Document:

EXHIBIT 10.4

 

 

 

 

TRANSGENOMIC,
INC. 2006 EQUITY INCENTIVE PLAN 

 

STOCK
APPRECIATION RIGHTS AGREEMENT 

 

THIS STOCK APPRECIATION
RIGHTS AGREEMENT (this “Agreement”) is effective October 4, 2013 (the “Grant Date”)
by and between Transgenomic, Inc., a Delaware corporation (the “Company”) and Mark Colonnese (“Grantee”).

 

WHEREAS, the Company
sponsors and maintains the Transgenomic, Inc. 2006 Equity Incentive Plan, a copy of which is attached hereto as Exhibit
A (the “Plan”); and

 

WHEREAS, Grantee,
as an Eligible Person, has been selected to receive a grant of Stock Appreciation Rights under the Plan.

 

NOW, THEREFORE, the
Company and Grantee hereby agree as follows:

 

Section 1. General.
This Agreement and the Stock Appreciation Rights granted hereunder are subject in all respects to the terms and conditions of the
Plan. Capitalized terms used in this Agreement without further definition shall have the same meanings given to such terms in the
Plan. The award of Stock Appreciation Rights of the Company described herein (this “Award”) is conditioned
on Grantee’s execution of the Award within ten (10) days after the Grant Date.

 

Section 2. Grant
of Stock Appreciation Rights. The Company hereby awards to Grantee, as of the Grant Date, Stock Appreciation Rights with the
following terms:

 

	Grant Date	October 4, 2013
	Vesting Commencement Date	October 4, 2013
	Number of Shares measuring the value of the Award	660,000 Shares (the “SAR Shares”)
	Exercise Price per SAR Share	$[_____._____]
    per Share (the “Exercise Price”)

 

    	- 1 -

    	 

    

 

	Vesting Schedule	
        224,400 of the SAR Shares
        shall vest on the one-year anniversary of the Vesting Commencement Date, with 18,150 of the SAR Shares vesting per month over the
        remaining 24 months, in each case provided that Grantee remains continuously employed with (or is providing continued service
        to) the Company through the applicable vesting date, inclusive; and provided further that if the Company terminates Grantee’s
        employment without Just Cause (as defined under that certain Employment Agreement, dated September 12, 2012, by and between the
        Company and Grantee, as amended (as may be amended or restated from time to time)) prior to the one-year anniversary of the Vesting
        Commencement Date, the SAR Shares shall be deemed to have vested on a monthly basis at a rate of 1/36th per month from the Vesting
        Commencement Date.

         

        Notwithstanding the foregoing,
        Grantee’s SAR Shares will become 100% vested upon the earlier to occur of: (i) Grantee’s Termination of Service as
        a result of Grantee’s Disability, death or Retirement; provided that Grantee has continuously served as a director,
        employee or Advisor of the Company for the two-year period immediately preceding Grantee’s Termination of Service; and (ii)
        as of immediately prior to, and contingent upon, a Qualified Change in Control; provided that Grantee remains continuously
        employed with (or is providing continued service to) the Company through immediately prior to the effectiveness of such Qualified
        Change in Control.

         

        For purposes of this
        Award, a “Qualified Change in Control” means a Change in Control whereby (i) the acquiring party (or
        parties) in such Change in Control offers cash, in whole or in part, to some or all of the Company’s stockholders as consideration
        for the shares of capital stock of the Company held thereby, and (ii) the Fair Market Value as of the last trading day immediately
        preceding the Change in Control or the aggregate per share price payable by the acquiring party in such Change in Control for the
        Common Stock is greater than the Exercise Price.

         

        Any fraction of a share
        that becomes exercisable on any date will be rounded down to the next lowest whole number and any fraction of a share shall be
        added to the portion of the SAR Shares becoming exercisable on the following vesting date.

         

	Expiration Date	October 4, 2023, subject to Section 6.

    	- 2 -

    	 

    

 

Section 3. Adjustments
to Number of SAR Shares and Exercise Price. No shares of Common Stock will be issued and no cash will be paid to Grantee before
the Award vests in accordance with the “Vesting Schedule” noted in Section 2 and is exercised. The amount Grantee receives
upon exercise will equal the product of:

 

		(a)	the number of SAR Shares that Grantee designates for exercise, and

 

		(b)	the excess of 100% of the Fair Market Value of one share of Common Stock on the date of exercise
over the Exercise Price stated in Section 2.

 

Section 4.
 Form of Payments to Grantee. Except with respect to an Automatic Exercise (as defined below), the Company will make any
payment to Grantee under the Award, as determined by the Board or the Committee following the exercise, in the form of cash, net
of any applicable tax withholding obligations or shares of Common Stock, with cash paid in lieu of fractional shares of Common
Stock, based on the Fair Market Value on the date of exercise. Any shares of Common Stock that Grantee receives will be free from
vesting restrictions (but subject to such legends as the Company determines to be appropriate). Notwithstanding the foregoing,
the Company will not issue certificates representing shares of Common Stock issuable upon the exercise of the Award to Grantee
unless Grantee has made arrangements satisfactory to the Board or the Committee to satisfy any applicable tax withholding obligations.
Grantee may satisfy minimum withholding requirements through the surrender of shares of Common Stock that are both subject to the
Award and that have a Fair Market Value equal to the minimum statutory tax withholding associated with the shares of Common Stock
giving rise to the taxable income. Grantee or the Successor of the Participant has no right or any privilege of a stockholder of
the Company in respect of any shares issuable on the exercise of the award unless and until such shares have been recorded on the
Company’s official stockholder records as having been issued and transferred.

 

Section 5. Automatic
Exercise. Notwithstanding anything herein to the contrary, this Award shall be deemed automatically exercised in full, without
any further action on the part of Grantee or the Company, effective as of immediately prior to, and contingent upon, a Qualified
Change in Control; provided that Grantee has remained continuously employed with (or has provided continued service to)
the Company from the Grant Date through immediately prior to the effectiveness of such Qualified Change in Control (an “Automatic
Exercise”). In the event of such Automatic Exercise, the Company will make a payment to Grantee under the Award in
the form of cash, net of any applicable tax withholding obligations.

 

Section 6. Failure
of Vesting Restrictions. By executing this Agreement, Grantee acknowledges and agrees that the Award will terminate
prior to the Expiration Date as provided below:

 

(a)Termination
of Service. Upon Grantee’s Termination of Service by the election of the Company for any reason other than Grantee’s
death, Retirement or Disability (other than for Cause), Grantee may exercise the Award at any time within three months from Grantee’s
Termination of Service, but only to the extent that, as of the date of Grantee’s Termination of Service, Grantee’s
right to exercise the Award has vested and Grantee has not previously exercised the Award. Any portion of the Award unexercised
following such period shall be forfeited as of the expiration date of such period. Notwithstanding the foregoing, if Grantee suffers
a Termination of Service for Cause or the Termination of Service occurs by the election of Grantee (other than an election because
of death, Retirement or Disability), Grantee’s unexercised Award as of the date of his or her Termination of Service shall
be cancelled and forfeited as of such date.

 

    	- 3 -

    	 

    

(b)Death,
Retirement or Disability. Upon Grantee’s Termination of Service by reason of Grantee’s death, Retirement or
Disability, or if Grantee dies with exercise rights under Section 6(a), Grantee (or his or her beneficiary in the case of death)
may exercise the Award at any time within 12 months from Grantee’s Termination of Service, but only to the extent that, at
the date of Termination of Service, Grantee’s right to exercise the Award has vested and Grantee has not previously exercised
the Award. Any portion of the Award unexercised following such period shall be forfeited as of the expiration date of such period.

 

Section 7. Exercise.
Subject to the provisions hereof, including Section 2 and Section 5, the Award may be exercised in whole or in part at
any time, within the period permitted for the exercise thereof, with respect to whole shares only. To exercise the Award, other
than pursuant to an Automatic Exercise, Grantee or the Successor of the Participant must deliver a Notice of Exercise in the form
attached hereto as Exhibit B (the
“Notice of Exercise”) to the Company at its principal office together with such additional documents
as the Company may then require. The Company will determine the amount of any applicable taxes which require withholding as a result
of the exercise, and Grantee must provide for such taxes as required by Section 9 and the Plan.

 

Section 8. Nontransferability
of Award. Except as the Company and Grantee may agree in accordance with Section 6.3 of the Plan,
the Award may not be sold, pledged, assigned, hypothecated, transferred or disposed of by Grantee in any manner other than
by will or the laws of descent and distribution. No transfer of any portion of the Award by will or the laws of descent and distribution
shall be effective to bind the Company unless the Company is furnished with written notice thereof and appropriate documentation
evidencing the rights of any Successor(s) of the Participant as the Committee deems necessary or desirable.

 

Section 9. Withholding
Obligations.

 

(a)At
the time Grantee exercises the Award, or this Award is otherwise deemed exercised pursuant to an Automatic Exercise, in either
case, in whole or in part, or at any time thereafter as requested by the Company, Grantee hereby authorizes withholding from payroll
and any other amounts payable to Grantee, and otherwise agree to make adequate provision for, any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if any, which arise in connection
with the exercise of the Award. By exercising the Award, Grantee agrees that, as a condition to any exercise of the Award, the
Company may require Grantee to enter into an arrangement providing for the payment by Grantee to the Company of any tax withholding
obligation of the Company arising by reason of the exercise of the Award.

    	- 4 -

    	 

    

 

(b)Upon
Grantee’s request and subject to approval by the Company, in its sole discretion, and compliance with any applicable legal
conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to Grantee upon
the exercise of the Award a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of
the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be
necessary to avoid variable award accounting). If the date of determination of any tax withholding obligation is deferred to a
date later than the date of exercise of the Award, share withholding pursuant to the preceding sentence shall not be permitted
unless Grantee makes a proper and timely election under Section 83(b) of the Code, covering the aggregate number of shares
of Common Stock acquired upon such exercise with respect to which such determination is otherwise deferred, to accelerate the determination
of such tax withholding obligation to the date of exercise of the Award. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock determined as of the date of exercise of the Award
that are otherwise issuable to Grantee upon such exercise. Any adverse consequences to Grantee arising in connection with such
share withholding procedure shall be Grantee’s sole responsibility.

 

(c)Grantee
may not exercise the Award unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly,
Grantee may not be able to exercise the Award when desired even though the Award is vested, and the Company shall have no obligation
to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow provided for herein
unless such obligations are satisfied.

 

Section 10. Miscellaneous
Provisions.

 

(a)No
Retention Rights. Nothing in this Agreement shall confer upon Grantee any right to continue in the employment or service
of the Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company
or of Grantee, which rights are hereby expressly reserved by each, to terminate his or her employment or service at any time and
for any reason, with or without cause.

 

(b)Antidilution.
In the event that any change in the outstanding shares of Common Stock of the Company (including an exchange of Common Stock for
stock or other securities of another corporation) occurs by reason of a Common Stock dividend or split, recapitalization, merger,
consolidation, combination, exchange of shares or other similar corporate changes, other than for consideration received by the
Company therefore, the number of shares of stock granted hereunder or the Exercise Price may be appropriately adjusted by the Committee
in its sole and absolute discretion, whose determination shall be conclusive, final and binding; provided, however
that fractional shares shall be rounded to the nearest whole share. In the event of any other change in the Common Stock, the Committee
shall in its sole discretion determine whether such change equitably requires a change in the number or type of shares of stock
granted hereunder or the Exercise Price and any adjustment made by the Committee shall be conclusive, final and binding.

 

    	- 5 -

    	 

    

(c)Determination
of Value. The Company makes no representation as to the value of the Award or whether Grantee will be able to realize any
profit from it.

 

(d)Plan.
The provisions of the Plan are incorporated by reference into these terms and conditions. To the extent any provision of this Agreement
conflicts with the Plan, the terms of the Plan shall govern. Grantee acknowledges receipt of a copy of the Plan and represents
that he has reviewed the Plan and is familiar with the terms and provisions thereof. Grantee hereby accepts this Agreement and
the terms of the Plan.

 

(e)Notices.
Any notice required by the terms of this Agreement shall be given in writing and shall be deemed effective upon personal delivery,
upon deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid or upon deposit
with a reputable overnight courier. Notice shall be addressed to the Company at its principal executive office and to Grantee at
the address most recently provided by Grantee to the Company.

 

(f)Blackout
Periods. In connection with certain corporate events, the Company reserves the right to designate periods during which
Grantee may not exercise the Award; provided that no such blackout period shall limit or delay an Automatic Exercise, as
provided under Section 5.

 

(g)Entire
Agreement; Amendments. This Agreement constitutes the entire contract between the parties hereto with regard to the subject
matter hereof. This Agreement supersedes any other agreements, representations or understandings (whether oral or written and whether
express or implied) which relate to the subject matter hereof. The Committee shall have authority, subject to the express provisions
of the Plan, to interpret this Agreement and the Plan, to establish, amend and rescind any rules and regulations relating to the
Plan, to modify the terms and provisions of this Agreement, and to make all other determinations in the judgment of the Committee
necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in this Agreement in the manner and to the extent it shall deem necessary or desirable to carry
it into effect. All action by the Committee under the provisions of this paragraph shall be final, conclusive and binding for all
purposes.

 

(h)Change
in Control. Unless provided otherwise in connection with the transaction resulting in the Change in Control, immediately
preceding the occurrence of a Change in Control of the Company, any unvested portion of the Award shall immediately vest in full
and to the extent not expired or previously exercised become immediately exercisable.

 

(i)Choice
of Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State, without giving
effect to the choice of law provisions thereof.

 

    	- 6 -

    	 

    

(j)Successors.
This Agreement is personal to Grantee and, except as otherwise provided above, shall not be assignable by Grantee otherwise than
by will or the laws of descent and distribution, without the written consent of the Company. This Agreement shall inure to the
benefit of and be enforceable by Grantee’s legal representatives. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors. It shall not be assignable by the Company except in connection with the sale or other disposition
of all or substantially all the assets or business of the Company.

 

(k)Severability.
If any provision of this Agreement for any reason should be found by any court of competent jurisdiction to be invalid, illegal
or unenforceable, in whole or in part, such declaration shall not affect the validity, legality or enforceability of any remaining
provision or portion hereof, which remaining provision or portion hereof shall remain in full force and effect as if this Agreement
had been adopted with the invalid, illegal or unenforceable provision or portion hereof eliminated.

 

(l)Headings.
The headings and captions in this Agreement shall not be construed to limit or modify the terms or meaning of this Agreement.

 

[Remainder
of Page Intentionally Left Blank]

 

    	- 7 -

    	 

    

BY GRANTEE’S
SIGNATURE BELOW, along with the signature of the Company’s representative, Grantee and the Company agree that the Stock
Appreciation Rights are awarded under and governed by the terms and conditions of this Agreement, the Plan and, in the event of
exercise of the Award, the Notice of Exercise. 

 

	Transgenomic, INC.
	 
	 
	By:	 
	 
	Name:	Rodney S. Markin, M.D., Ph.D.
	 
	Title:	Chairman of the Board of Directors
	 
	GRANTEE
	The undersigned Grantee hereby accepts the terms of this Agreement, the Plan and, in the event of exercise of the Award, the Notice of Exercise.
	By:	 	 
	 
	Name of Grantee:	Mark Colonnese
	 

  

 

[Signature
Page to Stock Appreciation Rights Agreement]

 

    	 

    	 

    

 

Exhibit
A

 

TRANSGENOMIC, INC.

 

2006
Equity Incentive Plan

 

 

 

 

 

 

 

 

A-1

 

    	 

    	 

    

Exhibit
B

 

TRANSGENOMIC, INC.

 

STOCK
APPRECIATION RIGHTS

 

NOTICE
OF EXERCISE

 

Transgenomic, Inc.

12325 Emmet Street

Omaha, Nebraska 68164

 

	 	Date of Exercise: _______________

 

Ladies and Gentlemen:

 

This constitutes notice
under my Stock Appreciation Rights Agreement with Transgenomic, Inc., a Delaware corporation (the “Company”),
identified below that I elect to exercise my Stock Appreciation Rights with respect to the number of shares set forth below.

 

	Grant Date of Stock Appreciation Rights Agreement:	 	October 4, 2013    
	Number of shares as

to which SAR is

exercised:	 	___________________________
	[Certificates to be

issued in name of:	 	___________________________]

 

By this exercise,
I agree (i) to provide such additional documents as the Company may require pursuant to the terms of the Transgenomic, Inc.
2006 Equity Incentive Plan (the “Plan”), and (ii) that the Company will satisfy its obligations
arising from this exercise notice through withholding a portion of the cash payment payable hereunder equal to the amount of such
obligations and/or issuing shares of common stock of the Company (net of shares of common stock of the Company having a Fair Market
Value (as defined in the Plan) equal to the minimum statutory taxes and withholding due; except to the extent the undersigned
pays cash herewith to settle such obligations). 

 

	Very truly yours,
	By:	 	 
	 
	Name:	Mark Colonnese
	 

 

 

 

B-1EXHIBIT 10.5

 

 

 

 

 

TRANSGENOMIC,
INC. 2006 EQUITY INCENTIVE PLAN 

 

FORM
OF

 

STOCK
APPRECIATION RIGHTS AGREEMENT 

 

 

 

THIS STOCK APPRECIATION
RIGHTS AGREEMENT (this “Agreement”) is effective _______________, 20__ (the “Grant Date”)
by and between Transgenomic, Inc., a Delaware corporation (the “Company”) and ____________ (“Grantee”).

 

WHEREAS, the Company
sponsors and maintains the Transgenomic, Inc. 2006 Equity Incentive Plan, a copy of which is attached hereto as Exhibit
A (the “Plan”); and

 

WHEREAS, Grantee,
as an Eligible Person, has been selected to receive a grant of Stock Appreciation Rights under the Plan.

 

NOW, THEREFORE, the
Company and Grantee hereby agree as follows:

 

Section 1. General.
 This Agreement and the Stock Appreciation Rights granted hereunder are subject in all respects to the terms and conditions
of the Plan. Capitalized terms used in this Agreement without further definition shall have the same meanings given to such terms
in the Plan. The award of Stock Appreciation Rights of the Company described herein (this “Award”) is
conditioned on Grantee’s execution of the Award within ten (10) days after the Grant Date.

 

Section 2. Grant
of Stock Appreciation Rights. The Company hereby awards to Grantee, as of the Grant Date, Stock Appreciation Rights with the
following terms:

 

	Grant Date	________________, 20__
	Vesting Commencement Date	________________, 20__
	Number of Shares measuring the value of the Award	__________ Shares (the “SAR Shares”)
	Exercise Price per SAR Share	$_____._____ per Share (the “Exercise Price”)

 

    	 

    	 

    

 

	Vesting Schedule	
        34% of the SAR Shares
        vest on the one-year anniversary of the Vesting Commencement Date and 33% of the SAR Shares vest on each of the two-year anniversary
        and three-year anniversary of the Vesting Commencement Date, in each case provided that Grantee remains continuously employed
        with (or is providing continued service to) the Company through the applicable vesting date, inclusive.

         

        Any fraction of a share
        that becomes exercisable on any date will be rounded down to the next lowest whole number and any fraction of a share shall be
        added to the portion of the SAR Shares becoming exercisable on the following vesting date.

         

	Expiration Date	________________, 20__, subject to Section 5.

 

Section 3. Adjustments
to Number of SAR Shares and Exercise Price. No shares of Common Stock will be issued and no cash will be paid to Grantee before
the Award vests in accordance with the “Vesting Schedule” noted in Section 2 and is exercised. The amount Grantee receives
upon exercise will equal the product of:

 

		(a)	the number of SAR Shares that Grantee designates for exercise, and

 

		(b)	the excess of 100% of the Fair Market Value of one share of Common Stock on the date of exercise
over the Exercise Price stated in Section 2.

 

Section 4.
 Form of Payments to Grantee. The Company will make any payment to Grantee under the Award, as determined by the Board
or the Committee following the exercise, in the form of cash, net of any applicable tax withholding obligations or shares of Common
Stock, with cash paid in lieu of fractional shares of Common Stock, based on the Fair Market Value on the date of exercise. Any
shares of Common Stock that Grantee receives will be free from vesting restrictions (but subject to such legends as the Company
determines to be appropriate). Notwithstanding the foregoing, the Company will not issue certificates representing shares of Common
Stock issuable upon the exercise of the Award to Grantee unless Grantee has made arrangements satisfactory to the Board or the
Committee to satisfy any applicable tax withholding obligations. Grantee may satisfy minimum withholding requirements through the
surrender of shares of Common Stock that are both subject to the Award and that have a Fair Market Value equal to the minimum statutory
tax withholding associated with the shares of Common Stock giving rise to the taxable income. Grantee or the Successor of the Participant
has no right or any privilege of a stockholder of the Company in respect of any shares issuable on the exercise of the award unless
and until such shares have been recorded on the Company’s official stockholder records as having been issued and transferred.

 

Section 5. Failure
of Vesting Restrictions. By executing this Agreement, Grantee acknowledges and agrees that the Award will terminate
prior to the Expiration Date as provided below:

 

    	- 2 -

    	 

    

 

(a)Termination
of Service. Upon Grantee’s Termination of Service by the election of the Company for any reason other than Grantee’s
death, Retirement or Disability (other than for Cause), Grantee may exercise the Award at any time within three months from Grantee’s
Termination of Service, but only to the extent that, as of the date of Grantee’s Termination of Service, Grantee’s
right to exercise the Award has vested and Grantee has not previously exercised the Award. Any portion of the Award unexercised
following such period shall be forfeited as of the expiration date of such period. Notwithstanding the foregoing, if Grantee suffers
a Termination of Service for Cause or the Termination of Service occurs by the election of Grantee (other than an election because
of death, Retirement or Disability), Grantee’s unexercised Award as of the date of his or her Termination of Service shall
be cancelled and forfeited as of such date.

 

(b)Death,
Retirement or Disability. Upon Grantee’s Termination of Service by reason of Grantee’s death, Retirement or
Disability, or if Grantee dies with exercise rights under Section 5(a), Grantee (or his or her beneficiary in the case of death)
may exercise the Award at any time within 12 months from Grantee’s Termination of Service, but only to the extent that, at
the date of Termination of Service, Grantee’s right to exercise the Award has vested and Grantee has not previously exercised
the Award. Any portion of the Award unexercised following such period shall be forfeited as of the expiration date of such period.

 

Section 6. Exercise.
Subject to the provisions hereof, the Award may be exercised in whole or in part at any time, within the period permitted for the
exercise thereof, with respect to whole shares only. To exercise the Award, Grantee or the Successor of the Participant must deliver
a Notice of Exercise in the form attached hereto as Exhibit
B (the “Notice of Exercise”) to the Company at its principal office together with such additional
documents as the Company may then require. The Company will determine the amount of any applicable taxes which require withholding
as a result of the exercise, and Grantee must provide for such taxes as required by Section 8 and the Plan.

 

Section 7. Nontransferability
of Award. Except as the Company and Grantee may agree in accordance with Section 6.3 of the Plan,
the Award may not be sold, pledged, assigned, hypothecated, transferred or disposed of by Grantee in any manner other than
by will or the laws of descent and distribution. No transfer of any portion of the Award by will or the laws of descent and distribution
shall be effective to bind the Company unless the Company is furnished with written notice thereof and appropriate documentation
evidencing the rights of any Successor(s) of the Participant as the Committee deems necessary or desirable.

 

Section 8. Withholding
Obligations.

 

(a)At
the time Grantee exercises the Award, in whole or in part, or at any time thereafter as requested by the Company, Grantee hereby
authorizes withholding from payroll and any other amounts payable to Grantee, and otherwise agree to make adequate provision for,
any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Company or an Affiliate,
if any, which arise in connection with the exercise of the Award. By exercising the Award, Grantee agrees that, as a condition
to any exercise of the Award, the Company may require Grantee to enter into an arrangement providing for the payment by Grantee
to the Company of any tax withholding obligation of the Company arising by reason of the exercise of the Award.

 

    	- 3 -

    	 

    

(b)Upon
Grantee’s request and subject to approval by the Company, in its sole discretion, and compliance with any applicable legal
conditions or restrictions, the Company may withhold from fully vested shares of Common Stock otherwise issuable to Grantee upon
the exercise of the Award a number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of
the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or such lower amount as may be
necessary to avoid variable award accounting). If the date of determination of any tax withholding obligation is deferred to a
date later than the date of exercise of the Award, share withholding pursuant to the preceding sentence shall not be permitted
unless Grantee makes a proper and timely election under Section 83(b) of the Code, covering the aggregate number of shares
of Common Stock acquired upon such exercise with respect to which such determination is otherwise deferred, to accelerate the determination
of such tax withholding obligation to the date of exercise of the Award. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock determined as of the date of exercise of the Award
that are otherwise issuable to Grantee upon such exercise. Any adverse consequences to Grantee arising in connection with such
share withholding procedure shall be Grantee’s sole responsibility.

 

(c)Grantee
may not exercise the Award unless the tax withholding obligations of the Company and/or any Affiliate are satisfied. Accordingly,
Grantee may not be able to exercise the Award when desired even though the Award is vested, and the Company shall have no obligation
to issue a certificate for such shares of Common Stock or release such shares of Common Stock from any escrow provided for herein
unless such obligations are satisfied.

 

Section 9. Miscellaneous
Provisions.

 

(a)No
Retention Rights. Nothing in this Agreement shall confer upon Grantee any right to continue in the employment or service
of the Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company
or of Grantee, which rights are hereby expressly reserved by each, to terminate his or her employment or service at any time and
for any reason, with or without cause.

 

(b)Antidilution.
In the event that any change in the outstanding shares of Common Stock of the Company (including an exchange of Common Stock for
stock or other securities of another corporation) occurs by reason of a Common Stock dividend or split, recapitalization, merger,
consolidation, combination, exchange of shares or other similar corporate changes, other than for consideration received by the
Company therefore, the number of shares of stock granted hereunder or the Exercise Price may be appropriately adjusted by the Committee
in its sole and absolute discretion, whose determination shall be conclusive, final and binding; provided, however that fractional
shares shall be rounded to the nearest whole share. In the event of any other change in the Common Stock, the Committee shall in
its sole discretion determine whether such change equitably requires a change in the number or type of shares of stock granted
hereunder or the Exercise Price and any adjustment made by the Committee shall be conclusive, final and binding.

 

    	- 4 -

    	 

    

(c)Determination
of Value. The Company makes no representation as to the value of the Award or whether Grantee will be able to realize any
profit from it.

 

(d)Plan.
The provisions of the Plan are incorporated by reference into these terms and conditions. To the extent any provision of this Agreement
conflicts with the Plan, the terms of the Plan shall govern. Grantee acknowledges receipt of a copy of the Plan and represents
that he has reviewed the Plan and is familiar with the terms and provisions thereof. Grantee hereby accepts this Agreement and
the terms of the Plan.

 

(e)Notices.
Any notice required by the terms of this Agreement shall be given in writing and shall be deemed effective upon personal delivery,
upon deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid or upon deposit
with a reputable overnight courier. Notice shall be addressed to the Company at its principal executive office and to Grantee at
the address most recently provided by Grantee to the Company.

 

(f)Blackout
Periods. In connection with certain corporate events, the Company reserves the right to designate periods during which
Grantee may not exercise the Award.

 

(g)Entire
Agreement; Amendments. This Agreement constitutes the entire contract between the parties hereto with regard to the subject
matter hereof. This Agreement supersedes any other agreements, representations or understandings (whether oral or written and whether
express or implied) which relate to the subject matter hereof. The Committee shall have authority, subject to the express provisions
of the Plan, to interpret this Agreement and the Plan, to establish, amend and rescind any rules and regulations relating to the
Plan, to modify the terms and provisions of this Agreement, and to make all other determinations in the judgment of the Committee
necessary or desirable for the administration of the Plan. The Committee may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in this Agreement in the manner and to the extent it shall deem necessary or desirable to carry
it into effect. All action by the Committee under the provisions of this paragraph shall be final, conclusive and binding for all
purposes.

 

(h)Change
in Control. Unless provided otherwise in connection with the transaction resulting in the Change in Control, immediately
preceding the occurrence of a Change in Control of the Company, any unvested portion of the Award shall immediately vest in full
and to the extent not expired or previously exercised become immediately exercisable.

 

    	- 5 -

    	 

    

(i)Choice
of Law.  This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State, without giving
effect to the choice of law provisions thereof.

 

(j)Successors.
This Agreement is personal to Grantee and, except as otherwise provided above, shall not be assignable by Grantee otherwise than
by will or the laws of descent and distribution, without the written consent of the Company. This Agreement shall inure to the
benefit of and be enforceable by Grantee’s legal representatives. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors. It shall not be assignable by the Company except in connection with the sale or other disposition
of all or substantially all the assets or business of the Company.

 

(k)Severability.
If any provision of this Agreement for any reason should be found by any court of competent jurisdiction to be invalid, illegal
or unenforceable, in whole or in part, such declaration shall not affect the validity, legality or enforceability of any remaining
provision or portion hereof, which remaining provision or portion hereof shall remain in full force and effect as if this Agreement
had been adopted with the invalid, illegal or unenforceable provision or portion hereof eliminated.

 

(l)Headings.
The headings and captions in this Agreement shall not be construed to limit or modify the terms or meaning of this Agreement.

 

[Remainder
of Page Intentionally Left Blank]

 

    	- 6 -

    	 

    

 

BY GRANTEE’S
SIGNATURE BELOW, along with the signature of the Company’s representative, Grantee and the Company agree that the Stock Appreciation
Rights are awarded under and governed by the terms and conditions of this Agreement, the Plan and, in the event of exercise of
the Award, the Notice of Exercise.

 

 

	Transgenomic, INC.
	 
	 
	By:	 
	 
	Name:	
	 
	Title:	
	 
	GRANTEE
	The undersigned Grantee hereby accepts the terms of this Agreement, the Plan and, in the event of exercise of the Award, the Notice of Exercise.
	By:	 	 
	 
	Name of Grantee:	
	 

 

 

 

 

[Signature
Page to Stock Appreciation Rights Agreement]

    	 

    	 

    

Exhibit
A

 

TRANSGENOMIC, INC.

 

2006
Equity Incentive Plan

 

 

 

 

 

 

 

1.

    	 

    	 

    

Exhibit
B

 

TRANSGENOMIC, INC.

 

STOCK
APPRECIATION RIGHTS

 

NOTICE
OF EXERCISE

 

Transgenomic, Inc.

12325 Emmet Street

Omaha, Nebraska 68164

 

	 	Date of Exercise: _______________

 

Ladies and Gentlemen:

 

This constitutes notice
under my Stock Appreciation Rights Agreement with Transgenomic, Inc., a Delaware corporation (the “Company”),
identified below that I elect to exercise my Stock Appreciation Rights with respect to the number of shares set forth below.

 

	Grant Date of Stock Appreciation Rights Agreement:	___________________________
	Number of shares as

to which SAR is

exercised:	___________________________
	Certificates to be

issued in name of:	___________________________

 

By this exercise, I
agree (i) to provide such additional documents as the Company may require pursuant to the terms of the Transgenomic, Inc.
2006 Equity Incentive Plan (the “Plan”), and (ii) that the Company will satisfy its obligations
arising from this exercise notice through withholding a portion of the cash payment payable hereunder equal to the amount of such
obligations and/or issuing shares of common stock of the Company (net of shares of common stock of the Company having a Fair Market
Value (as defined in the Plan) equal to the minimum statutory taxes and withholding due; except to the extent the undersigned pays
cash herewith to settle such obligations).

 

	Very truly yours,
	By:	 	 
	 
	Name:	
	 

 

 

 

1.

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