TRANSGENOMIC INC
EMPLOYMENT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>3
<FILENAME>a2073672zex-10_7.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT
<TEXT>
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EXHIBIT 10.7

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is made effective as of June 1, 2001, by and between
Transgenomic, Inc., a Delaware corporation (the "Company"), and John Allbery
("Employee").

     The Company and Employee desire to enter into an Employment Agreement (this
"Agreement"). Accordingly, the Company and Employee agree as follows:

     Section I. EFFECTIVE DATE; POSITION; TERM. This Agreement shall become
effective on June 1, 2001 (the "Effective Date"). The Company shall employ
Employee as Chief of Operations. The initial term of the Agreement will be for a
minimum of four (4) years from the Effective Date, and the Agreement may be
extended upon mutual consent of the parties.

     Section 2. POSITION AND DUTIES. During the Employment Period:

            (a) Employee shall have the normal responsibilities, duties and
     authorities of Chief of Operations to be defined prior to the Effective
     Date.

            (b) Employee shall report to the Chief Executive Officer of the
     Company and Employee shall perform faithfully the executive duties assigned
     to him to the best of his ability in a diligent, trustworthy, businesslike
     and efficient manner and will devote his full business time and attention
     to the business and affairs of the Company and its Subsidiaries and
     Affiliates; provided, however, that Employee may serve as a director of or
     a consultant to other corporations which do not compete with the Company,
     nonprofit corporations, civic organizations, professional groups and
     similar entities.

            (c) For purposes of this Agreement, "Subsidiary" shall mean any
     corporation or other entity of which securities having a majority of the
     voting power in electing directors or comparable management are, at the
     time of determination, owned by the Company, directly or through one or
     more Subsidiaries.

            (d) For purposes of this Agreement, "Affiliate" of any particular
     person means any other person controlling, controlled by or under common
     control with such particular person.

     Section 3. BASIC COMPENSATION.

     (a) BASE SALARY. As compensation for his services hereunder, the Company
shall pay to Employee during the Employment Period an initial base salary of
$200,000 per year.

     Base Salary shall be payable in equal installments in arrears on a biweekly
basis or as otherwise may be mutually agreed upon.

     The salary shall be increased over the previous year's salary as mutually
agreed to.

     Section 4. BONUS. In addition to the Base Salary, Employee shall be
eligible to receive an annual bonus based on Employee's performance in
conjunction with specific mutually agreed goals and objectives defined prior to
such calendar year payable at such time or times during or following each
calendar year as shall be determined by the Chief Executive

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Officer and the Board of Directors (the "Board") or a committee thereof in its
sole discretion and based on formulas to be determined each year by the Board or
such committee in its sole discretion for the Company's management bonus plan.

     Section 5. PARTICIPATION IN EMPLOYEE BENEFIT PLANS. Employee will be
entitled to participate in all Company salaried employee benefit plans and
programs, subject to the terms and conditions of each such employee benefit plan
or program and to the extent commensurate with his position as Chief of
Operations.

     Section 6. OTHER BENEFITS.

     (a) VACATION. Employee shall initially be entitled to four weeks' paid
vacation each year.

     (b) INSURANCE. The Company shall make available to Employee health,
hospitalization, major medical insurance and dental insurance (including
dependent coverage), and other benefits from time to time provided to employees.

     (c) RELOCATION. Employee shall be entitled to reimbursement of all
reasonable costs of relocation back to the U.S. as previously discussed and
agreed.

     Section 7. BUSINESS EXPENSES. The Company shall reimburse Employee for all
reasonable expenses incurred by him in the course of performing his duties under
this agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses,
subject to the Company's requirements with respect to report and documentation
of such expenses.

     Section 8. STOCK OPTIONS AND OPTION SHARES. Employee was previously granted
100,000 shares at $10.00 per share of options, 20,000 shares to vest per year.

     Section 9. TERMINATION OF EMPLOYMENT.

     (a) EVENTS OF TERMINATION AND SEVERANCE PAYMENT. In the event that, during
the term of this Agreement, Employee is discharged for any reason other than for
Just Cause (as defined below), Employee shall be entitled to receive certain
payment (the "Severance Payment") following termination of employment. Severance
Payment will be made at the Employees then current base salary for an amount
equal to 12 (twelve) months' salary. In addition, in case of such discharge,
Employee will retain all vested stock options. All unvested stock options will
lapse.

     (b) "Just Cause" being defined as any criminal act (felony) being committed
by employee, if employee commits fraud or dishonesty toward the Company, other
significant activities materially harmful to the reputation of the Company as
reasonably defined by the Company, willful refusal to perform or substantial
disregard of the duties properly assigned, significant violation of any
statutory or common law or a material violation of Section 11 or 12 below, or
intentionally takes any other action materially inimical to the best interests
of the Company

     (c) EFFECT OF BREACH OF NONCOMPETITION PROVISIONS. In the event Employee
breaches or otherwise fails to comply with the provisions of Section 11 or 12
below, then, in addition to any other remedies provided herein or at law or in
equity, the Company shall have the right to require return of any severance
payment made to the Employee. Return of such Severance Payment pursuant to the
preceding sentence shall not relieve Employee's obligations pursuant to Section
11 or 12 below.

     Section 10. ASSIGNMENT AND SUCCESSION.

     (a) The rights and obligations of the Company under this Agreement shall
inure to the benefit of and be binding upon its respective successors and
assigns, and Employee's rights and obligations hereunder shall inure to the
benefit of and be binding upon his successors and permitted assigns, whether so
expressed or not.

     (b) Employee acknowledges that the services to be rendered by him hereunder
are unique and personal. Accordingly, Employee may not pledge or assign any of
his rights or delegate any of his duties or obligations under this Agreement


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without the express prior written consent of the Company.

     (c) The Company may not assign its interest in or obligations under this
Agreement without the prior written consent of Employee.

     Section 11. CONFIDENTIAL INFORMATION.

     (a) COMPANY INFORMATION. Employee agrees at all times during the term of
his Relationship with the Company and thereafter, to hold in strictest
confidence, and not to use, except for the benefit of the Company, or to
disclose to any person, firm, corporation or other entity without written
authorization of the Board of Directors of the Company, any Confidential
Information of the Company which Employee obtains or creates, by whatever means.
Employee further agrees not to make copies of such Confidential Information
except as authorized by the Company. Employee understands that "CONFIDENTIAL
INFORMATION" means any Company proprietary information, technical data, trade
secrets or know-how, including, but not limited to, research product plans,
products, services, suppliers, customer lists and customers (including, but not
limited to, customers of the Company on whom Employee called or with whom
Employee became acquainted during the Relationship), prices and costs, markets,
software, developments, inventions, laboratory notebooks, processes, formulas,
technology, designs, drawings, engineering, hardware configuration information,
marketing, licenses, finances budgets or other business information disclosed to
Employee by the Company either directly or indirectly in writing, orally or by
drawings or observation of parts or equipment or created by Employee during the
period of the Relationship, whether or not during working hours. Employee
understands that "CONFIDENTIAL INFORMATION" includes, but is not limited to,
information pertaining to any aspects of the Company's business which is either
information not known by actual or potential competitors of the Company or is
proprietary information of the Company or its customers or suppliers, whether of
a technical nature or otherwise. Employee further understands that "CONFIDENTIAL
INFORMATION" does not include any of the foregoing items which have become
publicly and widely known and made generally available through no wrongful act
of Employee's or of others who were under confidentiality obligations as to the
item or items involved.

          (b) FORMER EMPLOYER INFORMATION. Employee represents that as an
     employee of the Company, he has not breached and will not breach any
     agreement to keep in confidence proprietary information, knowledge or data
     acquired by Employee in confidence or trust prior or subsequent to the
     commencement of Employee's Relationship with the Company, and Employee will
     not disclose to the Company, or induce the Company to use, any inventions,
     confidential or proprietary information or material belonging to any
     previous employer or any other party.

          (c) THIRD PARTY INFORMATION. Employee recognizes that the Company has
     received and in the future will receive confidential or proprietary
     information from third parties subject to a duty on the Company's part to
     maintain the confidentiality of such information and to use it only for
     certain limited purposes. Employee agrees to hold all such confidential or
     proprietary information in the strictest confidence and not to disclose it
     to any person, firm or corporation or to use it except as necessary in
     carrying out Employee's work for the Company consistent with the Company's
     agreement with such third party.

     Section 12. NONCOMPETITION. Independent of any obligation under any other
contract or agreement between Employee and the Company, for a period of one (1)
year following the termination of Employee's employment relationship with the
Company, Employee shall not, directly or indirectly, whether as an individual
for his own account, or for or with any other person, firm, corporation,
partnership, joint venture, association, or other entity whatsoever, which is or
intends to be engaged in biotechnology business and, more particularly, that
provides technologies for DNA/RNA analysis and purification utilization DHPLC
technologies (provided, however, that the restrictions set forth in this clause
shall not apply to involvement that consists solely of "beneficially owning," as
such term is used in Rule 13d-3 promulgated under the Exchange Act) 2% or less
of the outstanding securities of any class of securities issued by a
publicly-traded entity):

          (a) Solicit, interfere with, or endeavor to entice away from the
     Company, any person, firm, corporation,

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     partnership, or entity of any kind whatsoever, which was or is a client or
     licensor of the Company, for which the Company performed services, with
     respect to any business, product or service that is competitive to the
     products or services offered by the Company, or under development by the
     Company, as of the date of the termination of Employee's relationship with
     the Company. This restriction shall apply only to such clients or licensors
     of the Company as were serviced or solicited by Employee at any time during
     the one (1) year prior to the separation of Employee's relationship with
     the Company, either as an independent contractor or as an employee of the
     Company;

          (b) Solicit or endeavor to induce any of the Company's employees or
     consultants to terminate their relationship with the Company, or take away
     such employees or consultants, or attempt to solicit, induce, recruit,
     encourage or take away employees or consultants of the Company, either for
     Employee or for any other person or entity;

          (c) Induce or attempt to induce any supplier, licensee or other
     business relation of the Company to cease doing business with the Company,
     or in any way interfere with the relationship between any such supplier,
     licensee or business relation and the Company.

     Section 13. BUSINESS OPPORTUNITY. Employee represents and acknowledges that
the foregoing restrictions will not prevent him from obtaining gainful
employment in his/her field of expertise or cause him undue hardship; and that
there are numerous other employment opportunities available to him/her that are
not affected by the foregoing restrictions. Employee further acknowledges that
the foregoing restrictions are reasonable and necessary, in order to protect
the Company's legitimate interests, and that any violation thereof would result
in irreparable injury to the Company.

     Section 14. CONFLICTS OF INTEREST POLICIES. Employee shall diligently
adhere to the Company's Conflict of Interest Policy as adopted by the Board and
in effect from time to time.

     Section 15. ARBITRATION AND EQUITABLE REMEDIES.

          a) Except as provide in Section 14(b) hereof, the parties agree that
     any dispute or controversy arising out of, relating to, or concerning the
     interpretation, construction, performance or breach of this Agreement,
     shall be settled by arbitration to be held in Nebraska, in accordance with
     the Employment Dispute Resolution rules of the American Arbitration
     Association then in effect. The arbitrator may grant injunctions or other
     relief in such dispute or controversy and the decision of the arbitrator
     shall be final, conclusive and binding on the parties to the arbitration.
     Judgment may be entered on the arbitrator's decision in any court having
     jurisdiction. The Company and Employee shall each pay one-half of the costs
     and expenses of such arbitration, and each shall separately pay the fees
     and expenses of their respective legal counsel.

          THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A
     JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
     ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP.

          (b) Notwithstanding paragraph (a) of this Section 14, the parties
     agree that, in the event of the breach or threatened breach of Sections 11,
     12 or 13 of this Agreement by Employee, monetary damages alone would not be
     an adequate remedy to the Company and its Subsidiaries for the injury that
     would result from such breach, and that the Company and its Subsidiaries
     shall be entitled to apply to any court of competent jurisdiction for
     specific performance and/or injunctive relief (without posting bond or
     other security) in order to enforce or prevent any violation of such
     provisions of this Agreement. Employee further agrees that any such
     injunctive relief obtained by the Company or any of its Subsidiaries shall
     be in addition to monetary damages.

     Section 16. INDEMNIFICATION. The Company agrees to indemnify and hold
harmless Employee for any and all


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actions taken by Employee in carrying out his duties under this Agreement.

     Section 17. ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matters covered hereby and
shall supersede any prior understandings, agreements or representations by or
between the parties, written or oral, which may have related to the subject
matter hereof in any way and shall not be amended or waived except in a writing
signed by the parties hereto.

     Section 18. NOTICES. Any notice or request required or permitted to be
given hereunder shall be in writing and will be deemed to have been given (i)
when delivered personally, sent by telecopy (with hard copy to follow) or
overnight express courier or (ii) five days following mailing by certified or
registered mail, postage prepaid and return receipt requested, to the addresses
below unless another address is specified by such party in writing:

          To the Company:           Transgenomic, Inc.
                                    12325 Emmet Street
                                    Omaha, NE 68164
                                    Attention: Chief Executive Officer
                                    Telephone: (402) 452-5433
                                    Telecopy: (402) 452-5447

          To the Employee:          John L. Allbery
                                    110 Deer Creek Drive
                                    Omaha, NE 68164

     Section 19. HEADINGS. The article and section headings herein are for
convenience of reference only and shall not define or limit the provisions
hereof.

     Section 20. APPLICABLE LAW. The corporate law of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal laws of the
State of Nebraska.

     Section 21. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held prohibited by,
invalid or unenforceable in any respect under applicable law, such provision
will be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.

     Section 22. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be
amended or waived only with the prior written consent of the Company and
Employee.

     Section 23. NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto.

     Section 24. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

     Section 25. EMPLOYEE REPRESENTATIONS. Employee hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Employee does not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Employee is a party or by which he is bound, (ii) Employee is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Employee, enforceable in accordance with its


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terms.

     Section 26. SURVIVAL. Sections 8, 11, 12 and 15 shall survive and continue
in full force in accordance with their terms notwithstanding any termination of
the Employment Period.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its duly authorized officer and Employee has signed this Agreement.

                                    TRANSGENOMIC, INC.

                                    By /s/ Collin D'Silva
                                       ----------------------------------
                                       Name: Collin D'Silva
                                       Title: Chief Executive Officer

                                    EMPLOYEE

                                        /s/ John L. Allbery
                                        ---------------------------------
                                        Name: John Allbery


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