Exhibit 10.10

 

Engagement Agreement

 

TRANSGENOMIC Inc. (together with its subsidiaries and affiliates the “COMPANY”)

 

The parties to this Engagement Agreement (the “Agreement”) include Goldsmith,
Agio, Helms Securities, Inc. (“GAHS”) on the one hand, and the COMPANY on the
other hand. This is to confirm the COMPANY’s retention of GAHS for a minimum
period of four (4) months from the date hereof (the “Minimum Term”), as its
exclusive financial advisor to assist it with a merger, sale, or any similar
transaction related to the COMPANY’s Synthetic Nucleic Acid Business Unit,
(including both the Boulder, Colorado site and the Glasgow, Scotland site) (the
“SNABU”). After four (4) months, GAHS will proceed on such basis as is
reasonably agreed upon between the parties or on a holdover basis until either
GAHS or the COMPANY provides the other with written 30-day notice of termination
of this Agreement.

 

1. GAHS’s Performance. Throughout the course of its engagement, GAHS and the
COMPANY will follow all Process Guidelines set forth in Exhibit A.

 

2. Types of Transactions Covered. Transactions covered under this Agreement
(individually, a “Transaction” and collectively, “Transactions”) include any
sale, exchange or other disposition of all or a material (more than 10 percent)
portion of the SNABU, whether accomplished by a sale of assets or stock by or
through the COMPANY and/or the Shareholders (whether effected in one Transaction
or a series of Transactions), and shall include without limitation any merger,
tender or exchange offer, joint venture, equity investment, recapitalization, or
any other Transaction, the effect of which is to change the financial structure,
control or ownership of the SNABU. If a Transaction is completed during the term
of this Agreement, GAHS shall be entitled to its Accomplishment Fee provided
herein.

 

3. Equitable Protection Period. If, during the term of this Agreement, or within
a period of nine (9) months following termination of this Agreement, the COMPANY
or its Shareholders enter into an agreement in principle to consummate a
Transaction with a GAHS Prospect as defined below, GAHS’s Accomplishment Fee
shall be due and payable in full upon closing of such Transaction pursuant to
Paragraph 5 below. For purposes of this Agreement, “GAHS Prospect” includes any
party or parties (i) that execute a Confidentiality Agreement pertaining to the
sales process contemplated hereby; (ii) that GAHS actually contacts, as
evidenced by GAHS’s correspondence records, and the party, at that time, is not
interested in pursuing a Transaction as is documented by the sending or receipt
of written documentation that evidences said non-interest; (iii) that GAHS
proposes in good faith to contact but, at the COMPANY’s request, does not
approach; (iv) with which the COMPANY or its Shareholders have any discussions
relative to a possible Transaction during the term of this Agreement or the
one-year period prior to the date of this Agreement; or (v) who participate in a
Transaction wherein the services of GAHS are utilized by the COMPANY or its
Shareholders. GAHS Prospects include all affiliates of a “GAHS Prospect” as
defined above. The COMPANY agrees to provide GAHS with the names and key
contacts of all parties who have contacted the COMPANY or its Shareholders or
whom the COMPANY or its Shareholders have contacted relative to a possible
Transaction in the one-year term prior to the date of this Agreement.

 

4. Accomplishment Fee and Total Consideration. The amount payable by COMPANY to
GAH at closing of a Transaction (the “Accomplishment Fee”) shall be calculated
as provided below (subject to a minimum fee of $500,000)(the “Minimum Fee”):

 

  • 2.5 percent of the first $20.0 million of Total Consideration; plus

 

  • 5.0 percent of the next $15.0 million of Total Consideration; plus

 

  • 10.0 percent of Total Consideration in excess of $35.0 million.

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In addition, if a purchase agreement relating to a Transaction is entered into
within four months from the date of this Agreement, then GAH will be entitled to
additional Accomplishment Fee equal to the greater of: (x) $100,000; or (y) 50
basis points (0.005) of Total Consideration.

 

GAHS’s Accomplishment Fee shall be based upon the total consideration (“Total
Consideration”) paid or payable to the COMPANY, its shareholders, employees or
other security holders in connection with, or in anticipation of, the
Transaction, including amounts placed in escrow, and shall include without
limitation:

 

  (a) Cash paid and securities transferred to the COMPANY and/or holders of its
securities at closing, including the cash value of any outstanding stock options
or warrants, whether vested or not, that are “rolled over” or “cashed out” as
part of this Transaction;

 

  (b) In the case of a sale of stock by the COMPANY’s shareholders, all
liabilities of the COMPANY, other than trade payables, operating leases and
operating expenses accrued in the ordinary course of business. In the case of a
sale of assets, all liabilities of the COMPANY, other than trade payables,
intercompany debt and accrued operating expenses, which are assumed by the
buyer;

 

  (c) The net present value (applying a discount rate equal to the then
prevailing prime rate as quoted in The Wall Street Journal) of scheduled
payments provided for in any leases by the purchaser of assets owned and
retained by the COMPANY, its shareholders, or any affiliates thereof;

 

  (d) The principal amount of deferred installments of the purchase price
including promissory notes;

 

  (e) Amounts payable under consulting agreements, above-market employment
contracts, above non-compete agreements or similar arrangements;

 

  (f) Future payments that are contingent on the future earnings or operations
of the SNABU (or in the case of an asset sale, the underlying assets), with the
value of such payments included in Total Consideration based on the present
value of the reasonably expected amount of such contingent payments based on
COMPANY projections or in the absence of projections, as determined in good
faith by the COMPANY and GAHS, utilizing a 12 percent per annum discount rate;

 

  (g) The value of any retained or acquired interest in the SNABU or its
successor, or the right to acquire such interest.

 

5. Payment of Accomplishment Fee. Except as otherwise provided below, the
Accomplishment Fee shall be paid to GAHS or its assigns in cash via wire
transfer at the time of closing a Transaction. In the event that all or a
portion of the Total Consideration includes securities or other property (other
than installment notes), the portion of GAHS’s Accomplishment Fee attributable
thereto shall be payable at closing in cash, based on the fair market value of
such non-cash items as determined by mutual agreement of the parties. In the
event the parties are unable to agree on the fair market value, GAHS shall have
the option to receive payment in like kind or to cause an independent appraiser
acceptable to the COMPANY to determine fair market value; the expense of the
appraisal shall be shared equally by the parties.

 

6. Consulting Fees and Expenses. The COMPANY shall pay to GAHS a cash consulting
fee of $60,000, payable as follows: $15,000 monthly in advance for the term of
this Agreement. Any amounts actually paid to GAHS as consulting fees will be
offset against any Accomplishment Fee. The COMPANY also shall reimburse GAHS
monthly in arrears for all reasonable out-of-pocket expenses incurred on behalf
of the COMPANY. GAHS will secure the COMPANY’s verbal or written authorization
before incurring any expenses in excess of $500 and shall use COMPANY authorized
travel agents when booking travel unless a written waiver is obtained in each
instance. GAHS shall provide detailed monthly itemized summaries of expenses for
which reimbursement is requested by GAHS. The COMPANY agrees that any unpaid
payment (or portion thereof) of any fee, expense, consulting fee, or other
amount payable to GAHS shall bear interest payable at the highest rate of
interest permissible by law, but not to exceed 12 percent per annum, from the
date that such payment is due hereunder to the date that said payment is paid in
full.

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7. Indemnification and Other Matters. The COMPANY and GAHS agree to the
provisions of the attached Exhibit B, which relates to indemnification and other
matters and which is in its entirety incorporated by reference herein. The
COMPANY will cause the definitive merger or purchase agreement relating to a
Transaction to include an “entire agreement,” “integration,” or similar clause,
which in substance provides that such agreement contains the entire agreement
between the parties with respect to the Transaction and that it supersedes all
prior agreements, understandings, promises, undertakings, representations, and
warranties, whether written or oral, made by the parties to one another and/or
by GAHS to the buyer relating to the Transaction.

 

8. Reliance. The COMPANY will furnish GAHS with such information regarding the
business and financial condition of the SNABU as is reasonably requested, all of
which will be, to the best of COMPANY’s and information and belief, accurate and
complete in all material respects at the time furnished. The COMPANY will
promptly notify GAHS if it learns of any material misstatement in, or material
omission from, any information previously delivered to GAHS. On an ongoing
basis, the COMPANY will inform GAHS of any material developments or matters that
occur or come to the attention of the COMPANY, its Shareholders, directors,
officers, employees or affiliates. The COMPANY, to the best of its information
and belief, represents that the information contained in the Confidential
Memorandum described in Exhibit A (the “Confidential Memorandum”) will not
contain any untrue statement of material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
in which they were made, not misleading. In performing its services hereunder,
GAHS shall be entitled to rely without investigation upon all information that
is available from public sources as well as all other information supplied to it
by or on behalf of the COMPANY or its advisors and shall not in any respect be
responsible for the accuracy or completeness of, or have any obligation to
verify, the same or to conduct any appraisal of assets.

 

9. Arbitration. The COMPANY and GAHS agree that any dispute between them in any
way relating to this Agreement (including, but not limited to, its formation,
interpretation or termination or any alleged breach hereof) shall be determined
and settled by arbitration in Wilmington, Delaware, in accordance with the rules
of the American Arbitration Association. All costs associated with any such
disputes (including both parties’ legal fees) shall be allocated between the
parties by the arbitrators. The arbitrators shall have the power and authority
to, and to the fullest extent practicable shall, abbreviate arbitration
discovery in a manner that is fair to all parties in order to expedite the
conclusion of the arbitration proceeding. All decisions and awards of the
arbitrators shall be final and binding on both parties and may be enforced by
any court with jurisdiction.

 

10. Fairness Opinion. Subject to the mutual good faith written agreement of the
parties and for a fee of $125,000 , GAHS shall undertake a study to enable it to
render its opinion with respect to the fairness from a financial point of view
of the consideration proposed to be paid to the COMPANY or its shareholders in
connection with a Transaction.

 

11. Miscellaneous. All questions arising hereunder shall be determined according
to the laws of the State of Delaware, except for any conflicts of laws
provisions. The parties acknowledge and agree that their respective rights and
obligations are contractual in nature, that GAHS shall act as an independent
contractor hereunder with duties owed solely to the COMPANY, and each party
disclaims any intention to impose fiduciary or other non-contractual obligations
on the other by virtue of the engagement contemplated by this Agreement. Any
advice or opinion provided by GAHS shall not be disclosed to any third party or
disclosed or referred to publicly, except with the prior written consent of
GAHS. Any term or provision of this Agreement that is invalid or unenforceable
in any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity

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or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. This Agreement incorporates the entire understanding
of the parties regarding the subject matter hereof, and supersedes all previous
agreements or understandings regarding the same, whether written or oral. The
provisions of this Paragraph and Paragraphs 3, 4, 5, 6, 7, 8, 9, 10 and 11 will
survive the termination of this Agreement.

 

Read and agreed to this 18th day of March, 2004 by:

 

TRANSGENOMIC, INC. :   GOLDSMITH, AGIO, HELMS SECURITIES, INC.:

 

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EXHIBIT A

to

Engagement Agreement

 

GOLDSMITH, AGIO, HELMS & LYNNER, LLC

and

Transgenomic, Inc.

 

PROCESS GUIDELINES

 

In the course of GAHS’s engagement hereunder, GAHS will exercise its
commercially reasonable efforts to:

 

(a) Maintain strict confidentiality of all financial and other proprietary
information, data, and materials relating to the SNABU except as provided below.

 

(b) Familiarize itself with the business, operations, physical assets, financial
condition and prospects of the SNABU.

 

(c) Develop a list of potential buyers of the SNABU whom GAHS believes in good
faith to be financially qualified and potentially interested in participating in
a Transaction.

 

(d) Not share with any GAHS Prospect the identity of the SNABU or any
confidential information relating to the COMPANY unless the GAHS Prospect has
executed a Confidentiality Agreement in a form pre-approved by the COMPANY.

 

(e) Contact GAHS Prospects on the COMPANY’s behalf and, as appropriate, arrange
for and orchestrate meetings between GAHS Prospects and the SNABU.

 

(f) Assist the COMPANY in preparation of a Confidential Memorandum describing
the SNABU, and other analyses and data as may be reasonably requested by GAHS
Prospects. The Confidential Memorandum may not be reproduced or distributed to
parties other than the COMPANY’s Shareholders, officers, directors, employees
and representatives without GAHS’s prior written consent.

 

(g) Work in the capacity outlined above with the COMPANY’s legal counsel,
accountants, and other advisors as reasonably requested and directed by the
COMPANY.

 

(h) Present to the COMPANY all proposals from GAHS Prospects, and make
recommendations as to the COMPANY’s appropriate negotiating strategy and course
of conduct.

 

(i) Assist in all negotiations and in all document review as reasonably
requested and directed by the COMPANY.

 

(j) If the COMPANY requests that GAHS provide additional services not otherwise
set forth in this Agreement, the COMPANY and GAHS will enter into an additional
agreement that will set forth the nature and scope of the services, appropriate
compensation and other customary matters.

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EXHIBIT B

to

Engagement Agreement

 

GOLDSMITH, AGIO, HELMS & LYNNER, LLC

and

Transgenomic, Inc.

 

INDEMNIFICATION and OTHER MATTERS

 

1.) The COMPANY agrees to indemnify and hold GAH (which term, for purposes of
this paragraph, includes it, its affiliates and its and their respective
directors, officers, employees, shareholders, controlling persons, partners, and
members) harmless against and from all losses, claims, damages or liabilities,
and all actions, claims, proceedings and investigations in respect thereof
(collectively, “Losses”), arising out of or in connection with this engagement
or the performance by GAH of services on behalf of the company, and to timely
reimburse GAH for all reasonable legal and other out-of-pocket expenses as
incurred by GAH in connection with investigating, preparing to defend or
defending any such Losses (including costs of GAH personnel required to testify
or otherwise assist in any litigation calculated at customary per diem or hourly
rates), whether or not GAH is named as a party thereto; provided, however, that
the COMPANY shall not be liable to the extent such Losses are determined by
arbitration as herein provided (not subject to judicial review or appeal) to
have resulted primarily and directly from GAH’s gross negligence or willful
misconduct. If such indemnification and reimbursement are insufficient or
unavailable pursuant to, or as a result of, the foregoing sentence or otherwise,
the COMPANY and GAH agree to make contributions to any Losses paid or payable in
such proportion as appropriately reflects the relative economic benefits
received by, and fault of, the COMPANY and its Shareholders, on the one hand,
and GAH, on the other hand, as well as other equitable considerations; provided,
however that the COMPANY agrees to make contributions to any Losses paid or
payable such that GAH will not be liable for more than the Accomplishment Fee
received by GAH pursuant to this Agreement. The COMPANY further agrees that GAH
shall have no liability to the COMPANY in excess of the Accomplishment Fee
received by GAH pursuant to this Agreement. The foregoing rights to
indemnification and contribution shall not limit any other rights that GAH may
have at law or otherwise. The COMPANY further agrees that without the written
consent of GAH, the COMPANY will not settle or compromise any pending or
threatened action, claim, proceeding, or investigation with respect to which
indemnification or contribution may be sought hereunder unless such settlement
or compromise includes an unconditional release of GAH from all liability
resulting from such action, claim, proceeding, or investigation.

 

2.) Not later than thirty (30) days after receipt by GAHS of notice of the
commencement of any action, suit or proceeding, GAHS will, if a claim in respect
thereof is to be made against the COMPANY under this Agreement, notify the
COMPANY of the commencement thereof; but the omission so to notify the COMPANY
will not relieve it from any liability which it may have to GAHS otherwise than
under this Agreement. With respect to any such action, suit or proceeding as to
which GAHS notifies the COMPANY of the commencement thereof:

 

(a) the COMPANY will be entitled to participate therein at its own expense;

 

(b) except as otherwise provided in this section, and so long as the COMPANY has
irrevocably agreed that it will indemnify GAHS for all losses with respect to
such action, suit or proceeding, the COMPANY may, at its option and jointly with
any other indemnifying party similarly notified and

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electing to assume such defense, assume the defense of any claims asserted
pursuant to the indemnities granted GAHS under this Agreement, with COMPANY’S
chosen counsel reasonably satisfactory to GAHS. After notice from the COMPANY to
GAHS of its election to assume the defense thereof, the COMPANY will not be
liable to GAHS under this Agreement for any legal or other expenses subsequently
incurred by GAHS in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided in this section. GAHS shall have
the right to employ separate counsel in such action, suit or proceeding but the
fees and expenses of such counsel incurred after notice from the COMPANY of its
assumption of the defense thereof shall be at the expense of GAHS unless (i) the
employment of counsel by GAHS has been authorized by the COMPANY, which
authorization will not be unreasonably withheld, (ii) GAHS shall have reasonably
concluded as supported by its detailed written notification the COMPANY, that
there is a fundamental material conflict of interest between the COMPANY and
GAHS in the conduct of the defense of such action or (iii) the COMPANY shall not
in fact have employed counsel to assume the defense of such action, in each of
which cases the reasonable fees and expenses of GAHS’s separate counsel shall be
at the expense of the COMPANY. The COMPANY shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of the COMPANY
or as to which GAHS shall have made the conclusion provided for in clause (ii)
above; and

 

(c) the COMPANY shall not be liable to indemnify GAHS under this Agreement for
any amounts paid in settlement of any action or claim effected without its
written consent, which shall not be unreasonably withheld.

 

3. Not withstanding the foregoing, no indemnity shall be paid by the COMPANY on
account of any claim against GAHS solely for an accounting of profits made from
the purchase or sale by GAHS of securities of the COMPANY pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any federal, state or local
statutory law.

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1ST AMENDMENT

 

TO THE ENGAGEMENT AGREEMENT

 

BETWEEN

 

GOLDSMITH, AGIO, HELMS SECURITIES, INC.

 

AND

 

TRANSGENOMIC, INC.

 

This is the first Amendment, effective August 12, 2004 (hereinafter Effective
Date), is made by and between Goldsmith, Agio, Helms Securities, Inc.,
corporation having its principal office at (hereinafter GAH), and Transgenomic,
Inc., a corporation duly organized under the laws of Delaware and having its
principal office at 12325 Emmet Street, Omaha, NE 68164 (hereinafter COMPANY).

 

RECITALS

 

WHEREAS, GAH and COMPANY have previously entered into an Engagement Agreement
executed March 19, 2004 (hereinafter Agreement); and,

 

WHEREAS, GAH and Transgenomic now wish to amend the term and fees of the
Agreement.

 

NOW THEREFORE, the parties agree as follows:

 

The term of the Agreement shall be extended to December 31, 2004.

 

Section 4. Accomplishment Fee and Total Consideration shall be deleted in its
entirety and the following shall be substituted:

 

4. Accomplishment Fee and Total Consideration. The amount payable by COMPANY at
the closing of a Transaction shall be as follows:

 

  a) $ 300,000 at the closing of a Transaction for the custom contract cGMP
therapeutic oligonucleotides facility located at 5555 Airport Boulevard, Unit
101, Lake Centre Business Park, Boulder, CO and related business operations.

 

  b) $ 300,000 at the closing of a Transaction for the phosphoramidite
manufacturing facility located at the Inchinnan Business Park, Paisley, Scotland
and related operations.

 

GAHS’s fees for each of the above-referenced Transactions shall be based upon
the total consideration, limited solely to the consideration received for the
Transaction for each Business Unit, paid or payable to the COMPANY, its
shareholders, employees or other security holders in connection with, or in
anticipation of, each Transaction including amounts placed in escrow, and shall
include without limitation:

 

  (a) Cash paid and securities transferred to the COMPANY and/or holders of its
securities at closing, including the cash value of any outstanding stock options
or warrants, whether vested or not, that are “rolled over” or “cashed out” as
part of each Transaction;

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  (b) In the case of a sale of stock by the COMPANY’s shareholders, all
liabilities of the COMPANY, other than trade payables, operating leases and
operating expenses accrued in the ordinary course of business. In the case of a
sale of assets, all liabilities of the COMPANY, other than trade payables,
intercompany debt and accrued operating expenses, which are assumed by the
buyer;

 

  (c) The net present value (applying a discount rate equal to the then
prevailing prime rate as quoted in The Wall Street Journal) of scheduled
payments provided for in any leases by the purchaser of assets owned and
retained by the COMPANY, its shareholders, or any affiliates thereof;

 

  (d) The principal amount of deferred installments of the purchase price
including promissory notes;

 

  (e) Amounts payable under consulting agreements, above-market employment
contracts, above non-compete agreements or similar arrangements;

 

  (f) Future payments that are contingent on the future earnings or operations
of each Transaction (or in the case of an asset sale, the underlying assets),
with the value of such payments included in Total Consideration based on the
present value of the reasonably expected amount of such contingent payments
based on COMPANY projections or in the absence of projections, as determined in
good faith by the COMPANY and GAHS, utilizing a 12 percent per annum discount
rate;

 

  (g) The value of any retained or acquired interest in each Business Unit or
its successor, or the right to acquire such interest.”

 

In all other material terms and conditions the Agreement shall remain unaltered
and continue.

 

This Amendment embodies the entire understanding between the parties regarding
the subject matter thereof.

 

IN WITNESS WHEREOF, the parties have duly executed this Amendment in the day and
year set forth below:

 

GOLDSMITH AGIO HELMS, INC.    TRANSGENOMIC, INC. BY:  

 

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NAME:  

 

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TITLE:  

 

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   TITLE:  

 

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