Document:

THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE 1933 ACT, OR AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER HEREOF, TO
THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT AS SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND APPLICABLE LAWS IS AVAILABLE.

 

WARRANT TO PURCHASE

COMMON STOCK OF

RICK’S
CABARET INTERNATIONAL, INC.

 

	Date of Issuance:  February 7, 2014	Warrant No. 02-2014-001

 

This
certifies that, for value received, RICK’S CABARET INTERNATIONAL, INC., a Texas corporation (the “Company”),
grants Montgomery Street Research, LLC, whose address is 2027 E. Colter Street, Phoenix, Arizona, 85016, or
its registered assigns (the “Registered Holder”), the right to subscribe for and purchase from the Company, at the
Exercise Price (as defined herein), from and after 9:00 a.m. Texas time on February 7, 2014 (the “Exercise Date”) and
to and including 5:00 p.m., Texas time on the second anniversary of the Exercise Date, being February 7, 2016 (the “Expiration
Date”), 100,000 shares, as such number of shares may be adjusted from time to time
as described herein (the “Warrant Shares”), of the Company’s common stock, par value $.01 per share (the “Common
Stock”), subject to the provisions and upon the terms and conditions herein set forth. The “Exercise Price” per
share of Common Stock shall be $11.77 per share (as may be adjusted from time to time
as described herein). 

 

This Warrant is issued
in connection with the consulting agreement entered into with the Registered Holder on or about February 7, 2014 (the “Consulting
Agreement”). The Registered Holder of this Warrant is subject to certain restrictions set forth in the Consulting Agreement
and shall be entitled to certain rights and privileges set forth in the Consulting Agreement.

 

Section 1.          Registration in the
Records of the Company.    The Company shall register this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant Records”), in the name of the Registered Holder. The Company may deem and treat the Registered Holder
as the absolute owner of this Warrant for the purpose of any exercise hereof or any distribution to the Registered Holder.

 

Section 2.          Registration of Transfers
and Exchanges.

 

(a)          Subject to Section 9 hereof,
the Company shall register the transfer of this Warrant, in whole or in part, upon records to be maintained by the Company for
that purpose, upon surrender of this Warrant, with the Form of Assignment attached hereto completed and duly endorsed by the Registered
Holder, to the Company at the office specified in or pursuant to Section 3(b). Upon any such registration of transfer, a new Warrant,
in substantially the form of this Warrant, evidencing the Common Stock purchase rights so transferred shall be issued to the transferee
and a new Warrant, in similar form, evidencing the remaining Common Stock purchase rights not so transferred, if any, shall be
issued to the Registered Holder.

 

    	 

    	 

    

 

(b)          This Warrant is exchangeable,
upon the surrender hereof by the Registered Holder at the office of the Company specified in or pursuant to Section 3(b) hereof,
for new Warrants, in substantially the form of this Warrant evidencing, in the aggregate, the right to purchase the number of Warrant
Shares which may then be purchased hereunder, each of such new Warrants to be dated the date of such exchange and to represent
the right to purchase such number of Warrant Shares as shall be designated by the Registered Holder at the time of such surrender.

 

Section 3. Duration
and Exercise of this Warrant.

 

(a)          This Warrant
shall be exercisable by the Registered Holder as to the Warrant Shares at any time during the period commencing on the Exercise
Date and ending on the Expiration Date. At 5:00 p.m., Texas time, on the Expiration Date, this Warrant, to the extent not previously
exercised, shall become void and of no further force or effect.

 

(b)          Subject to Sections 4, and 7
hereof, upon exercise or surrender of this Warrant, with the Form of Election to Purchase attached hereto completed and duly endorsed
by the Registered Holder, to the Company at 10959 Cutten Road, Houston, Texas 77066, Attention: President, or at such other address
as the Company may specify in writing to the Registered Holder, and upon payment of the Exercise Price multiplied by the number
of Warrant Shares then issuable upon exercise of this Warrant in lawful money of the United States of America, all as specified
by the Registered Holder in the Form of Election to Purchase, the Company shall promptly issue and cause to be delivered to or
upon the written order of the Registered Holder, and in such name or names as the Registered Holder may designate, a certificate
for the Warrant Shares issued upon such exercise. Any person so designated in the Form of Election to Purchase, duly endorsed by
the Registered Holder, as the person to be named on the certificates for the Warrant Shares, shall be deemed to have become holder
of record of such Warrant Shares, evidenced by such certificates, as of the Date of Exercise (as hereinafter defined) of such Warrant.

 

(c)          The Registered Holder may pay
the applicable Exercise Price pursuant to Section 3(b), at the option of the Registered Holder, either (i) in cash or by cashier’s
or certified bank check payable to the Company, or (ii) by wire transfer of immediately available funds to the account which shall
be indicated in writing by the Company to the Registered Holder, in either case, in an amount equal to the product of the Exercise
Price multiplied by the number of Warrant Shares being purchased upon such exercise (the “Aggregate Exercise Price”).

 

(d)          The “Date of Exercise”
of any Warrant means the date on which the Company shall have received (i) this Warrant, with the Form of Election to Purchase
attached hereto appropriately completed and duly endorsed, and (ii) payment of the Aggregate Exercise Price as provided herein.

 

(e)          This Warrant shall not be exercisable
until the Exercise Date. This Warrant shall be exercisable either in its entirety or, from time to time, for part only of the number
of Warrant Shares which are issuable hereunder. If this Warrant shall have been exercised only in part, the Company shall, at the
time of delivery of the certificates for the Warrant Shares issued pursuant to such exercise, deliver to the Registered Holder
a new Warrant evidencing the rights to purchase the remaining Warrant Shares, which Warrant shall be substantially in the form
of this Warrant.

 

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Section 4.           Payment of Taxes
and Expenses. 

 

(a)           The Company
will pay all expenses and taxes (other than any federal or state income tax or similar obligations of the Registered Holder) and
other governmental charges attributable to the preparation, execution, issuance and delivery of this Warrant, any new Warrant
and the Warrant Shares; provided, however, that the Company shall not be required to pay any tax in respect of the transfer
of this Warrant or the Warrant Shares, or the issuance or delivery of certificates for Warrant Shares upon the exercise of this
Warrant, to a person or entity other than a Registered Holder or an Affiliate (as hereinafter defined) of such Registered Holder.

 

(b)          An “Affiliate” of
any person or entity means any other person or entity directly or indirectly controlling, controlled by or under direct or indirect
common control with such person or entity.

 

Section 5.           Mutilated
or Missing Warrant Certificate.    If this Warrant shall be mutilated, lost, stolen or destroyed, upon request by the Registered
Holder, the Company will issue, in exchange for and upon cancellation of the mutilated Warrant, or in substitution for the lost,
stolen or destroyed Warrant, a substitute Warrant, in substantially the form of this Warrant, of like tenor, but, in the case
of loss, theft or destruction, only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction
of this Warrant and, if requested by the Company, indemnity also reasonably satisfactory to it.

 

Section 6.           Reservation, Listing
and Issuance of Warrant Shares.

 

(a)          The Company will at all times
have authorized, and reserve and keep available, free from preemptive rights, for the purpose of enabling it to satisfy any obligation
to issue Warrant Shares upon the exercise of the rights represented by this Warrant, the number of Warrant Shares deliverable upon
exercise of this Warrant. The Company will, at its expense, use it best efforts to cause such shares to be included in or listed
on (subject to issuance or notice of issuance of Warrant Shares) all markets or stock exchanges in or on which the Common Stock
is included or listed not later than the date on which the Common Stock is first included or listed on any such market or exchange
and will thereafter maintain such inclusion or listing of all shares of Common Stock from time to time issuable upon exercise of
this Warrant.

 

(b)          Before taking any action which
could cause an adjustment pursuant to Section 7 hereof reducing the Exercise Price below the par value of the Warrant Shares, the
Company will take any corporate action which may be necessary in order that the Company may validly and legally issue at the Exercise
Price, as so adjusted, Warrant Shares that are fully paid and non-assessable.

 

(c)          The Company
covenants that all Warrant Shares will, upon issuance in accordance with the terms of this Warrant, be (i) duly authorized,
fully paid and nonassessable, and (ii) free from all taxes with respect to the issuance thereof and from all liens, charges
and security interests.

 

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Section 7.           Adjustment of Number
of Warrant Shares. 

 

(a) The number
of Warrant Shares to be purchased upon exercise hereof is subject to change or adjustment from time to time as hereinafter provided:

 

(i)          Stock
Dividends; Stock Splits; Reverse Stock Splits; Reclassifications. In case the Company shall (a) pay a dividend with respect
to its Common Stock in shares of capital stock, (b) subdivide its outstanding shares of Common Stock, (c) combine its outstanding
shares of Common Stock into a smaller number of shares of any class of Common Stock or (d) issue any shares of its capital stock
in a reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger in
which the Company is the continuing corporation), other than elimination of par value, a change in par value, or a change from
par value to no par value (any one of which actions is herein referred to as an “Adjustment Event”), the number of
Warrant Shares purchasable upon exercise of the Warrant immediately prior to the record date for such Adjustment Event shall be
adjusted so that the Registered Holder shall thereafter be entitled to receive the number of shares of Common Stock or other securities
of the Company (such other securities thereafter enjoying the rights of shares of Common Stock under this Warrant) that such Registered
Holder would have owned or have been entitled to receive after the happening of such Adjustment Event, had such Warrant been exercised
immediately prior to the happening of such Adjustment Event or any record date with respect thereto. An adjustment made pursuant
to this Section 7(a)(i) shall become effective immediately after the effective date of such Adjustment Event retroactive to the
record date, if any, for such Adjustment Event.

 

(ii)          Adjustment
of Exercise Price. Whenever the number of Warrant Shares purchasable upon the exercise of each Warrant is adjusted pursuant
to Section 7(a)(i), the Exercise Price for each Warrant Share payable upon exercise of each Warrant shall be adjusted by multiplying
such Exercise Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of shares of
Common Stock purchasable upon the exercise of each Warrant immediately prior to such adjustment, and the denominator of
which shall be the number of shares of Common Stock so purchasable immediately thereafter.

 

(iii)          Adjustments for Consolidation,
Merger, Sale of Assets, Reorganization, etc. In case the Company (a) consolidates with or merges into any other corporation
and is not the continuing or surviving corporation of such consolidation of merger, or (b) permits any other corporation to consolidate
with or merge into the Company and the Company is the continuing or surviving corporation but, in connection with such consolidation
or merger, the Common Stock is changed into or exchanged for stock or other securities of any other corporation or cash or any
other assets, or (c) transfers all or substantially all of its properties and assets to any other corporation, or (d) effects a
capital reorganization or reclassification of the capital stock of the Company in such a way that holders of Common Stock shall
be entitled to receive stock, securities, cash and/or assets with respect to or in exchange for Common Stock, then, and in each
such case, proper provision shall be made so that, upon the basis and upon the terms and in the manner provided in this subsection
7(a)(iii), the Registered Holder, upon the exercise of this Warrant at any time after the consummation of such consolidation, merger,
transfer, reorganization or reclassification, shall be entitled to receive (at the aggregate Exercise Price in effect for all shares
of Common Stock issuable upon such exercise immediately prior to such consummation as adjusted to the time of such transaction),
in lieu of shares of Common Stock issuable upon such exercise prior to such consummation, the stock and other securities, cash
and/or assets to which such holder would have been entitled upon such consummation if the Registered Holder had so exercised this
Warrant immediately prior thereto (subject to adjustments subsequent to such corporate action as nearly equivalent as possible
to the adjustments provided for in this Section).

 

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(iv)          De
Minimis Adjustments. No adjustment in the Exercise Price and number of Warrant Shares purchasable hereunder shall be required
unless such adjustment would require an increase or decrease of at least $0.02 in the Exercise Price; provided, however, that
any adjustments which by reason of this Section 7(a)(iv) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations shall be made to the nearest full share.

 

(b)          Notice
of Adjustment. Whenever the number of Warrant Shares purchasable upon the exercise of each Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall promptly notify the Registered Holder in writing (such writing referred to as an
“Adjustment Notice”) of such adjustment or adjustments and shall deliver to such Registered Holder a statement setting
forth the number of shares of Common Stock purchasable upon the exercise of each Warrant and the Exercise Price after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment
was made.

 

(c)          Other Notices. In case
at any time:

 

(i)          the Company shall declare any
cash dividend on its Common Stock;

 

(ii)         the Company shall pay any dividend
payable in stock upon its Common Stock or make any distribution (other than regular cash dividends) to the holders of its Common
Stock;

 

(iii)        the Company shall offer for
subscription pro rata to all of the holders of its Common Stock any additional shares of stock of any class or other rights;

 

(iv)        the
Company shall authorize the distribution to all holders of its Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of earnings or earned surplus or dividends payable in Common Stock);

 

(v)         there shall be any capital reorganization,
or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another corporation (other
than a subsidiary of the Company in which the Company is the surviving or continuing corporation and no change occurs in the Company’s
Common Stock), or sale of all or substantially all of its assets to another corporation; or

 

(vi)         there shall be a voluntary
or involuntary dissolution, liquidation, bankruptcy, assignment for the benefit of creditors, or winding up of the Company;

 

    	Warrant – Page 5

    	 

    

 

then, in any one or more of said cases
the Company shall give written notice, addressed to the Registered Holder at the address of such Registered Holder as shown on
the books of the Company, of (1) the date on which the books of the Company shall close or a record shall be taken for such dividend,
distribution or subscription rights, or (2) the date (or, if not then known, a reasonable approximation thereof by the Company)
on which such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, bankruptcy, assignment for
the benefit of creditors, winding up or other action, as the case may be, shall take place. Such notice shall also specify (or,
if not then known, reasonably approximate) the date as of which the holders of Common Stock of record shall participate in such
dividend, distribution or subscription rights, or shall be entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, bankruptcy, assignment
for the benefit of creditors, winding up, or other action, as the case may be. Such written notice shall be given (except as to
any bankruptcy proceeding) at least five (5) days prior to the action in question and not less than five (5) days prior to the
record date or the date on which the Company’s transfer books are closed in respect thereto. Such notice shall also state
that the action in question or the record date is subject to the effectiveness of a registration statement under the 1933 Act,
or to a favorable vote of stockholders, if either is required.

 

(d)          Statement
on Warrants. The form of this Warrant need not be changed because of any change in the Exercise Price or in the number or kind
of shares purchasable upon the exercise of a Warrant. However, the Company may at any time in its sole discretion make any change
in the form of the Warrant that it may deem appropriate and that does not affect the substance thereof and any Warrant thereafter
issued, whether in exchange or substitution for any outstanding Warrant or otherwise, may be in the form so changed.

 

(e)          Fractional
Interest. The Company will not be required to issue fractional Warrant Shares on the exercise of the Warrants. The number of
full Warrant Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of whole
shares of Common Stock purchasable on the exercise of the Warrants so presented. If any fraction of a share of Common Stock would,
except for the provisions of this Section 7(e) be issuable on the exercise of the Warrants (or specified proportion thereof), the
Company shall pay an amount in cash calculated by it to be equal to the then fair value of one share of Common Stock, as determined
by the Board of Directors of the Company in good faith, multiplied by such fraction computed to the nearest whole cent.

 

Section 8.           No Rights or Liabilities
as a Stockholder.    The Registered Holder shall not be entitled to vote or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained herein be construed
to confer upon the holder of this Warrant, as such, the rights of a stockholder of the Company or the right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting thereof, or give or withhold consent to any corporate
action or to receive notice of meetings or other actions affecting stockholders (except as provided herein), or to receive dividends
or subscription rights or otherwise, until the Date of Exercise shall have occurred. No provision of this Warrant, in the absence
of affirmative action by the Registered Holder hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights and privileges of the Registered Holder, shall give rise to any liability of such holder for the Exercise Price or as a
stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

Section 9.           Transfer Restrictions;
Registration of the Warrant and Warrant Shares.

 

(a)          Neither the Warrant nor the
Warrant Shares have been registered under the 1933 Act. The Registered Holder, by acceptance hereof, represents that it is acquiring
this Warrant to be issued to it for its own account and not with a view to the distribution thereof, and agrees not to sell, transfer,
pledge or hypothecate this Warrant, any purchase rights evidenced hereby or any Warrant Shares unless a registration statement
is effective for this Warrant or the Warrant Shares under the 1933 Act, or in the opinion of such Registered Holder’s counsel
reasonably satisfactory to the Company, a copy of which opinion shall be delivered to the Company, such registration is not required
as some other exemption from the registration requirement of the 1933 Act and applicable laws is available.

 

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(b)          Subject to the provisions of
the following paragraph of this Section 9, each Certificate for Warrant Shares shall be stamped or otherwise imprinted with a legend
in substantially the following form:

 

THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE 1933 ACT, AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER HEREOF, TO THE EFFECT THAT
REGISTRATION IS NOT REQUIRED UNDER THE 1933 ACT AS SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND
APPLICABLE LAWS IS AVAILABLE.

 

(c)          The restrictions and requirements
set forth in the foregoing paragraph shall apply with respect to Warrant Shares unless and until such Warrant Shares are sold or
otherwise transferred pursuant to an effective registration statement under the 1933 Act or are otherwise no longer subject to
the restrictions of the 1933 Act, at which time the Company agrees to promptly cause such restrictive legends to be removed and
stop transfer restrictions applicable to such Warrant Shares to be rescinded.

 

Section 10.          Notices.    All
notices and other communications provided for herein shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested, postage prepaid, or sent by overnight air courier
guaranteeing next day delivery:

 

(a)          If to the Registered Holder
of this Warrant or the holder of the Warrant Shares, addressed to the address of such Registered Holder or holder as set forth
on books of the Company or otherwise furnished by the Registered Holder or holder to the Company.

 

(b)          If to the Company, addressed
to:

 

Rick’s Cabaret
International, Inc.

10959 Cutten Road

Houston, Texas 77066

Attn: President

 

A notice or communication will be effective
(i) if delivered in person or by overnight courier, on the business day it is delivered or (ii) if sent by registered or certified
mail, the date of actual receipt by the party to whom such notice is required to be given.

 

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Section 11.      Binding Effect.
   This Warrant shall be binding upon and inure to the sole and exclusive benefit of the Company, its successors and assigns, and
the holder or holders from time to time of this Warrant and the Warrant Shares.

 

Section 12.      Survival of Rights
and Duties.    This Warrant shall terminate and be of no further force and effect on the earlier of (i) the Company's exercise
of its Option to Require Exercise pursuant to Section 10, (ii) 5:00 p.m., Texas time, on the Expiration Date and (iii) the date
on which this Warrant and all purchase rights evidenced hereby have been exercised, except that the provisions of Sections 4, 6(c)
and 10 hereof shall continue in full force and effect after such termination date.

 

Section 13.      Governing
Law.    This Warrant shall be governed and controlled as to the validity, enforcement, interpretations, construction and effect
and in all other aspects by the substantive laws of the State of Texas. In any action between or among any of the parties, whether
arising out of this Warrant or otherwise, each of the parties irrevocably consents to the exclusive jurisdiction and venue of
the federal and state courts located in Harris County, Texas.

 

Section 14.       Section Headings.
   The Section headings in this Warrant are for purposes of convenience only and shall not constitute a part hereof.

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date hereof.

 

	 	RICK’S CABARET INTERNATIONAL, INC.
	 	 
	 	 
	 	By:	/s/ Eric Langan
	 	 	Eric Langan, President

 

    	Warrant – Page 8

    	 

    

 

FORM OF ELECTION TO PURCHASE

 

(To Be Executed Upon Exercise of this Warrant)

 

To Rick’s Cabaret International, Inc.:

 

The undersigned, the
record holder of this Warrant (Warrant No. _____), hereby irrevocably elects to exercise the right, represented by this Warrant,
to purchase ___________ of the Warrant Shares and herewith and hereby tenders payment for such Warrant Shares to the order of Rick’s
Cabaret International, Inc. of $_________ representing the full purchase price for such shares at the price per share provided
for in such Warrant and the delivery of any applicable taxes payable by the undersigned pursuant to such Warrant.

 

The undersigned requests
that certificates for such shares be issued in the name of:

 

	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	(Please print name and address)	 	Social Security or Tax Identification No. 	 

 

In the event that not
all of the purchase rights represented by the Warrant are exercised, a new Warrant, substantially identical to the attached Warrant,
representing the rights formerly represented by the attached Warrant which have not been exercised, shall be issued in the name
of and delivered to:

 

	 	 	 	 
	 	 	 	 
	 	 	 	 
	(Please print name and address)	 	Social Security or Tax Identification No. 	 

 

 

	Dated:	 	 	Name of Holder (Print):
	 	 	 

 

	 	 	By:	 
	 	 	(Name):	 
	 	 	(Title):	 

 

Form of Election
to Purchase

    	 

    	 

    

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, ________________
hereby sells, assigns and transfers to each assignee set forth below all of the rights of the undersigned under the attached Warrant
(Warrant No. ___) with respect to the number of shares of Common Stock covered thereby set forth opposite the name of such assignee
unto:

 

	 	 	 	 	Number of Shares of
	Name of Assignee	 	Address	 	Of Common Stock
	 	 	 	 	 

 

If the total of said
purchase rights represented by the Warrant shall not be assigned, the undersigned requests that a new Warrant Certificate evidencing
the purchase rights not so assigned be issued in the name of and delivered to the undersigned.

 

	Dated:	 	 	Name of Holder (Print):	 

 

	 	 
	 	(Signature of Holder)

 

Form of AssignmentREGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (the
“Agreement”) is made as of this 5th day of March, 2014 among Transgenomic, Inc., a Delaware corporation (the “Company”),
Third Security Senior Staff 2008 LLC, a Virginia limited liability company (“Senior Staff LLC”), Third Security Staff
2014 LLC, a Virginia limited liability company (“Staff LLC”), and Third Security Incentive 2010 LLC, a Virginia limited
liability company (“Incentive LLC” and, together with Senior Staff LLC and Staff LLC, the “Investors”).

 

WHEREAS, the Investors and the Company are
parties to the Series B Convertible Preferred Stock Purchase Agreement, dated as of March 5, 2014 (the “Purchase Agreement”),
pursuant to which the Investors purchased from the Company shares of Series B Convertible Preferred Stock of the Company (the “Series
B Preferred”); and

 

WHEREAS, pursuant to the terms of the Purchase
Agreement, in order to induce the Investors to invest funds in the Company, the Company has agreed to enter into this Agreement
concurrently with the issuance of the Series B Preferred; and

 

WHEREAS, the Investors and the Company agree
to enter into this Agreement to set forth the circumstances pursuant to which the Holders (as herein defined) can cause the Company
to register shares of the Common (as herein defined) issuable to the Holders as set forth herein.

 

NOW, THEREFORE, the parties hereby agree
as follows:

 

ARTICLE I

DEFINITIONS

 

		1.1.	Definitions.

 

In addition to the terms defined elsewhere
herein, when used herein, the following terms shall have the meaning indicated hereunder for purposes of this Agreement:

 

“1934 Act” shall mean the Securities Exchange
Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, as the same shall be
in effect from time to time.

 

“Act” means the Securities Act of 1933,
as amended, or any similar successor federal statute and the rules and regulations thereunder, as the same shall be in effect from
time to time.

 

“Affiliate” shall mean, with respect to
any Person, any other Person who controls, is controlled by or is under common control with such Person.

 

“Agreement” means this Agreement as the
same may be amended, supplemented or modified in accordance with the terms hereof.

 

“Board” means the Board of Directors of
the Company.

 

    	 

    	 

    

 

“Common” means Common Stock, $0.01 par value
per share, of the Company.

 

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

 

“Form S-3” means such form under the Act as in effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC in lieu of Form S-3 that permits inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.

 

“Holder” means any Person who owns of record
Registrable Securities as of the date hereof (for and so long as such Person continues to own of record any Registrable Securities)
or any assignee or transferee thereof in accordance with Section 2.11.

 

“Investors” has the meaning assigned to
such term in the recitals to this Agreement.

 

“Person” means any individual or group of
individuals, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, governmental authority or other entity of any kind, and shall include any successor (by merger or otherwise)
of such entity.

 

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

 

“Register”, “Registered”, and
“Registration” refer to a registration effected by preparing and filing a registration statement or similar document
in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement or document.

 

“Registrable Securities” means (i) the Common
issuable or issued upon conversion of the Series B Preferred owned or acquired after the date hereof by the Holders, and (ii) any
Common issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of the shares referenced in (i) above. For the purposes
of any determination under this Agreement, the number of shares of Registrable Securities shall be determined by the number of
shares of Common outstanding that are, and the number of shares of Common issuable pursuant to then exercisable or convertible
securities that are exercisable or convertible into, Registrable Securities. Registrable Securities issuable upon exercise of an
option to purchase equity securities of the Company or upon conversion of another security shall be deemed outstanding for the
purposes of this Agreement.

 

    	2

    	 

    

 

“SEC” shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Act.

 

“Series A Preferred” means Series A Convertible
Preferred Stock, $0.01 par value per share, of the Company.

 

“Series B Preferred” has the meaning assigned
to such term in the recitals to this Agreement.

 

“Shares” means any of the Common, Series
A Preferred, Series B Preferred, or any other class of capital stock of the Company or other securities convertible into or exercisable
for any shares of any class of capital stock of the Company or any combination thereof.

 

“Transaction Documents” means collectively,
this Agreement and the Purchase Agreement.

 

ARTICLE II

REGISTRATION RIGHTS

 

		2.1	General; Securities Subject to this Agreement.

 

		(a)	The Company hereby grants registration rights to the Holders upon the terms and conditions set forth in this Agreement.

 

		(b)	For the purposes of this Agreement, Registrable Securities will cease to be Registrable Securities when (i) a registration
statement covering such Registrable Securities has been declared effective under the Act by the SEC and such Registrable Securities
have been disposed of pursuant to such effective registration statement or (ii) the entire amount of Registrable Securities proposed
to be sold by a Holder, in the opinion of counsel satisfactory to the Company and the Holder, each in their reasonable judgment,
may be distributed to the public within any 90-day period pursuant to Rule 144 (or any successor provision then in effect) under
the Act.

 

		2.2	Demand Registration.

 

		(a)	If the Company shall receive at any time within five (5) years after the date hereof a written request from the Holders holding
at least a majority of the Registrable Securities held by all Holders (the “Initiating Holders”) that the Company register
(a “Demand Registration”) that number of Registrable Securities held by such Holders stated in such request (which
amount of Registrable Securities shall have a fair market value of at least $2,000,000 in the aggregate, based upon the last sales
price of the Common on a national exchange or over-the-counter market, as applicable, on the day immediately preceding the date
of such request), then the Company shall (i) within ten (10) days of receipt thereof, give written notice of such request to all
other Holders of such request for a Demand Registration and (ii) take such steps as are necessary to prepare for the registration
of the Registrable Securities and file as soon as practicable, and in any event within ninety (90) days of the receipt of such
request, a registration statement under the Act covering all Registrable Securities that the Holders request to be registered,
including any Registrable Securities requested to be included in such registration by Holders other than the Initiating Holders
via the delivery to the Company of written notice of such request no later than ten (10) days following the Company’s delivery
of written notice of the Demand Registration, subject to the limitations contained herein. Notwithstanding the foregoing, the Company
shall not be obligated to effect more than two (2) Demand Registrations pursuant to this Section 2.2 nor shall the Company
be obligated to effect more than one (1) Demand Registration within any period of twelve (12) consecutive months. If at the time
of any request to register Registrable Securities pursuant to this Section 2.2, the Company is engaged in any other activity
that, in the good faith determination of the Board, would make it materially detrimental to the Company and its stockholders for
such Demand Registration to be effected at such time, then the Company may, at its option, direct that such request be delayed
for a reasonable period not in excess of one hundred twenty (120) days from the date of such request, such right to delay a request
to be exercised by the Company not more than once in any twelve (12) month period. In addition, the Company shall not be required
to effect any registration within ninety (90) days after the effective date of any other registration statement of the Company
(other than a registration statement on Form S-4 or S-8 or any successor thereto). Each request for a Demand Registration by the
Holders shall specify the number of Registrable Securities proposed to be registered and sold in connection with such Demand Registration
and the intended method of disposition thereof.

 

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		(b)	If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to Section 2.2(a). The underwriter or underwriters
shall be selected by the Company and shall be reasonably acceptable to the Initiating Holders. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company as provided in Section 2.6(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any
other provision of this Section 2.2, if the underwriter advises the Holders in writing that market factors require a limitation
of the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that
would otherwise be underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among the Holders in proportion to the amount of Registrable Securities owned by each such Holder;
provided, however, that the number of shares of Registrable Securities to be included in such underwriting shall
not be reduced unless all other securities are first entirely excluded from the underwriting. If any Holder that has requested
inclusion in such registration in accordance with the terms hereof does not agree to the terms of any such underwriting agreed
to by the Company, the underwriter and the Initiating Holders, such Holder shall be excluded therefrom by written notice from the
Company, the underwriter or the Initiating Holders and the Registrable Securities held by such Holder will be withdrawn from the
registration. If shares are so withdrawn from the registration and if the number of shares to be included in such registration
was previously reduced as a result of marketing factors pursuant to this Section 2.2(b), then the Company shall offer to
all Holders who have retained the right to include Registrable Securities in the registration the right to include additional securities
in the registration in an amount equal to the number of shares so withdrawn, with such shares to be allocated in proportion to
the amount of Registrable Securities owned by each Holder.

 

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		(c)	The Company shall use its reasonable best efforts to cause any Demand Registration to become and remain effective as soon as
practicable. A registration shall not constitute a Demand Registration until it has become effective and remains continuously effective
for the lesser of (i) the period during which all Registrable Securities registered in the Demand Registration are sold or (ii)
one hundred eighty (180) days; provided, however, that a registration shall not constitute a Demand Registration
if (x) after such Demand Registration has become effective, such registration or the related offer, sale or distribution of Registrable
Securities thereunder is prevented by any stop order, injunction or other order or requirement of the SEC or other governmental
agency or court for any reason not attributable to the Holders and such interference is not thereafter eliminated in a reasonable
period of time, (y) the conditions to closing specified in the underwriting agreement, if any, entered into in connection with
such Demand Registration are not satisfied or waived, other than by reason of a failure by the Holders or (z) if the request for
such Demand Registration is withdrawn by the Holders and such Holders reimburse the Company for any expenses incurred in relation
thereto.

 

		2.3	Company Registration.

 

If (but without any obligation to do so) the Company
proposes to register any of its Common under the Act in connection with an underwritten offering of such Common for its own account
(other than a registration statement on Form S-4 or S-8 or any successor thereto), then the Company shall give written notice of
such proposed filing to the Holders at least ten (10) days before the anticipated filing date, and such notice shall describe the
proposed registration and distribution and offer such Holders the opportunity to register the number of Registrable Securities
as the Holders may request. Upon the written request of any Holder given within twenty (20) days after mailing of such notice by
the Company in accordance with Section 3.5, the Company shall, subject to the terms of this Agreement, cause to be registered
under the Act all of the Registrable Securities that the Holders requested to be registered.

 

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		2.4	Form S-3 Registration.

 

		(a)	In case the Company shall receive from any Holder or Holders a written request or requests that the Company effect a registration
on Form S-3 with respect to all or a part of the Registrable Securities owned by such Holders (which amount of Registrable Securities
shall have a fair market value of at least $500,000 in the aggregate, based upon the last sales price of the Common on a national
exchange or over-the-counter market, as applicable, on the day immediately preceding the date of such request), the Company will
(i) promptly give notice of the proposed registration to all other Holders and (ii) as soon as practicable, use its reasonable
best efforts to effect the registration of all or such portion of such Holders’ Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of any other Holders joining in such request as are
specified in a written request given within ten (10) days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect any such registration pursuant to this Section 2.4: (w)
if Form S-3 is not available for such offering by the Holders; (x) if the Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if
any) at an aggregate price to the public (after deduction of any underwriters’ discounts or commissions) of less than $500,000;
(y) if the Company has, within the twelve (12) month period preceding the date of such request, already effected one (1) such registration
on Form S-3 for the Holders pursuant to this Section 2.4; or (z) if the Company shall furnish to the initiating Holders
a certificate signed by the Chief Executive Officer or President of the Company stating that in the good faith judgment of the
Board, it would be materially detrimental to the Company and its stockholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period
of not more than ninety (90) days after receipt of the request of the Holders under this Section 2.4.

 

		(b)	Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable (and in any event within forty-five (45) days) after receipt of the request
or requests of the Holders.

 

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		(c)	No registration requested by any Holder pursuant to this Section 2.4 shall be deemed a Demand Registration pursuant
to Section 2.2.

 

		2.5	Restrictions on Sales.

 

		(a)	The Company agrees not to effect any public sale or distribution of any Shares (except (i) pursuant to registrations on Form
S-4 or S-8 or any successor thereto or (ii) for those securities being sold by the Company pursuant to a registration statement
in which the Holders of Registrable Securities are participating) during the period beginning on the effective date of any registration
statement in which the Holders of Registrable Securities are participating and ending on the earlier of (x) the date on which all
Registrable Securities registered on such registration statement are sold or (y) one hundred eighty (180) days after the effective
date of such registration statement.

 

		(b)	Each Holder agrees that, if requested by the underwriters for an offering of equity securities by the Company, such Holder
shall not sell, transfer, pledge, make any short sale of, grant any option for the purchase of or enter into any hedging or similar
transaction with the same economic effect as a sale of any Registrable Securities held by such Holder (other than those included
in the offering pursuant to the terms hereof) for a period specified by such underwriters not to exceed one hundred eighty (180)
days (or such other period as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (1) the
publication or other distribution of research reports and (2) analyst recommendations and opinions, including, but not limited
to, the restrictions contained in Financial Industry Regulatory Authority (“FINRA”) Rule 2711(f)(4) or New York Stock
Exchange Rule 472(f)(4), or any successor provisions or amendments thereto) following the effective date of the registration statement
relating to such offering (or, in the case of an offering pursuant to an effective shelf registration statement pursuant to Rule
415 of the Act, the pricing date for such underwritten offering); provided, however, that all officers and directors
of the Company and holders of at least five percent (5%) of the Company’s voting securities enter into similar agreements.
The Company may impose stop-transfer instructions with respect to any Registrable Securities subject to the foregoing restriction
until the end of the period referenced above. The underwriters of the Company’s equity securities are intended third-party
beneficiaries of this Section 2.5(b) and shall have the right, power and authority to enforce the provisions hereof as though
they were parties hereto.

 

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		2.6	Obligations of the Company.

 

Whenever required under this Article
II to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

		(a)	Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its reasonable best
efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the votes
then represented by the Registrable Securities held by the Holders registered thereunder, keep such registration statement effective
for a period of time required for the distribution of the Registrable Securities; provided, however, that such period of
time will not exceed one hundred eighty (180) days after the effective date of such registration statement (the “Effectiveness
Period”); provided, further, that (i) the Effectiveness Period shall be extended for a period of time equal
to the period the Holders refrain from selling any securities included in such registration at the request of an underwriter of
Common (or other securities) of the Company; and (ii) in the case of any registration of Registrable Securities on Form S-3 that
are intended to be offered on a continuous or delayed basis, the Effectiveness Period shall be extended, if necessary, to keep
the registration statement effective for up to one (1) year or, if earlier, until all such Registrable Securities are sold, provided
that Rule 415, or any successor rule under the Act, permits an offering on a continuous or delayed basis, and provided further
that applicable rules under the Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective
amendment that (x) includes any prospectus required by Section 10(a)(3) of the Act or (y) reflects facts or events representing
a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of
information required to be included in (x) and (y) above to be contained in periodic reports filed pursuant to Section 13 or 15(d)
of the 1934 Act in the registration statement. In the event that, in the good faith and reasonable judgment of the Company, it
is advisable to suspend use of the prospectus relating to such registration statement for a discrete period of time (a “Deferral
Period”) due to pending material corporate developments or similar material events that have not yet been publicly disclosed
and as to which the Company believes public disclosure will be prejudicial to the Company, the Company shall deliver a certified
resolution of the Board, signed by a duly authorized officer of the Company, to each Holder of Registrable Securities covered by
such registration statement, to the effect of the foregoing and, upon receipt of such certificate, such Holders agree not to dispose
of such Holders’ Registrable Securities covered by such registration or prospectus (other than in transactions exempt from
the registration requirements under the Act); provided, however, that such Deferral Period shall be no longer than
ninety (90) days and that there may be only one Deferral Period during any twelve (12) month period. The Effectiveness Period shall
be extended for a period of time equal to such Deferral Period.

 

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		(b)	Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of
all securities covered by such registration statement.

 

		(c)	Furnish to the Holders of Registrable Securities covered by such registration statement such numbers of copies of a prospectus,
including a preliminary prospectus, and any amendment or supplement thereto and a reasonable number of copies of the then-effective
registration statement and any post-effective amendment thereto, all in conformity with the requirements of the Act, and such other
documents as they may reasonably request in order to facilitate the disposition of such Registrable Securities.

 

		(d)	Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other
securities or “blue sky” laws of such jurisdictions, and to continue such qualification in effect in such jurisdictions,
as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

 

		(e)	In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such offering; provided that each Holder participating in such
underwriting shall also enter into and perform its obligations under such underwriting agreement.

 

		(f)	Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading, and at the request of any such Holder prepare and furnish to such Holder a reasonable number of copies of
a supplement or an amendment to such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then
existing.

 

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		(g)	Use its reasonable best efforts to cause all such Registrable Securities registered pursuant hereto to be listed on each securities
exchange or automated quotation system on which similar securities issued by the Company are then listed.

 

		(h)	Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereto and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of such registration.

 

		(i)	Permit a single firm of counsel designated as selling stockholders’ counsel (the “Holder Counsel”) by the
Holders participating in such registration to review, at the expense of the Holders, the registration statement and all amendments
and supplements thereto a reasonable period of time prior to their filing with the SEC and state authorities, and shall not file
any document in a form to which such counsel reasonably objects.

 

		(j)	Subject to reasonable confidentiality arrangements, make available for inspection, upon reasonable notice during the Company’s
regular business hours, by any seller of Registrable Securities covered by a registration statement, any managing underwriter participating
in any disposition pursuant to such registration statement, the Holder Counsel and any accountant retained by any such seller or
any managing underwriter (each, an “Inspector” and collectively, the “Inspectors”), all financial and other
records, pertinent corporate documents and properties of the Company (collectively, the “Records”) as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and
employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspector
in connection with such registration statement. Records that the Company determines, in good faith, to be confidential and of which
it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (x) the disclosure of such Records
is necessary to avoid or correct a misstatement or omission in the registration statement, (y) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction or (z) the information in such Records was known to
the Inspectors on a non-confidential basis prior to its disclosure by the Company or has been made generally available to the public.
Each seller of Registrable Securities agrees that it shall, upon learning that disclosure of such Records is sought in a court
of competent jurisdiction, give notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate
action to prevent disclosure of the Records deemed confidential.

 

		(k)	If such sale is pursuant to an underwritten offering, use its reasonable best efforts to obtain a “cold comfort”
letter from the Company’s independent public accountants in customary form and covering such matters of the type customarily
covered by “cold comfort” letters as Holders’ counsel or the managing underwriter reasonably request.

 

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		(l)	Use its reasonable best efforts to furnish, on the date Registrable Securities are delivered to the underwriters for sale pursuant
to an underwritten registration, an opinion, dated such date, of counsel representing the Company for the purposes of such registration,
addressed to the underwriters, covering such legal matters with respect to the registration in respect of which such opinion is
being given as are customarily included in such opinions and are reasonably acceptable to counsel representing the Company.

 

		(m)	Use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable but no later than fifteen (15) months after the effective date of the registration statement,
an earnings statement covering a period of twelve (12) months beginning after the effective date of the registration statement,
in a manner which satisfies the provisions of Section 11(a) of the Act and Rule 158 thereunder.

 

		(n)	Cooperate with each seller of Registrable Securities and each underwriter participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required to be made with the FINRA.

 

		(o)	Use its reasonable best efforts to take all other steps necessary to effect the registration of the Registrable Securities
contemplated hereby.

 

		2.7	Furnish Information.

 

It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Article II with respect to the Registrable Securities
that any selling Holder shall timely furnish to the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Registrable
Securities.

 

		2.8	Expenses of Registration.

 

		(a)	Except as set forth in Section 2.8(b), the Company shall bear and pay all expenses incurred in connection with any registration,
filing or qualification of Registrable Securities pursuant to this Agreement, including (without limitation) all registration,
filing and qualification fees, printers’ and accounting fees, “blue sky” fees and expenses, including fees and
disbursements of counsel related to all “blue sky” matters, fees and expenses of listing any Registrable Securities
on any securities exchange or automated quotation system on which shares of Common are then listed, fees and disbursements of counsel
for the Company but excluding stock transfer taxes that may be payable by the selling Holders and underwriting discounts and commissions
relating to Registrable Securities covered by such registration, which shall be borne pro rata by the Holders. Expenses
for any and all registrations not specifically payable by the Company pursuant to this Section 2.8(a) shall be borne pro
rata by the selling stockholders based on the number of shares of securities sold by each such selling stockholder in the offering.

 

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		(b)	Notwithstanding Section 2.8(a), the Company shall not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 2.2 if the registration request is subsequently withdrawn at the request of the Initiating Holders
(in which case all participating Holders shall bear such expenses), unless the Holders holding at least a majority of the Registrable
Securities agree to forfeit their right to one of the demand registrations to which they are entitled pursuant to Section 2.2;
provided, however, that if such withdrawal occurs prior to the date the registration statement shall have become
effective and at the time of such withdrawal, the Holders have learned of a material adverse change in the financial condition,
business, prospects, properties or results of operations of the Company from that known to the Holders at the time of their request
and have withdrawn the request within five (5) business days following disclosure by the Company of such material adverse change,
then the Holders shall not be required to pay any of such expenses and shall retain their respective rights pursuant to Section
2.2.

 

		2.9	Underwriting Requirements.

 

In connection with any offering involving
an underwriting of shares being issued by the Company, the Company shall be required under Section 2.3 to include any securities
held by the Holders in such underwriting on the same terms and conditions as the securities of the Company included therein, but
only in such quantity as the underwriters determine in their reasonable and good faith judgment and written opinion will not jeopardize
the success of the offering by the Company. If such written opinion states that the registration of all or part of the Registrable
Securities that the Holders have requested to be included would materially adversely affect such offering, then the Company shall
be required to include in such registration, to the extent of the amount that the underwriters believe may be sold without jeopardizing
the success of the offering, first, all of the securities to be offered for the account of the Company; second, the
Registrable Securities to be offered for the account of the Holders, pro rata based upon the amount recommended by the underwriters;
and third, any other securities required to be included in such underwriting and so requested to be included; provided,
however, that the aggregate value of the Registrable Securities to be included in such registration by the Holders may not
be so reduced to less than twenty-five percent (25%) of the total value of all securities included in such registration. For purposes
of the preceding sentence concerning apportionment, for any selling stockholder that is a Holder of Registrable Securities that
is a partnership, limited liability company or corporation, the partners, retired partners, members and stockholders of such Holder,
or the estates and family members of any such partners and retired partners or members and any trusts for the benefit of any of
the foregoing persons and Affiliates of such Holder shall be deemed to be a single “selling stockholder,” and any pro
rata reduction with respect to such “selling stockholder” shall be based upon the aggregate amount of Registrable
Securities owned by all entities and individuals included in such “selling stockholder,” as defined in this sentence.

 

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		2.10	Indemnification.

 

In the event any Registrable Securities
are included in a registration statement under this Article II:

 

		(a)	To the extent permitted by law, the Company will indemnify and hold harmless each Holder and their respective officers, directors,
trustees, partners, employees, any underwriter (as defined in the Act) for such Holder and each Person, if any, who controls such
Holder or underwriter within the meaning of the Act or the 1934 Act (each, a “Holder Indemnified Person”), against
any losses, claims, damages, expenses or liabilities (joint or several) to which they may become subject under the Act or the 1934
Act, insofar as such losses, claims, damages, expenses or liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations (collectively, a “Violation”): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Act, the 1934 Act, or any rule or regulation promulgated under the Act or the 1934 Act;
and the Company will reimburse, as incurred, the Holder Indemnified Persons, for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 2.10(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by any Holder Indemnified Person.

 

		(b)	To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, its directors, its officers,
its employees, each Person, if any, who controls the Company within the meaning of the Act and any underwriter (each, a “Company
Indemnified Person”) against any losses, claims, damages, expenses or liabilities (joint or several) to which any of the
foregoing Persons may become subject, under the Act or the 1934 Act insofar as such losses, claims, damages, expenses or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use
in connection with such registration; and each such Holder will reimburse, as incurred, any legal or other expenses reasonably
incurred by any Company Indemnified Person, in connection with investigating or defending any such loss, claim, damage, liability
or action;  provided, however, that the indemnity agreement contained in this Section 2.10(b) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent
of the Holder (which consent shall not be unreasonably withheld); provided further, that, in no event shall any indemnity
under this Section 2.10(b) exceed the aggregate proceeds (net of underwriting discounts and commissions) from the sale of
the Registrable Securities received by such Holder from the shares sold by such Holder in the offering in question.

 

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		(c)	Promptly after receipt by an indemnified party under this Section 2.10 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 2.10, deliver to the indemnifying party a written notice of the commencement thereof; provided,
however, that the failure to so notify the indemnifying party shall not relieve the indemnifying party of any liability
that it may have to the indemnified party hereunder, except to the extent that the indemnifying party is materially prejudiced
by such failure to notify. The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory
to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may
be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented
by such counsel in such proceeding. An indemnifying party shall not, without the prior written consent of the indemnified parties,
settle, compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification may be sought hereunder by such indemnified parties (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes a release of such
indemnified parties reasonably acceptable to such indemnified parties from all liability arising out of such claim, action, suit
or proceeding or unless the indemnifying parties shall confirm in a written agreement reasonably acceptable to such indemnified
parties, that notwithstanding any federal, state or common law, such settlement, compromise or consent shall not adversely affect
the right of any indemnified party to indemnification as provided in this Article II.

 

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		(d)	If the indemnification provided for in this Section 2.10 is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information,
and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the liability of each Holder under
this Section 2.10(d) shall be limited to an amount equal to the aggregate proceeds (net of underwriting discounts and commissions)
from the sale of the Registrable Securities received by such Holder from the shares sold by such Holder in the offering in question.

 

		(e)	The obligations of the Company and the Holders under this Section 2.10 shall survive the completion of any offering
of Registrable Securities in a registration statement under this Article II and otherwise.

 

		2.11	Assignment of Registration Rights.

 

The rights to cause the Company to
register Registrable Securities pursuant to this Article II may be assigned (but only with all related obligations hereunder)
by (a) a Holder to a transferee or assignee of such securities who, after such assignment or transfer, holds at least 10% of the
outstanding Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations and other
recapitalizations and including for purposes of such calculation the shares of Common then issuable upon conversion of any securities
of the Company), (b) a Holder to its partners, members, former partners or former members (or their estates) or Affiliates or (c)
a Holder to any family member, family limited partnership, family limited liability company or trust for the benefit of the Holder;
provided in each case that: (i) the Company is, within a reasonable time after such transfer, furnished with written notice
of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being
assigned; (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement
as a “Holder”; and (iii) such assignment shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under the Act.

 

    	15

    	 

    

 

		2.12	Limitations on Subsequent Registration Rights.

 

From and after the date of this Agreement,
the Company shall not, without the prior written consent of the Holders holding at least a majority of the outstanding Registrable
Securities held by the Holders, enter into any agreement with any holder or prospective holder of any securities of the Company
that would allow such holder or prospective holder (a) to include such securities in any registration filed under Section 2.2,
Section 2.3 or Section 2.4 hereof, unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the inclusion of such prospective holder’s securities
will not reduce the amount of the Registrable Securities of the existing Holders that are included or (b) to effect a registration
that could result in such registration statement being declared effective within one hundred eighty (180) days of the effective
date of any registration effected pursuant to Section 2.2 or Section 2.4.

 

		2.13	Termination of Registration Rights.

 

This Agreement shall terminate and
be of no further force or effect, and no Holder shall be entitled to exercise any right provided for in this Article II
after the earlier of (i) five (5) years following the date hereof and (ii) as to each Holder, the date on which such Holder can
sell all shares of its Registrable Securities without restriction pursuant to Rule 144 or any successor provision thereto, without
regard to volume limitations or manner of sale.

 

ARTICLE III

MISCELLANEOUS

 

		3.1	Successors and Assigns.

 

Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns
of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

    	16

    	 

    

 

		3.2	Governing Law.

 

This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof.

 

		3.3	Counterparts.

 

This Agreement may be executed in any number of counterparts
and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement, and may be delivered to the other parties hereto by facsimile
or similar electronic means.

 

		3.4	Headings.

 

The headings and subheadings in this
Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

		3.5	Notices.

 

All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested,
telecopier, courier service or personal delivery:

 

		(a)	if to the Company:

 

Transgenomic, Inc.

12325 Emmet Street

Omaha, Nebraska 68164

Attention: Chief Financial Officer

Facsimile: 402-452-5401

 

with a copy to:

 

Paul Hastings LLP

1117 S. California Avenue

Palo Alto, California 94304

Attention: Jeffrey T. Hartlin

Facsimile: 650-320-1904

 

and

 

    	17

    	 

    

 

		(b)	if to the Investors:

 

c/o Third Security, LLC

1881 Grove Avenue

Radford, Virginia 24141

Attention: Tad Fisher

Facsimile: 540-633-7939

 

with a copy to:

 

Troutman Sanders LLP

Troutman Sanders Building

1001 Haxall Point

Richmond, Virginia 23219

Attention: John Owen Gwathmey

Facsimile: 804-698-5174

 

		(c)	if to any other Holders, to the address reflected in the stock ledger of the Company

 

All such notices and communications shall be deemed
to have been duly given and received when delivered by hand, if personally delivered; when delivered by courier, if delivered by
commercial courier service; and five days of business after being deposited in the mail, postage prepaid, if mailed.

 

		3.6	Expenses.

 

If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

 

		3.7	Amendments and Waivers.

 

		(a)	No failure or delay on the part of any party to this Agreement in exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not
exclusive of any remedies that may be available to the parties hereto at law, in equity or otherwise.

 

		(b)	Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement,
and any consent to any departure by any of the parties to this Agreement from the terms of any provision of this Agreement, shall
be effective (i) only if it is made or given in writing and signed by the Company and Holders holding at least a majority of the
outstanding Registrable Securities, and (ii) only in the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or demand on the Company in any case shall entitle
the Company to any other further notice or demand in similar or other circumstances.

 

    	18

    	 

    

 

		3.8	Severability.

 

If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in
any way impaired, unless the provision held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining
provisions hereof.

 

		3.9	Rules of Construction.

 

Unless the context otherwise requires, references to
sections or subsections refer to sections or subsections of this Agreement.

 

		3.10	Entire Agreement.

 

This Agreement and the other Transaction Documents are
intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions,
promises, representations, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement,
together with the exhibits and schedules hereto, and the other Transaction Documents, supersede all prior agreements and understandings
between the parties with respect to such subject matter, of which any such agreements are hereby terminated and shall have no further
force or effect.

 

[Signatures appear on the following page.]

 

    	19

    	 

    

 

IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed and delivered by their respective officers hereunto duly authorized on the date first above
written.

 

	COMPANY:	TRANSGENOMIC, INC.
	 	 
	 	By:	/s/ Paul Kinnon
	 	 	Name: Paul Kinnon
	 	 	Its: CEO and President
	 	 
	INVESTORS:	THIRD SECURITY SENIOR STAFF 2008 LLC
	 	 
	 	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 2014 LLC
	 	 
	 	By:	/s/ Randal J. Kirk
	 	 	Name: Randal J. Kirk
	 	 	Title: Manager, Third Security, LLC, which is the Manager of Third Security Staff 2014 LLC
	 	 
	 	THIRD SECURITY INCENTIVE 2010 LLC
	 	 
	 	By:  	/s/ Randal J. Kirk
	 	 	Name: Randal J. Kirk
	 	 	Title: Manager, Third Security, LLC, which is the Manager of Third Security Incentive 2010 LLC

 

[Signature Page to Series B Registration
Rights Agreement]

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