Exhibit 10.1




 


LIMITED WAIVER AND NINTH AMENDMENT TO


LOAN AND SECURITY AGREEMENT


(TERM LOAN AND REVOLVING LOAN)


 


This LIMITED WAIVER
AND NINTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”), dated as of June 6, 2016 (the “Effective
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 Loan), 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, the
Borrower has informed the Agent that it has ceased operations at its patient testing laboratory in New Haven, Connecticut (the
“PT Business”);


 


WHEREAS, the
Borrower has informed the Agent that the operating losses experienced by the Borrower and the resulting cash used to support operating
activities has resulted in a reduction in the Borrower’s liquidity below the required minimum liquidity levels set forth
in Section 6.9(a) of the Loan Agreement and, accordingly, an Event of Default has occurred and continues to exist under Section
8.2(a) of the Loan Agreement as a result (the “Liquidity Event of Default”);


 


WHEREAS, the
Borrower has informed the Agent that the decision to cease operations in its PT Business has resulted in a reduction in the Borrower’s
revenues below the required minimum revenue levels set forth in Section 6.9(b) of the Loan Agreement for the six month period ended
December 31, 2015 and, accordingly, an Event of Default has occurred and continues to exist under Section 8.2(a) of the Loan Agreement
as a result (the “Revenue Event of Default”);


 


WHEREAS, 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: (A) interest when due in the aggregate amount of $412,069.03; (B) the anniversary fee due to the Agent, for the benefit
of the Lenders, under Section 2.9(b) in the amount of $20,000 when due; and (C) Lender expenses in the amount of $36,119.25 when
due (collectively, the delinquent amounts set forth in clauses (A), (B) and (C) of this clause (i), the “Overdue Amounts”),
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 December 2015, January 2016, February 2016, March 2016 and April 2016 in accordance with Section 6.2(a)
of the Loan Agreement and (B) timely provide a Compliance Certificate for the months of December 2015, January 2016, February 2016,
March 2016 and April 2016 in accordance with Section 6.2(b) of the Loan Agreement (collectively, with the Liquidity Event of Default
and the Revenue Event of Default, the “Specified Events of Default”);


 






     


     


    

 


WHEREAS, on
February 25, 2016, the Agent, on behalf of itself and the Lenders, delivered a Reservation of Rights Letter to the Borrower and
provided, at the request of the Borrower, an Advance to the Borrower in the amount of $500,000 (the “Overadvance”);
and


 


WHEREAS, the
Borrower has requested that the Agent and the Lenders, and the Agent and the Lenders have agreed to, subject to the terms and conditions
set forth in this Amendment, (i) waive the Specified Events of Default, (ii) capitalize the Overdue Amounts and add such Overdue
Amounts to the outstanding principal amount of the Revolving Line such that, after giving effect to this Amendment, the outstanding
principal amount of Advances under the Revolving Line is equal to $3,243,188.28 and (iii) amend certain provisions of the Loan
Agreement, in each case, effective as of the Effective 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.
Subject to the terms, and the timely satisfaction of each of the conditions precedent in Section 4 of this Amendment, the
Agent and the Lenders hereby waive the Specified Events of Default.


 


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


 


(a)Capitalization
of Overdue Amounts. The Overdue Amounts are hereby deemed to be Advances that are capitalized and treated as additional principal
obligations under the Revolving Line subject to the terms of the Loan Agreement and shall accrue interest at the same rates (including
the Default Rate) as are applicable to the Advances under the Loan Agreement and shall form part of the Obligations under the Loan
Agreement and the other Loan Documents and shall be payable in full, in Cash, on the Revolving Line Maturity Date. The capitalization
of the Overdue Amounts on the Ninth Amendment Effective Date satisfies the Borrower’s obligations with respect to such Overdue
Amounts on such date, but for the avoidance of doubt, does not relieve the Borrower’s obligations to repay the full amount
of the Advances in full, in Cash, on the Revolving Line Maturity Date, which amount of Advances has been increased by the aggregate
amount of the Overdue Amounts on and as of the Ninth Amendment Effective Date.


 


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


 


“(c)Mandatory
Prepayments. If the Term Loan is accelerated following the occurrence of an Event of Default, Borrower shall immediately pay
to each Lender in accordance with its respective Pro Rata Share, an amount equal to the sum of: (i) all outstanding principal of
the Term Loan and all other Obligations, and all accrued and unpaid interest thereon, plus (ii) the Final Payment, plus
(iii) the Prepayment Fee, plus (iv) all other sums that shall have become due and payable hereunder, including Lender Expenses.”


 






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


 


“(a)Availability.
Subject to the terms and conditions of this Agreement and to deduction of Reserves, the Lenders agree, severally and not jointly,
to make Advances not exceeding the Availability Amount to the Borrower according to each Lender’s Pro Rata Share of the “Revolving
Loan Commitment” as set forth on Schedule 1 hereto. Amounts borrowed under the Revolving Line may be repaid and, prior
to the Revolving Line Maturity Date, reborrowed, subject to the applicable terms and conditions precedent herein. Notwithstanding
the foregoing, in connection with each prepayment or repayment of the principal amount of any Advances under the Revolving Line,
the amount of the Revolving Line (and the obligations of the Lenders to fund Advances thereunder) will be permanently reduced,
on the date of such prepayment or repayment, on a dollar for dollar basis in the amount of such prepayment or repayment.”


 


(d)Section
6.9 of the Loan Agreement is hereby deleted in its entirety.


 


(e)Section
7.1 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:


 


“7.1Dispositions.
Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, together with, for the avoidance of doubt, any exclusive
or non-exclusive license of all or any portion of the property or assets of the Borrower or any of its Subsidiaries, “Transfer”),
or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory
in the ordinary course of business; (b) of worn-out or obsolete Equipment that is, in the reasonable judgment of Borrower,
no longer economically practicable to maintain or useful in the ordinary course of business of Borrower; (c) consisting of Permitted
Liens and Permitted Investments; (d) consisting of the sale or issuance of any stock of Borrower permitted under Section 7.2
of this Agreement; or (e) consisting of Borrower’s use or transfer of money or Cash Equivalents in the ordinary course
of its business for the payment of ordinary course business expenses in a manner that is not prohibited by the terms of this Agreement
or the other Loan Documents.”


 


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


 


“Borrower
fails or neglects to perform any obligation in Sections 3.5, 6.2, 6.5, 6.7, 6.8, 6.10(c), 6.12, 6.13 or violates any covenant in
Section 7; or”


 


(g)Section
14.1 of the Loan Agreement is amended by deleting the existing text of the definitions of “Borrowing Base” and “Revolving
Line” in their entirety and inserting, in lieu thereof, the following:


 






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“Borrowing
Base” is the product of the Advance Rate multiplied by the Eligible Accounts; provided, however, that Agent
has the right to adjust the foregoing in its good faith business judgment to mitigate the impact of events, conditions, contingencies,
or risks which may adversely affect the Collateral or its value; and provided further, that, the proceeds for any sale of the Borrower's
intellectual property shall not be included for purposes of calculating the Borrowing Base; provided, further, that
until June 30, 2017, the Borrowing Base shall be equal to the Revolving Line.


 


“Revolving
Line” is an aggregate principal amount not to exceed $3,243,188.28 outstanding at any time, subject to permanent reduction
from time to time in accordance with Section 2.6(a).


 


“Revolving
Line Maturity Date” is November 1, 2017.


 


(h)Section
14.1 of the Loan Agreement is further amended by deleting in their entirety the existing text of the definitions of:


 


“Minimum
Liquidity Ratio”;


 


“ICE
COLD Excess Proceeds”;


 


“ICE
COLD Sale”; and


 


“ICE
COLD Trigger Event”


 


(i)Section
14.1 of the Loan Agreement is further amended by inserting the following new definitions in appropriate alphabetical order:


 


“Ninth
Amendment Effective Date” means June 3, 2016.


 


“Overdue
Amounts” means an aggregate amount equal to $468,188.28, which amount was capitalized and added to the outstanding balance
of the outstanding Advances under the Revolving Line as of the Ninth Amendment Effective Date.


 


4.Conditions
Precedent. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:


 


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


 


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


 


(c)the
truth and accuracy of the representations and warranties contained in Section 6 of this Amendment.


 






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5.Reaffirmation.
The Borrower hereby reaffirms each of the agreements, covenants and undertakings set forth in the Loan Agreement and each and every
other Loan Document as of the Effective Date as if the Borrower was making said agreements, covenants and undertakings as of the
Effective Date.


 


6.Representations,
Warranties, Covenants and Acknowledgments. To induce the Agent and Lenders to enter into this Amendment, the Borrower hereby:


 


(a)represents
and warrants that (i) as of the Effective Date, all of the representations and warranties made or deemed to be made under the Loan
Documents are true and correct in all material respects (other than any representation or warranty that is qualified by materiality
or Material Adverse Effect, in which case such representation or warranty is true and correct in all respects) on and as of the
Effective Date to the same extent as though made on and as of the Effective Date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such representations and warranties were true and correct in all
material respects (other than any representation or warranty that is qualified by materiality or Material Adverse Effect, in which
case such representation or warranty was true and correct in all respects) on and as of such earlier date; (ii) as of the Effective
Date, after giving effect to the terms of this Amendment, there exists no Default or Event of Default under the Loan Agreement
or any of the other Loan Documents; (iii) the Borrower has the corporate power and is duly authorized to enter into, deliver and
perform this Amendment; and (iv) this Amendment is the legal, valid and binding obligation of the Borrower enforceable against
the Borrower 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;


 


(b)acknowledges
and agrees that (i) this Amendment does not and shall not create (nor shall the Borrower or any of its Subsidiaries rely upon the
existence of or claim or assert that there exists) any obligation of the Agent or any Lender to consider or agree to any further
consent, waiver or amendment with respect to any Loan Document and, in the event that the Agent or any Lender subsequently agrees
to consider any further consent, waiver or amendment with respect to any Loan Document, neither this Amendment nor any other conduct
of the Agent or any Lender shall be of any force or effect on the Agent’s or such Lender’s consideration or decision
with respect thereto, and neither the Agent nor any Lender shall have any further obligation whatsoever to consider or agree to
any further consent, waiver or amendment with respect to any Loan Document; and (ii) except as expressly set forth in this Amendment,
the Agent and each Lender reserves all of their respective rights pursuant to the Loan Agreement and all other Loan Documents;


 


(c)further
acknowledges and agrees that the Agent’s and Lenders’ agreement to waive and amend the specific matters addressed in
this Amendment, do not and shall not create (nor shall the Borrower or any of its Subsidiaries rely upon the existence of or claim
or assert that there exists) any obligation of the Agent or any Lender to consider or agree to any further waivers, consents or
amendments and, in the event that the Agent or any Lender subsequently agrees to consider any further waivers, consents or amendments,
neither this Amendment nor any other conduct of the Agent or any Lender shall be of any force or effect on the Agent’s or
any Lender’s consideration or decision with respect to any such requested consent;


 






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(d)further
acknowledges and agrees that no right of offset, defense, counterclaim, claim, cause of action or objection in favor of the Borrower
against any Lender exists arising out of or with respect to (i) this Amendment, the Loan Agreement or any other Loan Document,
or (ii) any other documents now or heretofore evidencing, securing or in any way relating to the foregoing; and


 


(e)further
acknowledges and agrees that this Amendment shall be deemed a Loan Document for all purposes under the Loan Agreement and the other
Loan Documents.


 


7.Effect of
Non-Compliance. To the extent any representation or warranty made herein shall be untrue in any material respect, such occurrence
shall be deemed an Event of Default pursuant to the terms of the Loan Agreement and the other Loan Documents.


 


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
“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 Releasees which arise from or relate to any actions which the Releasees may have taken or omitted to take
in connection with the Loan Agreement or the other Loan Documents prior to the Effective 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 this Amendment, the Loan Documents or the Loan Agreement, including payment in full of all Obligations.


 


(b)The
Borrower hereby further agrees to indemnify and hold the 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
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 payment in full of the Obligations and the termination of this Amendment, the Loan Agreement and the other Loan Documents.


 






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9.Effect; Relationship
of Parties. Except as expressly modified hereby, the Loan Agreement and each other Loan Document 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.


 


10.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).


 


11.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.


 


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IN WITNESS WHEREOF,
the parties hereto have caused this Amendment to be executed as of the Effective 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 Ninth Amendment]