waiver . The Agent and the Lenders hereby waive (a) the Specified Events of Default and (b) any prospective Event of Default that would exist under Section 8.1 of the Loan Agreement as a result of the Borrower’s failure to make required payments of (1) interest under the Term Loan or the Revolving Line or (2) Obligations, in each case, on any date when due for the period commencing on the date hereof until the earlier of (i) the effective time of the Merger or (ii) the termination of the Merger Agreement in accordance with its terms.

 

3.        Amendments to the Loan Agreement. Effective as of the Amendment Date, the Loan Agreement is amended as follows:

 

(a)        Section 6.2(a) of the Loan Agreement is hereby amended by deleting the existing text of such subsection in its entirety and inserting, in lieu thereof, the following:

 

“6.2(a) Monthly Financial Statements . Commencing on the date of the termination of the Merger Agreement in accordance with its terms, Borrower shall provide to Lender as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Borrower’s and each of its Subsidiary’s operations for such month, certified by a Responsible Officer and in form acceptable to the Lenders (the “ Monthly Financial Statements ”)”;

 

(b)        Section 6.2(b) of the Loan Agreement is hereby amended by deleting the existing text of such subsection in its entirety and inserting, in lieu thereof, the following:

 

“6.2(b) Monthly Compliance Certificate . Commencing on the date of the termination of the Merger Agreement in accordance with its terms, Borrower shall provide to Lender as soon as available, but no later than thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as the Lenders may reasonably request, together with a statement that at the end of such month there were no held checks;”

 

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4.        Conversion. The Outstanding Indebtedness shall be convertible into shares of New Precipio Common Stock and New Precipio Preferred Stock, on the terms and conditions set forth in this Section 3 .

 

(a)       Effective as of the Merger Closing Date, a portion of the Outstanding Indebtedness shall automatically be converted into the right to receive a number of shares of New Precipio Preferred Stock equal to $3 million. The number of shares of New Precipio Preferred Stock issuable upon conversion of the Outstanding Indebtedness pursuant to this Section 4(a) shall be determined in accordance with the applicable conversion rate set forth in the purchase agreement between the Borrower, the Lenders and certain investors to be entered into on or about the Merger Closing Date pursuant to which the Borrower will issue shares of New Precipio Preferred Stock to such investors in an aggregate amount equal to up to $7 million.

 

(b)       Effective as of the Merger Closing Date, the portion of the Outstanding Indebtedness not converted into New Precipio Preferred Stock in accordance with Section 4(a) above shall automatically convert into validly issued, fully paid and non-assessable shares of New Precipio Common Stock at the Conversion Rate (as defined below).

 

(i)       The number of shares of New Precipio Common Stock issuable upon conversion of the Outstanding Indebtedness pursuant to this Section 4(b) shall be determined by dividing (x) the Conversion Amount by (y) the Conversion Price, which shall be subject to adjustment for any stock split, dividend or other distribution, adjustment, recapitalization or similar event (the “ Conversion Rate ”).

 

(1)       “ Conversion Amount ” means the Outstanding Indebtedness less the Outstanding Indebtedness converted into New Precipio Preferred Stock;

 

(2)       “ Conversion Price ” means $0.50.

 

(c)       The Borrower shall not issue any fraction of a share of Conversion Shares upon any conversion. If the issuance would result in the issuance of a fraction of a share of Conversion Shares, the Borrower shall round such fraction of a share of Conversion Shares up to the nearest whole share. The Borrower shall pay any and all transfer, stamp, issuance and similar taxes that may be payable with respect to the issuance and delivery of Conversion Shares upon conversion of the Outstanding Indebtedness. Lenders understand that such Conversion Shares issuable upon conversion of the Outstanding Indebtedness may be required to bear a restrictive legend pursuant to the Securities Act of 1933, as amended (the “ Securities Act ”), in which case such Conversion Shares shall be issuable in certificated form. For clarification purposes, the Borrower shall not be required to deliver unlegended shares hereunder for any reason whatsoever until such time as such shares are sold pursuant to Rule 144 of the Securities Act or pursuant to an effective Registration Statement on Form S-1 or S-3 and, notwithstanding anything to the contrary herein, may issue certificated shares bearing the restrictive legend pursuant to the Securities Act.

 

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(d)       On the Merger Closing Date, the Borrower shall deliver, or cause to be delivered, to the Agent and each Lender a certificate or certificates representing the number of Conversion Shares being acquired upon the conversion of the Outstanding Indebtedness. The person or persons entitled to receive Conversion Shares issuable upon a conversion of the Outstanding Amount shall be treated for all purposes as the record holder or holders of such Conversion Shares on and following the Merger Closing Date.

 

5.        Termination of Loan Documents .

 

(a)       Immediately following the conversion of the Outstanding Indebtedness into Conversion Shares in accordance with Section 3 of this Amendment:

 

(i)       all Loan Documents will terminate in their entirety, and shall be of no further force and effect;

 

(ii)       the security interests and liens of the Lenders in the Collateral will be terminated, released and of no force and effect, the Lenders will release any claim of right, title, or interest whatsoever in the Collateral, and the Lenders shall provide the Borrower or such other Person, as applicable, with such signed UCC Termination Statements as may be reasonably requested to effect the termination of any UCC Financing Statements in the applicable Lender’s favor in respect of such assets; and

 

(iii)       Lenders shall deliver to the Borrower any original signed Secured Promissory Notes marked “Paid in Full and Satisfied”/“Cancelled”;

 

(b)       Each of the parties hereto will use commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable consistent with applicable law to consummate and make effective in the most expeditious manner practicable the transactions contemplated hereby, including without limitation, executing such other documents and delivering such information as may be reasonably requested by the other party in respect of the transactions being consummated hereunder.

 

6.        Conditions Precedent . Except with respect to Section 2 which shall be effective as of the Amendment Date without condition, the effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:

 

(a)       the consummation of the Merger on the Merger Closing Date.

 

(b)       receipt by the Agent of a copy of this Amendment, duly executed and delivered by the Borrower and the Lenders;

 

(c)       receipt by the Agent of any other documents or agreements reasonably requested by the Agent in connection with the transactions contemplated by this Amendment;

 

(d)       the truth and accuracy of the representations and warranties contained in Section 6 of this Amendment; and

 

(e)       the conversion of the Outstanding Indebtedness as contemplated by Section 2 of this Amendment shall have been approved by the stockholders of Borrower in accordance with the rules of the Nasdaq Capital Market.

 

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7.        Representations and Warranties . Each party hereto, as of the Amendment Date and as of the Merger Closing Date, hereby represents and warrants that (i) it has the corporate power and is duly authorized to enter into, deliver and perform this Amendment; and (ii) this Amendment is the legal, valid and binding obligation of such party enforceable against it in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability;

 

8.        Release; Indemnitees .

 

(a)       In further consideration of the execution of this Amendment by the Agent and each Lender, the Borrower, individually and on behalf of its successors (including, without limitation, any trustees acting on behalf of the Borrower and any debtor-in-possession with respect to the Borrower), assigns, subsidiaries and Affiliates, hereby forever releases the Agent, each Lender and their respective successors, assigns, parents, subsidiaries, Affiliates, officers, employees, directors, agents and attorneys (collectively, the “ Lender Releasees ”) from any and all debts, claims, demands, liabilities, responsibilities, disputes, causes, damages, actions and causes of actions (whether at law or in equity) and obligations of every nature whatsoever, whether liquidated or unliquidated, whether known or unknown, matured or unmatured, fixed or contingent (collectively, “ Claims ”) that the Borrower may have against the Lender Releasees which arise from or relate to any actions which the Lender Releasees may have taken or omitted to take in connection with the Loan Agreement or the other Loan Documents prior to the Amendment Date and the Merger Closing Date, including, without limitation, with respect to the Obligations, any Collateral, the Loan Agreement, any other Loan Document and any third parties liable in whole or in part for the Obligations. This provision shall survive and continue in full force and effect whether or not the Borrower shall satisfy all other provisions of the Loan Documents or the Loan Agreement.

 

(b)       In further consideration of the execution of this Amendment by the Borrowers, the Agent and each Lender, individually and on behalf of its successors (including, without limitation, any trustees acting on behalf of the Agent and each Lender), assigns, subsidiaries and Affiliates, hereby forever releases the Borrower and its successors, assigns, parents, subsidiaries, Affiliates, officers, employees, directors, agents and attorneys (collectively, the “ Borrower Releasees ”) from any and all Claims that the Agent and/or each Lender may have against the Borrower Releasees which arise from or relate to any actions which the Borrower Releasees may have taken or omitted to take in connection with the Loan Agreement or the other Loan Documents prior to the Amendment Date and the Merger Closing Date, including, without limitation, with respect to the Obligations, any Collateral, the Loan Agreement, any other Loan Document and any third parties liable in whole or in part for the Obligations. This provision shall survive and continue in full force and effect whether or not the Agent and each Lender shall satisfy all other provisions of the Loan Documents or the Loan Agreement.

 

(c)       The Borrower hereby further agrees to indemnify and hold the Lender Releasees harmless with respect to any and all liabilities, obligations, losses, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever incurred by the Lender Releasees, or any of them, whether direct, indirect or consequential, as a result of or arising from or relating to any proceeding by, or on behalf of any Person, including, without limitation, officers, directors, agents, trustees, creditors, partners or shareholders of the Borrower or any parent, Subsidiary or Affiliate of the Borrower, whether threatened or initiated, asserting any claim for legal or equitable remedy under any statutes, regulation or common law principle arising from or in connection with the negotiation, preparation, execution, delivery, performance, administration and enforcement of this Amendment. The foregoing indemnity shall survive the termination of the Loan Agreement and the other Loan Documents.

 

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9.        Consent to Merger . The Lenders hereby consent to the Merger, the Merger Agreement and the transactions contemplated thereby, including the bridge loan in an amount up to two hundred fifty thousand dollars ($250,000) to be provided to Borrower by Precipio, and agree that neither the Borrower’s execution of the Merger Agreement nor the Borrower’s consummation of the Merger or any of the transactions contemplated thereby shall constitute a breach of Sections 7.3 or 7.4 of the Loan Agreement or any other covenant or agreement under the Loan Agreement.

 

10.        Termination of Amendment . In the event the Merger is not consummated, whether by termination of the Merger Agreement by the parties thereto or otherwise, this Amendment, including all provisions herein other than Section 2 , Section 3 , Section 9 , Section 10 , Section 11 and Section 12 , shall terminate and be of no further force and effect.

 

11.        Effect; Relationship of Parties . Except as expressly modified hereby, the Loan Agreement and each other Loan Document from the Amendment Date until the Merger Closing Date shall be and remain in full force and effect as originally written, and shall constitute the legal, valid, binding and enforceable obligations of the Borrower to the Agent and Lenders. The relationship of the Agent and Lenders, on the one hand, and the Borrower, on the other hand, has been and shall continue to be, at all times, that of creditor and debtor and not as joint venturers or partners. Nothing contained in this Amendment, any instrument, document or agreement delivered in connection herewith or in the Loan Agreement or any of the other Loan Documents shall be deemed or construed to create a fiduciary relationship between or among the parties.

 

12.        Expenses . The Borrower shall pay the Agent all of its actual, documented and reasonable costs and expenses in connection with the preparation, negotiation, execution and enforcement of this Amendment in accordance with the Loan Agreement (including, without limitation, all actual, documented and reasonable fees, expenses and disbursements of counsel to the Agent).

 

13.        Miscellaneous . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. This Amendment shall be binding upon and inure to the benefit of the successors and permitted assigns of the parties hereto. California law governs this Amendment, without regard to principles of conflicts of law. This Amendment embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written negotiations, agreements and understandings of the parties with respect to the subject matter hereof. Time is of the essence of this Amendment.

 

 

[ remainder of page intentionally blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the Amendment Date.

 

  BORROWER
       
  TRANSGENOMIC, INC.
       
       
  By: /s/ Paul Kinnon
    Name: Paul Kinnon
    Title: President & CEO
       
  AGENT:
       
  THIRD SECURITY SENIOR STAFF 2008 LLC
  As Agent for Lenders
       
       
  By: /s/ Randal J. Kirk
    Name: Randal J. Kirk
    Title:

Manager, Third Security, LLC, which is

the Manager of Third Security Senior

Staff 2008 LLC

       
  LENDERS:
       
  THIRD SECURITY SENIOR STAFF 2008 LLC
       
       
  By: /s/ Randal J. Kirk
    Randal J. Kirk
    Manager, Third Security, LLC, which is the
    Manager of Third Security Senior Staff 2008 LLC
       
  THIRD SECURITY STAFF 2010 LLC
       
       
  By: /s/ Randal J. Kirk
    Randal J. Kirk
    Manager, Third Security, LLC, which is the
    Manager of Third Security Staff 2010 LLC
       
  THIRD SECURITY INCENTIVE 2010 LLC
       
       
  By: /s/ Randal J. Kirk
    Randal J. Kirk
    Manager, Third Security, LLC, which is the
    Manager of Third Security Incentive 2010 LLC

 

 

 

[Signature Page to Tenth Amendment]

 

 

Exhibit 10.2

 

PROMISSORY NOTE

 

 

Commitment Amount:     $250,000 February 2, 2017

 

FOR VALUE RECEIVED, Transgenomic, Inc., a Delaware corporation, having its principal office at 12325 Emmet Street, Omaha, NE 68164 (the “ Borrower ”) hereby unconditionally promises to pay to the order of Precipio Diagnostics, LLC, a Delaware limited liability company, having its principal place of business at 4 Science Park, New Haven, CT 06511 (the “ Lender ”), upon the earlier of (x) the Closing (as defined in the Merger Agreement) and (y) May 3, 2017 or such later date as requested by Borrower and agreed to in writing by the Lender in its sole discretion (such date, the “ Maturity Date ”), the principal sum of $250,000 (the “ Commitment Amount ”) or such lesser amount as may be outstanding under this Promissory Note (the “ Note ”), together with accrued unpaid interest as set forth herein.

 

Borrower, Lender and New Haven Labs, Inc., a Delaware corporation and wholly owned subsidiary of Borrower (“ Merger Sub ”) have entered into an Agreement and Plan of Merger, dated as of October 12, 2016, as amended by that First Amendment, dated as of February 2, 2017 (as further amended, the “ Merger Agreement ”), pursuant to which Merger Sub will merge with and into the Lender with Lender continuing as the surviving company (the “ Merger ”).

 

1.        Revolving Credit Facility .

 

1.1       Upon execution hereof, the Borrower shall be deemed to have requested, and the Lender agrees to make, so long as an Event of Default has not occurred prior to such date, an Advance on each date on Schedule I for at least the minimum amount set forth opposite such date on Schedule I (the “ Agreed Advances ”). In addition, subject to the terms hereof, the Lender may, in its sole discretion, agree to make additional advances (each an “ Additional Advance ,” and, together with the Agreed Advances, the “ Advances ”) to the Borrower upon receipt of an Advance Request in accordance with Section 1.2 , in an aggregate amount that, when combined with the Agreed Advances, shall not exceed the Commitment Amount. The Borrower acknowledges and agrees that (i) the Lender has no obligation of any kind to make any Additional Advance, (ii) the Lender may elect at any time and without cause to make an Additional Advance in a lesser amount than requested in an Advance Request or to not make any Additional Advances entirely and (iii) the Lender may elect, in its discretion, to pay directly the expenses, payables or indebtedness owed to any third parties identified in an Advance Request and any such amounts so paid shall be treated as an Advance for all purposes under this Note.

 

1.2       To request additional Advances, the Borrower shall provide written notice to the Lender, together with supporting documentation, including any related invoices or schedules, detailing the expenses in which the Advance will be used to satisfy, in each case in form and substance satisfactory to the Lender (the “ Advance Request ”), not later than 5:00p.m., eastern standard time, seven (7) calendar days prior to the date of the proposed borrowing.

 

1.3       The Lender shall maintain a record of all Advances and payments made hereunder and such records shall, absent manifest error, be binding on the Borrower for all purposes.

 

1.4       Principal amounts repaid or prepaid hereunder, subject to the terms hereof, may be reborrowed.

 

 

 

 

2.        Interest; Net Payments .

 

2.1       All Advances outstanding hereunder shall accrue interest daily at a rate per annum equal to the Interest Rate and be calculated based on a 360-day year of twelve 30-day months, from the date thereof until paid in full, upon any net balance outstanding, which interest will be payable by the Borrower in arrears on the Maturity Date (and, in any event, until the principal is paid pursuant to the terms hereof); provided , however , if the Borrower does not pay the interest due and owing by the Maturity Date, such amount(s) shall automatically be compounded. Principal and interest shall be repaid in full on the Maturity Date or upon such earlier date upon which demand therefor is made by the Lender; provided , however , five days advance notice of any such demand shall be given to the Borrower.

 

2.2       Any amounts outstanding on the earliest of (i) the occurrence of an Event of Default and the passage of any applicable cure period or (ii) ten days after the Maturity Date, to the extent permitted by applicable law, shall accrue interest at the Interest Rate plus two percent (2.0%) per annum, compounded daily (the “ Default Rate ”).

 

2.3       All payments hereunder shall be made to the account specified by the Lender to the Borrower in immediately available funds in United States Dollars without setoff, defense or counterclaim or withholding on account of taxes, levies, duties or any other deduction whatsoever; provided , however , the Lender may reduce the amount to be paid at any time hereunder by any amount owed by the Lender to the Borrower, as reflected on the books and records of the Lender. Whenever any payment to be made hereunder shall be otherwise due on a day which is not a business day, such payment shall be made on the next succeeding business day, unless such date falls into the next calendar month (in which case payment is to be made on the preceding date) and such extension of time shall in such case be included in the computation of interest.

 

2.4       “ Interest Rate ” shall mean an annual rate equal to ten percent (10.0%).

 

3.        Representations and Warranties; Covenants .

 

3.1       As an inducement for the Lender to make Advances hereunder, the Borrower hereby represents, warrants and covenants that on the closing date and at the time of each Advance that:

 

(a)       it is a Delaware corporation, duly organized, validly existing, and in good standing;

 

(b)       it has the authority and has taken all necessary action in order to execute and deliver this Note and to perform the terms and provisions set forth herein;

 

(c)       the Borrower's obligations under this Note are legal, valid, binding, and enforceable against the Borrower in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency, or similar laws affecting the enforcement of creditor’s rights in general;

 

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(d)       except for the consent of Third Security Senior Staff 2008 LLC, acting as agent on behalf of the lenders under the Borrower’s secured loan agreement, no consent, approval or authorization of, or registration, declaration or filing with, any governmental authority or other person or entity is required as a condition to or in connection with the due and valid execution, delivery and performance by the Borrower of this Note;

 

(e)       the Borrower shall provide the Lender with (i) a daily update of the cash receipts and cash balance of the Borrower, including a reconciliation of the cash receipts and disbursements and (ii) such other financial information regarding the Borrower, its affiliates, and their respective business operations as the Lender may from time to time request;

 

(f)       without the prior written consent of the Lender, the Borrower shall not amend its governing documents in any manner that would be adverse to the Lender;

 

(g)       without the prior written consent of the Lender, the Borrower shall not directly or indirectly incur any indebtedness for borrowed money (or similar liability); and

 

(h)       without the prior written consent of the Lender, the Borrower shall not, directly or indirectly, encumber, pledge, hypothecate, or charge any of its assets or properties or sell all or substantially all of its assets or properties.

 

4.        Use of Proceeds . The proceeds of each Advance shall be used in accordance with the Advance Request with respect to such Advance; provided , that (i) the Agreed Advances may only be used for payroll obligations of the Borrower and any premiums due and payable on existing insurance policies of the Borrower, and (ii) to the extent an Advance Request does not otherwise specify the use of the full amount of an Advance, such remaining amounts of an Advance shall be used solely for operating expenses of the Borrower. The Borrower hereby covenants and agrees that it will not, directly or indirectly, without the prior written consent of the Lender use the proceeds of any Advance, or lend, contribute or otherwise make available such proceeds to any subsidiary, affiliate, joint venture partner or other person or entity for any purpose other than as described in the first sentence of this Section 4.

 

5.        Events of Default .

 

5.1       In the event of any of the following (each, an “ Event of Default ”), then the obligations hereunder shall immediately and automatically become due and payable in full without further demand or notice, and the Lender shall be entitled to exercise all of its rights and remedies under this Note, the other related documents and as otherwise provided under applicable law:

 

(a)       the Borrower fails to pay any principal amount when due hereunder, whether at maturity, upon demand, or otherwise;

 

(b)       the Borrower fails to pay any interest or other amount when due hereunder;

 

(c)       the Borrower shall have made a material misrepresentation herein, in the Merger Agreement or in any other document or agreement delivered to the Lender in connection with this Note;

 

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(d)       the Borrower uses the proceeds of any Advance for any purpose other than in accordance with Section 4 above.

 

(e)       the Borrower fails to perform any agreement or covenant contained herein or under any other document or agreement delivered to the Lender in connection with this Note;

 

(f)       (i) the Borrower voluntarily commences a case or proceeding seeking liquidation, reorganization, or other relief with respect to the Borrower or any of its debts under any bankruptcy, insolvency, or other similar law or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official of it or any substantial part of its property (hereinafter, a “ Proceeding ”), (ii) an involuntary Proceeding is commenced against the Borrower, and such involuntary Proceeding shall remain undismissed and unstayed for a period of 30 days, (iii) an order for relief shall be entered against the Borrower with respect to the disposition of any of its respective property under the bankruptcy laws as now or hereafter in effect, (iv) the Borrower makes an assignment for the benefit of its creditors or admits in writing its inability to pay its debts, or (v) the Borrower shall generally not, or be unable to, or shall admit in writing its inability to, pay its debts as its debts become due;

 

(g) one or more judgments or decrees shall be entered by a court or courts against the Borrower or any of its properties;

 

(h)       the Borrower sell, transfers, or assigns the Note or any of the loans or Advances thereunder without the prior written consent of Lender; or

 

(i)       the Borrower terminates or dissolves its business or takes any actions designed or intended to impair or limit in any material respect the ability of Borrower to conduct its business in the ordinary course consistent with past practices.

 

6.        Lender's Expenses .

 

The Borrower agrees to pay or reimburse the Lender for all its reasonable costs and expenses, including, without limitation, reasonable fees and disbursements of counsel to the Lender, incurred in connection with the enforcement or preservation of any rights under this Note, including, without limitation, costs and expenses incurred in connection with the collection of amounts due hereunder following a default or an Event of Default. The agreements in this Section 6 shall survive repayment of the Note.

 

7.        Cumulative Remedies; No Waiver .

 

To the extent permitted by law, every remedy given hereunder to the Lender shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every remedy provided by statute, law, equity or otherwise.

 

8.        Waiver of Presentment .

 

The Borrower hereby waives presentment for payment, demand, notice of nonpayment, notice of protest, notice of intent to accelerate, notice of acceleration and protest of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, and agrees that its liability shall not be in any manner affected by any indulgence, extension of time, renewal, waiver or modification granted or consented to by the Lender and consents to any and all such extensions of time, renewals, waivers and modifications as may be granted by the Lender with respect to the payment or other provisions of this Note without notice to the Borrower and without affecting its liability hereunder.

 

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9.        Compliance with Usury Laws .

 

It is the intent of the Lender and the Borrower to comply at all times with applicable usury laws. If at any time such laws would render usurious any amounts called for under this Note, then it is the express intention of the Borrower and the Lender that such excess amount be immediately credited on the principal balance of this Note (or, if this Note has been fully paid, refunded by the Lender to the Borrower, and the Borrower shall accept such refund), and the provisions hereof be immediately deemed to be reformed and the amounts thereafter collectible hereunder reduced to comply with the then applicable laws, without the necessity of the execution of any further documents, but so as to permit the recovery of the fullest amount otherwise called for hereunder.

 

10.        Governing Law .

 

(a)       This Note shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Delaware.

 

(b)        THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS NOTE AND FOR ANY COUNTERCLAIM THEREIN .

 

11.        Amendment; Entire Agreement .

 

(a)       This Note may not be changed, waived, modified or discharged orally but only by an agreement in writing, signed by the party against whom enforcement of any such change, waiver, modification or discharge is sought. This Note may not be assigned by the Borrower or the Lender. This Note shall be binding on the Borrower and shall inure to the benefit of the Lender.

 

(b)       This Note represents the agreement of the Borrower and the Lender with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Lender relative to the subject matter hereof not expressly set forth or referred to herein or under any other document or agreement delivered to the Lender in connection with this Note.

 

12.        Severability .

 

If any term or provision of this Note or the application thereof to any person or circumstance shall to any extent be invalid, illegal or unenforceable, the remainder of this Note or the application of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected thereby.

 

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IN WITNESS WHEREOF , the parties hereto have caused this Note to be executed by their duly authorized officers as of the date and year first above written.

 

 

  LENDER:  
       
  PRECIPIO DIAGNOSTICS, LLC
       
       
  By: /s/ Ilan Danieli  
  Name: Ilan Danieli  
  Title: Chief Executive Officer  
       
       
  BORROWER:  
       
  TRANSGENOMIC, INC.
       
       
  By: /s/ Paul Kinnon  
  Name: Paul Kinnon  
  Title: President  

 

 

 

[Signature Page to Promissory Note]

 

 

 

Schedule I

 

Agreed Advances

 

Advance Date   Amount
February 8, 2017   $20,000
February 15, 2017   $30,000
February 22, 2017   $60,000
March 1, 2017   $30,000