Document:

EXHIBIT 10.1
                    AMENDED AND RESTATED CONSULTING AGREEMENT

     This  Amended  and  Restated Consulting Agreement ("Agreement") is made and
entered  into  this  16th day of  April, 2004  (the  "Effective  Date")  by  and
between  Robert  Genovese  (the  "Consultant") and  Spectrum Sciences & Software
Holdings  Corp.  (the  "Company").

     WHEREAS,  the  Company  and  Consulting entered into a Consulting Agreement
dated  March  11,  2004  (the Initial Agreement"), pursuant to which the Company
engaged  Consultant to perform certain corporate planning, business development,
and  financial  strategy  services  for  the  Company.

     WHEREAS,  certain provisions of the Initial Agreement have been modified by
agreement  among  the  parties;  and

     WHEREAS, the parties hereto wish to amend and restate the Initial Agreement
to  reflect  the  changes  agreed  to  by  the  parties.

     NOW  IN  CONSIDERATION  OF  THE  MUTUAL  PROMISES  AND  UNDERTAKING  HEREIN
CONTAINED  AND  FOR  OTHER  GOOD  AND  VALUABLE  CONSIDERATION,  THE RECEIPT AND
SUFFICIENCY  OF  WHICH  IS  HEREBY  ACKNOWLEDGED  THE  PARTIES AGREE AS FOLLOWS:

     1.     ENGAGEMENT OF CONSULTANT:  The Company hereby engages Consultant and
Consultant  hereby  agrees  to hold itself available to render, and to render at
the  request of the Company, independent advisory consulting services concerning
the  following:

     a)     develop  an  in-depth  familiarization  with  the Company's business
objectives  and  bring  to its attention potential or actual opportunities which
meet  those  objectives  or  logical  extensions  thereof;

     b)     alert  the  Company  to  new  or  emerging  high  potential forms of
production  and  distribution  which  could  either  be  acquired  or  developed
internally;

     c)     comment  on  the  Company's  corporate  development  including  such
factors  as  position  in  competitive  environment,  financial performances vs.
competition,  strategies,  operational  viability,  etc.;

     d)     identify  respective  suitable  merger or acquisition candidates for
the Company, perform  appropriate diligence investigations with respect thereto,
advise the Company with respect to the desirability of pursuing such candidates,
and  assist  the  Company  in  any  negotiations  which may ensue therefrom; and

     e)     other  such  planning and development services, all as requested and
instructed  by  the  Company.

     The  services  to be rendered by Consultant to the Company shall under
NO  circumstances  include  the  following:

     a)     any  activities  which  could  be  deemed by the Securities and
Exchange  Commission  to  constitute  investment  banking  or  any  other
activities  required by Consultant to be registered as a broker-dealer under the
Securities  Act  of  1934.

     b)     services  in  connection  with  the offer or sale of securities in a
capital-raising  transaction;

     c)     services  that  directly  or indirectly promote or maintain a market
for the securities of the Company including without limitation the dissemination
of  information that reasonably may be expected to sustain or raise or otherwise
influence  the  price  of  the  securities;

     d)     services providing investor relations or shareholder communications;

     e)     consultation  in  connection  with  financing that involves any
issuance  of  the  Company's  securities,  whether  equity  or  debt.

<PAGE>

     2.     TERM:  The  term  of  this  agreement ("Term") shall begin as of the
Effective  Date  and  shall  terminate  two  (2)  years thereafter ("Anniversary
Date").  Consultant  shall  perform  the  full  term hereof, provided and to the
extent  he  is  compensated  as  provided  herein and requested by Company to so
perform.

     3.     COMPENSATION:  In  consideration  of the services to be provided for
the  Company  by  Consultant  the Company agrees to compensate the Consultant as
follows:

     a)     Pursuant  to the Initial Agreement, the Company issued to Consultant
an  option  (the  "Option") to purchase 9,000,000 shares of the Company's common
stock  at  an  exercise price of the lesser of $1.65 or the fair market value of
the  shares  at  the  time  of  exercise.

     b)     As  soon  as  practicable after the execution of this Agreement, the
Company  agrees  to  issue  to  Consultant  an option (the "Option") to purchase
9,000,000 shares of the Company's common stock at an exercise price equal to the
greater  of  $1.95, or sixty percent (60%) of the closing price of the Company's
common  stock  on  the day immediately preceding Consultant's notice to exercise
(the  "Option  Shares").

     c)     Additional  Compensation.

          (1)  As soon as practicable after the execution of this Agreement, and
     in  consideration  for  (i)  procuring  the  letter  of  intent with Inland
     Fabricators,  LLC  ("Inland"),  (ii)  further  due  diligence  assistance
     respecting Inland, and (iii) assisting the Company in negotiating the terms
     and the closing of the definitive agreement between the Company and Inland,
     the  Company  agrees  to  issue  to  Consultant an option (the "Option") to
     purchase  an  5,000,000 shares of the Company's common stock at an exercise
     price  of the lesser of $1.65 or the fair market value of the shares at the
     time  of  exercise.

          (2)  If,  during  the  terms of this Agreement, the Consultant submits
     suitable  merger  or  acquisition  candidates which, in the aggregate, have
     revenues  equal  to  or exceeding $100,000,000 dollars, the Company may, in
     its  discretion,  further  compensate  Consultant.

     d)     The  Option  Shares  shall  vest immediately upon issuance, and all
shall  have  "piggyback"  or  S-8  registration  rights.

     e)     The  exercise  rights  of  Consultant  shall  be  limited such that,
unless  Consultant  gives  written  notice  75 days in advance to the Company of
Consultant's intention to exceed the Limitation on Conversion as defined herein,
with  respect  to  all or a specified amount of the Option and the corresponding
number  of  the  underlying shares, in no instance shall Consultant (singularly,
together  with  any Persons who in the determination of the Consultant, together
with the Consultant, constitute a group as defined in Rule 13d-5 of the Exchange
Act) be entitled to exercise the Option to the extent such exercise would result
in Consultant beneficially owning more than five percent (5%) of the outstanding
shares  of common stock of the Company. For these purposes, beneficial ownership
shall be defined and calculated in accordance with Rule 13d-3, promulgated under
the  Exchange  Act (the foregoing being herein referred to as the "Limitation on
                                                                   -------------
Conversion").
----------

     f)     If  pursuant  to  1(d)  above,  Consultant  introduces  a  merger or
a  combination of sorts with another entity to the Company, the Consultant shall
be  entitled  to  a  finder's fee, and the Company shall enter into an agreement
with  the  Consultant  respecting  same.

     4.     INDEPENDENT  CONTRACTOR:  It  is expressly agreed that Consultant is
acting  as  an  independent  contractor  in  performing  its services hereunder.
Company  shall  carry  no  workmen's  compensation  insurance  or  any health or
accident  insurance  to  cover  Consultant.  The  Company  shall  not  pay  any
contributions  to  social  security,  unemployment  insurance,  Federal or State
withholding  taxes  nor  pay any other contributions or benefits, which might be
expected  in  an  employer-employee  relationship.

     5.     ASSIGNMENT:  This  Agreement  and  the rights and obligations of the
parties  hereunder shall inure to the benefit of and shall be binding upon their
successors  and  assigns  but  cannot  be  assigned  by Consultant without prior
written  consent  of  Company.

<PAGE>

     6.     EXCLUSIVITY:  In  order  to  ensure  best  efforts  on behalf of the
Company,  Consultant  agrees  that  during  the  period  of  your  engagement,
Consultant,  nor  any  person  or  entity acting on Consultant's behalf or which
Consultant  is  are a shareholder, partner, interested person, or employee, will
directly or indirectly engage in any consulting arrangements, whether written or
otherwise,  with  any  company,  unless,  prior  to  such engagement, Consultant
obtains  written  consent  from  the  Company.

     7.     GENERAL  PROVISIONS:

     a)     The  Consultant  hereby  agrees, warrants and covenants that it will
provide to the Company copies of all works product for review, use and retention
as  Company  sees  fit. Consultant further agrees, warrants and covenants not to
utilize  or  disclose  any  during the term hereof and for 12 months thereafter.

     b)     The Consultant agrees to provide full and accurate disclosure of any
and all equity compensation, which Consultant has received or will receive under
this  agreement,  whereas  required  under  the  Securities  Act of 1933 and the
Securities  Exchange  Act  of  1934.

     c)     Governing  Law and Jurisdiction: This agreement shall be governed by
and  interpreted  in accordance with the laws of the state of Delaware.  Each of
the  parties  hereto  consents  to such jurisdiction for the enforcement of this
agreement  and  matters  pertaining  the transaction and activities contemplated
hereby.

     d)     Attorney's Fees:  In the event a dispute arises with respect to this
agreement, the party prevailing in such dispute shall be entitled to recover all
expenses, including, without limitation, reasonable attorney's fees and expenses
incurred  in  ascertaining  such  parties' rights, in preparing to enforce or in
enforcing  such  parties'  right  under  this  agreement,  whether or not it was
necessary  for  such  party  to  institute  suit.

     e)     Complete  Agreement:  This  Agreement  supercedes any and all of the
other  agreements,  either  oral  or  in  writing,  between  the  parties  with
respect  to  such  subject matter  in  any  manner  whatsoever.  Each  party  to
this  agreement  acknowledges  that  no   representations,   inducements,
promises  or  agreements,  oral  or  otherwise,  have been made by any party, or
anyone  herein,  and that no other agreement, statement or promise not contained
in  this  Agreement  may be changed or amended  only by an  amendment in writing
signed  by  all  parties  or  their  respective  successors-in-interest.

     f)     Binding:  This  Agreement  shall  be  binding  upon and inure to the
benefit  of the successor-in-interest, assignees and personal representatives of
the  respective  parties.

     g)     Unenforceable  Terms:  Any  provision  hereof  prohibited  by law or
unenforceable  under  the  law  of  any  jurisdiction in which such provision is
applicable  shall  adhere  to  such  jurisdiction only to be ineffective without
affecting  any other provision of this Agreement.  To the full extent,  however,
that  such  applicable  law  may  be  waived  to the end that this  Agreement be
deemed  to  be a valid and binding agreement  enforceable in accordance with its
terms,  the  Parties  hereto  hereby  waive  such  applicable  law knowingly and
understanding  the  effect  of  such  waiver.

     h)     Execution  Assurances:  This  Agreement  may be  executed in several
counterparts  and when so executed  shall  constitute  one agreement  binding on
all  the parties, notwithstanding  that all the Parties are not signatory to the
original  and  same  counterpart.

     i)     Further Assurances:  From time to time each party will  execute  and
deliver  such  further  instruments  and  will  take  such  other  action as any
other  party may reasonably   request  in  order  to  this  charge  and  perform
their  obligations  and  agreement   hereunder  and  to  give  effect  to  the
intentions  expressed  in  this  agreement.

     j)     Miscellaneous  Provisions:  The  various  heading  and  numbers
herein  and the grouping of provisions of this agreement in to separate articles
and paragraphs are for the purpose of convenience only and shall be considered a
party  hereof. The language in all parts of this agreement shall in all cases by
construed  in accordance with its fair meanings as if prepared by all parties to
the  agreement  and  not  strictly  for  or  against  any  of  the  parties.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

IN  WITNESS  WHEREOF,  the parties hereto have executed this agreement as of the
day  and  year  first  written  above.

SPECTRUM  SCIENCES  &
SOFTWARE  HOLDINGS  CORP.

By:  /s/ William  H.  Ham,  Jr.             /s/ Robert  Genovese
     ----------------------------------     ----------------------------------
     Name:  William  H.  Ham,  Jr.          Robert  Genovese
     Title:  Executive  Vice  President

<PAGE>Securities Purchase Agreement

 EXHIBIT 10.1 
  
 TRANSGENOMIC, INC. 
  
 SECURITIES PURCHASE AGREEMENT 
  
 February 19, 2004 

 TABLE OF CONTENTS 
  

							
	 	  	 	  	 	  	Page

	1.	  	Agreement to Sell and Purchase	  	1
			
	2.	  	Fees and Warrant	  	1
			
	3.	  	Closing, Delivery and Payment.	  	2
	 	  	3.1	  	 Closing
	  	2
	 	  	3.2	  	 Delivery
	  	2
			
	4.	  	Representations and Warranties of the Company	  	2
	 	  	4.1	  	 Organization, Good Standing and Qualification
	  	2
	 	  	4.2	  	 Subsidiaries
	  	3
	 	  	4.3	  	 Capitalization; Voting Rights
	  	3
	 	  	4.4	  	 Authorization; Binding Obligations
	  	4
	 	  	4.5	  	 Liabilities
	  	4
	 	  	4.6	  	 Agreements; Action
	  	4
	 	  	4.7	  	 Obligations to Related Parties
	  	5
	 	  	4.8	  	 Changes
	  	6
	 	  	4.9	  	 Title to Properties and Assets; Liens, Etc.
	  	7
	 	  	4.10	  	 Intellectual Property
	  	7
	 	  	4.11	  	 Compliance with Other Instruments
	  	8
	 	  	4.12	  	 Litigation
	  	8
	 	  	4.13	  	 Tax Returns and Payments
	  	8
	 	  	4.14	  	 Employees
	  	8
	 	  	4.15	  	 Registration Rights and Voting Rights
	  	9
	 	  	4.16	  	 Compliance with Laws; Permits
	  	9
	 	  	4.17	  	 Environmental and Safety Laws
	  	9
	 	  	4.18	  	 Valid Offering
	  	10
	 	  	4.19	  	 Full Disclosure
	  	10
	 	  	4.20	  	 Insurance
	  	10
	 	  	4.21	  	 SEC Reports
	  	10
	 	  	4.22	  	 Listing
	  	11
	 	  	4.23	  	 No Integrated Offering
	  	11
	 	  	4.24	  	 Stop Transfer
	  	11
	 	  	4.25	  	 Dilution
	  	11
			
	5.	  	Representations and Warranties of the Purchaser	  	12
	 	  	5.1	  	 No Shorting
	  	12
	 	  	5.2	  	 Requisite Power and Authority
	  	12
	 	  	5.3	  	 Investment Representations
	  	12
	 	  	5.4	  	 Purchaser Bears Economic Risk
	  	13
	 	  	5.5	  	 Acquisition for Own Account
	  	13
	 	  	5.6	  	 Purchaser Can Protect Its Interest
	  	13
	 	  	5.7	  	 Accredited Investor
	  	13
	 	  	5.8	  	 Legends
	  	13
			
	6.	  	Covenants of the Company	  	14
	 	  	6.1	  	 Stop-Orders
	  	14

  

 i 

							
	 	  	6.2	  	 Listing
	  	14
	 	  	6.3	  	 Market Regulations
	  	15
	 	  	6.4	  	 Reporting Requirements
	  	15
	 	  	6.5	  	 Use of Funds
	  	15
	 	  	6.6	  	 Access to Facilities
	  	15
	 	  	6.7	  	 Taxes
	  	15
	 	  	6.8	  	 Insurance
	  	16
	 	  	6.9	  	 Intellectual Property
	  	17
	 	  	6.10	  	 Properties
	  	17
	 	  	6.11	  	 Confidentiality
	  	17
	 	  	6.12	  	 Required Approvals
	  	17
	 	  	6.13	  	 Reissuance of Securities
	  	18
	 	  	6.14	  	 Opinion
	  	18
			
	7.	  	Covenants of the Purchaser	  	18
	 	  	7.1	  	 Confidentiality
	  	18
	 	  	7.2	  	 Non-Public Information
	  	18
			
	8.	  	Covenants of the Company and Purchaser Regarding Indemnification	  	18
	 	  	8.1	  	 Company Indemnification
	  	18
	 	  	8.2	  	 Purchaser’s Indemnification
	  	18
	 	  	8.3	  	 Procedures
	  	19
			
	9.	  	Conversion of Convertible Note	  	19
	 	  	9.1	  	 Mechanics of Conversion
	  	19
	 	  	9.2	  	 Maximum Conversion
	  	20
	 	  	9.3	  	 NASDAQ Approval
	  	 
			
	10.	  	Registration Rights.	  	21
	 	  	10.1	  	 Registration Rights Granted
	  	21
	 	  	10.2	  	 Indemnification
	  	21
	 	  	10.3	  	 Offering Restrictions
	  	23
			
	11.	  	Miscellaneous	  	23
	 	  	11.1	  	 Governing Law
	  	23
	 	  	11.2	  	 Survival
	  	24
	 	  	11.3	  	 Successors
	  	24
	 	  	11.4	  	 Entire Agreement
	  	24
	 	  	11.5	  	 Severability
	  	24
	 	  	11.6	  	 Amendment and Waiver
	  	24
	 	  	11.7	  	 Delays or Omissions
	  	24
	 	  	11.8	  	 Notices
	  	25
	 	  	11.9	  	 Attorneys’ Fees
	  	26
	 	  	11.10	  	 Titles and Subtitles
	  	26
	 	  	11.11	  	 Facsimile Signatures; Counterparts
	  	26
	 	  	11.12	  	 Broker’s Fees
	  	26
	 	  	11.13	  	 Construction
	  	26

  

 ii 

 LIST OF EXHIBITS 
  

			
	 Form of Convertible Term Note
	  	Exhibit A
	 Form of Warrant
	  	Exhibit B
	 Form of Opinion
	  	Exhibit C
	 Form of Escrow Agreement
	  	Exhibit D

  
  

 iii 

 SECURITIES PURCHASE AGREEMENT 
  
 THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of February 9, 2004, by and
between TRANSGENOMIC, INC., a Delaware corporation (the “Company”), and Laurus Master Fund, Ltd., a Cayman Islands company (the “Purchaser”). 
  
 RECITALS 
  
 WHEREAS, the Company has authorized the sale to the Purchaser of a Convertible Term Note in the aggregate principal amount of Two Million Seven Hundred
Fifty Thousand Dollars ($2,750,000.00) (the “Note”), which Note is convertible into shares of the Company’s common stock, $0.01 par value per share (the “Common Stock”) at a fixed conversion price of $2.61 per share of
Common Stock (“Fixed Conversion Price”); 
  
 WHEREAS,
the Company wishes to issue a warrant to the Purchaser to purchase up to 125,000 shares of the Company’s Common Stock in connection with Purchaser’s purchase of the Note; 
  
 WHEREAS, Purchaser desires to purchase the Note and Warrant on the terms and conditions set forth herein; and 
  
 WHEREAS, the Company desires to issue and sell the Note and Warrant to
Purchaser on the terms and conditions set forth herein. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of
the foregoing recitals and the mutual promises, representations, warranties and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows: 
  
 1. Agreement to Sell and Purchase. Pursuant
to the terms and conditions set forth in this Agreement, on the Closing Date (as defined in Section 3), the Company agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase from the Company a Note in the amount of Two Million
Seven Hundred Fifty Thousand Dollars ($2,750,000.00) convertible in accordance with the terms thereof into shares of the Company’s Common Stock in accordance with the terms of the Note and this Agreement. The Note purchased on the Closing Date
shall be known as the “Offering.” A form of the Note is annexed hereto as Exhibit A. The Note will have a Maturity Date (as defined in the Note) thirty six (36) months from the date of issuance. Collectively, the Note and Warrant (as
defined in Section 2) and Common Stock issuable in payment of the Note, upon conversion of the Note and upon exercise of the Warrant are referred to as the “Securities.” 
  
 2. Fees and Warrant. On the Closing Date: 
  
 (a) The Company will issue and deliver to the Purchaser a Warrant to purchase up to 125,000 shares of Common
Stock in connection with the Offering (the 

 “Warrant”) pursuant to Section 1 hereof. The Warrant must be delivered on the Closing Date. A
form of Warrant is annexed hereto as Exhibit B. All the representations, covenants, warranties, undertakings, and indemnification, and other rights made or granted to or for the benefit of the Purchaser by the Company are hereby also made and
granted in respect of the Warrant and shares of the Company’s Common Stock issuable upon exercise of the Warrant (the “Warrant Shares”). 
  
 (b) Subject to the terms of Section 2(d) below, the Company shall pay to Laurus Capital Management, LLC, manager of Purchaser a closing
payment in an amount equal to three and six-tenths percent (3.60%) of the aggregate principal amount of the Note. The foregoing fee is referred to herein as the “Closing Payment.” 
  
 (c) The Company shall reimburse the Purchaser for its
reasonable legal fees for services rendered to the Purchaser in preparation of this Agreement and the Related Agreements (as hereinafter defined), and expenses in connection with the Purchaser’s due diligence review of the Company and relevant
matters. Amounts required to be paid hereunder will be paid at the Closing and shall be $25,000 for legal expenses and for performing due diligence inquiries on the Company. 
  
 (d) The Closing Payment, legal fees and due diligence fees (net of deposits previously paid by the Company
shall be paid at closing out of funds held pursuant to a Funds Escrow Agreement of even date herewith among the Company, Purchaser, and an Escrow Agent (the “Funds Escrow Agreement”) and a disbursement letter (the “Disbursement
Letter”). 
  
 3. Closing, Delivery and Payment. 

  
 3.1 Closing. Subject to the terms and conditions
herein, the closing of the transactions contemplated hereby (the “Closing”), shall take place on the date hereof, at such time or place as the Company and Purchaser may mutually agree (such date is hereinafter referred to as the
“Closing Date”). 
  
 3.2 Delivery. Pursuant to
the Funds Escrow Agreement in the form attached hereto as Exhibit C, at the Closing on the Closing Date, the Company will deliver to the Purchaser, among other things, a Note in the form attached as Exhibit A representing the principal amount of
$2,750,000, and a Warrant in the form attached as Exhibit B in the Purchaser’s name representing 125,000 Warrant Shares and the Purchaser will deliver to the Company, among other things, the amounts set forth in the Disbursement Letter by
certified funds or wire transfer. 
  
 4. Representations and
Warranties of the Company. The Company hereby represents and warrants to the Purchaser as of the date of this Agreement as set forth below which disclosures are supplemented by, and subject to the Company’s filings under the Securities
Exchange Act of 1934 (collectively, the “Exchange Act Filings”), copies of which have been provided to the Purchaser. 
  
 4.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has the corporate power and authority to own and operate its properties 
  

 2 

 and assets, to execute and deliver this Agreement, and the Note and the Warrant to be issued in connection with this
Agreement, the Security Agreement relating to the Note dated as of February 9, 2004 between the Company and the Purchaser, the Registration Rights Agreement relating to the Securities dated as of February 9, 2004 between the Company and the
Purchaser and all other agreements referred to herein (collectively, the “Related Agreements”), to issue and sell the Note and the shares of Common Stock issuable upon conversion of the Note (the “Note Shares”), to issue and sell
the Warrant and the Warrant Shares, and to carry out the provisions of this Agreement and the Related Agreements and to carry on its business as presently conducted. The Company is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a
material adverse effect on the Company or its business. 
  
 4.2
Subsidiaries. The Company owns all of the issued and outstanding capital stock of Annovis, Inc, a Delaware Corporation; Transgenomic Japan, Inc., a Delaware corporation; TBIO Nebraska, Inc., a Delaware Corporation; Transgenomic Ltd. a
corporation organized under the laws of England & Wales; Cruachem Limited, a corporation organized under the laws of Scotland; and Todd Campus Limited, a corporation organized under the laws of Scotland. The Company does not own or control any
equity security or other interest of any other corporation, limited partnership or other business entity. 
  
 4.3 Capitalization; Voting Rights. 
  
 (a) The authorized capital stock of the Company, as of the date hereof consists of 75 million shares, of which 60 million are shares of
Common Stock, par value $0.01 per share and further of which 28,769,122 shares of which are issued and outstanding as of February 4, 2004, and 15 million are shares of preferred stock, par value $0.01 per share of which no shares of Preferred Stock
are issued and outstanding. 
  
 (b) Except as
disclosed on Schedule 4.3, other than: (i) the shares reserved for issuance under the Company’s stock option plans; and (ii) shares which may be granted pursuant to this Agreement and the Related Agreements, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Company of any of its securities. Except as
disclosed on Schedule 4.3, neither the offer, issuance or sale of any of the Note or Warrant, or the issuance of any of the Note Shares or Warrant Shares, nor the consummation of any transaction contemplated hereby will result in a change in the
price or number of any securities of the Company outstanding, under anti-dilution or other similar provisions contained in or affecting any such securities. 
  
 (c) All issued and outstanding shares of the Company’s Common Stock: (i) have been duly authorized and validly issued and are fully
paid and nonassessable; and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities. 
  

 3 

 (d) The rights, preferences, privileges and restrictions of the shares of the Common
Stock are as stated in the Company’s Certificate of Incorporation (the “Charter”). The Note Shares and Warrant Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement
and the Company’s Charter, the Securities will be validly issued, fully paid and nonassessable, and will be free of any liens or encumbrances; provided, however, that the Securities may be subject to restrictions on transfer under state and/or
federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed. 
  
 4.4 Authorization; Binding Obligations. All corporate action on the part of the Company, its officers and directors necessary for the authorization
of this Agreement and the Related Agreements, the performance of all obligations of the Company hereunder at the Closing and, the authorization, sale, issuance and delivery of the Note and Warrant has been taken or will be taken prior to the
Closing. The Agreement and the Related Agreements, when executed and delivered and to the extent it is a party thereto, will be valid and binding obligations of the Company enforceable in accordance with their terms, except: 
  
 (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights; and 
  
 (b) general principles of equity that restrict the availability of equitable or legal remedies. 
  
 The sale of the Note and the subsequent conversion of the Note into Note Shares are not and
will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with. The issuance of the Warrant and the subsequent exercise of the Warrant for Warrant Shares are not and will not be subject to
any preemptive rights or rights of first refusal that have not been properly waived or complied with. 
  
 4.5 Liabilities. The Company, to the best of its knowledge, has no material contingent liabilities, except current liabilities incurred in the
ordinary course of business and liabilities disclosed in any Exchange Act Filings. 
  
 4.6 Agreements; Action. Except as set forth on Schedule 4.6 or as disclosed in any Exchange Act Filings: 
  
 (a) There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company is a party or to its knowledge by which it is bound which may involve: (i) obligations (contingent or otherwise) of, or payments to, the Company in excess of $50,000 (other than obligations of, or payments to, the Company arising from
purchase or sale agreements entered into in the ordinary course of business); or (ii) the transfer or license of any patent, copyright, trade secret or other proprietary right to or from the Company (other than licenses arising from the purchase of
“off the shelf” or other standard products); or (iii) provisions restricting the development, manufacture or distribution of the Company’s products or services; or (iv) indemnification by the Company with respect to infringements of
proprietary rights. 
  

 4 

 (b) Since September 30, 2003, the Company has not: (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series of its capital stock; (ii) incurred any indebtedness for money borrowed or any other liabilities (other than ordinary course obligations) individually in excess of
$50,000 or, in the case of indebtedness and/or liabilities individually less than $50,000, in excess of $100,000 in the aggregate; (iii) made any loans or advances to any person not in excess, individually or in the aggregate, of $100,000, other
than ordinary advances for travel expenses; or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. 
  
 (c) For the purposes of subsections (a) and (b) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. 
  
 4.7 Obligations to Related Parties. Except as set forth on Schedule 4.7, there are no obligations of the Company to officers, directors,
stockholders or employees of the Company other than: 
  
 (a) for payment of salary for services rendered and for bonus payments; 
  
 (b) reimbursement for reasonable expenses incurred on behalf of the Company; 
  
 (c) for other standard employee benefits made generally
available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company); and 
  

(d) obligations listed in the Company’s financial statements or disclosed in any of its Exchange Act Filings. 
  
 Except as described above or set forth on Schedule 4.7, none of the officers, directors or,
to the best of the Company’s knowledge, key employees or stockholders of the Company or any members of their immediate families, are indebted to the Company, individually or in the aggregate, in excess of $50,000 or have any direct or indirect
ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, other than passive investments in publicly traded
companies (representing less than one percent (1%) of such company) which may compete with the Company. Except as described above, no officer, director or stockholder, or any member of their immediate families, is, directly or indirectly, interested
in any material contract with the Company and no agreements, understandings or proposed transactions are contemplated between the Company and any such person. Except as set forth on Schedule 4.7, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation. 
  

 5 

 4.8 Changes. Since September 30, 2003, except as disclosed in any Exchange Act Filing or in any
Schedule to this Agreement or to any of the Related Agreements, there has not been: 
  
 (a) Any change in the assets, liabilities, financial condition, prospects or operations of the Company, other than changes in the ordinary
course of business, none of which individually or in the aggregate has had or is reasonably expected to have a material adverse effect on such assets, liabilities, financial condition, prospects or operations of the Company; 
  
 (b) Any resignation or termination of any officer, key
employee or group of employees of the Company; 
  
 (c) Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise; 
  
 (d) Any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the properties, business or prospects or financial condition of the Company; 
  
 (e) Any waiver by the Company of a valuable right or of a material debt owed to it; 
  
 (f) Any direct or indirect material loans made by the
Company to any stockholder, employee, officer or director of the Company, other than advances made in the ordinary course of business; 
  
 (g) Any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder; 
  
 (h) Any declaration or payment of any dividend or other
distribution of the assets of the Company; 
  
 (i) Any labor organization activity related to the Company; 
  
 (j) Any debt, obligation or liability incurred, assumed or guaranteed by the Company, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business; 
  
 (k) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets; 
  
 (l) Any change in any material agreement to which the Company is a party or by which it is bound which may materially and adversely affect the business, assets, liabilities, financial condition, operations or
prospects of the Company; 
  

 6 

 (m) Any other event or condition of any character that, either individually or
cumulatively, has or may materially and adversely affect the business, assets, liabilities, financial condition, prospects or operations of the Company; or 
  
 (n) Any arrangement or commitment by the Company to do any of the acts described in subsection (a) through (m) above. 
  
 4.9 Title to Properties and Assets; Liens, Etc. Except as set forth on
Schedule 4.9, the Company has good and marketable title to its properties and assets, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than: 
  
 (a) those resulting from taxes which have not yet become
delinquent; 
  
 (b) minor liens and encumbrances
which do not materially detract from the value of the property subject thereto or materially impair the operations of the Company; and 
  
 (c) those that have otherwise arisen in the ordinary course of business. 
  
 All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company are in good operating
condition and repair and are reasonably fit and usable for the purposes for which they are being used. Except as set forth on Schedule 4.9, the Company is in compliance with all material terms of each lease to which it is a party or is otherwise
bound. 
  
 4.10 Intellectual Property. 
  
 (a) The Company owns or possesses sufficient legal rights to
all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes necessary for its business as now conducted and to the Company’s knowledge as presently proposed to
be conducted (the “Intellectual Property”), without any known infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing proprietary rights, nor is the Company bound
by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or
entity other than such licenses or agreements arising from the purchase of “off the shelf” or standard products. 
  
 (b) The Company has not received any communications alleging that the Company has violated any of the patents, trademarks, service marks,
trade names, copyrights or trade secrets or other proprietary rights of any other person or entity, nor is the Company aware of any basis therefor. 
  
 (c) The Company does not believe it is or will be necessary to utilize any inventions, trade secrets or proprietary information of any of
its employees made prior to their employment by the Company, except for inventions, trade secrets or proprietary information that have been rightfully assigned to the Company. 
  

 7 

 4.11 Compliance with Other Instruments. Except as set forth on Schedule 4.11, the Company is not
in violation or default of any term of its Charter or Bylaws, or of any material provision of any mortgage, indenture, contract, agreement, instrument or contract to which it is party or by which it is bound or of any judgment, decree, order or
writ. The execution, delivery and performance of and compliance with this Agreement and the Related Agreements to which it is a party, and the issuance and sale of the Note by the Company and the other Securities by the Company each pursuant hereto,
will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term or provision, or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations or
any of its assets or properties. 
  
 4.12 Litigation.
Except as set forth on Schedule 4.12 hereto, there is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company that prevents the Company to enter into this Agreement or the
Related Agreements, or to consummate the transactions contemplated hereby or thereby, or which might result, either individually or in the aggregate, in any material adverse change in the assets, condition, affairs or prospects of the Company,
financially or otherwise, or any change in the current equity ownership of the Company, nor is the Company aware that there is any basis for any of the foregoing. The Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate. 
  
 4.13 Tax Returns and Payments. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown to be due and payable on such returns, any assessments imposed, and to the Company’s knowledge all other taxes due and payable by the Company on or before the
Closing, have been paid or will be paid prior to the time they become delinquent. Except as set forth on Schedule 4.13, the Company has not been advised: 
  
 (a) that any of its returns, federal, state or other, have been or are being audited as of the date hereof; or 
  
 (b) of any deficiency in assessment or proposed judgment to
its federal, state or other taxes. 
  
 The Company has no knowledge of any
liability of any tax to be imposed upon its properties or assets as of the date of this Agreement that is not adequately provided for. 
  
 4.14 Employees. Except as set forth on Schedule 4.14, the Company has no collective bargaining agreements with any of its employees. There is no
labor union organizing activity pending or, to the Company’s knowledge, threatened with respect to the Company. 
  

 8 

 Except as disclosed in the Exchange Act Filings or on Schedule 4.14, the Company is not a party to or bound by any
currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement. To the Company’s knowledge, no employee of the
Company, nor any consultant with whom the Company has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to
contract with, the Company because of the nature of the business to be conducted by the Company; and to the Company’s knowledge the continued employment by the Company of its present employees, and the performance of the Company’s
contracts with its independent contractors, will not result in any such violation. The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company. The Company has not received any notice alleging that any such violation has occurred. Except for employees who
have a current effective employment agreement with the Company, no employee of the Company has been granted the right to continued employment by the Company or to any material compensation following termination of employment with the Company. Except
as set forth on Schedule 4.14, the Company is not aware that any officer, key employee or group of employees intends to terminate his, her or their employment with the Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of employees. 
  
 4.15 Registration Rights and Voting Rights. Except as set forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, the Company is presently not under any obligation, and has not granted any rights, to register any of
the Company’s presently outstanding securities or any of its securities that may hereafter be issued. Except as set forth on Schedule 4.15 and except as disclosed in Exchange Act Filings, to the Company’s knowledge, no stockholder of the
Company has entered into any agreement with respect to the voting of equity securities of the Company. 
  
 4.16 Compliance with Laws; Permits. Except as set forth on Schedule 4.16, to its knowledge, the Company is not in violation in any material respect
of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties which violation would
materially and adversely affect the business, assets, liabilities, financial condition, operations or prospects of the Company. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no
registrations or declarations are required to be filed in connection with the execution and delivery of this Agreement and the issuance of any of the Securities, except such as has been duly and validly obtained or filed, or with respect to any
filings that must be made after the Closing, as will be filed in a timely manner. The Company has all material franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack
of which would materially and adversely affect the business, properties, prospects or financial condition of the Company. 
  
 4.17 Environmental and Safety Laws. The Company is not in violation of any applicable statute, law or regulation relating to the environment or
occupational health and 
  

 9 

 safety, and to its knowledge, no material expenditures are or will be required in order to comply with any such existing
statute, law or regulation. Except as set forth on Schedule 4.17, no Hazardous Materials (as defined below) are used or have been used, stored, or disposed of by the Company or, to the Company’s knowledge, by any other person or entity on any
property owned, leased or used by the Company. For the purposes of the preceding sentence, “Hazardous Materials” shall mean: 
  
 (a) materials which are listed or otherwise defined as “hazardous” or “toxic” under any applicable local, state,
federal and/or foreign laws and regulations that govern the existence and/or remedy of contamination on property, the protection of the environment from contamination, the control of hazardous wastes, or other activities involving hazardous
substances, including building materials; or 
  
 (b) any petroleum products or nuclear materials. 
  
 4.18
Valid Offering. Assuming the accuracy of the representations and warranties of the Purchaser contained in this Agreement, the offer, sale and issuance of the Securities will be exempt from the registration requirements of the Securities Act
of 1933, as amended (the “Securities Act”), and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities
laws. 
  
 4.19 Full Disclosure. The Company has provided
the Purchaser with all information requested by the Purchaser in connection with its decision to purchase the Note and Warrant, including all information the Company believes is reasonably necessary to make such investment decision. Neither this
Agreement, the exhibits and schedules hereto, the Related Agreements nor any other document delivered by the Company to Purchaser or its attorneys or agents in connection herewith or therewith or with the transactions contemplated hereby or thereby,
contain any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which they are made, not misleading. Any financial projections
and other estimates provided to the Purchaser by the Company were based on the Company’s experience in the industry and on assumptions of fact and opinion as to future events which the Company, at the date of the issuance of such projections or
estimates, believed to be reasonable. 
  
 4.20 Insurance.
The Company has general commercial, product liability, fire and casualty insurance policies with coverages which the Company believes are customary for companies similarly situated to the Company in the same or similar business. 
  
 4.21 SEC Reports. Except as set forth on Schedule 4.21, the Company
has filed all proxy statements, reports and other documents required to be filed by it under the Exchange Act. The Company has furnished the Purchaser with copies of: (i) its Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002;
and (ii) its Quarterly Reports on Form 10-QSB for the fiscal quarters ended June 30, 2003 and September 30, 2003, and the Form 8-K filings which it has made during 2003 to date (collectively, the “SEC Reports”). Except as set forth on
Schedule 4.21, each SEC Report was, at the time of its filing, in substantial compliance with the requirements of its respective form and none of the SEC Reports, nor the 
  

 10 

 financial statements (and the notes thereto) included in the SEC Reports, as of their respective filing dates, contained
any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 
  
 4.22 Listing. The Company’s Common Stock is listed for trading on
the NASDAQ National Market (“NASDAQ NM”)] and satisfies all requirements for the continuation of such listing. The Company has not received any notice that its Common Stock will be delisted from NASDAQ NM or that its Common Stock does not
meet all requirements for listing. 
  
 4.23 No Integrated
Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under circumstances that
would cause the offering of the Securities pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Securities pursuant to Rule 506 under the
Securities Act, or any applicable exchange-related stockholder approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of the Securities to be integrated with other
offerings. 
  
 4.24 Stop Transfer. The Securities are
restricted securities as of the date of this Agreement. The Company will not issue any stop transfer order or other order impeding the sale and delivery of any of the Securities at such time as the Securities are registered for public sale or an
exemption from registration is available, except as required by state and federal securities laws. 
  
 4.25 Dilution. The Company specifically acknowledges that its obligation to issue the shares of Common Stock upon conversion of the Note and
exercise of the Warrant is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company. 
  
 4.26 Patriot Act. If the Company is a corporation, trust, partnership, limited liability Purchaser or other
organization, the Company certifies that, to the best of Company’s knowledge, the Company has not been designated, and is not owned or controlled, by a “suspected terrorist” as defined in Executive Order 13224. The Company hereby
acknowledges that the Purchaser seeks to comply with all applicable laws concerning money laundering and related activities. In furtherance of those efforts, the Company hereby represents, warrants and agrees that: (i) none of the cash or property
that the Company will pay or will contribute to the Purchaser has been or shall be derived from, or related to, any activity that is deemed criminal under United States law; and (ii) no contribution or payment by the Company to the Purchaser, to the
extent that they are within the Company’s control shall cause the Purchaser to be in violation of the United States Bank Secrecy Act, the United States International Money Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Company shall promptly notify the Purchaser if any of these representations ceases to be true and accurate regarding the Company. The Company agrees to provide the Purchaser any
additional information regarding the 
  

 11 

 Company that the Purchaser deems necessary or convenient to ensure compliance with all applicable laws concerning money
laundering and similar activities. The Company understands and agrees that if at any time it is discovered that any of the foregoing representations are incorrect, or if otherwise required by applicable law or regulation related to money laundering
similar activities, the Purchaser may undertake appropriate actions to ensure compliance with applicable law or regulation, including but not limited to segregation and/or redemption of the Company’s investment in the Purchaser. The Company
further understands that the Purchaser may release confidential information about the Company and, if applicable, any underlying beneficial owners, to proper authorities if the Purchaser, in its sole discretion, determines that it is in the best
interests of the Purchaser in light of relevant rules and regulations under the laws set forth in subsection (ii) above. 
  
 5. Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants to the Company as follows (such representations
and warranties do not lessen or obviate the representations and warranties of the Company set forth in this Agreement) 
  
 5.1 No Shorting. The Purchaser or any of its affiliates and investment partners has not, will not and will not cause any person or entity, directly
or indirectly, to engage in “short sales” of the Company’s Common Stock or any other hedging strategies as long as the Note shall be outstanding. 
  

5.2 Requisite Power and Authority. Purchaser has all necessary power and authority under all applicable provisions of law to execute and deliver
this Agreement and the Related Agreements and to carry out their provisions. All corporate action on Purchaser’s part required for the lawful execution and delivery of this Agreement and the Related Agreements have been or will be effectively
taken prior to the Closing. Upon their execution and delivery, this Agreement and the Related Agreements will be valid and binding obligations of Purchaser, enforceable in accordance with their terms, except: 
  
 (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights; and 
  
 (b) as limited by general principles of equity that restrict the availability of equitable and legal remedies. 
  
 5.3 Investment Representations. Purchaser understands that the
Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Purchaser’s representations contained in the Agreement, including, without limitation, that the Purchaser is an
“accredited investor” within the meaning of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”). The Purchaser confirms that it has received or has had full access to all the information it considers
necessary or appropriate to make an informed investment decision with respect to the Note and the Warrant to be purchased by it under this Agreement and the Note Shares and the Warrant Shares acquired by it upon the conversion of the Note and the
exercise of the Warrant, respectively. The Purchaser further confirms that it has had an opportunity to ask questions and receive answers from the 
  

 12 

 Company regarding the Company’s business, management and financial affairs and the terms and conditions of the
Offering, the Note, the Warrant and the Securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished
to the Purchaser or to which the Purchaser had access. 
  
 5.4
Purchaser Bears Economic Risk. Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of
its investment in the Company and has the capacity to protect its own interests. Purchaser must bear the economic risk of this investment until the Securities are sold pursuant to: (i) an effective registration statement under the Securities Act; or
(ii) an exemption from registration is available with respect to such sale. 
  
 5.5 Acquisition for Own Account. Purchaser is acquiring the Note and Warrant and the Note Shares and the Warrant Shares for Purchaser’s own account for investment only, and not as a nominee or agent and
not with a view towards or for resale in connection with their distribution. 
  
 5.6 Purchaser Can Protect Its Interest. Purchaser represents that by reason of its, or of its management’s, business and financial experience, Purchaser has the capacity to evaluate the merits and risks of
its investment in the Note, the Warrant and the Securities and to protect its own interests in connection with the transactions contemplated in this Agreement, and the Related Agreements. Further, Purchaser is aware of no publication of any
advertisement in connection with the transactions contemplated in the Agreement or the Related Agreements. 
  
 5.7 Accredited Investor. Purchaser represents that it is an accredited investor within the meaning of Regulation D under the Securities Act.

  
 5.8 Legends. 
  
 (a) The Note shall bear substantially the following legend:

  
 “THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES LAWS. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE OR SUCH SHARES UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO TRANSGENOMIC, INC. THAT SUCH REGISTRATION IS
NOT REQUIRED.” 
  

 13 

 (b) The Note Shares and the Warrant Shares, if not issued by DWAC system (as hereinafter
defined), shall bear a legend which shall be in substantially the following form until such shares are covered by an effective registration statement filed with the SEC: 
  
 “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE, STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO TRANSGENOMIC, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.” 
  
 (c) The Warrant shall bear substantially the following legend: 
  
 “THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT OR THE UNDERLYING SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO TRANSGENOMIC, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.” 
  
 6. Covenants of the Company. The
Company covenants and agrees with the Purchaser as follows: 
  
 6.1 Stop-Orders. The Company will advise the Purchaser, promptly after it receives notice of issuance by the Securities and Exchange Commission (the “SEC”), any state securities commission or any other regulatory authority
of any stop order or of any order preventing or suspending any offering of any securities of the Company, or of the suspension of the qualification of the Common Stock of the Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose. 
  
 6.2 Listing. The
Company shall promptly secure the listing of the shares of Common Stock issuable upon conversion of the Note and upon the exercise of the Warrant on the NASDAQ SC (the “Principal Market”) upon which shares of Common Stock are listed
(subject to official notice of issuance) and shall maintain such listing so long as any other shares of Common Stock shall be so listed. The Company will maintain the listing of its Common Stock on the Principal Market, and will comply in all
material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers (“NASD”) and such exchanges, as applicable. 
  

 14 

 6.3 Market Regulations. The Company shall notify the SEC, NASD and applicable state authorities,
in accordance with their requirements, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to Purchaser and promptly provide copies thereof to Purchaser. 
  
 6.4 Reporting Requirements. The Company will timely file with the SEC all reports required to be filed pursuant to the Exchange Act and refrain from terminating its status as an issuer required by the Exchange
Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination. 
  
 6.5 Use of Funds. The Company agrees that it will use the proceeds of the sale of the Note and Warrant to pay off, in its entirety, the existing
mortgage on the Compnay’s Glasgow Scotland facility with Royal Bank of Scotland, with the balance being used for the general working capital purposes. 
  
 6.6 Access to Facilities. The Company will permit any representatives designated by the Purchaser (or any successor of the Purchaser), upon
reasonable notice and during normal business hours, at such person’s expense and accompanied by a representative of the Company, to: 
  
 (a) visit and inspect any of the properties of the Company; 
  
 (b) examine the corporate and financial records of the Company (unless such examination is not permitted by
federal, state or local law or by contract) and make copies thereof or extracts therefrom; and 
  
 (c) discuss the affairs, finances and accounts of the Company with the directors, officers and independent accountants of the Company.

  
 Notwithstanding the foregoing, the Company will not provide any material,
non-public information to the Purchaser unless the Purchaser signs a confidentiality agreement and otherwise complies with Regulation FD, under the federal securities laws. 
  
 6.7 Taxes. The Company will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of the Company; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if the Company shall have set aside on its books adequate reserves with respect thereto, and provided, further, that the Company will pay all such taxes, assessments, charges or
levies forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefor. 
  

 15 

 6.8 Insurance. The Company will keep its assets which are of an insurable character insured by
financially sound and reputable insurers against loss or damage by fire, explosion and other risks customarily insured against by companies in similar business similarly situated as the Company; and the Company will maintain, with financially sound
and reputable insurers, insurance against other hazards and risks and liability to persons and property to the extent and in the manner which the Company reasonably believes is customary for companies in similar business similarly situated as the
Company and to the extent available on commercially reasonable terms. The Company and each of its subsidiaries set forth in Section 4.2 hereof (the “Subsidiaries”) will jointly and severally bear the full risk of loss from any loss of any
nature whatsoever with respect to the assets pledged to the Purchaser as security for its obligations hereunder and under the Related Agreements. At the Company’s own cost and expense in amounts and with carriers reasonably acceptable to
Purchaser, the Company and each of the Subsidiaries shall (i) keep all its insurable properties and properties in which it has an interest insured against the hazards of fire, flood, sprinkler leakage, those hazards covered by extended coverage
insurance and such other hazards, and for such amounts, as is customary in the case of companies engaged in businesses similar to the Company’s or the respective Subsidiary’s including business interruption insurance; (ii) maintain a bond
in such amounts as is customary in the case of companies engaged in businesses similar to the Company’s or the Subsidiary’s insuring against larceny, embezzlement or other criminal misappropriation of insured’s officers and employees
who may either singly or jointly with others at any time have access to the assets or funds of the Company either directly or through governmental authority to draw upon such funds or to direct generally the disposition of such assets; (iii)
maintain public and product liability insurance against claims for personal injury, death or property damage suffered by others; (iv) maintain all such worker’s compensation or similar insurance as may be required under the laws of any state or
jurisdiction in which the Company or the Subsidiary is engaged in business; and (v) furnish Purchaser with (x) copies of all policies and evidence of the maintenance of such policies at least thirty (30) days before any expiration date, (y)
excepting the Company’s workers’ compensation policy, endorsements to such policies naming Purchaser as “co-insured” or “additional insured” and appropriate loss payable endorsements in form and substance satisfactory
to Purchaser, naming Purchaser as loss payee, and (z) evidence that as to Purchaser the insurance coverage shall not be impaired or invalidated by any act or neglect of the Company or any Subsidiary and the insurer will provide Purchaser with at
least thirty (30) days notice prior to cancellation. The Company and each Subsidiary shall instruct the insurance carriers that in the event of any loss thereunder, the carriers shall make payment for such loss to the Company and/or the Subsidiary
and Purchaser jointly. In the event that as of the date of receipt of each loss recovery upon any such insurance, the Purchaser has not declared an event of default with respect to this Agreement or any of the Related Agreements, then the Company
shall be permitted to direct the application of such loss recovery proceeds toward investment in property, plant and equipment that would comprise “Collateral” secured by Purchaser’s security interest pursuant to its security
agreement, with any surplus funds to be applied toward payment of the obligations of the Company to Purchaser. In the event that Purchaser has properly declared an event of default with respect to this Agreement or any of the Related Agreements,
then all loss recoveries received by Purchaser upon any such insurance thereafter may be applied to the obligations of the Company hereunder and under the Related Agreements, in such order as the Purchaser may determine. Any surplus (following
satisfaction of all Company obligations to Purchaser) shall be paid by Purchaser to the Company or applied as may be otherwise required by law. Any deficiency thereon shall be paid by the Company or the Subsidiary, as applicable, to Purchaser, on
demand. 
  

 16 

 6.9 Intellectual Property. The Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use Intellectual Property owned or possessed by it and reasonably deemed to be necessary to the conduct of its business. 
  
 6.10 Properties. The Company will keep its properties in good repair,
working order and condition, reasonable wear and tear excepted, and from time to time make all needful and proper repairs, renewals, replacements, additions and improvements thereto; and the Company will at all times comply with each provision of
all leases to which it is a party or under which it occupies property if the breach of such provision could reasonably be expected to have a material adverse effect. 
  
 6.11 Confidentiality. The Company agrees that it will not disclose, and will not include in any public announcement,
the name of the Purchaser, unless expressly agreed to by the Purchaser or unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement. The Company may disclose Purchaser’s
identity and the terms of this Agreement to its current and prospective debt and equity financing sources. 
  
 6.12 Required Approvals. For so long as twenty-five percent (25%) of the principal amount of the Note is outstanding, the Company, without the
prior written consent of the Purchaser, shall not: 
  
 (a) directly or indirectly declare or pay any dividends, other than dividends with respect to its preferred stock; 
  
 (b) liquidate, dissolve or effect a material reorganization; 
  
 (c) become subject to (including, without limitation, by way of amendment to or modification of) any
agreement or instrument which by its terms would (under any circumstances) restrict the Company’s right to perform the provisions of this Agreement or any of the agreements contemplated thereby; 
  
 (d) materially alter or change the scope of the business of
the Company; 
  
 (e) create, incur, assume or
suffer to exist any indebtedness (exclusive of trade debt and debt incurred to finance the purchase of equipment (not in excess of five percent (5%) per annum of the Company’s assets) whether secured or unsecured other than the Company’s
indebtedness to Laurus and as set forth on Exhibit 6.12(e) attached hereto and made a part hereof or any refinancings or replacements thereof or any debt incurred in connection with the purchase of assets or in connection with operating lines
of credit as necessary to operate such assets, or any refinancings or replacements thereof; (ii) cancel any debt owing to it in excess of $50,000 in the aggregate during any 12 month period; (iii) assume, guarantee, endorse or otherwise become
directly or contingently liable in connection with any obligations of any other Person, except the endorsement of negotiable instruments by a Company for deposit or collection or similar transactions in the ordinary course of business or guarantees
provided to any of the lenders set forth in subparagraph (i) immediately above. 
  

 17 

 6.13 Reissuance of Securities. The Company agrees to reissue certificates representing the
Securities without the legends set forth in Section 5.7 above at such time as: 
  
 (a) the holder thereof is permitted to dispose of such Securities pursuant to Rule 144(k) under the Securities Act; or 
  
 (b) upon resale subject to an effective registration
statement after such Securities are registered under the Securities Act. 
  
 The
Company agrees to cooperate with the Purchaser in connection with all resales pursuant to Rule 144(d) and Rule 144(k) and provide legal opinions necessary to allow such resales provided the Company and its counsel receive reasonably requested
representations from the selling Purchaser and broker, if any. 
  
 6.14 Opinion. On the Closing Date, the Company will deliver to the Purchaser an opinion acceptable to the Purchaser from the Company’s legal counsel. The Company will provide, at the Company’s expense, such other legal
opinions in the future as are reasonably necessary for the conversion of the Note and exercise of the Warrant. 
  
 7. Covenants of the Purchaser. The Purchaser covenants and agrees with the Company as follows: 
  
 7.1 Confidentiality. The Purchaser agrees that it will not disclose,
and will not include in any public announcement, the name of the Company, unless expressly agreed to by the Company or unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement.

  
 7.2 Non-Public Information. The Purchaser agrees not to
effect any sales in the shares of the Company’s Common Stock while in possession of material, non-public information regarding the Company if such sales would violate applicable securities law. 
  
 8. Covenants of the Company and Purchaser Regarding Indemnification.

  
 8.1 Company Indemnification. The Company agrees to
indemnify, hold harmless, reimburse and defend Purchaser, each of Purchaser’s officers, directors, agents, affiliates, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the Purchaser which results, arises out of or is based upon: (i) any misrepresentation by Company or breach of any warranty by Company in this Agreement or in any exhibits
or schedules attached hereto or any Related Agreement; or (ii) any breach or default in performance by Company of any covenant or undertaking to be performed by Company hereunder, or any other agreement entered into by the Company and Purchaser
relating hereto. 
  
 8.2 Purchaser’s Indemnification.
Purchaser agrees to indemnify, hold harmless, reimburse and defend the Company and each of the Company’s officers, directors, 
  

 18 

 agents, affiliates, control persons and principal shareholders, at all times against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Company which results, arises out of or is based upon: (i) any misrepresentation by Purchaser or breach of any warranty by Purchaser in this
Agreement or in any exhibits or schedules attached hereto or any Related Agreement; or (ii) any breach or default in performance by Purchaser of any covenant or undertaking to be performed by Purchaser hereunder, or any other agreement entered into
by the Company and Purchaser relating hereto. 
  
 8.3
Procedures. The procedures and limitations set forth in Section 10.2(c) and (d) shall apply to the indemnifications set forth in Sections 8.1 and 8.2 above. 
  
 9. Conversion of Convertible Note. 
  
 9.1 Mechanics of Conversion. 
  
 (a) Provided the Purchaser has notified the Company of the Purchaser’s intention to sell the Note
Shares and the Note Shares are included in an effective registration statement or are otherwise exempt from registration when sold: (i) Upon the conversion of the Note or part thereof, the Company shall, at its own cost and expense, take all
necessary action (including the issuance of an opinion of counsel) to assure that the Company’s transfer agent shall issue shares of the Company’s Common Stock in the name of the Purchaser (or its nominee) or such other persons as
designated by the Purchaser in accordance with Section 9.1(b) hereof and in such denominations to be specified representing the number of Note Shares issuable upon such conversion; and (ii) The Company warrants that no instructions other than these
instructions have been or will be given to the transfer agent of the Company’s Common Stock and that after the Effectiveness Date (as defined in the Registration Rights Agreement) the Note Shares issued will be freely transferable subject to
the prospectus delivery requirements of the Securities Act and the provisions of this Agreement, and will not contain a legend restricting the resale or transferability of the Note Shares. 
  
 (b) Purchaser will give notice of its decision to exercise
its right to convert the Note or part thereof by telecopying or otherwise delivering an executed and completed notice of the number of shares to be converted to the Company (the “Notice of Conversion”). The Purchaser will not be required
to surrender the Note until the Purchaser receives a credit to the account of the Purchaser’s prime broker through the DWAC system (as defined below), representing the Note Shares or until the Note has been fully satisfied. Each date on which a
Notice of Conversion is telecopied or delivered to the Company in accordance with the provisions hereof shall be deemed a “Conversion Date.” Pursuant to the terms of the Notice of Conversion, the Borrower will issue instructions to the
transfer agent accompanied by an opinion of counsel within one (1) business day of the date of the delivery to Borrower of the Notice of Conversion and shall cause the transfer agent to transmit the certificates representing the Conversion Shares to
the Holder by crediting the account of the Purchaser’s prime broker with the Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system within three (3) business days after receipt by
the Company of the Notice of Conversion (the “Delivery Date”). 
  

 19 

 (c) The Company understands that a delay in the delivery of the Note Shares in the form
required pursuant to Section 9 hereof beyond the Delivery Date could result in economic loss to the Purchaser. In the event that the Company fails to direct its transfer agent to deliver the Note Shares to the Purchaser via the DWAC system within
the time frame set forth in Section 9.1(b) above and the Note Shares are not delivered to the Purchaser by the Delivery Date, as compensation to the Purchaser for such loss, the Company agrees to pay late payments to the Purchaser for late issuance
of the Note Shares in the form required pursuant to Section 9 hereof upon conversion of the Note in the amount equal to the greater of: (i) $500 per business day after the Delivery Date; or (ii) the Purchaser’s actual damages from such delayed
delivery. Notwithstanding the foregoing, the Company will not owe the Purchaser any late payments if the delay in the delivery of the Note Shares beyond the Delivery Date is solely out of the control of the Company and the Company is actively trying
to cure the cause of the delay. The Company shall pay any payments incurred under this Section in immediately available funds upon demand and, in the case of actual damages, accompanied by reasonable documentation of the amount of such damages. Such
documentation shall show the number of shares of Common Stock the Purchaser is forced to purchase (in an open market transaction) which the Purchaser anticipated receiving upon such conversion, and shall be calculated as the amount by which (A) the
Purchaser’s total purchase price (including customary brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (B) the aggregate principal and/or interest amount of the Note, for which such Conversion Notice was not
timely honored. 
  
 Nothing contained herein or in any document referred to herein
or delivered in connection herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest or dividends required to be
paid or other charges hereunder exceed the maximum amount permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to a Purchaser and thus refunded to the Company. 
  
 9.2 Maximum Conversion. The Purchaser shall not be entitled to convert
on a Conversion Date, that amount of a Note in connection with that number of shares of Common Stock which would be (a) in excess of the sum of: (i) the number of shares of Common Stock beneficially owned by the Purchaser on a Conversion Date; and
(ii) the number of shares of Common Stock issuable upon the conversion of the Note with respect to which the determination of this proviso is being made on a Conversion Date, which would result in beneficial ownership by the Purchaser of more than
4.99% of the outstanding shares of Common Stock of the Company on such Conversion Date and (b) (ii) exceed twenty five percent (25%) of the aggregate dollar trading volume of the Common Stock for the ten (10) day trading period immediately preceding
delivery of a Notice of Conversion to the Borrower. For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and Regulation 13d-3 thereunder. Upon an Event
of Default under the Note, the conversion limitation in this Section 9.2 shall become null and void. 
  

 20 

 10. Registration Rights, Indemnification. 
  
 10.1 Registration Rights Granted. The Company hereby grants
registration rights to the Purchaser pursuant to a Registration Rights Agreement dated as of even date herewith between the Company and the Purchaser. 
  
 10.2 Indemnification. (a) In the event of a registration of any Registrable Securities under the Securities Act pursuant to the Registration Rights
Agreement, the Company will indemnify and hold harmless the Purchaser, and its officers, directors and each other person, if any, who controls the Purchaser within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Purchaser, or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act pursuant to the Registration Rights Agreement, any
preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Purchaser, and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by or on behalf of the Purchaser or any such person in writing specifically for use in any such document. 
  

 21 

 (b) In the event of a registration of the Registrable Securities under the Securities Act pursuant to the
Registration Rights Agreement, the Purchaser will indemnify and hold harmless the Company, and its officers, directors and each other person, if any, who controls the Company within the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which such Registrable Securities were registered under the Securities Act pursuant to the Registration Rights Agreement, any
preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Company and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or
action, provided, however, that the Purchaser will be liable in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished in writing to the Company by or on behalf of the Purchaser specifically for use in any such document. 
  
 (c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which
it may have to such indemnified party other than under this Section 10.2(c) and shall only relieve it from any liability which it may have to such indemnified party under this Section 10.2(c) if and to the extent the indemnifying party is prejudiced
by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall
wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this Section 10.2(c) for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof; if the indemnified party retains its own
counsel, then the indemnified party shall pay all fees, costs and expenses of such counsel, provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the indemnified party shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and
fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. 
  

 22 

 (d) In order to provide for just and equitable contribution in the event of joint liability under the
Securities Act in any case in which either: (i) the Purchaser, or any controlling person of the Purchaser, makes a claim for indemnification pursuant to this Section 10.2 but it is judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 10.2 provides for indemnification
in such case; or (ii) contribution under the Securities Act may be required on the part of the Purchaser or controlling person of the Purchaser in circumstances for which indemnification is provided under this Section 10.2; then, and in each such
case, the Company and the Purchaser will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Purchaser is responsible only for the portion
represented by the percentage that the public offering price of its securities offered by the registration statement bears to the public offering price of all securities offered by such registration statement, provided, however, that, in any such
case, (A) the Purchaser will not be required to contribute any amount in excess of the public offering price of all such securities offered by it pursuant to such registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 10 of the Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation. 
  
 10.3 Offering Restrictions. Except as previously disclosed in the SEC Reports or in the Exchange Act Filings, or
stock or stock options granted to employees or directors of the Company; or shares of preferred stock issued to pay dividends in respect of the Company’s preferred stock; or equity or debt issued in connection with an acquisition of a business
or assets by the Company; or the issuance by the Company of stock in connection with the establishment of a joint venture partnership or licensing arrangement (these exceptions hereinafter referred to as the “Excepted Issuances”), the
Company will not issue any securities with a continuously variable/floating conversion feature which are or could be (by conversion or registration) free-trading securities (i.e. common stock subject to a registration statement) prior to the full
repayment or conversion of the Note (the “Exclusion Period”). 
  
 11. Miscellaneous. 
  
 11.1 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT BY EITHER PARTY AGAINST THE OTHER CONCERNING THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT SHALL BE BROUGHT ONLY IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK. BOTH PARTIES AND THE INDIVIDUALS EXECUTING THIS AGREEMENT AND OTHER AGREEMENTS ON BEHALF OF THE COMPANY AGREE TO
SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE TRIAL BY JURY. IN THE EVENT THAT ANY PROVISION OF THIS AGREEMENT OR ANY OTHER AGREEMENT DELIVERED IN CONNECTION HEREWITH IS INVALID OR UNENFORCEABLE UNDER ANY APPLICABLE STATUTE OR RULE OF LAW,
THEN SUCH PROVISION SHALL BE DEEMED INOPERATIVE TO THE EXTENT THAT IT MAY CONFLICT THEREWITH AND SHALL BE DEEMED 
  

 23 

 MODIFIED TO CONFORM WITH SUCH STATUTE OR RULE OF LAW. ANY SUCH PROVISION WHICH MAY PROVE INVALID OR UNENFORCEABLE UNDER
ANY LAW SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF ANY AGREEMENT. 
  
 11.2 Survival. The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby to the extent provided therein. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the
transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument. 
  
 11.3 Successors. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Securities from time to time, other than the holders of
Common Stock which has been sold by the Purchaser pursuant to Rule 144 or an effective registration statement. Purchaser may not assign its rights hereunder to a competitor of the Company. 
  
 11.4 Entire Agreement. This Agreement, the exhibits and schedules
hereto, the Related Agreements and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in
any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 
  
 11.5 Severability. In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby. 
  
 11.6 Amendment and Waiver. 
  
 (a) This Agreement may be amended or modified only upon the written consent of the Company and the Purchaser. 
  
 (b) The obligations of the Company and the rights of the Purchaser under this Agreement may be waived only with the written consent of the
Purchaser. 
  
 (c) The obligations of the
Purchaser and the rights of the Company under this Agreement may be waived only with the written consent of the Company. 
  
 11.7 Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the Related Agreements, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of or in any similar breach, default or noncompliance thereafter occurring. All remedies, either under this Agreement, the Note or the Related Agreements, by law or otherwise afforded to any party, shall be cumulative and not
alternative. 
  

 24 

 11.8 Notices. All notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: 
  
 (a) upon personal delivery
to the party to be notified; 
  
 (b) when sent by
confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day; 
  
 (c) three (3) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or

  
 (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. 
  
 All communications shall be sent as follows: 
  

			
	If to the Purchaser, to:	  	Transgenomic, Inc.
	 	  	12325 Emmet Street,
	 	  	Omaha, NE, 68124
		
	 	  	Attention: Chief Financial Officer
	 	  	Facsimile: 402.452.5487
		
	 	  	with a copy to: Transgenomic Law Department
		
	 	  	Attention: Law Department
	 	  	Facsimile: 402.452.5487
		
	If to the Company, to:	  	Laurus Master Fund, Ltd.
	 	  	c/o Ironshore Corporate Services ltd.
	 	  	P.O. Box 1234 G.T.
	 	  	Queensgate House, South Church Street
	 	  	Grand Cayman, Cayman Islands
	 	  	Facsimile: 345-949-9877
		
	 	  	with a copy to:
		
	 	  	John E. Tucker , Esq.
	 	  	825 Third Avenue 14th Floor
	 	  	New York, NY 10022
	 	  	Facsimile: 212-541-4434

  
 or at such other address as the
Company or the Purchaser may designate by written notice to the other parties hereto given in accordance herewith. 
  

 25 

 11.9 Attorneys’ Fees. In the event that any suit or action is instituted to enforce any
provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including,
without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 
  
 11.10 Titles and Subtitles. The titles of the sections and subsections of the Agreement are for convenience of
reference only and are not to be considered in construing this Agreement. 
  
 11.11 Facsimile Signatures; Counterparts. This Agreement may be executed by facsimile signatures and in any number of counterparts, each of which shall be an original, but all of which together shall constitute
one instrument. 
  
 11.12 Broker’s Fees. Except as set
forth on Schedule 11.12 hereof, Each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker’s or
finder’s fee or any other commission directly or indirectly in connection with the transactions contemplated herein. Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party
as a result of the representation in this Section 11.12 being untrue. 
  
 11.13 Construction. Each party acknowledges that its legal counsel participated in the preparation of this Agreement and the Related Agreements and, therefore, stipulates that the rule of construction that ambiguities are to be
resolved against the drafting party shall not be applied in the interpretation of this Agreement to favor any party against the other. 
  
 [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 
  

 26 

 IN WITNESS WHEREOF, the parties hereto have executed the SECURITIES PURCHASE AGREEMENT as of the date set
forth in the first paragraph hereof. 
  

							
	 COMPANY:
	 	 PURCHASER:

		
	 TRANSGENOMIC, INC.
	 	 LAURUS MASTER FUND, LTD.

				
	 By:
	 	 /s/ Michael J. Draper

	 	 By:
	 	 /s/ David Grin

	 Name:
	 	 Michael J. Draper
	 	 Name:
	 	 David Grin

	 Title:
	 	 CFO
	 	 Title:
	 	 

  

 27 

 EXHIBIT A 
  

FORM OF CONVERTIBLE NOTE 
  

 A-1 

 EXHIBIT B 
  

FORM OF WARRANT 
  

 B-1 

 EXHIBIT C 
  

FORM OF OPINION 
  

 C-1 

 EXHIBIT D 
  

FORM OF ESCROW AGREEMENT 
  

 D-1 

 AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT 
  
 April 15, 2004 
  
 Reference is made to that certain Securities Purchase Agreement dated February 19, 2004 by and between Transgenomic, Inc., a
Delaware corporation (the “Borrower”) and LAURUS MASTER FUND, LTD., c/o Ironshore Corporate Services Ltd., P.O. Box 1234 G.T., Queensgate House, South Church Street, Grand Cayman, Cayman Islands (the “Laurus”) (the
“Securities Purchase Agreement”) pursuant to which, among other things, the Borrower issued a note in the original principal amount of Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000) (the “Note”) to Laurus.
Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Securities Purchase Agreement. 
  
 WHEREAS, the Borrower and Laurus have agreed to amend the Securities Purchase Agreement to each of the Borrower and Laurus desires to make certain changes
to the Securities Purchase Agreement to address the comments made by the National Association of Securities Dealer Automated Quotation System market where the common stock of the Borrower is listed for trading. 
  
 NOW, THEREFORE, in consideration of the above, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 
  

	 	1.	 	Section 9.2 of the Securities Purchase Agreement is hereby deleted in its entirety and the insert the following paragraph inserted in its stead: 

  
 “9.2 Maximum Conversion. Notwithstanding
anything contained herein to the contrary, the Purchaser shall not be entitled to convert pursuant to the terms of a Note an amount that would be convertible into that number of shares of Common Stock which, when added to the number of shares of
Common Stock otherwise beneficially owned by such Purchaser including those issuable upon exercise of warrants held by such Purchaser would exceed 4.99% of the outstanding shares of Common Stock of the Company at the time of conversion. For the
purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and Regulation 13d-3 thereunder. The conversion limitation described in this Section 9.2 shall
automatically become null and void without any notice to Company upon the occurrence and during the continuance beyond any applicable grace period of an Event of Default, or upon 75 days prior notice to the Company. Notwithstanding anything
contained herein to the contrary, the number of shares of Common Stock issuable by the Company and acquirable by the Purchaser at a price below $2.65 per share pursuant to the terms of the Secured Convertible Term Note and/or Warrants issued by the
Company to the Purchaser pursuant to this Securities Purchase Agreement (the “February Transaction Documents”), shall not exceed an aggregate of 5,776,614 shares of the Company’s Common Stock, (subject to appropriate adjustment for
stock splits, stock dividends, or other similar recapitalizations affecting the Common Stock) (the “Maximum Common Stock Issuance”), unless the issuance of shares hereunder in excess of the Maximum Common Stock Issuance shall first
be approved by the Company’s shareholders. If at any point in time and from time to time the number of shares of Common Stock issued pursuant to the terms of the February Transaction Documents, together with the 

 number of shares of Common Stock that would then be issuable by the Company to the Purchaser in the event
of a conversion or exercise pursuant to the terms of the February Transaction Documents, would exceed the Maximum Common Stock Issuance but for this Section, the Company shall promptly call a shareholders meeting to solicit shareholder approval for
the issuance of the shares of Common Stock hereunder in excess of the Maximum Common Stock Issuance.” 
  

	 	2.	 	The foregoing amendment shall be effective as of the date hereof. 

  

	 	3.	 	There are no other amendments to the Securities Purchase Agreement, and all of the other forms, terms and provisions of the Securities Purchase Agreement remain in full force and
effect. 

  

	 	4.	 	The Borrower hereby represents and warrants to Laurus that as of the date hereof all representation, warranties and covenants made by Borrower in connection with the Securities
Purchase Agreement are true correct and complete and all of Borrower’s covenants requirements have been met. 

  
 IN WITNESS WHEREOF, each of the Borrower and Laurus has caused this Amendment No. 1 to Securities Purchase Agreement signed in its name effective
as of this 15th day of April, 2004. 
  

			
	TRANSGENOMIC, INC.
		
	 By:
	 	 /s/ Mitchell L. Murphy

	 Name:
	 	 Mitchell L. Murphy

	 Title:
	 	 VP, Secretary & Treasurer

	
	LAURUS MASTER FUND, LTD.
		
	 By:
	 	 /s/ David Grin

	 Name:
	 	 David Grin

	 Title:

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