AGREEMENT REGARDING PREFERRED STOCK
 
This Agreement Regarding Preferred Stock is made and entered into as of November
8, 2011, by and among Third Security Senior Staff 2008 LLC, a Virginia limited
liability company, Third Security Staff 2010 LLC, a Virginia limited liability
company, and Third Security Incentive 2010 LLC, a Virginia limited liability
company (collectively the “Holders” and each individually a “Holder”), and
Transgenomic, Inc., a Delaware corporation (the “Company”).
 
WITNESSETH:

WHEREAS, the Company and the Holders previously entered into that certain Series
A Convertible Preferred Stock Purchase Agreement dated as of December 29, 2010
(the “Purchase Agreement”) pursuant to which the Holders purchased 2,586,205
shares of Series A Convertible Preferred Stock of the Company (the “Series A
Preferred”) and received warrants (“Warrants”) to purchase an aggregate of
1,293,102 shares of Series A Preferred;

WHEREAS, in connection with entering into the Purchase Agreement, the Holders
and the Company entered into a Registration Rights Agreement, dated December 29,
2010 (the “Registration Rights Agreement”), pursuant to which the Company agreed
to provide certain registration rights to the Holders with respect to the
securities issuable upon conversion of the Series A Preferred, including any
Series A Preferred issued in connection with the exercise of any Warrants;

WHEREAS, the Holders presently own all of the outstanding Series A Preferred and
all of the Warrants;

WHEREAS, the Board of Directors of the Company has adopted Resolutions setting
forth (i) a proposed amendment of the Certificate of Incorporation of the
Company, attached hereto as Exhibit A, changing the Certificate of Designation
of the Series A Preferred by deleting in its entirety: (a) Section 4(e)(v)
thereof captioned: Adjustment of Conversion Rate after a “Diluting Issue” and
(b) Section 5 thereof captioned: Optional Redemption, declaring the advisability
of the amendment, and directing that the proposed Amendment be considered at the
next annual meeting of the stockholders of the Company (the “Certificate
Amendment”); and (ii) a proposed Amendment to the Registration Rights Agreement,
attached hereto as Exhibit B, to amend the definition of “Registrable
Securities” to include the shares of Common Stock issued to the Holders in
connection with the transaction contemplated hereby (the “Rights Amendment,”
and, together with the Certificate Amendment, the “Amendments”);

WHEREAS, the parties to this Agreement desire to agree upon certain matters
relating to the Amendments and the terms of the Series A Preferred;
 
 
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NOW, THEREFORE, in consideration of the premises and the mutual covenants set
forth in this Agreement, the parties to this Agreement agree as follows:

1.  Definitions.  As used in this Agreement, unless the context otherwise
requires:

 
(a)
“Agreement” means this Agreement Regarding Preferred Stock as the same may be
amended, supplemented or modified in accordance with the terms hereof.

 
(b)
“Amendments” has the meaning assigned to such term in the recitals to this
Agreement.

 
(c)
“Annual Meeting” means the next annual meeting of the stockholders of the
Company after the date of this Agreement at which the proposed Certificate
Amendment is voted upon.

 
(d)
“Certificate Amendment” has the meaning assigned to such term in the recitals to
this Agreement.

 
(e)
“Common Stock” means the Company’s Common Stock.

 
(f)
“Company” has the meaning assigned to such term in the recitals to this
Agreement.

 
(g)
“Holder” and “Holders” have the meanings assigned to such terms in the recitals
to this Agreement.

 
(h)
“Person” means any individual, corporation, limited liability company,
partnership, trust, incorporated or unincorporated association, joint venture,
joint stock company, government (or agency or political subdivision thereof) or
other entity of any kind.

 
(i)
“Purchase Agreement” has the meaning assigned to such term in the recitals to
this Agreement.

 
(j)
“Registration Rights Agreement” has the meaning assigned to such term in the
recitals to this Agreement.

 
(k)
“Rights Amendment” has the meaning assigned to such term in the recitals to this
Agreement.

 
(l)
“Series A Preferred" means the Company’s Series A Convertible Preferred Stock.

 
 
(m)
“Transferee” means any Person who becomes an owner, by issuance, assignment,
sale or otherwise, of (i) Series A Preferred originally held by a Holder or (ii)
any Warrants or Warrant Shares, other than a Holder.

 
 
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(n)
“Warrant Shares” means the shares of Series A Preferred issuable upon exercise
of the Warrants.

 
(o)
“Warrants” has the meaning assigned to such term in the recitals to this
Agreement.

2.             Issuance of Common Stock to Holders.  Promptly upon the full
execution of this Agreement, and in consideration for the waiver of certain
rights by the Holders pursuant to paragraph 4 below, Company shall issue to each
Holder, in proportion to their respective ownership of the Series A Preferred,
the number of shares of Common Stock determined by dividing $300,000 by the last
trading price for the Common Stock as of the date of this Agreement.  In the
event such calculation results in a fractional share to be issued to any Holder,
such fractional share shall be rounded up to the next whole share.

3.           Approval of Amendments and Voting Agreement.  The Company and each
Holder consents to and approves the Amendments, subject to any requisite
stockholder approval.  The Company agrees to recommend to its stockholders the
approval of the Certificate Amendment and to submit such proposal to its
stockholders at its next Annual Meeting of Stockholders, which the Company
agrees it will hold no later than May 31, 2012.  Each Holder agrees to vote the
shares of Series A Preferred, including the Warrant Shares, if any, and Common
Stock owned of record by such Holder in favor of the Certificate Amendment at
the Annual Meeting. In addition, each Holder agrees not to transfer, prior to
the Annual Meeting, any of the Series A Preferred, Warrant Shares or Warrants
owned by such Holder unless the Transferee agrees to and assumes the obligations
of such Holder under this Agreement as they relate to the Series A Preferred,
Warrant Shares and Warrants held by or transferred or issued to such Transferee
or becomes a Holder as provided in Section 11 of this Agreement.

4.           Waiver of Holders’ Rights.   Without limiting the generality of the
other obligations of the Holders under this Agreement, each Holder hereby waives
and agrees not to assert, and agrees to cause its Transferees to waive and not
to assert, any rights which such Holder or Transferee would have pursuant to
Section 4(e)(v) or Section 5 of the Certificate of Designation of the Series A
Preferred.

5.           Representations and Warranties of Holders. Each Holder hereby
represents and warrants to the Company as follows:

 
(a)
Organization.  Holder is duly organized, validly existing and in good standing
under the laws applicable to its formation or organization.

 
(b)
Capacity, Authorization and Enforceability.  Holder has full power and authority
to enter into this Agreement and to perform all its obligations under this
Agreement.  This Agreement has been duly authorized, executed and delivered by
Holder and constitutes its legal, valid and binding obligations enforceable
against it in accordance with its terms.

 
 
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(c)
No Violation.  The execution, delivery and performance of this Agreement will
not violate or cause a default under any of the documents applicable to the
formation, organization or governance of Holder, or any law, rule or regulation
of any governmental authority.

 
(d)
Experience.  Holder has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of acquiring the
Common Stock contemplated hereby.  Holder is an "accredited investor" as such
term is defined in Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended (the “Securities Act”).

 
(e)
Information Provided Respecting the Company.  Holder is a stockholder of the
Company and as such has been supplied with information and materials concerning
the Company and its operations, structuring and financing.  The Company has
provided Holder with the opportunity to discuss with and ask questions of the
Company's representatives concerning its financial and business affairs.

 
(f)
Investment.  Holder is acquiring the Common Stock in the ordinary course of its
business, for investment for its own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution thereof.
Holder understands that the Common Stock to be issued to Holder pursuant to this
Agreement has not been, and will not be, registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of Holder's
representations as expressed herein.

 
(g)
Rule 144.  Holder acknowledges that the Common Stock must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from such registration is available.  Holder is aware of the provisions of Rule
144 promulgated under the Securities Act which permit limited resale of
securities acquired in a private placement subject to the satisfaction of
certain conditions.

 
(h)
Ownership.   As of the date hereof Holder owns all of the Series A Preferred and
Warrants it acquired pursuant to the Purchase Agreement, it has not exercised
its Warrants to receive any Warrant Shares, and it has not transferred or agreed
to transfer any of its rights or interests in the Series A Preferred, Warrant
Shares or Warrants.

 
6.           Representations and Warranties of the Company.   The Company hereby
represents and warrants to the Holders as follows:

 
(a)
Organization.  The Company is duly organized, validly existing and in good
standing under the laws applicable to its formation or organization.

 
 
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(b)
Capacity, Authorization and Enforceability.  The Company has full corporate
power and authority to enter into this Agreement and to perform all its
obligations under this Agreement.  This Agreement has been duly authorized,
executed and delivered by the Company and constitutes its legal, valid and
binding obligations enforceable against it in accordance with its terms.

 
(c)
No Violation.  The execution, delivery and performance of this Agreement will
not violate or cause a default under any of the documents applicable to the
formation, organization or governance of the Company, or any law, rule or
regulation of any governmental authority.

7.             Notices.  All notices required or permitted to be given under
this Agreement shall be in writing, addressed as hereinafter indicated, and
shall be deemed to have been duly given when received if personally delivered or
on the next business day if sent by an overnight express delivery service or on
the third business day after mailing if sent by United States certified mail,
postage prepaid.  Whenever notice is to be given to a Transferee, the notice
shall be addressed to such Transferee's address as it appears in the records of
the Company.

If to the Company:   Transgenomic, Inc.
12325 Emmet Street
Omaha, Nebraska 68164
Attention: Craig J. Tuttle

If to Holders:             c/o Third Security, LLC
1881 Grove Avenue
Radford, Virginia 24141
Attention: Tad Fisher

A party may change its address for notice by giving notice of such change as
provided in this Paragraph 7.

8.              Binding Effect and Benefits.  The terms of this Agreement shall
be binding upon and inure to the benefit of the parties to this Agreement and
their respective Transferees, successors, and assigns.

9.             Term of Agreement.  This Agreement shall become effective on the
date of this Agreement and shall remain in full force and effect until the first
to occur of any of the following events:

(a)           The agreement in writing by all parties to this Agreement that
this Agreement shall terminate, which termination shall occur at the time set
forth in such written agreement; or
 
 
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(b)           The Certificate Amendment has been duly approved by the
stockholders of the Company at the Annual Meeting in compliance with the
Delaware General Corporation Law.

10.             Entire Agreement and Amendments.  This Agreement contains the
entire understanding and agreement among the parties with respect to the subject
matter of this Agreement and supersedes any prior agreements among the parties
pertaining to the matters covered by this Agreement.  There are no
representations, warranties, promises, covenants, or understandings with respect
to the subject matter of this Agreement other than those expressly set forth in
this document.  No change, modification, or amendment of this Agreement shall be
valid unless in writing and signed by all of the parties to this Agreement,
except as provided in Paragraph 11 in connection with the addition of a Holder.

11.             Additional Holders.  Any Person who is not now a Holder but
hereafter becomes a Transferee and, with the consent of the Company, becomes a
party to this Agreement shall be included in the terms "Holders" and "Holder" so
long as such Person holds the Series A Preferred, Warrants or Warrant Shares.
Such additional Holder shall agree in writing to be bound by the terms and
conditions of this Agreement, and such written agreement must be accepted by the
Company in writing.

12.             Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law; but if any provision of this Agreement is held to be invalid,
illegal, or unenforceable in any respect under any applicable law or rule in any
jurisdiction, then such invalidity, illegality, or unenforceability shall not
affect any other provision or any other jurisdiction, but this Agreement shall
be reformed, construed, and enforced in such jurisdiction as if such invalid,
illegal, or unenforceable provision had never been contained in this Agreement.

13.             Headings.  The headings of the several paragraphs of this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

14.             Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.

15.             Governing Law.  This Agreement shall be governed by the laws of
the State of Delaware applicable to contracts made and to be performed entirely
in such state.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

[Signature page follows]
 
 
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  Third Security Senior Staff 2008 LLC,  
 
a Virginia limited liability company  
 
             
 
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
         
 
Third Security Staff 2010 LLC,  
 
a Virginia limited liability company  
 
             
 
By:  
/s/ Randal J. Kirk
 
 
 
Name:  Randal J. Kirk
 
 
 
Title:   Manager, Third Security, LLC,
     
which is the Manager of
     
Third Security Staff 2010 LLC
         
 
Third Security Incentive 2010 LLC,  
 
a Virginia limited liability company  
 
             
 
By: 
/s/ Randal J. Kirk
 
 
 
Name:  Randal J. Kirk
 
 
 
Title:   Manager, Third Security, LLC,
     
which is the Manager of
     
Third Security Incentive 2010 LLC
            Transgenomic, Inc.,     a Delaware corporation          
 
By:  
/s/ Craig J. Tuttle
 
 
 
Name:  Craig J. Tuttle
 
 
 
Title:    President
 

 
 
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