S-3

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As filed with the Securities and Exchange Commission on December 22, 2003

Commission File No.: 333-            

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

TRANSGENOMIC, INC.
(Exact Name of Registrant As Specified In Its Charter)

Delaware (State of Incorporation)	91-1789357 (IRS Employer I.D. Number)
12325 Emmet Street Omaha, Nebraska 68164 (402) 452-5400 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Collin J. D'Silva President and Chief Executive Officer 12325 Emmet Street Omaha, Nebraska 68164 (402) 452-5400 (Name, address and telephone number of Agent for Service)

Copies to:

Steven P. Amen
Kutak Rock LLP
1650 Farnam Street
Omaha, Nebraska 68102
Tel: (402) 346-6000
Fax: (402) 346-1148

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement
as determined by market conditions.

        If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. ý

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

Calculation of Registration Fee

Title of each class of securities be registered	Amount to be registered	Proposed maximum offering price per share(1)	Proposed maximum aggregate offering price(1)	Amount of registration fee
Common Stock, par value $.01 per share	1,505,009(2)	$1.87	$2,814,367	$227.68

(1)

Estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(c) under the Securities Act of 1933, as amended. Estimate based on the average of the high and low prices of the Registrant's common stock as reported by the Nasdaq National Market on December 18, 2003 pursuant to Rule 457(c) promulgated under the Securities Act of 1933, as amended.

(2)

Consists of 909,091 shares of common stock issuable upon conversion of $2,000,000 in outstanding convertible debt and 595,918 shares issuable upon exercise of outstanding Warrants.

We hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until we file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting according to Section 8(a), may determine.

SUBJECT TO COMPLETION, DATED DECEMBER 22, 2003

PRELIMINARY PROSPECTUS

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not seeking an offer to buy these securities in any state where the offer or sale is not permitted. these securities and is not seeking an offer to buy these securities in any state where the offer or sale is not permitted.

1,505,009 Shares

TRANSGENOMIC, INC.

COMMON STOCK

        This Prospectus covers 1,505,009 shares ("Shares") of our common stock that may be sold by the selling stockholders from time to time. These stockholders may sell the shares at the then prevailing market price for the shares at the time of the sale, or at other prices. The last reported sale price for our common stock on December 18, 2003 was $1.86 per share. We will not receive any of the proceeds from the sale of these shares by these stockholders.

        Our common stock is listed on the Nasdaq National Market under the symbol "TBIO."

        The selling stockholders are offering the common stock as described under "Plan of Distribution."

Investing in our common stock involves a high degree of risk. You should carefully consider the information under the heading "Risk Factors" beginning on page 6 of this Prospectus before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

                        , 2003

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	1
TRANSGENOMIC, INC.	1
RISK FACTORS	6
USE OF PROCEEDS	9
SELLING STOCKHOLDERS	9
PLAN OF DISTRIBUTION	11
EXPERTS	12
LEGAL OPINIONS	13
WHERE YOU CAN FIND MORE INFORMATION	13
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE	13

Forward-Looking Statements

        This prospectus contains or incorporates by reference certain forward-looking statements. Many of these forward-looking statements refer to our plans, objectives, expectations and intentions, as well as our future financial results and are subject to risk and uncertainty. You can identify these forward-looking statements by words such as "expects," "anticipates," "intends," "plans," "may," "will," "believes," "seeks," "estimates" and similar expressions. Because these forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results to differ materially from those expressed or implied by these forward-looking statements, including those discussed under "Risk Factors" in this Prospectus or described in reports that we file from time to time with the Securities and Exchange Commission, such as our Forms 10-K and 10-Q.

        You should rely only on the information contained in or incorporated by reference into this Prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The information in this Prospectus is current as of its date. Our business, financial condition, results of operations and prospects may have changed since that date.

        This Prospectus references the following registered trademarks which are the property of Transgenomic: DNASEP® Columns, WAVE® System, WAVEMAKER® Software, TRANSFORMING THE WORLD® for Laboratory Equipment, TRANSGENOMIC® and the Globe Logo®; MutationDiscovery.com® Website, OLIGOSEP® for Systems and Reagents, OPTIMASE® Polymerase, RNASEP® Columns, WAVE OPTIMIZED® reagents, and WAVE® MD Systems. Additionally, this Prospectus references the following trademarks which are the property of Transgenomic: DHPLC™ or Education Programs, FIRST BASE™ Linkers, MitoScreen™ Kits, ProtocolWriter™ Software, Navigator™ Software, THE POWER OF DISCOVERY™ for Lab Reagents and Educational Programs, and Surveyor™ Nuclease. All other trademarks or trade names referred to in this Prospectus are the property of their respective owners.

ABOUT THIS PROSPECTUS

This Prospectus does not contain all of the information you need to consider before buying our common stock. Additional important information is contained in the documents that are incorporated by reference into this Prospectus, including more detailed financial statements and the notes thereto. See "Incorporation of Certain Documents By Reference." As a result, information presented in this Prospectus is qualified in its entirety by this additional information. We urge you to carefully read this entire Prospectus, along with the additional information that is incorporated by reference into this Prospectus, before investing in our common stock. In particular, you should carefully consider the information discussed under "Risk Factors". All references to "we," "us" or the "Company" in this Prospectus mean Transgenomic, Inc.

TRANSGENOMIC, INC.

Our Business

        We provide innovative products and services for the synthesis, purification and analysis of nucleic acids. Our operations fall into two principal segments, BioSystems and Nucleic Acids. Our BioSystems products include our WAVE® automated instrument systems and associated consumable products. Our Nucleic Acids products include chemical building blocks for nucleic acid synthesis and synthesized nucleic acids. Our service offerings include genetic variation discovery services, novel chemistry development services and custom synthesis of nucleic acids. Our business strategy is to align our products and services with the advancements in the field of genetics and to become a major supplier of products and services to researchers, medical institutions, diagnostic and pharmaceutical companies. Specifically, our strategy is to:

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Establish the WAVE System as the industry standard in the genetic research market, thereby expanding the installed base of systems and related consumable sales; and



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Position ourselves as a unique partner to biopharmaceutical and pharmaceutical companies in the early stages of their efforts to develop genomic-based diagnostics and therapeutics thereby allowing us to participate in future successes of products derived from the expanding knowledge of genomics.

        Our technologies center around three core competencies: separation chemistries, enzymology, and nucleic acid chemistries. We employ novel chemistries for separating nucleic acids, proteins, peptides, amino acids and carbohydrates. One of our significant separation technologies is currently embodied in the WAVE System. The WAVE System is a versatile instrument that can be used for variation detection, size-based double-strand DNA separation and analysis, single-strand DNA separation and analysis and DNA purification. The WAVE System requires the use of various consumable products that we manufacture and sell separately.

        Our second core competency is expertise in developing novel enzymes. Enzymes are proteins that act as catalysts for biochemical reactions. Several of these reactions are useful in genomics. The ability to develop enzymes useful in the experimental manipulation of genes provides powerful tools for producing genetic material in the form needed for further analysis or incorporation into diagnostics and therapeutics. These products can also expand the sale of consumable products to WAVE System users and may also be sold for other applications. In September 2003 we introduced our SURVEYOR® product line of mutation detection kits. The key component of SURVEYOR Mutation Detection Kits is an enzyme that cleaves DNA at points where any type of DNA sequence variation exists, a significant improvement compared to related enzymes in its class. The resulting DNA fragments can then be analyzed by the Transgenomic WAVE System, fluorescent capillary electrophoresis or standard gel electrophoresis. SURVEYOR Kits provide a simple and robust method of scanning relatively large DNA fragments for both known and novel sequence variations. We have recently completed product testing with end users and have begun commercial sales. Sales to date have been nominal.

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        Our third core competency is nucleic acid chemistries. Our synthetic nucleic acid products consist of chemical building blocks of nucleic acids (known as "phosphoramidites"), fluorescent markers and dyes, associated reagents, and synthesized segments of nucleic acids (known as "oligonucleotides" and "oligomimetics"). These products are used by research organizations, diagnostic companies and pharmaceutical companies. We produce these products in our Glasgow, Scotland facility. We recently completed a new production facility in Boulder, Colorado that will be able to further process phosphoramidite products into synthesized oligonucleotides in larger quantities. This facility will also provide process development, enhancement and unique chemistry development services. Finally, our nucleic acid chemistry capabilities also include the ability to produce related specialty chemicals, such as molecular tags, dyes, quenchers, linkers, and solvents used to modify nucleic acids for subsequent detection or manipulation.

Business Strategy

        Our business strategy is to align our product and service offerings with the evolution of genetic advancements and to become a major supplier of products and services to researchers, medical institutions, diagnostic and pharmaceutical companies. Genetic advancements have developed and continue to develop over time. The movement in the field of genomics, and related market opportunities, has shifted from gene discovery to the analysis of variations in gene sequences. From these variations researchers are beginning to link the impacts of variations in the gene sequences to disorders and diseases. It is hoped that this knowledge will lead to the creation of diagnostic tests for these disorders and diseases and the development of therapeutic treatments and drugs.

Research and Development

        We maintain an active program of research and development and expect to continue to spend significant amounts in 2004. Our research and development activities include the improvement of the DNA separation media used in our WAVE System, the refinement of the hardware and software components of the WAVE System, the creation of unique enzymes and WAVE-optimized enzymes, and the improvement of chemical and biochemical reaction techniques for synthetic nucleic acids.

Sales and Marketing

        We currently sell our products in major markets, including the U.S., U.K. and most countries in Western Europe, with a direct sales and support staff. For the rest of the world, we sell our products through dealers and distributors located in those local markets. As of September 30, 2003, we had over 25 dealers and distributors. We also maintain regionally-based technical support staffs and applications scientists to support our sales and marketing activities throughout the U.S. and Europe.

Customers

        We have sold our products to several hundred customers in over 30 countries. Customers include numerous leading academic and medical institutions in the U.S. and abroad. In addition, our customers also include a number of large, established U.S. and foreign pharmaceutical, biotech and commercial companies.

Manufacturing

        We manufacture bioconsumable products including our separation columns, liquid reagents, polymerase and nucleic acid products. The major components of our WAVE systems are manufactured for us by a third party. We integrate our own hardware and software with these third party manufactured components. Our manufacturing facilities for our WAVE systems and bioconsumables are

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located in Omaha, Nebraska, San Jose, California, and Cramlington, England. Our Synthetic Nucleic Acid products are manufactured in Glasgow, Scotland and Boulder, Colorado.

Intellectual Property

        To establish and protect our proprietary technologies and products, we rely on a combination of patent, copyright, trademark and trade-secret laws, as well as confidentiality provisions in our contracts. We have successfully prosecuted or licensed in numerous patents protecting our core technologies, and as a result we presently own rights to more than 80 issued patents and over 60 pending applications in both the US and abroad. Our DNA separation technologies and methods embodied in our BioSystems business unit products are protected by patents and licensed technologies. These patents, including licensed technologies, have remaining lives of between 9 to 18 years. Intellectual property related to our Nucleic Acid business unit is mainly licensed—in technology. We will continue to file patent applications and seek new licenses as we develop new products and technologies.

Recent Developments

        In 2002, we began a project to upgrade and expand our nucleic acid building block production capabilities in Glasgow, Scotland. This project included the upgrading of equipment and processes at the current production facility and the purchase of a new facility that will permit significant capacity expansion. The improvements to the existing production facility were completed during 2002 and the first production line, or pilot line, in the new facility was completed in 2003. Also in 2002, we leased a production facility in Boulder, Colorado and have been developing it as a cGMP (Good Manufacturing Practices) facility principally for the synthesis of oligonucleotides. The Boulder facility began limited cGMP production in the second quarter of 2003. While additional expansion projects for the Glasgow and Boulder production facilities may be undertaken over the next 2 to 3 years as business demand dictates, the current expansion projects have been substantially completed. As a result, our capital expenditures during the second half of 2003 have been significantly lower than during the first six months of the year. We expect capital expenditures for 2003 to be in the range of $6.2 million to $6.9 million.

        Since our inception, we have operated at a loss. In addition, we have used more cash than we generated from our operations due primarily to the expenditures we have needed to make for research and development, sales and marketing and expansion of our physical facilities. We instituted a cost reduction program beginning during the fourth quarter of 2002 in order to more closely align our cash expenditures with our current revenues and other cash resources. Among other things, this cost reduction program resulted in the elimination of a significant number of job positions during the first half of 2003 and the abandonment of certain intellectual property. We expect that, as a result of this restructuring, our total operating expenses for 2003 will be 20% to 25% below 2002 levels. Further restructuring activities may occur during 2004.

        In December 2003, we terminated our existing line of credit with Silicon Valley Bank, and entered into a new line of credit facility with Laurus Master Fund, Ltd. ("Laurus"). Under the terms of the agreement, we can borrow up to $7,500,000 based on eligible accounts receivable and inventory balances. As of December 18, 2003, we had approximately $3.8 million outstanding on this line of credit facility based upon our current eligible accounts receivable and inventory balances. This line of credit is secured by most of our assets. Payment of interest and principal can, under certain circumstances, be made with shares of our common stock at a conversion price that exceeds the average trading price of our common stock over the ten trading days prior to execution of the new line of credit. Conversion of any of this debt to common stock may only occur if our shares trade at a price exceeding $2.42 per share for ten consecutive trading days and is further subject to trading volume limitations and a limitation on the total beneficial ownership by Laurus of our common stock described in footnote (1) of the "Selling Stockholders" table. In connection with the new line of credit, we issued

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warrants to Laurus and its broker, TN Capital Equities, Ltd. ("TerraNova"), to acquire 595,918 shares of our common stock at exercise prices that also exceed the average trading price of our common stock over the ten trading days prior to execution of the new line of credit. Laurus and TerraNova are the selling stockholders named in this Prospectus with respect to shares of our common stock that may be issued under the terms of a Secured Convertible Minimum Borrowing Note that is part of our new line of credit and upon exercise of the warrants.

        In December 2003, we announced that we had entered into several specific agreements with Novartis Pharmaceuticals Corp. to provide mutation discovery services in the context of translational research programs in oncology. These services are being provided using our WAVE system along with other technologies and represent a natural extension of our separation chemistries core competency.

        In November 2003, we announced the signing of an agreement with Fisher Scientific, a leading global provider of scientific research products and services, to distribute Optimase Polymerase, Transgenomic's high fidelity, thermostable polymerase enzyme for PCR (polymerase chain reaction) amplification of DNA.

        During the fourth quarter of 2003, we entered into a preliminary agreement for a sale/leaseback opportunity for our manufacturing facility in Glasgow, Scotland. Proceeds from this transaction are expected to be approximately $1.5 million, net of transaction costs and amounts used to repay our existing mortgage debt on the facility. We expect the transaction to close before December 31, 2003.

        On September 9, 2003, we issued 1,780,000 shares of our common stock and on November 13, 2003, we issued 2,720,000 shares of our common stock in privately-negotiated sales. These shares were sold pursuant to the terms of a Securities Purchase Agreement, dated August 27, 2003. The sale of these shares was exempt from registration under the Securities Act of 1933, as amended (the "Securities Act") as a sale not involving a public offering. These shares have been registered for resale pursuant to a Registration Statement declared effective on November 14, 2003. The net proceeds to us, after payment of a 5% sales commission to Fahnestock & Co. Inc., who acted as our placement agent for the sale, and other expenses of the offering, were approximately $4.2 million.

        In June 2003 we expanded our license agreement with Geron Corporation under which we produce nucleic acid building blocks. As part of the consideration for the amendment to the License Agreement we agreed to purchase 310,000 shares of Geron Corporation common stock at $5.05 per share, the Nasdaq closing price on June 2, 2003, pursuant to a securities purchase agreement. These shares were subsequently sold in an open market transaction. In September 2003, we signed an addendum to an existing supply agreement with Geron Corporation agreeing to supply additional nucleic acid products. This addendum was filled in the fourth quarter of 2003. Geron elected to pay for such products in Geron Corporation common stock. In 2003, we expect Geron Corporation to be the single largest customer for our Nucleic Acid Business Unit.

        As a result of our cost control measures and reduced capital expenditures, we expect our cash usage to decrease in 2004. Based upon our current projections, we expect to meet our cash needs for 2004 from existing cash, additional cash generated from our working capital, additional funds available to us under our $7.5 million credit facility and the net proceeds of the proposed sale/leaseback transaction. These projections assume continued revenue strength in our Biosystems business unit and increasing revenues from our Nucleic Acid business unit. We believe growth will result from increased consumable product offerings, continued strength in demand for our instruments and returning demand for nucleic acid products from Pharmaceutical and BioPharmaceutical customers. These projections may or may not be realized based upon actual operating results and capital project requirements. Thus, cash generated by these sources may be insufficient to satisfy our liquidity requirements. We may need to sell additional equity or debt securities or obtain additional credit arrangements. We cannot assure you that any financing arrangement will be available in amounts or on terms acceptable to us. Our failure to raise additional capital, if needed, would harm our financial condition, results of operations

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and our business. We are monitoring our liquidity position and are prepared to take appropriate measures, as needed, to address liquidity. Such measures include, but are not limited to, further expense reductions, asset sales and the placement of equity or debt.

General Information

        We were incorporated in Delaware on March 6, 1997. Our principal office is located at 12325 Emmet Street, Omaha, Nebraska 68164 (telephone: 402-452-5400). We maintain manufacturing facilities in Omaha, Nebraska, Boulder, Colorado, San Jose, California, Glasgow, Scotland and Cramlington, England. We maintain research and development offices in Gaithersburg, Maryland, Boulder, Colorado, Piscataway, New Jersey and Omaha, Nebraska.

        Our internet address is www.transgenomic.com. We make our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports available free of charge through our website as soon as reasonably practicable after we file these documents with the Securities and Exchange Commission. The information contained in our website is not part of this Prospectus and you should not rely on it in deciding whether to invest in our common stock.

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RISK FACTORS

An investment in our common stock involves a number of risks. Before making an investment decision, you should carefully consider all of the risks described in this Prospectus and the documents that are incorporated by reference into this Prospectus. The risks discussed in this Prospectus could materially adversely affect our business, financial condition and results of operations and cause the trading price of our common stock to decline significantly. If this occurs, you may lose all or part of your investment.

We have a history of operating losses and expect to incur losses in the future.

        We have experienced losses from operations since inception of our operations. Our operating losses for each of the last three fiscal years were $21.7 million, $9.7 million and $8.7 million, in 2002, 2001 and 2000, respectively. During the nine months ended September 30, 2003, we experienced operating losses of $14.1 million. These losses have been due principally to the high levels of research and development expenses and sales and marketing expenses that we have incurred in order to develop and market our products. In addition, markets for our products have developed more slowly than expected in some cases and may continue to do so. As a result, we expect to incur operating losses in the future and we may never be profitable.

We may not have adequate financial resources to execute our business plan.

        We have historically experienced operating losses and negative cash flows. As of September 30, 2003, we had approximately $1.6 million in cash and cash equivalents and short-term investments and an accumulated deficit of $64.1 million. To date, we have financed our operations and capital expenditures primarily from the proceeds of public and private placements of common stock. Additionally, in December 2003 we entered into a loan agreement Laurus Master Fund, Ltd. for up to a $7.5 million secured line of credit. We expect to continue to need substantial amounts of cash to fund our operations and capital expenditures in the future. Based upon our current projections, we expect to meet our cash needs for 2004 from existing cash, additional cash generated from our working capital, additional funds available to us under our $7.5 million credit facility and the net proceeds of the proposed sale/leaseback transaction. These projections may or may not be realized based upon actual operating results and capital project requirements. Thus, our existing cash balances, cash generated by our working capital, available borrowings under credit agreements and net proceeds of the proposed sale/leaseback transaction may be insufficient to satisfy our liquidity requirements. Accordingly, we may need to raise additional capital in the future. However, we cannot assure you that additional financing will be available to us when we need it or on acceptable terms. If we raise additional capital by issuing common stock or other equity securities, the issuance of these securities would result in dilution of our existing stockholders. If we borrow additional money, we will incur additional interest costs and may become subject to covenants that restrict our operations. If we are not able to obtain additional capital as needed, we may need to take further steps to reduce our operating costs, and may not be able to execute parts or all of our business plan.

Markets for our products and services may develop slowly.

        There are many factors that affect the market demand for our products and services that we cannot control. This is especially true in our Nucleic Acid segment where the demand for our products depends to a large degree on the success that our customers and potential customers have in developing useful pharmaceutical products based on genetic intervention. A central strategy for our Nucleic Acid segment is to sell synthetic nucleic acid products to biopharmaceutical and pharmaceutical companies that are seeking to develop commercially viable genomic-based diagnostic and therapeutic products. We have invested a significant amount of capital into acquiring and developing manufacturing facilities and other assets to allow us to pursue this market. However, this is a new field of commercial development, and many of these biopharmaceutical and pharmaceutical companies are in the early

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stages of their efforts to develop genomic-based diagnostics and therapeutics and have encountered difficulties in these efforts. As a result, the demand for our synthetic nucleic acid products is difficult to forecast and may develop slowly or sporadically. In addition, we cannot assure you that these companies will not develop internally the chemistries and manufacturing capabilities to produce the products they could buy from us. Demand for our WAVE System is similarly affected by the needs and budgetary resources of research institutions, universities, hospitals and others who use the WAVE System for genetic-variation research. The WAVE System represents a significant expenditure by these types of customers and often requires a long sales cycle. If revenues from the sales of our products and services continue at current levels, we may need to raise additional working capital or take steps to further reduce operating expenses. We cannot assure you that sales will increase or that we will be able to raise additional working capital or reduce operating expenses.

The sale of our products and business operations in international markets subjects us to additional risks.

        International sales have historically accounted for approximately 50% of our net sales. As a result, a major portion of our revenues and expenses are subject to risks associated with international sales and operations. These risks include:

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payment cycles in foreign markets are typically longer than in the U.S.;



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changes in foreign currency exchange rates can make our products more costly and operating expenses higher in local currencies since our foreign sales and operating expenses are typically paid for in U.S. Dollars, British Pounds or the Euro; and



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the potential for changes in U.S. and foreign laws or regulations that result in additional import or export restrictions, higher tariffs or other taxes, more burdensome licensing requirements or similar impediments to our ability to sell products and services profitably in these markets.

We may not have adequate personnel to execute our business plan.

        During the fourth quarter of 2002 and the first half of 2003, we took steps to reduce our operating costs that resulted in a significant reduction in our number of employees, including our research and development staff and our sales and marketing personnel. In addition, we may lose other key management, scientific, technical, sales and manufacturing personnel from time to time. It may be very difficult to replace personnel if they are needed in the future, and the loss of key personnel could harm our business and operating results. We cannot assure you that our employee reductions will not impair our ability to continue to develop new products and refine existing products in order to remain competitive. In addition, these reductions could prevent us from successfully marketing our products and developing our customer base.

Our markets are very competitive.

        We compete with many other companies in both our Biosystems segment and Nucleic Acids segment. Competitors for our Biosystems segment include several companies, such as Varian, Waters, Agilent, Applied Biosystems, Beckman Coulter, Amersham Biosciences and Invitrogen. These companies provide various products and services that compete either directly with our WAVE system, bioconsumables and services, or indirectly through alternative technologies and/or methods. Competitors for our Nucleic Acid segment vary depending on the product. In the standard chemical building blocks market, we compete with Applied Biosystems, Proligo and Pierce Nucleic Acid Technologies. The competitors for our pharmaceutical-grade oligonucleotide synthesis products and services include primarily Proligo, Dow Chemical and Avecia. Many of these competing companies have greater resources than we do or may enjoy other competitive advantages. This may allow them to more effectively market their products to our customers or potential customers, to develop products that make our products obsolete or to produce and sell products less expensively than us. As a result of

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these competitive factors, demand for and pricing of our products and services could be negatively affected.

The price for our common stock is volatile and may drop further.

        Our stock has traded at prices as high as $30.00 per share immediately after our initial public offering in 2000 to as low as $0.93 per share in April 2003. This volatility in the price of our stock is attributable to a number of factors, not all of which relate to our operating results and financial position. Nevertheless, continued volatility in the market price for our stock should be expected and we cannot assure you that the price of our stock will increase in the future. Fluctuations or further declines in the price of our stock may affect your ability to sell shares of our stock and our ability to raise capital through future equity financing.

Our patents may not protect us from others using our technology that could harm our business and competitive position.

        Patent law relating to the scope of claims in the technology fields in which we operate is still evolving. The degree of future protection for our proprietary rights is uncertain. Furthermore, we cannot be certain that others will not independently develop similar or alternative products or technology, duplicate any of our products, or, if patents are issued to us, design around the patented products developed by us. Our patents or licenses could be challenged by litigation and, if the outcome of such litigation were adverse to us, our competitors could be free to use our technology. We may not be able to obtain additional patents for our technology, or if we are able to do so, patents may not provide us with substantial protection or be commercially beneficial. In addition, we could incur substantial costs in litigation if we are required to defend ourselves in patent suits brought by third parties or if we initiate such suits.

We cannot be certain that other measures taken to protect our intellectual property will be effective.

        We rely upon trade secret protection, copyright and trademark laws, non-disclosure agreements and other contractual provisions for some of our confidential and proprietary information that is not subject matter for which patent protection is being sought. Such measures, however, may not provide adequate protection for our trade secrets or other proprietary information. If they do not protect our rights, third parties could use our technology and our ability to compete in the market would be reduced.

We are dependent upon our licensed technologies and may need to obtain additional licenses in the future to offer our products and remain competitive.

        We have licensed key components of our technologies from third parties. If these agreements were to terminate prematurely due to our breach of the terms of these licenses or we otherwise fail to maintain our rights to such technology, we may lose the right to manufacture or sell a substantial portion of our products. In addition, we may need to obtain licenses to additional technologies in the future in order to keep our products competitive. If we fail to license or otherwise acquire necessary technologies, we may not be able to develop new products that we need to remain competitive.

The protection of intellectual property in foreign countries is uncertain.

        A significant percentage of our sales are to customers located outside the U.S. The patent and other intellectual property laws of some foreign countries may not protect our intellectual property rights to the same extent as U.S. laws. We may need to bring proceedings to defend our patent rights or to determine the validity of our competitors' foreign patents. These proceedings could result in

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substantial cost and diversion of our efforts. Finally, some of our patent protection in the U.S. is not available to us in foreign countries due to the laws of those countries.

Our products could infringe on the intellectual property rights of others.

        There are a significant number of U.S. and foreign patents and patent applications submitted for technologies in, or related to, our area of business. As a result, any application or exploitation of our technology could infringe patents or proprietary rights of others and any licenses that we might need as a result of such infringement might not be available to us on commercially reasonable terms, if at all. This may lead others to assert patent infringement or other intellectual property claims against us.

Our failure to comply with any applicable government regulations or otherwise respond to claims relating to improper handling, storage or disposal of hazardous chemicals that we use may adversely affect our results of operations.

        Our research and development and manufacturing activities involve the controlled use of hazardous materials and chemicals. We are subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of hazardous materials and waste products. If we fail to comply with applicable laws or regulations, we could be required to pay penalties or be held liable for any damages that result and this liability could exceed our financial resources. We cannot assure you that accidental contamination or injury will not occur. Any such accident could damage our research and manufacturing facilities and operations, resulting in delays and increased costs.

If our outstanding options and warrants are exercised, or our outstanding debt is converted into common stock, it will result in dilution.

        As of November 30, 2003, we had outstanding approximately 28.1 million shares of common stock. We also had obligations to issue approximately 5.7 million shares of common stock under outstanding stock options and warrants. Additionally, we may issue shares of common stock upon conversion of all or part of our new line of credit and the exercise of related warrants. The issuance of such additional shares of common stock may be dilutive to our current shareholders and could negatively impact the market price of our common stock.

USE OF PROCEEDS

        We received initial loan proceeds of $4.0 million of which $2.0 million relates to a Secured Convertible Minimum Borrowing Note which may be converted into 909,091 of the shares offered hereby. Additionally, we will receive approximately $1.5 million upon the exercise of warrants for the remaining 595,918 shares offered hereby. The loan proceeds and the proceeds from any exercise of these warrants will be used by us for working capital purposes. We will not receive any proceeds from the sale of the shares of common stock offered by this Prospectus.

SELLING STOCKHOLDERS

        The shares offered by this Prospectus may be sold from time to time by the selling stockholders named in the following table. The number of shares these selling stockholders are offering under this Prospectus will be adjusted to reflect any additional shares of common stock which may become issuable to the selling stockholders by reason of any stock dividend, stock split or other similar transaction effected without the receipt of consideration and which results in an increase in the number of our outstanding shares of common stock or which otherwise increases the number of shares issuable upon conversion of the loan proceeds or upon the exercise of the warrants under which such shares may by issued.

9

        The following table also sets forth the total number of shares of our common stock beneficially owned by each of the selling stockholders and the percentage of our total outstanding shares of common stock that each selling stockholder beneficially owns. Percentage ownership is based on the 28,119,122 shares of our common stock outstanding as of the date of this Prospectus plus the 1,505,009 shares that may be issued to the selling stockholders and which may be sold under this Prospectus. The estimate of shares owned after this offering assumes that all shares offered by the Prospectus are sold. These estimates may prove to be inaccurate because the selling stockholders may offer all or some of their shares and because there currently are no agreements, arrangements or understandings with respect to the sale of any of the shares.

	Shares Beneficially Owned Prior to the Offering				Shares Beneficially Owned After the Offering
Name	Number	Percentage		Shares to be Sold	Number	Percentage
Laurus Master Fund, Ltd. (1)	1,459,091	4.94	%	1,459,091	0	*
TN Capital Equities, Ltd. (2)	45,918	*		45,918	0	*
	1,505,009	5.09	%	1,505,009	0	*

*

less than 1%

(1)

Consists of 909,091 shares issuable upon the conversion of the $2.0 million Secured Convertible Minimum Borrowing Note and 550,000 shares issuable upon the exercise of warrants. Laurus Master Fund, Ltd. has contractually agreed to beneficial ownership limitations that restrict the conversion or exercise of securities held by Laurus. Laurus has agreed that it will not convert debt or exercise warrants to the extent that such conversion or exercise would result in Laurus, together with its affiliates, beneficially owning more than 4.99% of the number of shares of our common stock outstanding at the time of conversion or exercise.

(2)

Represents shares issuable upon the exercise of warrants. TN Capital Equities, Ltd. ("TerraNova") served as broker for the agreements entered into between the Company and Laurus. Warrants were issued to TerraNova as partial compensation for their services as broker.

        Each selling stockholder acquired the shares to be sold by such selling stockholder in the ordinary course of business and, at the time of acquisition of such shares, no selling stockholder had any agreement or understanding, directly or indirectly, to distribute such shares.

10

PLAN OF DISTRIBUTION

        The selling stockholders or their donees or pledgees may sell their shares of our common stock from time to time. The selling stockholders will act independently of us in making decisions regarding the timing, manner and size of each sale. The sales may be made on the Nasdaq National Market, in the over-the-counter market or otherwise, at prices and terms then prevailing or at prices related to the then current market price, or in negotiated transactions. The last reported sale price of our common stock on December 18, 2003 was $1.86 per share. The selling stockholders may effect such transactions by selling the shares to or through broker-dealers. The shares may be sold by one or more of, or a combination of, the following:

•

a block trade in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction,



•

purchases by a broker-dealer as principal and resale by such broker-dealer for its account under this prospectus,



•

an exchange distribution in accordance with the rules of such exchange,



•

ordinary brokerage transactions and transactions in which the broker solicits purchasers, and



•

in privately negotiated transactions.

        To the extent required, this Prospectus may be amended or supplemented from time to time to describe a specific plan of distribution. In effecting sales, broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in the resales. The selling stockholders may enter into hedging transactions with broker-dealers in connection with distributions of the shares or otherwise. In these transactions, broker-dealers may engage in short sales of the shares in the course of hedging the positions they assume with selling stockholders. The selling stockholders also may sell shares short and redeliver the shares to close out such short positions. The selling stockholders may enter into option or other transactions with broker-dealers which require the delivery to the broker-dealer of the shares. The broker-dealer may then resell or otherwise transfer such shares under this prospectus. The selling stockholders also may lend or pledge their shares to a broker-dealer. The broker-dealer may sell the shares so lent, or upon a default the broker-dealer may sell the pledged shares under this Prospectus.

        Broker-dealers or agents may receive compensation in the form of commissions, discounts or concessions from selling stockholders. Broker-dealers or agents may also receive compensation from the purchasers of the shares for whom they act as agents or to whom they sell as principals, or both. Compensation as to a particular broker-dealer might be in excess of customary commissions and will be in amounts to be negotiated in connection with the sale. Broker-dealers or agents and any other participating broker-dealers or the selling stockholders may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act of 1933 (the "Securities Act") in connection with sales of the shares. Accordingly, any such commission, discount or concession received by them and any profit on the resale of the shares purchased by them may be deemed to be underwriting discounts or commissions under the Securities Act. Because selling stockholders may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, the selling stockholders will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this Prospectus which qualify for sale under Rule 144 promulgated under the Securities Act may be sold under Rule 144 rather than under this Prospectus. The selling stockholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their securities. There is no underwriter or coordinating broker acting in connection with the proposed sale of shares by the selling stockholders.

11

        The shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states the shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

        Under applicable rules and regulations under the Securities Exchange Act of 1934 (the "Exchange Act"), any person engaged in the distribution of the shares may not simultaneously engage in market making activities with respect to our common stock for a period of two business days prior to the commencement of such distribution. In addition, each selling stockholder will be subject to applicable provisions of the Exchange Act and the associated rules and regulations under the Exchange Act, including Regulation M, which provisions may limit the timing of purchases and sales of shares of our common stock by the selling stockholders. We will make copies of this Prospectus available to the selling stockholders and have informed them of the need to deliver copies of this Prospectus to purchasers at or prior to the time of any sale of the shares.

        We will file a supplement to this Prospectus, if required, to comply with Rule 424(b) under the Securities Act upon being notified by a selling stockholder that any material arrangements have been entered into with a broker-dealer for the sale of shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer. Such supplement will disclose:

•

the name of each such selling stockholder and of the participating broker-dealer(s),



•

the number of shares involved,



•

the price at which such shares were sold,



•

the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable,



•

that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and



•

other facts material to the transaction.

        In addition, upon being notified by a selling stockholder that a donee or pledgee intends to sell more than 500 shares, we will file a supplement to this Prospectus.

        We will bear all costs, expenses and fees in connection with the registration of the shares. We agreed to indemnify and hold the selling stockholders harmless against certain liabilities under the Securities Act that could arise in connection with the sale by the selling stockholders of the shares. The selling stockholders will bear all commissions and discounts, if any, attributable to the sales of the shares. The selling stockholders may agree to indemnify any broker-dealer or agent that participates in transactions involving sales of the shares against certain liabilities, including liabilities arising under the Securities Act.

EXPERTS

        The financial statements as of December 31, 2002 and 2001 and for each of the three years in the period ended December 31, 2002 incorporated in this Prospectus by reference from our Annual Report on Form 10-K for the year ended December 31, 2002 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report (which report expresses an unqualified opinion and includes an explanatory paragraph relating to our change in method of accounting for goodwill and other intangible assets in connection with the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, in 2002 and our receipt of a commitment letter for a new revolving credit agreement on March 31, 2003), which is incorporated herein by reference, and has

12

been so incorporated, in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

LEGAL OPINIONS

        The validity of the common stock offered by this Prospectus has been passed upon for us by Kutak Rock LLP, Omaha, Nebraska.

WHERE YOU CAN FIND MORE INFORMATION

        We file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). You may read and copy the materials we file at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the SEC's regional office at Citicorp Center, 500 West Madison Street, Room 1400, Chicago, Illinois 60661-2511. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the Public Reference Rooms. Our SEC filings are also available to the public from the SEC's World Wide Web site on the Internet at http://www.sec.gov. This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

        We maintain a site on the World Wide Web at www.transgenomic.com. The information contained in our website is not part of this Prospectus and you should not rely on it in deciding whether to invest in our common stock.

        We have filed a Registration Statement on Form S-3, of which this Prospectus is a part, covering the securities offered hereby. As allowed by SEC rules, this Prospectus does not contain all the information set forth in the Registration Statement and the exhibits, financial statements and schedules thereto. We refer you to the Registration Statement, the exhibits, financial statements and schedules thereto for further information. This Prospectus is qualified in its entirety by such other information.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

        The SEC allows us to "incorporate by reference" information into this Prospectus, which means that we can disclose important information to you by referring you to another document filed separately by us with the SEC under the Securities Exchange Act of 1934 (the "Exchange Act"). The information incorporated by reference is deemed to be part of this Prospectus, except for any information superseded by information in this Prospectus. We have filed our annual report on Form 10-K for the year ended December 31, 2002, our quarterly reports on Form 10-Q for the quarters ended March 31, 2003, June 30, 2003, and September 30, 2003, current reports on Form 8-K dated May 30, August 29, November 19, November 20, December 3, December 4 and December 9, 2003 and our proxy statement dated April 18, 2003 with the SEC (File No. 000-30975), and these documents are incorporated herein by reference.

        Any documents we file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the securities to which this Prospectus relates will automatically be deemed to be incorporated by reference into this Prospectus and to be part hereof from the date of filing those documents. Any statement contained in this Prospectus or in a document incorporated by reference shall be deemed to be modified or superseded for all purposes to the extent that a statement contained in this Prospectus or in any other document which is also incorporated by reference modifies or supersedes that statement.

        You may obtain copies of all documents which are incorporated in this Prospectus by reference (other than the exhibits to those documents which are not specifically incorporated by reference herein) without charge by writing or calling Mr. Mitchell L. Murphy, at Transgenomic, Inc., 12325 Emmet Street, Omaha, NE, 68164, telephone number (402) 452-5400.

13

1,505,009 Shares

TRANSGENOMIC, INC.

COMMON STOCK

PROSPECTUS

                        , 2003

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.    Other Expenses of Issuance and Distribution.

        The following table shows the estimated expenses in connection with the issuance and distribution of the common stock being registered:

Securities and Exchange Commission filing fees	$	228
Legal fees and expenses		10,000
Accounting fees and expenses		5,000
Printing and engraving		1,000
Miscellaneous expenses		1,000
Total	$	17,228

Item 15.    Indemnification of Directors and Officers.

        Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933.

        As permitted by the Delaware General Corporation Law, the Registrant's First Restated Certificate of Incorporation eliminates the personal liability of its directors for monetary damages for breach of fiduciary duty as a director, except for liability (1) for any breach of the director's duty of loyalty to the Registrant or its stockholders, (2) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (3) under Section 174 of the Delaware General Corporation Law (regarding unlawful dividends and stock purchases) or (4) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended to authorize further elimination or limiting of directors' personal liability, then the First Amended and Restated Certificate provides that the personal liability of directors will be eliminated or limited to the fullest extent provided under the Delaware General Corporation Law.

        As permitted by the Delaware General Corporation Law, the Registrant's First Amended and Restated Certificate of Incorporation and its Bylaws provide that (1) the Registrant is required to indemnify its directors and officers to the fullest extent permitted by the Delaware General Corporation Law, subject to certain very limited exceptions, (2) the Registrant may indemnify its other employees and agents as set forth in the Delaware General Corporation Law, (3) the Registrant is required to advance expenses, as incurred, to its directors and executive officers in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to certain conditions and (4) the rights conferred by the First Amended and Restated Certificate of Incorporation and Bylaws are not exclusive.

        The Delaware General Corporation Law authorizes a corporation to indemnify its directors and officers provided that the corporation shall not eliminate or limit the liability of a director as follows:

(a)

for any action brought by or in the right of a corporation where the director or officer is adjudged to be liable to the corporation, except where a court determines the director or officer is entitled to indemnity;



(b)

for acts or omissions not in good faith or which involve conduct that the director or officer believes is not in the best interests of the corporation;



(c)

for knowing violations of the law;

II-1

(d)

for any transaction from which the directors derived an improper personal benefit; and



(e)

for payment of dividends or approval of stock repurchases or redemptions leading to liability under Section 174 of the Delaware General Corporation Law.

        The Delaware General Corporation Law requires a corporation to indemnify a director or officer to the extent that the director or officer has been successful, on the merits or otherwise, in defense of any action, suit or proceeding for which indemnification is lawful.

        The Registrant maintains a director and officer insurance policy which insures the directors and officers of the Registrant against damages, judgments, settlements and costs incurred by reason of certain wrongful acts committed by such persons in their capacities as directors and officers.

Item 16.    Exhibits.

4

Form of Certificate of the Registrant's Common Stock (1)



5

Opinion of Kutak Rock LLP



10.1

Security Agreement by and between the Registrant and Laurus Master Fund, Ltd. dated December 3, 2003



10.2

Secured Revolving Note by and between the Registrant and Laurus Master Fund, Ltd. dated December 3, 2003



10.3

Secured Convertible Minimum Borrowing Note by and between the Registrant and Laurus Master Fund, Ltd. dated December 3, 2003



10.4

Common Stock Purchase Warrant by and between the Registrant and Laurus Master Fund, Ltd. dated December 3, 2003



10.5

Registration Rights Agreement by and between the Registrant and Laurus Master Fund, Ltd. dated December 3, 2003



10.6

Common Stock Purchase Warrant by and between the Registrant and TN Capital Equities, Ltd. dated December 3, 2003



23.1

Consent of Deloitte & Touche LLP



23.2

Consent of Kutak Rock LLP (included in Exhibit 5)



24

Powers of Attorney (included on page II-4 of this Registration Statement)

(1)

This Exhibit is incorporated by reference to the Registration Statement of the Registrant (Registration No. 333-32174), which was filed on March 10, 2000.

Item 17.    Undertakings.

        We undertake:

        (1)   To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

          (i)  to include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

         (ii)  to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any

II-2

deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" in this registration statement;

        (iii)  to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement provided, however, that the undertakings set forth in paragraphs (i) and (ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement.

        (2)   That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        (3)   To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

        (4)   That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        (5)   Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted against the Registrant by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-3

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Omaha, Nebraska, on the 22nd day of December, 2003.

TRANSGENOMIC, INC.
By:	/s/  COLLIN J. D'SILVA Collin J. D'Silva, President and Chief Executive Officer

        Each person whose signature appears below hereby authorizes Collin J. D'Silva as attorney-in-fact, to sign on his or her behalf, individually and in each capacity stated below, any amendment, including post-effective amendments to this Registration Statement, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission.

        Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Date: December 22, 2003	By:	/s/  COLLIN J. D'SILVA Collin J. D'Silva, President, Chief Executive Officer and Director (Principal Executive Officer)
Date: December 22, 2003	By:	/s/  MICHAEL J. DRAPER Michael J. Draper, Chief Financial Officer (Principal Financial Officer)
Date: December 22, 2003	By:	/s/  GREGORY J. DUMAN Gregory J. Duman, Director
Date: December 22, 2003	By:	/s/  JEFFREY SKLAR Jeffrey Sklar, Director
Date: December 22, 2003	By:	/s/  ROLAND J. SANTONI Roland J. Santoni, Director
Date: December 22, 2003	By:	/s/  PARAG SAXENA Parag Saxena, Director

II-4

EXHIBIT INDEX

Exhibit No.	Description
4	Form of Certificate of the Registrant's Common Stock (1)
5	Opinion of Kutak Rock LLP
10.1	Security Agreement by and between the Registrant and Laurus Master Fund, Ltd. dated December 3, 2003
10.2	Secured Revolving Note by and between the Registrant and Laurus Master Fund, Ltd. dated December 3, 2003
10.3	Secured Convertible Minimum Borrowing Note by and between the Registrant and Laurus Master Fund, Ltd. dated December 3, 2003
10.4	Common Stock Purchase Warrant by and between the Registrant and Laurus Master Fund, Ltd. dated December 3, 2003
10.5	Registration Rights Agreement by and between the Registrant and Laurus Master Fund, Ltd. dated December 3, 2003
10.6	Common Stock Purchase Warrant by and between the Registrant and TN Capital Equities, Ltd. dated December 3, 2003
23.1	Consent of Deloitte & Touche LLP
23.2	Consent of Kutak Rock LLP (included in Exhibit 5)
24	Powers of Attorney (included on page II-4 of this Registration Statement)

(1)

This Exhibit is incorporated by reference to the Registration Statement of the Registrant (Registration No. 333-32174), which was filed on March 10, 2000.

QuickLinks

TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
TRANSGENOMIC, INC.
RISK FACTORS
USE OF PROCEEDS
SELLING STOCKHOLDERS
PLAN OF DISTRIBUTION
EXPERTS
LEGAL OPINIONS
WHERE YOU CAN FIND MORE INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
PART II INFORMATION NOT REQUIRED IN PROSPECTUS

Item 15. Indemnification of Directors and Officers.
Item 16. Exhibits.
Item 17. Undertakings.

SIGNATURES
EXHIBIT INDEX

EX-5

                                                                       Exhibit 5

                                December 19, 2003

Transgenomic, Inc.
12325 Emmet Street
Omaha, NE  68164

     Re:       Transgenomic, Inc. Common Stock

Ladies and Gentlemen:

     We have acted as counsel for Transgenomic, Inc., a Delaware corporation
(the "Company"), in connection with the filing of a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), with respect to the registration of 1,505,909 shares of
common stock of the Company (the "Shares") which may be issued to Laurus Master
Fund, Ltd. ("Laurus") upon conversion of a $2.0 million Secured Convertible
Minimum Borrowing Note from the Company to Laurus (the "Note") and upon the
exercise of Warrants issued to Laurus and TN Capital Equities, Ltd. in
connection therewith (the "Warrants"). This opinion is being furnished in
accordance with the requirements of Item 16 of Form S-3 and Item 601(b)(5)(i) of
Regulation S-K.

     In the course of such representation, we have examined, among other things,
the terms of the Note, the Warrants and other documents associated therewith and
such corporate records, certificates of public officials and other documents we
deemed relevant and appropriate. Based on the foregoing, we are of the opinion
that the Shares when issued pursuant to the terms of the Note and the Warrants
will be legally issued, fully paid and nonassessable.

     We hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Opinions" in the prospectus which is part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act, the rules and
regulations of the Securities and Exchange Commission promulgated thereunder, or
Item 509 of Regulation S-K.

     This opinion letter is rendered as of the date first written above. We
disclaim any obligation to advise you of facts, circumstances, events or
developments which may be brought to our attention after the effective date of
the Registration Statement and which may alter, affect or modify the opinion
expressed herein. This opinion letter supercedes any opinion letter previously
delivered by us with respect to the registration of the Shares. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company or the Shares.

                                Very truly yours,


                               /s/ Kutak Rock LLP

EX-10.1

                                                                    Exhibit 10.1

                               SECURITY AGREEMENT

          This Security Agreement is made as of December 3, 2003 by and between
LAURUS MASTER FUND, LTD., a Cayman Islands corporation ("Laurus") and
TRANSGENOMIC, INC., a Delaware corporation (the "Company").

                                   BACKGROUND

          Company has requested that Laurus make advances available to Company;
and

          Laurus has agreed to make such advances to Company on the terms and
conditions set forth in this Agreement.

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the mutual covenants and undertakings
and the terms and conditions contained herein, the parties hereto agree as
follows:

          1.   (a) GENERAL DEFINITIONS. Capitalized terms used in this Agreement
shall have the meanings assigned to them in Annex A.

          (b)      ACCOUNTING TERMS. Any accounting terms used in this Agreement
which are not specifically defined shall have the meanings customarily given
them in accordance with GAAP and all financial computations shall be computed,
unless specifically provided herein, in accordance with GAAP consistently
applied.

          (c)      OTHER TERMS. All other terms used in this Agreement and
defined in the UCC shall have the meaning given therein unless otherwise defined
herein.

          (d)      RULES OF CONSTRUCTION. All Schedules, Addenda, Annexes and
Exhibits hereto or expressly identified to this Agreement are incorporated
herein by reference and taken together with this Agreement constitute but a
single agreement. The words "herein", hereof" and "hereunder" or other words of
similar import refer to this Agreement as a whole, including the Exhibits,
Addenda, Annexes and Schedules thereto, as the same may be from time to time
amended, modified, restated or supplemented, and not to any particular section,
subsection or clause contained in this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in the masculine,
feminine or neuter gender shall include the masculine, the feminine and the
neuter. The term "or" is not exclusive. The term "including" (or any form
thereof) shall not be limiting or exclusive. All references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations. All references in this Agreement or in the Schedules,
Addenda, Annexes and Exhibits to this Agreement to sections, schedules,
disclosure schedules, exhibits, and attachments shall refer to the corresponding
sections, schedules, disclosure schedules, exhibits, and attachments of or to
this Agreement. All references to any instruments or agreements, including
references to any of this Agreement or the Ancillary Agreements shall include
any and all modifications or amendments thereto and any and all extensions or
renewals thereof.



          2.   LOANS.

          (a)    (i)     Subject to the terms and conditions set forth herein
and in the Ancillary Agreements, Laurus may make loans (the "Loans") to Company
from time to time during the Term which, in the aggregate at any time
outstanding, will not exceed the lesser of (x) (I) the Capital Availability
Amount minus (II) such reserves as Laurus may in its commercially reasonable
good faith judgment deem proper and necessary from time to time to preserve and
protect the Collateral and/or its rights and remedies hereunder (the "Reserves")
or (y) an amount equal to (I) the Accounts Availability, plus (II) the Inventory
Availability, minus (III) the Reserves. The amount derived at any time from
Section 2(a)(i)(y)(I), plus 2(a)(i)(y)(II), minus 2(a)(i)(y)(III) shall be
referred to as the "Formula Amount". Company shall execute and deliver to Laurus
on the Closing Date a Minimum Borrowing Note evidencing the Loans funded on the
Closing Date and a Revolving Note evidencing (without duplication of Loans
evidenced by any Minimum Borrowing Note) the Capital Availability Amount. From
time to time thereafter, Company shall execute and deliver to Laurus immediately
prior to the final funding of each additional $2,000,000 tranche of Loans
(calculated on a cumulative basis for each such tranche) an additional Minimum
Borrowing Note evidencing such tranche, in the form of Minimum Borrowing Note
delivered by Company to Laurus on the Closing Date.

                 (ii)    Notwithstanding  the  limitations  set forth  above,
if requested by Company, Laurus retains the right to lend to Company from time
to time such amounts in excess of such limitations as Laurus may determine in
its sole discretion.

                 (iii)   Company acknowledges that the exercise of Laurus'
discretionary rights (which shall be exercised by Laurus in good faith and in
its commercially reasonable discretion) hereunder may result during the Term in
one or more increases or decreases in the advance percentages used in
determining Accounts Availability and/or Inventory Availability and Company
hereby consents to any such increases or decreases which may limit or restrict
advances requested by Company.

                 (iv)    If Company does not pay any interest, fees, costs or
charges to Laurus when due, Company shall thereby be deemed to have requested,
and Laurus is hereby authorized at its discretion to make and charge to
Company's account, a Loan to Company as of such date in an amount equal to such
unpaid interest, fees, costs or charges.

                 (v)     If Company at any time fails to perform or observe any
of the covenants contained in this Agreement or any Ancillary Agreement, Laurus
may, but need not, perform or observe such covenant on behalf and in the name,
place and stead of Company (or, at Laurus' option, in Laurus' name) and may, but
need not, with three (3) days prior written notice to the Company (provided that
such notice shall not be required in the event Laurus in its good faith exercise
of its commercially reasonable discretion determines that such action is
necessary to preserve or protect the Collateral) take any and all other actions
which Laurus may deem necessary to cure or correct such failure (including the
payment of taxes, the satisfaction of Liens, the performance of obligations owed
to Account Debtors, lessors or other obligors, the procurement and maintenance
of insurance, the execution of assignments, security agreements and financing
statements, and the endorsement of instruments). The amount of all monies
expended and all costs and expenses (including attorneys' fees and legal
expenses) incurred by

                                        2


Laurus in connection with or as a result of the performance or observance of
such agreements or the taking of such action by Laurus shall be charged to
Company's account as a Loan and added to the Obligations. To facilitate Laurus'
performance or observance of such covenants of Company, Company hereby
irrevocably appoints Laurus, or Laurus' delegate, acting alone, as Company's
attorney in fact (which appointment is coupled with an interest) with the right
(but not the duty) from time to time to create, prepare, complete, execute,
deliver, endorse or file in the name and on behalf of Company any and all
instruments, documents, assignments, security agreements, financing statements,
applications for insurance and other agreements and writings required to be
obtained, executed delivered or endorsed by Company.

                 (vi)    Laurus will account to Company monthly with a
statement of all Loans and other advances, charges and payments made pursuant to
this Agreement, and such account rendered by Laurus shall be deemed final,
binding and conclusive unless Laurus is notified by Company in writing to the
contrary within thirty (30) days of the date each account was rendered
specifying the item or items to which objection is made.

                 (vii)   During the Term, Company may borrow and prepay Loans in
excess of the Minimum Borrowing Amount, all in accordance with the terms and
conditions hereof.

          (b)  Following the occurrence of an Event of Default which continues
to exist, Laurus may, at its option, elect to convert the credit facility
contemplated hereby to an accounts receivable purchase facility. Upon such
election by Laurus (subsequent notice of which Laurus shall provide to Company),
Company shall be deemed to hereby have sold, assigned, transferred, conveyed and
delivered to Laurus, and Laurus shall be deemed to have purchased and received
from Company, all right, title and interest of Company in and to all Accounts
which shall at any time constitute Eligible Accounts (the "Receivables
Purchase"). All outstanding Loans hereunder shall be deemed obligations under
such accounts receivable purchase facility. The conversion to an accounts
receivable purchase facility in accordance with the terms hereof shall not be
deemed an exercise by Laurus of its secured creditor rights under Article 9 of
the UCC. Immediately following Laurus' request, Company shall execute all such
further documentation as may be required by Laurus to more fully set forth the
accounts receivable purchase facility herein contemplated, including, without
limitation, Laurus' standard form of accounts receivable purchase agreement and
account debtor notification letters, but Company's failure to enter into any
such documentation shall not impair or affect the Receivables Purchase in any
manner whatsoever.

          (c)  MINIMUM BORROWING AMOUNT. After a registration statement
registering the Registrable Securities has been declared effective by the SEC,
conversions of the Minimum Borrowing Amount into the common stock of Company may
be initiated as set forth in the Minimum Borrowing Note. From and after the date
upon which any outstanding principal of the Minimum Borrowing Amount (as
evidenced by the first Minimum Borrowing Note) is converted into common stock
(the "First Conversion Date"), (i) corresponding amounts of all outstanding
Loans (not attributable to the then outstanding Minimum Borrowing Amount)
existing on or made after the First Conversion Date will be aggregated until
they reach the sum of $2,000,000, (ii) Company will issue a new (serialized)
Minimum Borrowing Note to Laurus in respect of such $2,000,000 aggregation, and
(iii) Company shall prepare and file a subsequent registration

                                        3


statement with the SEC to register shares of its' common stock that will be
issued in accordance with such subsequent Minimum Borrowing Note in accordance
with the terms of the Registration Rights Agreement.

          3.   REPAYMENT OF THE LOANS. Company (a) may prepay the Obligations in
excess of the Minimum Borrowing Amount from time to time in accordance with the
terms and provisions of the Notes (and Section 16 hereof if such prepayment is
due to a termination of this Agreement); and (b) shall repay on the expiration
of the Term (i) the then aggregate outstanding principal balance of the Loans
made by Laurus to Company hereunder together with accrued and unpaid interest,
fees and charges and (ii) all other amounts owed Laurus under this Agreement and
the Ancillary Agreements. Any payments of principal, interest, fees or any other
amounts payable hereunder or under any Ancillary Agreement shall be made prior
to 12:00 noon (New York time) on the due date thereof in immediately available
funds.

          4.   PROCEDURE FOR LOANS. Company may by written notice request a
borrowing of Loans prior to 12:00 p.m. (New York time) on the Business Day of
its request to incur, on the next business day, a Loan. Together with each
request for a Loan (or at such other intervals as Laurus may request), Company
shall deliver to Laurus a Borrowing Base Certificate in the form of Exhibit A,
which shall be certified as true and correct by the Chief Executive Officer or
Chief Financial Officer of Company together with all supporting documentation
relating thereto. All Loans shall be disbursed from whichever office or other
place Laurus may designate from time to time and shall be charged to Company's
account on Laurus' books. The proceeds of each Loan made by Laurus shall be made
available to Company on the Business Day following the Business Day so requested
in accordance with the terms of this Section 4 by way of credit to Company's
operating account maintained with such bank as Company designated to Laurus. Any
and all Obligations due and owing hereunder may be charged to Company's account
and shall constitute Loans.

          5.   INTEREST AND PAYMENTS.

          (a)    INTEREST.

                 (i)     Except as modified by Section 5(a)(iii) below, Company
shall pay interest at the Contract Rate on the unpaid principal balance of each
Loan until such time as such Loan is collected in full in good funds in dollars
of the United States of America.

                 (ii)    Interest and payments shall be computed on the basis of
actual days elapsed in a year of 360 days. At Laurus' option, Laurus may charge
Company account for said interest.

                 (iii)   Effective upon the occurrence of any Event of Default
and for so long as any Event of Default shall be continuing, the interest rate
on outstanding Obligations shall convert from the Contract Rate to a rate equal
to the Prime Rate plus six percent (6%) per annum (such increased rate, the
"Default Rate"), and all outstanding Obligations, including unpaid interest,
shall continue to accrue interest from the date of such Event of Default at the
Default Rate applicable to such Obligations until such Event of Default is cured
or waived in writing.

                                        4


                 (iv)    In no event shall the aggregate interest payable on the
Notes exceed the maximum rate permitted under any applicable law or regulation,
as in effect from time to time (the "Maximum Legal Rate") and if any provision
of this Agreement or any Ancillary Agreement is in contravention of any such law
or regulation, interest payable under this Agreement and each Ancillary
Agreement shall be computed on the basis of the Maximum Legal Rate (so that such
interest will not exceed the Maximum Legal Rate).

                 (v)     Company shall pay principal, interest and all other
amounts payable hereunder and in respect of the Notes, or under any Ancillary
Agreement, without any deduction whatsoever, including any deduction for any
set-off or counterclaim.

          (b)    PAYMENTS.

                 (i)     CLOSING PAYMENT. Upon execution of this Agreement by
Company and Laurus, Company shall pay to Laurus Capital Management, LLC a
closing payment in an amount equal to three and six-tenths percent (3.6%) of the
Capital Availability Amount, representing the aggregate closing payments payable
by Company during the Term. Such payments shall be deemed fully earned on the
Closing Date and shall not be subject to rebate or proration for any reason.

                 (ii)    UNUSED LINE PAYMENT. If, for any month, the average
outstanding Loans (the"Average Loan Amount") do not equal the Capital
Availability Amount, Company shall pay to Laurus at the end of such month a
payment in an amount equal to a rate of one half percent (0.5%) per annum of the
amount by which the Capital Availability Amount exceeds the Average Loan Amount.
Notwithstanding the foregoing, any unpaid fee shall be immediately due and
payable upon termination of this Agreement.

                 (iii)   OVERADVANCE PAYMENT. Without affecting Laurus' rights
hereunder in the event the Loans exceed the amounts permitted by Section 2
("Overadvances"), in the event an Overadvance occurs or is made by Laurus and
such Overadvance is not repaid by the Company within three (3) business days,
all such Overadvances shall bear interest at an annual rate equal to the Prime
Rate plus four percent (4%) per annum of the amount of such Overadvances for
each month or portion thereof as such amounts shall be outstanding.

                 (iv)    FINANCIAL INFORMATION DEFAULT. Without affecting
Laurus' other rights and remedies, in the event Company fails to deliver the
financial information required by Section 11 on or before the date required by
this Agreement and such required information remains undelivered after a three
(3) business day grace period, Company shall pay Laurus a fee in the amount of
$500.00 per week (or portion thereof) for each such failure until such failure
is cured to Laurus' satisfaction or waived in writing by Laurus. Such fee shall
be charged to Company's account upon the occurrence of each such failure.

          6.   SECURITY INTEREST.

          (a)    To secure the prompt payment to Laurus of the Obligations,
Company hereby assigns, pledges and grants to Laurus a continuing security
interest in and Lien upon all of the Collateral. All of Company's Books and
Records relating to the Collateral shall, until delivered to or removed by
Laurus, be kept by Company in trust for Laurus until all Obligations

                                        5


have been paid in full. Each confirmatory assignment schedule or other form of
assignment hereafter executed by Company shall be deemed to include the
foregoing grant, whether or not the same appears therein.

          (b)    Company hereby (i) authorizes Laurus to file any financing
statements, continuation statements or amendments thereto that (x) indicate the
Collateral (1) as all assets of Company or words of similar effect, regardless
of whether any particular asset comprised in the Collateral falls within the
scope of Article 9 of the UCC of such jurisdiction, or (2) as being of an equal
or lesser scope or with greater detail, and (y) contain any other information
required by Part 5 of Article 9 of the UCC for the sufficiency or filing office
acceptance of any financing statement, continuation statement or amendment and
(ii) ratifies its authorization for Laurus to have filed any initial financial
statements, or amendments thereto if filed prior to the date hereof. Company
acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
without the prior written consent of Laurus and agrees that it will not do so
without the prior written consent of Laurus, subject to Company's rights under
Section 9-509(d)(2) of the UCC.

          (c)    Company hereby grants to Laurus an irrevocable, non-exclusive
license (exercisable upon the termination of this Agreement due to an occurrence
and during the continuance of an Event of Default without payment of royalty or
other compensation to Company) to use, transfer, license or sublicense any
Intellectual Property now owned, licensed to, or hereafter acquired by Company,
and wherever the same may be located, and including in such license access to
all media in which any of the licensed items may be recorded or stored and to
all computer and automatic machinery software and programs used for the
compilation or printout thereof, and represents, promises and agrees that any
such license or sublicense is not and will not be in conflict with the
contractual or commercial rights of any third Person; provided, that on
termination of this Agreement and payment in full of the Obligations, such
license will terminate and Laurus, to the extent applicable, will reassign its
rights in and to any such license to Company or as otherwise required under
applicable law.

          7.   REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING THE
COLLATERAL. Company represents, warrants (each of which such representations and
warranties shall be deemed repeated upon the making of each request for a Loan
and made as of the time of each and every Loan hereunder) and covenants as
follows:

          (a)    all of the Collateral (i) is owned by Company free and clear of
all Liens (including any claims of infringement) except those in Laurus' favor
and Permitted Liens and (ii) is not subject to any agreement prohibiting the
granting of a Lien or requiring notice of or consent to the granting of a Lien
(other than the GE Agreement).

          (b)    Company shall not encumber, mortgage, pledge, assign or grant
any Lien in any Collateral of Company or any of Company's other assets to anyone
other than Laurus and except for Permitted Liens.

          (c)    The Liens granted pursuant to this Agreement, upon completion
of the filings and other actions listed on EXHIBIT 7(c) (which, in the case of
all filings and other documents referred to in said Exhibit, have been delivered
to Laurus in duly executed form)

                                        6


constitute valid perfected security interests in all of the Collateral in favor
of Laurus as security for the prompt and complete payment and performance of the
Obligations, enforceable in accordance with the terms hereof against any and all
creditors of and any purchasers from Company and such security interest is prior
to all other Liens in existence on the date hereof.

          (d)    No effective security agreement, mortgage, deed of trust,
financing statement, equivalent security or Lien instrument or continuation
statement covering all or any part of the Collateral is or will be on file or of
record in any public office, except those relating to Permitted Liens.

          (e)    Company shall not dispose of any of the Collateral whether by
sale, lease or otherwise except for the sale of Inventory in the ordinary course
of business and for the disposition or transfer in the ordinary course of
business during any fiscal year of obsolete and worn-out Equipment having an
aggregate fair market value of not more than $75,000 and only to the extent that
(i) the proceeds of any such disposition are used to acquire replacement
Equipment which is subject to Laurus' first priority security interest or are
used to repay Loans or to pay general corporate expenses, or (ii) following the
occurrence of an Event of Default which continues to exist the proceeds of which
are remitted to Laurus to be held as cash collateral for the Obligations.

          (f)    Company shall defend the right, title and interest of Laurus in
and to the Collateral against the claims and demands of all Persons whomsoever,
and take such actions, including (i) all actions necessary to grant Laurus
"control" of any Investment Property, Deposit Accounts, Letter-of-Credit Rights
or electronic Chattel Paper owned by Company, with any agreements establishing
control to be in form and substance satisfactory to Laurus, (ii) the prompt (but
in no event later than five (5) Business Days following Laurus' request
therefor) delivery to Laurus of all original Instruments, Chattel Paper,
negotiable Documents and certificated Stock owned by Company (in each case,
accompanied by stock powers, allonges or other instruments of transfer executed
in blank), (iii) notification of Laurus' interest in Collateral at Laurus'
request, and (iv) the institution of litigation against third parties as shall
be prudent in order to protect and preserve Company's and Laurus' respective and
several interests in the Collateral.

          (g)    Company shall promptly, and in any event within five (5)
Business Days after the same is acquired by it, notify Laurus of any commercial
tort claim (as defined in the UCC) acquired by it and unless otherwise consented
by Laurus, Company shall enter into a supplement to this Agreement granting to
Laurus a Lien in such commercial tort claim.

          (h)    Company shall place notations upon its Books and Records and
any financial statement of Company to disclose Laurus' Lien in the Collateral.

          (i)    If Company retains possession of any Chattel Paper or
Instrument with Laurus' consent, upon Laurus' request such Chattel Paper and
Instruments shall be marked with the following legend: "This writing and
obligations evidenced or secured hereby are subject to the security interest of
Laurus Master Fund, Ltd."

                                        7


          (j)    Company shall perform in a reasonable time all other steps
requested by Laurus to create and maintain in Laurus' favor a valid perfected
first Lien in all Collateral subject only to Permitted Liens.

          (k)    Company shall notify Laurus promptly and in any event within
five (5) Business Days after obtaining knowledge thereof (i) of any event or
circumstance that to Company's knowledge would cause Laurus to consider any then
existing Account or Inventory as no longer constituting an Eligible Account or
Eligible Inventory, as the case may be; (ii) of any material delay in Company's
performance of any of its obligations to any Account Debtor; (iii) of any
assertion by any Account Debtor of any material claims, offsets or
counterclaims; (iv) of any allowances, credits and/or monies granted by Company
to any Account Debtor; (v) of all material adverse information relating to the
financial condition of an Account Debtor; (vi) of any material return of goods;
and (vii) of any loss, damage or destruction of any of the Collateral.

          (l)    All Eligible Accounts (i) which are billed on a construction
completion basis but not payable until the project is completed, represent
complete bona fide transactions which require no further act under any
circumstances on Company's part to make such Accounts payable by the Account
Debtors, (ii) are not subject to any present, future contingent offsets or
counterclaims, and (iii) do not represent bill and hold sales, consignment
sales, guaranteed sales, sale or return or other similar understandings or
obligations of any Affiliate or Subsidiary of Company. Company has not made, and
will not make any agreement with any Account Debtor for any extension of time
for the payment of any Account, any compromise or settlement for less than the
full amount thereof, any release of any Account Debtor from liability therefor,
or any deduction therefrom except a discount or allowance for prompt or early
payment allowed by Company in the ordinary course of its business consistent
with historical practice.

          (m)    Company shall keep and maintain its Equipment in good operating
condition, except for ordinary wear and tear, and shall make all necessary
repairs and replacements thereof so that the value and operating efficiency
shall at all times be maintained and preserved. Company shall not permit any
such items to become a Fixture to real estate or accessions to other personal
property.

          (n)    All Inventory manufactured by Company in the United States of
America shall be produced in accordance with the requirements of the Federal
Fair Labor Standards Act of 1938, as amended and all rules, regulations and
orders related thereto or promulgated thereunder.

          (o)    Company shall maintain and keep all of its Books and Records
concerning the Collateral at Company's executive offices listed in EXHIBIT
12(d).

          (p)    Company shall maintain and keep the tangible Collateral at the
addresses listed in EXHIBIT 12(d), provided, that Company may change such
locations or open a new location, provided that Company provides Laurus at least
fifteen (15) days prior written notice of such changes or new location and (ii)
prior to such change or opening of a new location where Collateral having a
value of more than $50,000 will be located, Company executes and delivers to
Laurus such agreements as Laurus may request, including landlord agreements,
mortgagee agreements and warehouse agreements, each in form and substance
satisfactory to Laurus.

                                        8


          (q)    EXHIBIT 7(p) lists all banks and other financial institutions
at which Company maintains deposits and/or other accounts, and such Exhibit
correctly identifies the name, address and telephone number of each such
depository, the name in which the account is held, a description of the purpose
of the account, and the complete account number. The Company shall not establish
any depository or other bank account of any with any financial institution
(other than the accounts set forth on EXHIBIT 7(p)) unless Laurus shall have
received all such documents required to perfect Laurus' first priority security
interest in such account.

          8.   PAYMENT OF ACCOUNTS.

          (a)    Company will irrevocably direct all of its present and future
Account Debtors and other Persons obligated to make payments constituting
Collateral to make such payments directly to the lockbox maintained by Company
(the "Lockbox") with Silicon Valley Bank or Barclays Bank (each a "Lockbox
Bank") pursuant to the terms of the Deposit Account Control Agreement or such
other financial institution accepted by Laurus in writing as may be selected by
Company. On or prior to the Closing Date, Company shall and shall cause each
Lockbox Bank to enter into all such documentation acceptable to Laurus pursuant
to which, among other things, each Lockbox Bank agrees to: (a) sweep the Lockbox
on a daily basis and deposit all checks received therein to an account
designated by Laurus in writing and (b) comply only with the instructions or
other directions of Laurus concerning the Lockbox. All of Company's invoices,
account statements and other written or oral communications directing,
instructing, demanding or requesting payment of any Account of Company or any
other amount constituting Collateral shall conspicuously direct that all
payments be made to the Lockbox or such other address as Laurus may direct in
writing. If, notwithstanding the instructions to Account Debtors, Company
receives any such payments, Company shall immediately deposit such payments into
the Lockbox in their original form with all necessary endorsements and within
two (2) Business days following such receipt provide Laurus a copy of the check
evidencing such payment and the related deposit slip. Until so remitted, Company
shall hold all such payments in trust for and as the property of Laurus and
shall not commingle such payments with any of its other funds or property.

          (b)    At Laurus' election, following the occurrence of an Event of
Default which is continuing, Laurus may notify Company's Account Debtors of
Laurus' security interest in the Accounts, collect them directly and charge the
collection costs and expenses thereof to Company's account.

          9.   COLLECTION AND MAINTENANCE OF COLLATERAL.

          (a)    Laurus may verify Company's Accounts from time to time, but not
more often than once every three (3) months unless an Event of Default has
occurred and is continuing, utilizing an audit control company or any other
agent of Laurus.

          (b)    Proceeds of Accounts received by Laurus will be deemed received
on the Business Day after Laurus' receipt of such proceeds in good funds in
dollars of the United States of America in Laurus' account. Any amount received
by Laurus after 12:00 noon (New York time) on any Business Day shall be deemed
received on the next Business Day.

                                        9


          (c)    As Laurus receives the proceeds of Accounts, it shall remit all
such proceeds (net of interest, fees and other amounts then due and owing to
Laurus hereunder) to Company twice a week on days designated by Company.
Notwithstanding the foregoing, following the occurrence and during the
continuance of an Event of Default, Laurus, at its option, may (a) apply such
proceeds to the Obligations in such order as Laurus shall elect, (b) hold such
proceeds as cash collateral for the Obligations and Company hereby grants to
Laurus a security interest in such cash collateral amounts as security for the
Obligations and/or (c) do any combination of the foregoing.

          10.  INSPECTIONS AND APPRAISALS. At all times during normal business
hours, Laurus, and/or any agent of Laurus shall have the right to (a) have
access to, visit, inspect, review, evaluate and make physical verification and
appraisals of Company's properties and the Collateral, (b) inspect, audit and
copy and make extracts from Company's Books and Records, including management
letters prepared by independent accountants, and (c) discuss with Company's
principal officers, and independent accountants, Company's business, assets,
liabilities, financial condition, results of operations and business prospects.
Company will deliver to Laurus any instrument necessary for Laurus to obtain
records from any service bureau maintaining records for Company. If any
internally prepared financial information, including that required under this
Section is unsatisfactory in any manner to Laurus, Laurus may request that the
Accountants review the same.

          11.  FINANCIAL REPORTING. Company will deliver, or cause to be
delivered, to Laurus each of the following, which shall be in form and detail
acceptable to Laurus:

          (a)    As soon as available, and in any event within ninety (90) days
after the end of each fiscal year of Company, Company's audited financial
statements with a report of independent certified public accountants of
recognized standing selected by Company and acceptable to Laurus (the
"Accountants"), which annual financial statements shall include Company's
balance sheet as at the end of such fiscal year and the related statements of
Company's income, retained earnings and cash flows for the fiscal year then
ended. Delivery of Companys' filing of the Annual Report on Form 10-K will be
considered delivery of such audited financial statements on a consolidated
basis. If Laurus so requests, Company will supplementally deliver unaudited
financial statements on a consolidating basis to include all Subsidiaries and
Affiliates, all in reasonable detail and prepared in accordance with GAAP,
together with (i) if and when available, copies of any management letters
prepared by such accountants; and (ii) a certificate of Company's President,
Chief Executive Officer or Chief Financial Officer stating that such financial
statements have been prepared in accordance with GAAP and whether or not such
officer has knowledge of the occurrence of any Default or Event of Default
hereunder and, if so, stating in reasonable detail the facts with respect
thereto;

          (b)    As soon as available and in any event within forty five (45)
days after the end of each quarter, an unaudited/internal balance sheet and
statements of income, retained earnings and cash flows of Company as at the end
of and for such quarter and for the year to date period then ended. Delivery of
Company's filing of the Quarterly Report on Form 10-Q will be considered
delivery of such financial statements on a consolidated basis. If Laurus so
requests, Company will supplementally deliver unaudited financial statements on
a consolidating basis to include all Subsidiaries and Affiliates, in reasonable
detail and stating in comparative form the

                                       10


figures for the corresponding date and periods in the previous year, all
prepared in accordance with GAAP, subject to year-end adjustments and
accompanied by a certificate of Company's President, Chief Executive Officer or
Chief Financial Officer, stating (i) that such financial statements have been
prepared in accordance with GAAP, subject to year-end audit adjustments, and
(ii) whether or not such officer has knowledge of the occurrence of any Default
or Event of Default hereunder not theretofore reported and remedied and, if so,
stating in reasonable detail the facts with respect thereto;

          (c)    Within thirty (30) days after the end of each month (or more
frequently if Laurus so requests), agings of Company's Accounts, unaudited trial
balances and their accounts payable and a calculation of Company's Accounts,
Eligible Accounts, Inventory and Eligible Inventory as at the end of such month
or shorter time period, provided, however, that if Laurus shall request the
foregoing information more often than as set forth in the immediately preceding
clause, Company shall have thirty days from each such request to comply with
Laurus' demand; and

          (d)    Promptly after (i) the filing thereof, copies of Company's most
recent registration statements and annual, quarterly, monthly or other regular
reports which Company files with the Securities and Exchange Commission (the
"SEC"), and (ii) the issuance thereof, copies of such financial statements,
reports and proxy statements as Company shall send to its stockholders.

          12.  ADDITIONAL REPRESENTATIONS AND WARRANTIES. Company represents and
warrants (each of which such representations and warranties shall be deemed
repeated upon the making of a request for a Loan and made as of the time of each
Loan made hereunder), as follows:

          (a)    Company is a corporation duly incorporated and validly existing
under the laws of the jurisdiction of its incorporation and duly qualified and
in good standing in every other state or jurisdiction in which the nature of
Company's business requires such qualification.

          (b)    The execution, delivery and performance of this Agreement and
the Ancillary Agreements (i) have been duly authorized, (ii) are not in
contravention of Company's certificate of incorporation, by-laws or of any
indenture, agreement (other than the GE Agreement) or undertaking to which
Company is a party or by which Company is bound and (iii) are within Company's
corporate powers.

          (c)    This Agreement and the Ancillary Agreements executed and
delivered by Company are Company's legal, valid and binding obligations,
enforceable in accordance with their terms.

          (d)    EXHIBIT 12(d) sets forth Company's name as it appears in
official filing in the state of its incorporation, the type of entity of
Company, the organizational identification number issued by Company's state of
incorporation or a statement that no such number has been issued, Company's
state of incorporation, and the location of Company's chief executive office,
corporate offices, warehouses, other locations of Collateral and locations where
records with respect to Collateral are kept (including in each case the county
of such locations) and, except as

                                       11


set forth in such EXHIBIT 12(d), such locations have not changed during the
preceding twelve months. As of the Closing Date, during the prior five years,
except as set forth in EXHIBIT 12(d), Company has not been known as or conducted
business in any other name (including trade names). Company has only one state
of incorporation.

          (e)    Based upon the Employee Retirement Income Security Act of 1974
("ERISA"), and the regulations and published interpretations thereunder: (i)
Company has not engaged in any Prohibited Transactions as defined in Section 406
of ERISA and Section 4975 of the Internal Revenue Code, as amended; (ii) Company
has met all applicable minimum funding requirements under Section 302 of ERISA
in respect of its plans; (iii) Company has no knowledge of any event or
occurrence which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Title IV of ERISA to terminate any employee benefit
plan(s); (iv) Company has no fiduciary responsibility for investments with
respect to any plan existing for the benefit of persons other than Company's
employees; and (v) except as disclosed in EXHIBIT 12(e) attached hereto, Company
has not withdrawn, completely or partially, from any multi-employer pension plan
so as to incur liability under the Multiemployer Pension Plan Amendments Act of
1980.

          (f)    There is no pending or threatened litigation, court order,
judgment, writ, suit, action or proceeding which could reasonably be expected to
have a Material Adverse Effect.

          (g)    All balance sheets and income statements which have been
delivered to Laurus fairly, accurately and properly state Company's financial
condition on a basis consistent with that of previous financial statements and
except as reflected in such financial statements there has been no material
adverse change in Company's financial condition as reflected in such statements
since the balance sheet date of the statements last delivered to Laurus and such
statements do not fail to disclose any fact or facts which might have a Material
Adverse Effect on Company's financial condition.

          (h)    Company possesses or has licenses to use all of the
Intellectual Property necessary to conduct its business. There has been no
assertion or claim of violation or infringement with respect to any Intellectual
Property. EXHIBIT 12(i) describes all Intellectual Property of Company.

          (i)    Neither this Agreement, the exhibits and schedules hereto, the
Ancillary Agreements nor any other document delivered by Company to Laurus 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. The issuance of the Notes and the Warrants and
the shares of common stock issued upon conversion of the Notes and exercise of
the Warrants 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. Neither Company nor any of its Affiliates, nor any person
acting on its or their behalf, has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Securities.

                                       12


          (j)    The common stock of Company is registered pursuant to Section
12(b) or 12(g) of the Exchange Act and, except with respect to certain matters
set forth on EXHIBIT 12(j) attached hereto, Company has timely filed all proxy
statements, reports, schedules, forms, statements and other documents required
to be filed by it under the Exchange Act. Company has filed (i) its Annual
Report on Form 10-K for the fiscal year ended December 31, 2002 and (ii) its
Quarterly Report on Form 10-Q for the fiscal quarters ended March 31, 2003, June
30, 2003 and September 30, 2003 (collectively, the "SEC Reports"). 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
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. The financial statements of Company included in the
SEC Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed) and fairly present in all
material respects the financial condition, the results of operations and the
cash flows of Company and its subsidiaries, on a consolidated basis, as of, and
for, the periods presented in each such SEC Report.

          (k)    The common stock of Company is listed for trading on the NASDAQ
National Market and satisfies all requirements for the continuation of such
listing. Company has not received any notice that its common stock will be
delisted from the NASDAQ National Market or that the common stock does not meet
all requirements for the continuation of such listing.

          (l)    Neither 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 and the Ancillary Agreements to be integrated with prior offerings by
Company for purposes of the Securities Act which would prevent Company from
selling the Securities pursuant to Rule 506 under the Securities Act, or any
applicable exchange-related stockholder approval provisions, nor will 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.

          (m)    The Securities are all restricted securities under the
Securities Act as of the date of this Agreement. 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 such Securities are registered for public sale or an
exemption from registration is available, except as required by federal or state
securities laws.

          (n)    Company understands the nature of the Securities issuable under
the Ancillary Agreements and recognizes that the issuance of such Securities may
have a potential

                                       13


dilutive effect. Company specifically acknowledges that its obligation to issue
the Securities is binding upon Company and enforceable regardless of the
dilution such issuance may have on the ownership interests of other shareholders
of Company.

          (o)    Except for agreements made in the ordinary course of business,
there is no agreement that has not been filed with the SEC as an exhibit to a
registration statement or to a form required to be filed by Company under the
Exchange Act, the breach of which could reasonably be expected to have a
Material Adverse Effect or would prohibit or otherwise interfere with the
ability of Company to enter into and perform any of its obligations under this
Agreement and/or any Registration Rights Agreement executed by Company in favor
of Laurus in any material respect.

          13.  COVENANTS.  Company covenants as follows:

          (a)    Company will not, without the prior written consent of Laurus,
change (i) its name as it appears in the official filings in the state of its
incorporation or formation, (ii) the type of legal entity it is, (iii) its
organizational identification number, if any, issued by its state of
incorporation, (iv) its state of incorporation or (v) amend its certificate of
incorporation, by-laws or other organizational document.

          (b)    The operation of Company's business is and will continue to be
in compliance in all material respects with all applicable federal, state and
local laws, rules and ordinances, including to all laws, rules, regulations and
orders relating to taxes, payment and withholding of payroll taxes, employer and
employee contributions and similar items, securities, employee retirement and
welfare benefits, employee health safety and environmental matters.

          (c)    Company will pay or discharge when due all taxes, assessments
and governmental charges or levies imposed upon Company or any of the Collateral
unless such amounts are being diligently contested in good faith by appropriate
proceedings provided that (i) adequate reserves with respect thereto are
maintained on the books of Company in conformity with GAAP and (ii) the related
Lien shall have no effect on the priority of the Liens in favor of Laurus or the
value of the assets in which Laurus has a Lien.

          (d)    Company will promptly inform Laurus in writing of: (i) the
commencement of all proceedings and investigations by or before and/or the
receipt of any notices from, any governmental or nongovernmental body and all
actions and proceedings in any court or before any arbitrator against or in any
way concerning any event which could reasonable be expected to have singly or in
the aggregate, a Material Adverse Effect; (ii) any amendment of Company's
certificate of incorporation, by-laws or other organizational document; (iii)
any change which has had or could reasonably be expected to have a Material
Adverse Effect; (iv) any Event of Default or Default; (v) any default or any
event which with the passage of time or giving of notice or both would
constitute a default under any agreement for the payment of money to which
Company is a party or by which Company or any of Company's properties may be
bound the breach of which would have a Material Adverse Effect and (vi) any
change in Company's name or any other name used in its business.

                                       14


          (e)    Company will not, unless approved by Laurus in writing, (i)
create, incur, assume or suffer to exist any indebtedness (exclusive of trade
debt) whether secured or unsecured other than Company's indebtedness to Laurus
and as set forth on EXHIBIT 13(e)(i) attached hereto and made a part hereof;
(ii) cancel any debt owing to it in excess of $75,000 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; (iv) directly or indirectly declare, pay or make any dividend or
distribution on any class of its Stock or apply any of its funds, property or
assets to the purchase, redemption or other retirement of any Stock of Company;
(v) purchase or hold beneficially any Stock or other securities or evidences of
indebtedness of, make or permit to exist any loans or advances to, or make any
investment or acquire any interest whatsoever in, any other Person, including
any partnership or joint venture, except (x) travel advances, (y) loans to
Company's officers and employees not exceeding at any one time an aggregate of
$10,000, (z) common stock received as payment for goods or services under the
Supply Agreeement and (aa) Subsidiaries of Company; (vi) create or permit to
exist any Subsidiary, other than any Subsidiary in existence on the date hereof
and listed in EXHIBIT 13(e)(ii) unless such new Subsidiary is designated by
Laurus as either a co-borrower or guarantor hereunder and such Subsidiary shall
have entered into all such documentation required by Laurus to grant to Laurus a
first priority perfected security interest in such Subsidiary's assets to secure
the Obligations; (vii) directly or indirectly, prepay any indebtedness (other
than to Laurus and in the ordinary course of business), or repurchase, redeem,
retire or otherwise acquire any indebtedness (other than to Laurus and in the
ordinary course of business) except to make scheduled payments of principal and
interest thereof; (viii) enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a portion of the
assets or Stock of any Person or permit any other Person to consolidate with or
merge with it, unless (1) Company is the surviving entity of such merger or
consolidation, (2) no Event of Default shall exist immediately prior to and
after giving effect to such merger or consolidation, (3) Company shall have
provided Laurus copies of all documentation relating to such merger or
consolidation and (4) Company shall have provided Laurus with at least fifteen
(15) days' prior written notice of such merger or consolidation; (ix) materially
change the nature of the business in which it is presently engaged; (x) change
its fiscal year or make any changes in accounting treatment and reporting
practices without prior written notice to Laurus except as required by GAAP or
in the tax reporting treatment or except as required by law; (xi) enter into any
transaction with any employee, director or Affiliate, except in the ordinary
course on arms-length terms; or (xii) bill Accounts under any name except the
present name of Company or its existing Subsidiaries.

          (f)    None of the proceeds of the Loans hereunder will be used
directly or indirectly to "purchase" or "carry" "margin stock" or to repay
indebtedness incurred to "purchase" or "carry" "margin stock" within the
respective meanings of each of the quoted terms under Regulation U of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect.

          (g)    Company will bear the full risk of loss from any loss of any
nature whatsoever with respect to the Collateral. At Company's own cost and
expense in amounts and with carriers acceptable to Laurus, Company shall (i)
keep all its insurable properties and properties in which it has an interest
insured against the hazards of fire, sprinkler leakage, those

                                       15


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 Company'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 Company'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
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 Company is engaged in business; and (v) furnish Laurus
with (x) certificates as to all such insurance coverages and evidence of the
maintenance of such policies at least thirty (30) days before any expiration
date, (y) endorsements to such policies naming Laurus as "co-insured" or
"additional insured" and appropriate loss payable endorsements in form and
substance satisfactory to Laurus, naming Laurus as loss payee, and (z) evidence
that as to Laurus the insurance coverage shall not be impaired or invalidated by
any act or neglect of Company and the insurer will provide Laurus with at least
thirty (30) days notice prior to cancellation or expiration thereof. Company
shall instruct the insurance carriers that in the event of any loss thereunder,
the carriers shall make payment for such loss to Laurus and not to Company and
Laurus jointly. If any insurance losses are paid by check, draft or other
instrument payable to Company and Laurus jointly, Laurus may endorse Company's
name thereon and do such other things as Laurus may deem advisable to reduce the
same to cash. Laurus is hereby authorized to adjust and compromise claims during
the continuance of an Event of Default. All loss recoveries received by Laurus
upon any such insurance may be applied to the Obligations, in such order as
Laurus in its sole discretion shall determine or shall otherwise be delivered to
Company. Any surplus shall be paid by Laurus to Company or applied as may be
otherwise required by law. Any deficiency thereon shall be paid by Company to
Laurus, on demand.

          (h)    Company will at all times have authorized and reserved a
sufficient number of shares of common stock to provide for the conversion of the
Notes and exercise of the Warrants.

          14.  FURTHER ASSURANCES. At any time and from time to time, upon the
written request of Laurus and at the sole expense of Company, Company shall
promptly and duly execute and deliver any and all such further instruments and
documents and take such further action as Laurus may request (a) to obtain the
full benefits of this Agreement and the Ancillary Agreements, (b) to protect,
preserve and maintain Laurus' rights in the Collateral and under this Agreement
or any Ancillary Agreement, or (c) to enable Laurus to exercise all or any of
the rights and powers herein granted or any Ancillary Agreement.

          15.  POWER OF ATTORNEY. Company hereby appoints Laurus, or any other
Person whom Laurus may designate as Company's attorney, with power to: (i)
endorse Company's name on any checks, notes, acceptances, money orders, drafts
or other forms of payment or security that may come into Laurus' possession;
(ii) sign Company's name on any invoice or bill of lading relating to any
Accounts, drafts against Account Debtors, schedules and assignments of Accounts,
notices of assignment, financing statements and other public records,
verifications of Account and notices to or from Account Debtors; (iii) verify
the validity, amount or any other

                                       16


matter relating to any Account by mail, telephone, telegraph or otherwise with
Account Debtors; (iv) do all things necessary to carry out this Agreement, any
Ancillary Agreement and all related documents; and (v) on or after the
occurrence and continuation of an Event of Default, notify the post office
authorities to change the address for delivery of Company's mail to an address
designated by Laurus, and to receive, open and dispose of all mail addressed to
Company; PROVIDED, HOWEVER, Laurus shall forward to Company all mail not
otherwise relating to payments in respect of the Collateral. Company hereby
ratifies and approves all acts of the attorney. Neither Laurus, nor the attorney
will be liable for any acts or omissions or for any error of judgment or mistake
of fact or law, except for gross negligence or willful misconduct. This power,
being coupled with an interest, is irrevocable so long as Laurus has a security
interest and until the Obligations have been fully satisfied.

          16.  TERM OF AGREEMENT. Laurus' agreement to make Loans and extend
financial accommodations under and in accordance with the terms of this
Agreement or any Ancillary Agreement shall continue in full force and effect
until the expiration of the Initial Term. At Laurus' election following the
occurrence of an Event of Default, Laurus may terminate this Agreement. The
termination of the Agreement shall not affect any of Laurus' rights hereunder or
any Ancillary Agreement and the provisions hereof and thereof shall continue to
be fully operative until all transactions entered into, rights or interests
created and the Obligations have been disposed of, concluded or liquidated.
Notwithstanding the foregoing, Laurus shall release its security interests at
any time after thirty (30) days notice upon payment to it of all Obligations if
Companies shall have (i) provided Laurus with an executed release of any and all
claims which Companies may have or thereafter have under this Agreement and all
Ancillary Agreements and (ii) paid to Laurus an early payment fee in an amount
equal to (1) three percent (3%) of the Capital Availability Amount if such
payment occurs prior to the first anniversary of the Initial Term or any
applicable renewal term, and (2) two percent (2%) of the Capital Availability
Amount if such payment occurs on or after the first anniversary and prior to the
second anniversary of the Initial Term or any applicable renewal term and (3)
one percent (1%) of the Capital Availability Amount on or after the second
anniversary and prior to the third anniversary of the Initial Term or any
applicable renewal term; such fee being intended to compensate Laurus for its
costs and expenses incurred in initially approving this Agreement or extending
same. Such early payment fee shall be due and payable by Company to Laurus upon
termination by acceleration of this Agreement by Laurus due to the occurrence
and continuance of an Event of Default.

          17.  TERMINATION OF LIEN. The Liens and rights granted to Laurus
hereunder and any Ancillary Agreements and the financing statements filed in
connection herewith or therewith shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that Company's
account may from time to time be temporarily in a zero or credit position, until
all of the Obligations of Company have been paid or performed in full after the
termination of this Agreement. Laurus shall not be required to send termination
statements to Company, or to file them with any filing office, unless and until
this Agreement and the Ancillary Agreements shall have been terminated in
accordance with their terms and all Obligations paid in full in immediately
available funds.

          18.  EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default:

                                       17


          (a)    failure to make payment of any of the Obligations when required
hereunder;

          (b)    failure to pay any taxes when due, such taxes continuing to be
unpaid for 15 days past the due date, unless such taxes are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves have been provided on Company's books;

          (c)    failure to perform under and/or committing any breach of this
Agreement or any Ancillary Agreement or any other agreement between Company and
Laurus which shall continue for a period of fifteen (15) days after the
occurrence thereof;

          (d)    the occurrence of a default under any agreement to which
Company is a party with third parties which has a Material Adverse Effect;

          (e)    any representation, warranty or statement made by Company
hereunder, in any Ancillary Agreement, any certificate, statement or document
delivered pursuant to the terms hereof, or in connection with the transactions
contemplated by this Agreement should at any time be false or misleading in any
material respect;

          (f)    an attachment or levy is made upon Company's assets having an
aggregate value in excess of $75,000 or a judgment is rendered against Company
or Company's property involving a liability of more than $75,000 which shall not
have been vacated, discharged, stayed or bonded pending appeal within thirty
(30) days from the entry thereof;

          (g)    any change in Company's condition or affairs (financial or
otherwise) which in Laurus' reasonable, good faith opinion, could reasonably be
expected to have a Material Adverse Effect;

          (h)    any Lien created hereunder or under any Ancillary Agreement for
any reason ceases to be or is not a valid and perfected Lien having a first
priority interest;

          (i)    if Company shall (i) apply for, consent to or suffer to exist
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;

          (j)    Company shall admit in writing its inability, or be generally
unable to pay its debts as they become due or cease operations of its present
business;

          (k)    any Affiliate or Subsidiary of Company shall (i) apply for,
consent to or suffer to exist the appointment of, or the taking possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present

                                       18


business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under the federal bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vii) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws or
(viii) take any action for the purpose of effecting any of the foregoing;

          (l)    Company directly or indirectly sells, assigns, transfers,
conveys, or suffers or permits to occur any sale, assignment, transfer or
conveyance of any assets of Company or any interest therein, except as permitted
herein or approved in writing by Laurus with 30 days notice by Company which
such approval shall be in Laurus' sole and absolute discretion;

          (m)    the occurrence of a change in the controlling ownership of
Company;

          (n)    a default by Company in the payment, when due, of any principal
of or interest on any other indebtedness for money borrowed in an amount greater
than $37,500, which is not cured within any applicable cure or grace period;

          (o)    the indictment of Company or any executive officer of Company
under any criminal statute, or commencement of criminal or civil proceeding
against Company or any executive officer of Company pursuant to which statute or
proceeding penalties or remedies sought or available include forfeiture of any
of the property of Company;

          (p)    if an Event of Default shall occur under and as defined in any
Note;

          (q)    any Guarantor shall breach any term or provision of any
Ancillary Agreement which is not cured within any applicable cure or grace
period;

          (r)    if any Guarantor attempts to terminate, challenges the validity
of, or its liability under any Guaranty or any Guarantor Security Agreement; or

          (s)    should any Guarantor default in its obligations under any
Guaranty or any Guarantor Security Agreement or if any proceeding shall be
brought to challenge the validity, binding effect of any Guaranty or any
Guarantor Security Agreement or should any Guarantor breach any representation,
warranty or covenant contained in any Guaranty Agreement or any Guarantor
Security Agreement or should any Guaranty or Guarantor Security Agreement cease
to be a valid, binding and enforceable obligation.

          19.  REMEDIES. Following the occurrence of an Event of Default, Laurus
shall have the right to demand repayment in full of all Obligations, whether or
not otherwise due. Until all Obligations have been fully satisfied, Laurus shall
retain its Lien in all Collateral. Laurus shall have, in addition to all other
rights provided herein and in each Ancillary Agreement, the rights and remedies
of a secured party under the UCC, and under other applicable law, all other
legal and equitable rights to which Laurus may be entitled, including the right
to take immediate possession of the Collateral, to require Company to assemble
the Collateral, at Company's expense, and to make it available to Laurus at a
place designated by Laurus which is reasonably convenient to both parties and to
enter any of the premises of Company or wherever the Collateral shall be
located, with or without force or process of law, and to keep and store the

                                       19


same on said premises until sold (and if said premises be the property of
Company, Company agrees not to charge Laurus for storage thereof), and the right
to apply for the appointment of a receiver for Company's property. Further,
Laurus may, at any time or times after the occurrence of an Event of Default,
sell and deliver all Collateral held by or for Laurus at public or private sale
for cash, upon credit or otherwise, at such prices and upon such terms as
Laurus, in Laurus' sole discretion, deems advisable or Laurus may otherwise
recover upon the Collateral in any commercially reasonable manner as Laurus, in
its sole discretion, deems advisable. The requirement of reasonable notice shall
be met if such notice is mailed postage prepaid to Company at Company's address
as shown in Laurus' records, at least ten (10) days before the time of the event
of which notice is being given. Laurus may be the purchaser at any sale, if it
is public. In connection with the exercise of the foregoing remedies, Laurus is
granted permission to use all of Company's trademarks, tradenames, tradestyles,
patents, patent applications, licenses, franchises and other proprietary rights.
The proceeds of sale shall be applied first to all costs and expenses of sale,
including attorneys' fees, and second to the payment (in whatever order Laurus
elects) of all Obligations. After the indefeasible payment and satisfaction in
full in cash of all of the Obligations, and after the payment by Laurus of any
other amount required by any provision of law, including Section 608(a)(1) of
the United States Bankruptcy Code (but only after Laurus has received what
Laurus considers reasonable proof of a subordinate party's security interest),
the surplus, if any, shall be paid to Company or its representatives or to
whosoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction may direct. Company shall remain liable to Laurus for any
deficiency. In addition, Company shall pay Laurus a liquidation fee
("Liquidation Fee") in the amount of five percent (5%) of the actual amount
collected in respect of each Account outstanding at any time during a
"liquidation period". Such liquidation fee shall be payable without duplication
of any collection fees in respect of Accounts incurred by Laurus in connection
with the utilization by Laurus of a third party collection company. For purposes
hereof, "liquidation period" means a period: (i) beginning on the earliest date
of (x) an event referred to in Section 18(i) or 18(j), or (y) the cessation of
Company's business; and (ii) ending on the date on which Laurus has actually
received all Obligations due and owing it under this Agreement and the Ancillary
Agreements. The Liquidation Fee shall be paid on the date on which Laurus
collects the applicable Account by deduction from the proceeds thereof.. Company
and Laurus acknowledge that the actual damages that would be incurred by Laurus
after the occurrence of an Event of Default would be difficult to quantity and
that Company and Laurus have agreed that the fees and obligations set forth in
this Section and in this Agreement would constitute fair and appropriate
liquidated damages in the event of any such termination.

          20.  WAIVERS. To the full extent permitted by applicable law, Company
waives (a) presentment, demand and protest, and notice of presentment, dishonor,
intent to accelerate, acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all of this
Agreement and the Ancillary Agreements or any other notes, commercial paper,
Accounts, contracts, Documents, Instruments, Chattel Paper and guaranties at any
time held by Laurus on which Company may in any way be liable, and hereby
ratifies and confirms whatever Laurus may do in this regard; (b) all rights to
notice and a hearing prior to Laurus' taking possession or control of, or to
Laurus' replevy, attachment or levy upon, any Collateral or any bond or security
that might be required by any court prior to allowing Laurus to exercise any of
its remedies; and (c) the benefit of all valuation, appraisal and exemption
laws. Company acknowledges that it has been advised by counsel of its choices
and decisions with

                                       20


respect to this Agreement, the Ancillary Agreements and the transactions
evidenced hereby and thereby.

          21.  EXPENSES. Subject to the limitations expressly set forth in the
Proposal Letter between Company and Laurus, Company shall pay all of Laurus'
reasonable out-of-pocket costs and expenses, including reasonable fees and
disbursements of in-house or outside counsel and appraisers, in connection with
the preparation, execution and delivery of this Agreement and the Ancillary
Agreements, and in connection with the prosecution or defense of any action,
contest, dispute, suit or proceeding concerning any matter in any way arising
out of, related to or connected with this Agreement or any Ancillary Agreement.
Company shall also pay all of Laurus' reasonable fees, charges, out-of-pocket
costs and expenses, including fees and disbursements of counsel and appraisers,
in connection with (a) the preparation, execution and delivery of any waiver,
any amendment thereto or consent proposed or executed in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements, (b)
Laurus' obtaining performance of the Obligations under this Agreement and any
Ancillary Agreements, including, but not limited to, the enforcement or defense
of Laurus' security interests, assignments of rights and Liens hereunder as
valid perfected security interests, (c) any attempt to inspect, verify, protect,
collect, sell, liquidate or otherwise dispose of any Collateral, (d) any
appraisals or re-appraisals of any property (real or personal) pledged to Laurus
by Company as Collateral for, or any other Person as security for, Company's
Obligations hereunder and (e) any consultations in connection with any of the
foregoing. Company shall also pay Laurus' customary bank charges for all bank
services (including wire transfers) performed or caused to be performed by
Laurus for Company at Company's request or in connection with Company's loan
account with Laurus. All such costs and expenses together with all filing,
recording and search fees, taxes and interest payable by Company to Laurus shall
be payable on demand and shall be secured by the Collateral. If any tax by any
Governmental Authority is or may be imposed on or as a result of any transaction
(other than taxes imposed on Laurus' net income) between Company and Laurus
which Laurus is or may be required to withhold or pay, Company agrees to
indemnify and hold Laurus harmless in respect of such taxes, and Company will
repay to Laurus the amount of any such taxes which shall be charged to Company's
account; and until Company shall furnish Laurus with indemnity therefor (or
supply Laurus with evidence satisfactory to it that due provision for the
payment thereof has been made), Laurus may hold without interest any balance
standing to Company's credit and Laurus shall retain its Liens in any and all
Collateral.

          22.  ASSIGNMENT BY LAURUS. Laurus may assign any or all of the
Obligations together with any or all of the security therefor to any Person
which is not a competitor of Company and any such transferee shall succeed to
all of Laurus' rights with respect thereto. Upon such transfer, Laurus shall be
released from all responsibility for the Collateral to the extent same is
assigned to any transferee. Laurus may from time to time sell or otherwise grant
participations in any of the Obligations and the holder of any such
participation shall, subject to the terms of any agreement between Laurus and
such holder, be entitled to the same benefits as Laurus with respect to any
security for the Obligations in which such holder is a participant. Company
agrees that each such holder may exercise any and all rights of banker's lien,
set-off and counterclaim with respect to its participation in the Obligations as
fully as though Company were directly indebted to such holder in the amount of
such participation.

                                       21


          23.  NO WAIVER; CUMULATIVE REMEDIES. Failure by Laurus to exercise any
right, remedy or option under this Agreement, any Ancillary Agreement or any
supplement hereto or thereto or any other agreement between Company and Laurus
or delay by Laurus in exercising the same, will not operate as a waiver; no
waiver by Laurus will be effective unless it is in writing and then only to the
extent specifically stated. Laurus' rights and remedies under this Agreement and
the Ancillary Agreements will be cumulative and not exclusive of any other right
or remedy which Laurus may have.

          24.  APPLICATION OF PAYMENTS. Company irrevocably waives the right to
direct the application of any and all payments at any time or times hereafter
received by Laurus from or on Company's behalf and Company hereby irrevocably
agrees that Laurus shall have the continuing exclusive right to apply and
reapply any and all payments received at any time or times hereafter against the
Obligations hereunder in such manner as Laurus may deem advisable
notwithstanding any entry by Laurus upon any of Laurus' books and records.

          25.  INDEMNITY. Company agrees to indemnify and hold Laurus, and its
respective affiliates, employees, attorneys and agents (each, an "Indemnified
Person"), harmless from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses of any kind or nature
whatsoever (including attorneys' fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal) which may be
instituted or asserted against or incurred by any such Indemnified Person as the
result of credit having been extended, suspended or terminated under this
Agreement or any of the Ancillary Agreements or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement, the Ancillary Agreements or any
other documents or transactions contemplated by or referred to herein or therein
and any actions or failures to act with respect to any of the foregoing, except
to the extent that any such indemnified liability is finally determined by a
court of competent jurisdiction to have resulted solely from such Indemnified
Person's gross negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO COMPANY OR TO ANY OTHER PARTY OR TO ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.

          26.  REPRESENTATIONS AND WARRANTIES OF LAURUS.

     Laurus hereby represents and warrants to Company as follows:

          (a)    Laurus has all necessary power and authority under all
applicable provisions of law to execute and deliver this Agreement and the
Ancillary Agreements and to carry out their provisions. All corporate action on
Laurus' part required for the lawful execution and delivery of this Agreement
and the Ancillary Agreements have been or will be effectively taken prior to the
Closing Date. Upon their execution and delivery, this Agreement and the other
Ancillary Agreements will be valid and binding obligations of Laurus,
enforceable in accordance

                                       22


with their terms, except (1) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights, and (2) as limited by general principles of
equity that restrict the availability of equitable and legal remedies.

          (b)    Laurus understands that the Securities are being offered and
sold pursuant to an exemption from registration contained in the 1933 Act based
in part upon Laurus's representations contained in this Agreement, including,
without limitation, that Laurus is an "accredited investor" within the meaning
of Regulation D. Laurus has had an opportunity to ask questions and receive
answers from Company regarding Company's business, management and financial
affairs and the terms and conditions of the offering and the Securities and to
obtain additional information (to the extent Company possessed such information
or could acquire it without unreasonable effort or expense) necessary to verify
any information furnished to Laurus or to which Laurus had access.

          (c)    Laurus has substantial experience in evaluating and investing
in private placement transactions of securities in companies similar to Company
so that it is capable of evaluating the merits and risks of its investment in
Company and has the capacity to protect its own interests. Laurus must bear the
economic risk of this investment until the Securities are sold pursuant to (i)
an effective registration statement under the 1933 Act, or (ii) an exemption
from registration is available.

          (d)    Laurus is acquiring the Securities for its own account and only
for investment purposes, and not as a nominee or agent and not with a view
towards or for resale in connection with their distribution.

          (e)    By reason of its, or of its management's, business and
financial experience, Laurus has the capacity to evaluate the merits and risks
of its investment in the Securities and to protect its own interests in
connection with the transactions contemplated in this Agreement, and the other
Ancillary Agreements. Further, Laurus is aware of no publication of any
advertisement in connection with the transactions contemplated in the Agreement
or the other Ancillary Agreements.

          (f)    Laurus will not make any resale of the Securities under any
Registration Statement (as defined in the Registration Rights Agreement) without
effectively complying with the prospectus delivery requirement under the
Securities Act (as defined in the Registration Rights Agreement).

          (g)    Laurus has no present intention of distributing any Securities
or any arrangement or understanding with any other persons regarding the
distribution of any Securities within the meaning of Section 2(11) of the
Securities Act. Laurus has not entered into any agreement, understanding or
arrangement with any underwriter or broker-dealer regarding any resale of the
Securities and will promptly notify Company if it enters into such an agreement.

          27.  REVIVAL. Company further agrees that to the extent Company makes
a payment or payments to Laurus, which payment or payments or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be

                                       23


repaid to a trustee, receiver or any other party under any bankruptcy act, state
or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, the obligation or part thereof intended to be satisfied
shall be revived and continued in full force and effect as if said payment had
not been made.

          28.  NOTICES. Any notice or request hereunder may be given to Company
or Laurus at the respective addresses set forth below or as may hereafter be
specified in a notice designated as a change of address under this Section. Any
notice or request hereunder shall be given by registered or certified mail,
return receipt requested, hand delivery, overnight mail or telecopy (confirmed
by mail). Notices and requests shall be, in the case of those by hand delivery,
deemed to have been given when delivered to any officer of the party to whom it
is addressed, in the case of those by mail or overnight mail, deemed to have
been given three (3) business days after the date when deposited in the mail or
with the overnight mail carrier, and, in the case of a telecopy, when confirmed.

Notices shall be provided as follows:

          If to Laurus:                     Laurus Master Fund, Ltd.
                                            c/o Laurus Capital Management, LLC
                                            825 Third Avenue 14th Fl.
                                            New York, New York 10022
                                            Attention:  David Grin
                                            Telephone:  (212) 541-4434
                                            Telecopier:  (212) 541-5800

                                       24


          With a copy to:                   Loeb & Loeb LLP
                                            345 Park Avenue
                                            New York, New York  10154
                                            Attention:  Scott J. Giordano, Esq.
                                            Telephone:  (212) 407-4000
                                            Telecopier: (212) 407-4990

          If to Company:                    Transgenomic, Inc.
                                            12325 Emmet Street
                                            Omaha, Nebraska  68164
                                            Attention:  Chief Financial Officer
                                            Telephone:  (402) 452-5446
                                            Telecopier:

          With a copy to:                   Kutak Rock LLP
                                            1650 Farnam Street
                                            Omaha, Nebraska 68102
                                            Attention:  Steven Amen
                                            Telephone: (402) 346-6000
                                            Telecopier: (402) 346-1148

or such other address as may be designated in writing hereafter in accordance
with this Section 28 by such Person.

          29.  GOVERNING LAW, JURISDICTION AND WAIVER OF JURY TRIAL. (a) THIS
AGREEMENT AND THE ANCILLARY AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE.

          (b)  COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN COMPANY AND
LAURUS PERTAINING TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS OR TO ANY
MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE ANCILLARY
AGREEMENTS; PROVIDED, THAT LAURUS AND COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM
THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF
NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LAURUS FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS,
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LAURUS. COMPANY EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY

                                       25


SUCH COURT, AND COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS. COMPANY
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO COMPANY AT THE ADDRESS SET FORTH IN SECTION 27 AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF COMPANY'S ACTUAL RECEIPT
THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.

          (c)  THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN LAURUS AND
COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, ANY
ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED THERETO.

          30.  LIMITATION OF LIABILITY. Company acknowledges and understands
that in order to assure repayment of the Obligations hereunder Laurus may be
required to exercise any and all of Laurus' rights and remedies hereunder and
agrees that, except as limited by applicable law, neither Laurus nor any of
Laurus' agents shall be liable for acts taken or omissions made in connection
herewith or therewith except for actual bad faith.

          31.  ENTIRE UNDERSTANDING. This Agreement and the Ancillary Agreements
contain the entire understanding between Company and Laurus as to the subject
matter hereof and thereof and any promises, representations, warranties or
guarantees not herein contained shall have no force and effect unless in
writing, signed by Company's and Laurus' respective officers. Neither this
Agreement, the Ancillary Agreements, nor any portion or provisions thereof may
be changed, modified, amended, waived, supplemented, discharged, cancelled or
terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged.

          32.  SEVERABILITY. Wherever possible each provision of this Agreement
or the Ancillary Agreements shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or the Ancillary Agreements shall be prohibited by or invalid under applicable
law such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions thereof.

          33.  CAPTIONS. All captions are and shall be without substantive
meaning or content of any kind whatsoever.

                                       26


          34.  COUNTERPARTS; TELECOPIER SIGNATURES. This Agreement may be
executed in one or more counterparts, each of which shall constitute an original
and all of which taken together shall constitute one and the same agreement. Any
signature delivered by a party via telecopier transmission shall be deemed to be
any original signature hereto.

          35.  CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

          36.  PUBLICITY. Without the written approval of the other party
hereto, which such approval not being unreasonably withheld, neither Company nor
Laurus shall issue a press release relating to the financial arrangement entered
into by and between Company and Laurus, including, without limitation,
announcements which are commonly known as tombstones.

          37.  LEGENDS. The Securities shall bear legends as follows;

          (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."

          (b)    Any shares of common stock issued pursuant to
conversion of the Note or exercise of the Warrants, 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

                                       27


          TRANSGENOMIC, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

          (c)    The Warrants 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."

          38.  SHORTING. Neither Laurus nor any of its Affiliates or investment
partners will, or cause any person or entity, directly or indirectly to, engage
in "short sales" of Company's common stock or any other hedging strategies
directly related to Company's common stock.

       [Balance of page intentionally left blank; signature page follows.]

                                       28


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


                                        TRANSGENOMIC, INC.


                                        By: /s/ Michael J. Draper
                                           --------------------------------
                                        Name:   Michael J. Draper
                                             ------------------------------
                                        Title:  CFO
                                              -----------------------------


                                        LAURUS MASTER FUND, LTD.


                                        By: /s/ David Grin
                                           --------------------------------
                                        Name:
                                             ------------------------------
                                        Title:
                                              -----------------------------

                                       29


                              ANNEX A - DEFINITIONS

          "ACCOUNT DEBTOR" means any Person who is or may be obligated with
respect to, or on account of, an Account.

          "ACCOUNTANTS" has the meaning given to such term in Section 11(a).

          "ACCOUNTS" means all "accounts", as such term is defined in the UCC,
now owned or hereafter acquired by any Person, including: (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments) (including
any such obligations that may be characterized as an account or contract right
under the UCC); (b) all of such Person's rights in, to and under all purchase
orders or receipts for goods or services; (c) all of such Person's rights to any
goods represented by any of the foregoing (including unpaid sellers' rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods); (d) all rights to payment due to such
Person for Goods or other property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a secondary
obligation incurred or to be incurred, for energy provided or to be provided,
for the use or hire of a vessel under a charter or other contract, arising out
of the use of a credit card or charge card, or for services rendered or to be
rendered by such Person or in connection with any other transaction (whether or
not yet earned by performance on the part of such Person); and (e) all
collateral security of any kind given by any Account Debtor or any other Person
with respect to any of the foregoing.

          "ACCOUNTS AVAILABILITY" means the amount of Loans against Eligible
Accounts and Eligible Foreign Accounts Laurus may from time to time make
available to Company up to ninety percent (90%) of the net face amount of
Eligible Accounts and Eligible Foreign Accounts based on Accounts of Company.

          "AFFILIATE" of any Person means (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, (b) any Person who is a director or
officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For the purposes of this definition,
control of a Person shall mean the power (direct or indirect) to direct or cause
the direction of the management and policies of such Person whether by contract
or otherwise.

          "ANCILLARY AGREEMENTS" means, the Notes, Warrants, Registration Rights
Agreements, each Guaranty, each Guaranty Security Agreement and all other
agreements, instruments, documents, mortgages, pledges, powers of attorney,
consents, assignments, contracts, notices, security agreements, trust agreements
and guarantees whether heretofore, concurrently, or hereafter executed by or on
behalf of Company or any other Person or delivered to Laurus, relating to this
Agreement or to the transactions contemplated by this Agreement or otherwise
relating to the relationship between the Company and Laurus.

          "BOOKS AND RECORDS" means all books, records, board minutes,
contracts, licenses, insurance policies, environmental audits, business plans,
files, computer files, computer discs and other data and software storage and
media devices, accounting books and records,

                                       30


financial statements (actual and pro forma), filings with Governmental
Authorities and any and all records and instruments relating to the Collateral
or otherwise necessary or helpful in the collection thereof or the realization
thereupon.

          "BUSINESS DAY" means a day on which Laurus is open for business and
that is not a Saturday, a Sunday or other day on which banks are required or
permitted to be closed in the State of New York.

          "CAPITAL AVAILABILITY AMOUNT" means $7,500,000.

          "CHATTEL PAPER" means all "chattel paper," as such term is defined in
the UCC, including electronic chattel paper, now owned or hereafter acquired by
any Person.

          "CLOSING DATE" means the date on which Company shall first receive
proceeds of the initial Loans.

          "COLLATERAL" means all of Company's property and assets, whether real
or personal, tangible or intangible, and whether now owned or hereafter
acquired, or in which it now has or at any time in the future may acquire any
right, title or interests including all of the following property in which it
now has or at any time in the future may acquire any right, title or interest:

          (a)    all Inventory;

          (b)    all Equipment;

          (c)    all Fixtures;

          (d)    all General Intangibles;

          (e)    all Accounts;

          (f)    all Deposit Accounts, other bank accounts and all funds on
                 deposit therein;

          (g)    all Investment Property;

          (h)    all Stock;

          (i)    all Chattel Paper;

          (j)    all Letter-of-Credit Rights;

          (k)    all Instruments;

          (l)    all commercial tort claims set forth on EXHIBIT 1(A);

          (m)    all Books and Records;

                                       31


          (n)    all Supporting Obligations including letters of credit and
guarantees issued in support of Accounts, Chattel Paper, General
Intangibles and Investment Property;

          (o)    (i) all money, cash and cash equivalents and (ii) all cash held
as cash collateral to the extent not otherwise constituting Collateral, all
other cash or property at any time on deposit with or held by Laurus for the
account of Company (whether for safekeeping, custody, pledge, transmission or
otherwise); and

          (p)    all products and Proceeds of all or any of the foregoing, tort
claims and all claims and other rights to payment including insurance claims
against third parties for loss of, damage to, or destruction of, and (ii)
payments due or to become due under leases, rentals and hires of any or all of
the foregoing and Proceeds payable under, or unearned premiums with respect to
policies of insurance in whatever form.

          "CONTRACT RATE" means an interest rate per annum equal to the greater
of (a) Prime Rate plus two percent (2.0%) per annum and (b) six percent (6.0%)
per annum; provided, however, the Contract Rate shall be subject to adjustment
as follows: if (i) Company shall have registered the shares of Company's common
stock underlying the conversion of the applicable Minimum Borrowing Note and
that certain warrant issued to Laurus on a registration statement declared
effective by the SEC, and (ii) the volume weighted average price of the common
stock as reported by Bloomberg, L.P. on the principal market for any of the 10
trading days immediately preceding any applicable date upon which interest is
payable under Section 5 hereof exceeds the then applicable Fixed Conversion
Price by a multiple of at least fifteen percent (15%), then the Contract Rate
for the succeeding calendar month shall automatically be reduced by twenty-five
basis points (25 b.p.) for such month for each such fifteen percent (15%)
multiple.

          "DEFAULT" means any act or event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.

          "DEFAULT RATE" has the meaning given to such term in Section
5(a)(iii).

          "DEPOSIT ACCOUNTS" means all "deposit accounts" as such term is
defined in the UCC, now or hereafter held in the name of any Person, including,
without limitation, the Lockbox Account.

          "DOCUMENTS" means all "documents", as such term is defined in the UCC,
now owned or hereafter acquired by any Person, wherever located, including all
bills of lading, dock warrants, dock receipts, warehouse receipts, and other
documents of title, whether negotiable or non-negotiable.

          "ELIGIBLE ACCOUNTS" means and includes each Account (payable in United
States dollars) which conforms to the following criteria: (a) shipment of the
merchandise or the rendition of services has been completed; (b) no return,
rejection or repossession of the merchandise has occurred; (c) merchandise or
services shall not have been rejected or disputed by the Account Debtor and
there shall not have been asserted any offset, defense or counterclaim; (d)
continues to be in full conformity with the representations and warranties made
by Company to Laurus with respect thereto; (e) Laurus is, and continues to be,
satisfied with the credit standing of the Account Debtor in relation to the
amount of credit extended as determined

                                       32


by Laurus in the good faith exercise of its reasonable discretion; (f) there are
no facts existing or threatened which are likely to result in any adverse change
in an Account Debtor's financial condition; (g) is documented by an invoice in a
form approved by Laurus and shall not be unpaid more than one hundred and twenty
(120) days from invoice date; (h) not more than twenty-five percent (25%) of the
unpaid amount of invoices due from such Account Debtor remains unpaid more than
one hundred and twenty (120) days from invoice date; (i) is not evidenced by
chattel paper or an instrument of any kind with respect to or in payment of the
Account unless such instrument is duly endorsed to and in possession of Laurus
or represents a check in payment of a Account; (j) the Account Debtor is located
in the United States except with respect to Eligible Foreign Accounts; (k)
Laurus has a first priority perfected Lien in such Account and such Account is
not subject to any Lien other than Permitted Liens; (l) does not arise out of
transactions with any employee, officer, director, stockholder or Affiliate of
Company; (m) is payable to Company; (n) does not arise out of a bill and hold
sale prior to shipment and does not arise out of a sale to any Person to which
Company is indebted; (o) is net of any returns, discounts, claims, credits and
allowances; (p) if the Account arises out of contracts between Company and the
United States, any state, or any department, agency or instrumentality of any of
them ("Government Accounts"), Company has so notified Laurus, in writing, prior
to the creation of such Account, and there has been compliance with any
governmental notice or approval requirements, including compliance with the
Federal Assignment of Claims Act; provided that, so long as no Event of Default
shall have occurred and be continuing, such compliance shall only be required to
the extent that the total unpaid Government Accounts exceed twenty percent (20%)
of all Eligible Accounts; (q) is a good and valid account representing an
undisputed bona fide indebtedness incurred by the Account Debtor therein named,
for a fixed sum as set forth in the invoice relating thereto with respect to an
unconditional sale and delivery upon the stated terms of goods sold by Company
or work, labor and/or services rendered by Company; (r) does not arise out of
progress billings prior to completion of the order; (s) the total unpaid
Accounts from such Account Debtor does not exceed twenty-five percent (25%) of
all Eligible Accounts; (t) Company's right to payment is absolute and not
contingent upon the fulfillment of any condition whatsoever; (u) Company is able
to bring suit and enforce its remedies against the Account Debtor through
judicial process; (v) does not represent interest payments, late or finance
charges owing to Company; and (w) is otherwise satisfactory to Laurus as
determined by Laurus in the good faith exercise of its commercially reasonable
discretion. In the event Company requests that Laurus include within Eligible
Accounts certain Accounts of one or more of Company's acquisition targets,
Laurus shall at the time of such request consider such inclusion, but any such
inclusion shall be at the sole option of Laurus and shall at all times be
subject to the execution and delivery to Laurus of all such documentation
(including, without limitation, guaranty and security documentation) as Laurus
may require in its sole discretion.

          "ELIGIBLE FOREIGN ACCOUNTS" means and includes each Account with
respect to which the Account Debtor is located in a country other than the
United States of America and which conforms to the following criteria: (a) is
deemed an "Eligible Account" hereunder and (b) (i) the goods which gave rise to
such Account were shipped after receipt by Laurus of an irrevocable letter of
credit naming Laurus as the beneficiary thereof issued and confirmed by a
financial institution acceptable in all respects to Laurus and otherwise in form
and substance acceptable to Laurus in the face amount covering the gross amount
of the Account and payable in United States dollars at a place of payment
located within the United States or (ii) such Account is covered by an insurance
policy issued by an insurance carrier acceptable to Laurus in

                                       33


all respects, the proceeds under which shall be assigned to Laurus pursuant to
such documentation acceptable to Laurus in all respects and shall otherwise be
satisfactory to Laurus in all respects.

          "ELIGIBLE INVENTORY" means Inventory owned by Company which Laurus, in
its sole and absolute discretion, determines: (a) is subject to a first priority
perfected Lien in favor of Laurus and is subject to no other Liens whatsoever
(other than Permitted Liens); (b) is located on premises with respect to which
Laurus has received a landlord or mortgagee waiver acceptable in form and
substance to Laurus; (c) is not in transit; (d) is in good condition and meets
all standards imposed by any governmental agency, or department or division
thereof having regulatory Governmental Authority over such Inventory, its use or
sale including the Federal Fair Labor Standards Act of 1938 as amended, and all
rules, regulations and orders thereunder; (e) is currently either usable or
salable in the normal course of Company's business; (f) is not placed by Company
on consignment or held by Company on consignment from another Person; (g) is in
conformity with the representations and warranties made by Company to Laurus
with respect thereto; (h) is not subject to any licensing, patent, royalty,
trademark, trade name or copyright agreement with any third parties; (i) does
not require the consent of any Person for the completion of manufacture, sale or
other disposition of such Inventory and such completion, manufacture or sale
does not constitute a breach or default under any contract or agreement to which
Company is a party or to which such Inventory is or may be subject; (j) is not
work-in-process; (k) is covered by casualty insurance acceptable to Laurus; and
(l) not to be ineligible for any other reason.

          "EQUIPMENT" means all "equipment" as such term is defined in the UCC,
now owned or hereafter acquired by any Person, wherever located, including any
and all machinery, apparatus, equipment, fittings, furniture, fixtures, motor
vehicles and other tangible personal property (other than Inventory) of every
kind and description that may be now or hereafter used in such Person's
operations or that are owned by such Person or in which such Person may have an
interest, and all parts, accessories and accessions thereto and substitutions
and replacements therefor.

          "ERISA" shall have the meaning given to such term in Section 12(g).

          "EVENT OF DEFAULT" means the occurrence of any of the events set forth
in Section 18.

          "FIXTURES" means all "fixtures" as such term is defined in the UCC,
now owned or hereafter acquired by any Person.

          "FORMULA AMOUNT" has the meaning set forth in Section 2(a)(i).

          "GAAP" means generally accepted accounting principles, practices and
procedures in effect from time to time in the United States of America.

          "GE AGREEMENT" means that certain Master Lease Agreement dated as of
December 12, 2002 by and between General Electric Capital Corporation and
Company.

                                       34


          "GENERAL INTANGIBLES" means all "general intangibles" as such term is
defined in the UCC, now owned or hereafter acquired by any Person including all
right, title and interest that such Person may now or hereafter have in or under
any contract, all Payment Intangibles, customer lists, Licenses, Intellectual
Property, interests in partnerships, joint ventures and other business
associations, permits, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, Software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials, Books and Records, Goodwill
(including the Goodwill associated with any Intellectual Property), all rights
and claims in or under insurance policies (including insurance for fire, damage,
loss, and casualty, whether covering personal property, real property, tangible
rights or intangible rights, all liability, life, key-person, and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit accounts, rights to receive tax refunds and other
payments, rights to received dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged Stock and Investment
Property, and rights of indemnification.

          "GOODS" means all "goods", as such term is defined in the UCC, now
owned or hereafter acquired by any Person, wherever located, including embedded
software to the extent included in "goods" as defined in the UCC, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.

          "GOODWILL" means all goodwill, trade secrets, proprietary or
confidential information, technical information, procedures, formulae, quality
control standards, designs, operating and training manuals, customer lists, and
distribution agreements now owned or hereafter acquired by any Person.

          "GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

          "GUARANTOR" means Transgenomic UK and any other Person who may
guarantee payment of performance of the whole or any part of the Obligations.

          "GUARANTOR SECURITY AGREEMENTS" means all security agreements,
mortgages, cash collateral deposit letters, pledges and other agreements which
are executed by any Guarantor in favor of Laurus.

          "GUARANTY" means all agreements to perform all or any portion of the
Obligations on behalf of Company.

          "INDEMNIFIED PERSON" shall have the meaning given to such term in
Section 25.

          "INITIAL TERM" means the Closing Date through the close of business on
the day immediately preceding the third anniversary of the Closing Date, subject
to acceleration at the option of Laurus upon the occurrence of an Event of
Default hereunder or other termination hereunder.

                                       35


          "INSTRUMENTS" means all "instruments", as such term is defined in the
UCC, now owned or hereafter acquired by any Person, wherever located, including
all certificated securities and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.

          "INTELLECTUAL PROPERTY" means any and all Licenses, patents, patent
registrations, copyrights, copyright registrations, trademarks, trademark
registrations, trade secrets and customer lists.

          "INVENTORY" means all "inventory", as such term is defined in the UCC,
now owned or hereafter acquired by any Person, wherever located, including all
inventory, merchandise, goods and other personal property that are held by or on
behalf of such Person for sale or lease or are furnished or are to be furnished
under a contract of service or that constitute raw materials, work in process,
finished goods, returned goods, or materials or supplies of any kind, nature or
description used or consumed or to be used or consumed in such Person's business
or in the processing, production, packaging, promotion, delivery or shipping of
the same, including all supplies and embedded software.

          "INVENTORY AVAILABILITY" means the amount of Loans against Eligible
Inventory Laurus may from time to time make available to Company up to the
lesser of (a) one hundred percent (100%) of the value of Company's Eligible
Inventory (calculated on the basis of the lower of cost or market, on a first-in
first-out basis), (b) thirty percent (30%) of Accounts Availability and (c)
$1,000,000.

          "INVESTMENT PROPERTY" means all "investment property", as such term is
defined in the UCC, now owned or hereafter acquired by any Person, wherever
located.

          "LETTER-OF-CREDIT RIGHTS" means "letter-of-credit rights" as such term
is defined in the UCC, now owned or hereafter acquired by any Person, including
rights to payment or performance under a letter of credit, whether or not such
Person, as beneficiary, has demanded or is entitled to demand payment or
performance.

          "LICENSE" means any rights under any written agreement now or
hereafter acquired by any Person to use any trademark, trademark registration,
copyright, copyright registration or invention for which a patent is in
existence or other license of rights or interests now held or hereafter acquired
by any Person.

          "LIEN" means any mortgage, security deed, deed of trust, pledge,
hypothecation, assignment, security interest, lien (whether statutory or
otherwise), charge, claim or encumbrance, or preference, priority or other
security agreement or preferential arrangement held or asserted in respect of
any asset of any kind or nature whatsoever including any conditional sale or
other title retention agreement, any lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the UCC or comparable law of any
jurisdiction.

          "LOANS" shall have the meaning set forth in Section 2(a)(i) and shall
include all other extensions of credit hereunder and under any Ancillary
Agreement.

                                       36


          "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
condition, operations, assets, business or prospects of Company, (b) Company's
ability to pay or perform the Obligations in accordance with the terms hereof or
any Ancillary Agreement, (c) the value of the Collateral, the Liens on the
Collateral or the priority of any such Lien or (d) the practical realization of
the benefits of Laurus' rights and remedies under this Agreement and the
Ancillary Agreements.

          "MAXIMUM LEGAL RATE" shall have the meaning given to such term in
Section 5(a)(iv).

          "MINIMUM BORROWING AMOUNT" means $2,000,000, which such aggregate
amount shall be evidenced by Minimum Borrowing Notes.

          "MINIMUM BORROWING NOTES" shall mean each Secured Convertible Note,
which shall be issued in a series, made by Company in favor of Laurus to
evidence the Minimum Borrowing Amount.

          "NOTES" means each of the Minimum Borrowing Notes and the Revolving
Note made by Company in favor of Laurus in connection with the transactions
contemplated hereby, as the same may be amended, modified and supplemented from
time to time, as applicable.

          "OBLIGATIONS" means all Loans, all advances, debts, liabilities,
obligations, covenants and duties owing by Company to Laurus (or any corporation
that directly or indirectly controls or is controlled by or is under common
control with Laurus) of every kind and description (whether or not evidenced by
any note or other instrument and whether or not for the payment of money or the
performance or non-performance of any act), direct or indirect, absolute or
contingent, due or to become due, contractual or tortious, liquidated or
unliquidated, whether existing by operation of law or otherwise now existing or
hereafter arising including any debt, liability or obligation owing from Company
to others which Laurus may have obtained by assignment or otherwise and further
including all interest (including interest accruing at the then applicable rate
provided in this Agreement after the maturity of the Loans and interest accruing
at the then applicable rate provided in this Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), charges or any other payments Company
is required to make by law or otherwise arising under or as a result of this
Agreement and/or the Ancillary Agreements, together with all reasonable expenses
and reasonable attorneys' fees chargeable to Company's account or incurred by
Laurus in connection with Company's account whether provided for herein or in
any Ancillary Agreement.

          "PAYMENT INTANGIBLES" means all "payment intangibles" as such term is
defined in the UCC, now owned or hereafter acquired by any Person, including, a
General Intangible under which the Account Debtor's principal obligation is a
monetary obligation.

          "PERMITTED LIENS" means (a) Liens of carriers, warehousemen, artisans,
bailees, mechanics and materialmen incurred in the ordinary course of business
securing sums not overdue; (b) Liens incurred in the ordinary course of business
in connection with workmen's compensation, unemployment insurance or other forms
of governmental insurance or benefits,

                                       37


relating to employees, securing sums (i) not overdue or (ii) being diligently
contested in good faith provided that adequate reserves with respect thereto are
maintained on the books of the applicable Company in conformity with GAAP; (c)
Liens in favor of Laurus; (d) Liens for taxes (i) not yet due or (ii) being
diligently contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of the
applicable Company in conformity with GAAP provided, that, the Lien shall have
no effect on the priority of Liens in favor of Laurus or the value of the assets
in which Laurus has a Lien; (e) Purchase Money Liens securing Purchase Money
Indebtedness to the extent permitted in this Agreement and (f) Liens specified
on EXHIBIT 2 hereto.

          "PERSON" means any individual, sole proprietorship, partnership,
limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
public benefit corporation, entity or government (whether federal, state,
county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof), and shall include such Person's successors
and assigns.

          "PRIME RATE" means the "prime rate" published in THE WALL STREET
JOURNAL from time to time. The Prime Rate shall be increased or decreased as the
case may be for each increase or decrease in the Prime Rate in an amount equal
to such increase or decrease in the Prime Rate; each change to be effective as
of the day of the change in such rate.

          "PROCEEDS" means "proceeds", as such term is defined in the UCC and,
in any event, shall include: (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Company or any other Person from time
to time with respect to any Collateral; (b) any and all payments (in any form
whatsoever) made or due and payable to Company from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of any
Collateral by any governmental body, governmental authority, bureau or agency
(or any person acting under color of governmental authority); (c) any claim of
Company against third parties (i) for past, present or future infringement of
any Intellectual Property or (ii) for past, present or future infringement or
dilution of any trademark or trademark license or for injury to the goodwill
associated with any trademark, trademark registration or trademark licensed
under any trademark License; (d) any recoveries by Company against third parties
with respect to any litigation or dispute concerning any Collateral, including
claims arising out of the loss or nonconformity of, interference with the use
of, defects in, or infringement of rights in, or damage to, Collateral; (e) all
amounts collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock; and (f) any and all other amounts , rights to
payment or other property acquired upon the sale, lease, license, exchange or
other disposition of Collateral and all rights arising out of Collateral.

          "PURCHASE MONEY INDEBTEDNESS" means (a) any indebtedness incurred for
the payment of all or any part of the purchase price of any fixed asset,
including indebtedness under capitalized leases, (b) any indebtedness incurred
for the sole purpose of financing or refinancing all or any part of the purchase
price of any fixed asset, and (c) any renewals, extensions or refinancings
thereof (but not any increases in the principal amounts thereof outstanding at
that time).

                                       38


          "PURCHASE MONEY LIEN" means any Lien upon any fixed assets that
secures the Purchase Money Indebtedness related thereto but only if such Lien
shall at all times be confined solely to the asset the purchase price of which
was financed or refinanced through the incurrence of the Purchase Money
Indebtedness secured by such Lien and only if such Lien secures only such
Purchase Money Indebtedness.

          "REGISTRATION RIGHTS AGREEMENTS" means those registration rights
agreements from time to time entered into between Company and Laurus, as
amended, modified and supplemented from time to time.

          "REVOLVING NOTE" means that secured revolving note made by Company in
favor of Laurus in the aggregate principal amount (without duplication of any
amounts owing under the Minimum Borrowing Notes) of Seven Million Five Hundred
Thousand Dollars ($7,500,000).

          "SECURITIES" means the Notes and the Warrants being issued by Company
to Laurus pursuant to this Agreement and the Ancillary Agreements and the shares
of the common stock of Company which may be issued pursuant to conversion of
such Notes in whole or in part or exercise of such Warrants.

          "SECURITIES ACT" shall have the meaning given to such term in Section
12(i).

          "SOFTWARE" means all "software" as such term is defined in the UCC,
now owned or hereafter acquired by any Person, including all computer programs
and all supporting information provided in connection with a transaction related
to any program.

          "STOCK" means all certificated and uncertificated shares, options,
warrants, membership interests, general or limited partnership interests,
participation or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Securities Exchange Act of
1934).

          "SUBSIDIARY" of any Person means a corporation or other entity whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.

          "SUPPLY AGREEMENT" means that certain Supply Agreement dated June 15,
2002 by and between Geron Corporation and Company.

          "SUPPORTING OBLIGATIONS" means all "supporting obligations" as such
term is defined in the UCC.

          "TERM" means, as applicable, the Initial Term and any Renewal Term.

          "TRANSGENOMIC UK" means Transgenomic, Ltd., a United Kingdom
corporation.

                                       39


          "UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, that in the event that,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of, or remedies with respect to, Laurus' Lien on any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions of this Agreement relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such provisions;
provided further, that to the extent that UCC is used to define any term herein
or in any Ancillary Agreement and such term is defined differently in different
Articles or Divisions of the UCC, the definition of such term contained in
Article or Division 9 shall govern.

          "WARRANTS" has the meaning set forth in the Registration Rights
Agreements.

                                       40

EX-10.2

                                                                    Exhibit 10.2

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES 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 UNDER SAID ACT
AND ANY APPLICABLE STATES SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO TRANSGENOMIC, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

                             SECURED REVOLVING NOTE

          FOR VALUE RECEIVED, TRANSGENOMIC, INC. a Delaware corporation (the
"BORROWER"), promises to pay 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, Fax: 345-949-9877 (the "HOLDER") or its
registered assigns, on order, the sum of SEVEN MILLION FIVE HUNDRED THOUSAND
DOLLARS ($7,500,000), without duplication of any amount owing by Borrower to
Holder under the Minimum Borrowing Notes (as defined in the Security Agreement
referred to below), or, if different, the aggregate principal amount of all
"Loans" (as such term is defined in the Security Agreement referred to below),
together with any accrued and unpaid interest hereon, on December 3, 2006 (the
"MATURITY DATE").

          Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Security Agreement between Borrower and
the Holder dated as of the date hereof (as amended, modified and supplemented
from time to time, the "SECURITY AGREEMENT").

The following terms shall apply to this Note:

                                    ARTICLE I
                                    INTEREST

          1.1. INTEREST RATE AND PAYMENTS. Subject to Sections 5.3 and 6.7
hereof, interest payable on this Note shall accrue at a rate per annum (the
"Contract Rate") equal to the "prime rate" published in THE WALL STREET JOURNAL
from time to time, plus two percent (2.00%), but in no event less than six
percent (6%) per annum. The prime rate shall be increased or decreased as the
case may be for each increase or decrease in the Prime Rate in an amount equal
to such increase or decrease in the prime rate; each change to be effective as
of the day of the change in such rate in accordance with the terms of the
Security Agreement. The Contract Rate shall be further adjusted from time to
time as follows: if (i) the Borrower shall have registered the shares of the
Borrower's common stock underlying the conversion of each applicable Minimum
Borrowing Note and that certain warrant issued to Holder on a registration
statement declared effective by the Securities Exchange Commission, and (ii) the
volume weighted average price of the Common Stock as reported by Bloomberg, L.P.
on the Principal Market for any of the ten (10) trading days immediately
preceding an Interest Payment Date (defined below)



exceeds the then applicable Fixed Conversion Price by a multiple of at least
fifteen percent (15%), then the Contract Rate for the succeeding calendar month
shall automatically be reduced by twenty five basis points (25 b.p.) for such
period for each such multiple of fifteen percent (15%). Interest shall be
payable monthly in arrears commencing on January 1, 2004 and on the first day of
each consecutive calendar month thereafter (each, an "Interest Payment Date").

                                   ARTICLE II
            ADVANCES, BORROWER CONVERSION RIGHTS, PAYMENTS UNDER NOTE

          2.1. MECHANICS OF ADVANCES. All Loans evidenced by this Note shall be
made in accordance with the terms and provisions of the Security Agreement.

          2.2. BORROWER'S CONVERSION RIGHTS. Subject to the terms hereof, the
Borrower shall have the sole option to determine whether to satisfy payment of
any payment of principal or interest when due either in cash or in shares of
Common Stock (as defined in the Security Agreement), or a combination of both.
Each month by the tenth (10th) day of such month, the Borrower shall deliver to
the Holder a written irrevocable notice in the form of Exhibit A attached hereto
electing to pay the amount specified therein payable on the first day of the
next month in either cash or Common Stock, or a combination of both (each, a
"REPAYMENT ELECTION NOTICE"). Each Repayment Election Notice shall be delivered
to the Holder not later than the tenth (10th) day of the month prior to the
applicable payment date (the date by which such notice is required to be given
being hereinafter referred to as the "NOTICE DATE"). If, for any amount which is
due on any repayment date, a Repayment Election Notice is not delivered to the
Holder by the applicable Notice Date for such repayment date, then the amount
due on such repayment date shall be paid in cash. If the Borrower repays all or
a portion of the amount due on any payment date in shares of Common Stock, the
number of such shares to be issued for such payment date shall be the number
determined by dividing (x) the amount to be paid in shares of Common Stock, by
(y) the Fixed Conversion Price. For purposes hereof, subject to Section 3.5
hereof, the "FIXED CONVERSION PRICE" means $2.20.

          2.3. NO EFFECTIVE REGISTRATION. Notwithstanding anything to the
contrary herein, the Borrower shall be prohibited from exercising its right to
repay any amount hereunder in shares of Common Stock if at any time from the
Notice Date for such payment through the date upon which such payment is made by
delivery of certificates for shares of Common Stock (i) there fails to exist an
effective registration statement on Form S-3, covering the resale of shares of
Common Stock to be issued, or (ii) an Event of Default hereunder exists and is
continuing, unless such Event of Default is otherwise cured.

          2.4. COMMON STOCK PAYMENT GUIDELINES. Notwithstanding anything to the
contrary herein, if the Borrower has elected to make a payment hereunder in
shares of Common Stock and the closing price of the Common Stock as reported by
Bloomberg, L.P. on the Principal Market for any of the eleven (11) trading days
preceding the scheduled payment date was less than 110% of the Fixed Conversion
Price, then the Holder shall have the option to refuse to accept any portion of
such payment in shares of Common Stock.

          2.5. OPTIONAL PAYMENTS IN COMMON STOCK. Subject to Section 2.2 hereof,
if the Borrower elects to pay interest or prepay principal and the average
closing price of the

                                        2


Common Stock on the Principal Market is greater than 110% of the Fixed
Conversion Price for a period of at least five (5) consecutive trading days,
then the Borrower may, AT ITS SOLE OPTION, provide the Holder written notice (a
"CALL NOTICE") requiring the conversion at the Fixed Conversion Price of (a) in
the case of interest, all interest due and payable for the current calendar
month and (b) in the case of principal, all or a portion of the outstanding
principal of this Note (subject to compliance with Section 2.3 and 3.2),
together with accrued interest on the principal amount being prepaid, in each
case, as of the date set forth in such Call Notice (the "CALL DATE"). The Call
Date shall be (a) in the case of interest, at least eleven (11) trading days
prior to the first day of the immediately succeeding calendar month and (b) in
the case of principal, at least eleven (11) trading days following the date of
the Call Notice. On the Call Date the Borrower shall deliver to the Holder
certificates evidencing the shares of Common Stock issued in satisfaction of the
principal and/or interest being retired. Notwithstanding the foregoing, the
Borrower's right to issue shares of Common Stock in payment of obligations under
this Note shall be subject to the limitation that the number of shares of Common
Stock issued at the Fixed Conversion Price in connection with any Call Notice
shall not exceed 25% of the aggregate dollar trading volume of the Common Stock
for the ten (10) trading days immediately preceding the Call Date (as such
volume is reported by Bloomberg, L.P. If the closing price of the Common Stock
is below 110% of the Fixed Conversion Price during the ten (10) trading day
period immediately preceding the Call Date, then the Holder will then be
required to convert only such amount of the Note as shall equal twenty five
percent (25%) of the aggregate dollar trading volume (as such volume is reported
by Bloomberg L.P.) for each day that the closing price of the Common Stock
exceeded 110% of the then applicable Fixed Conversion Price. The Borrower shall
not be permitted to give the Holder more than one Call Notice under this Note
during any 22-day period.

          2.6. OPTIONAL PREPAYMENT IN CASH. The Borrower will have the option of
prepaying this Note in full or in part at any time without any premium or
penalty other than the prepayment fees under Section 16 of the Security
Agreement in the event this Note is paid in full.

                                   ARTICLE III
                           HOLDER'S CONVERSION RIGHTS

          3.1. OPTIONAL CONVERSION. Subject to the terms of this Article III,
the Holder shall have the right, but not the obligation, at any time until the
Maturity Date, or thereafter during an Event of Default (as defined in Article
V), and, subject to the limitations set forth in Section 3.2 hereof, to convert
all or any portion of the outstanding Principal Amount and/or accrued interest
and fees due and payable into fully paid and nonassessable shares of the Common
Stock at the Fixed Conversion Price. The shares of Common Stock to be issued
upon such conversion are herein referred to as the "CONVERSION SHARES."

          3.2. CONVERSION LIMITATION. Notwithstanding anything contained herein
to the contrary, the Holder shall not be entitled to convert pursuant to the
terms of this Note an amount that would be convertible into that number of
Conversion Shares which, when added to the number of shares of Common Stock
otherwise beneficially owned by such Holder including those issuable upon
exercise of warrants held by such Holder would exceed 4.99% of the outstanding
shares of Common Stock of the Borrower at the time of conversion. For the

                                        3


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 Shares limitation described in this Section 3.2
shall automatically become null and void without any notice to Borrower 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 Borrower.

          3.3. MECHANICS OF HOLDER'S CONVERSION. In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion
("NOTICE OF CONVERSION") to the Borrower and such Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees that are being converted. Each date on which a Notice of
Conversion is delivered or telecopied to the Borrower in accordance with the
provisions hereof shall be deemed a Conversion Date (the "CONVERSION DATE"). On
each Conversion Date (as hereinafter defined) and in accordance with its Notice
of Conversion, the Holder shall make the appropriate reduction to the Principal
Amount, accrued interest and fees as entered in its records and shall provide
written notice thereof to the Borrower within two (2) Business Days after the
Conversion Date. A form of Notice of Conversion to be employed by the Holder is
annexed hereto as Exhibit A. 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 two (2) Business Days 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 Holder's designated broker with the Depository
Trust Corporation ("DTC") through its Deposit Withdrawal Agent Commission
("DWAC") system within three (3) Business Days after receipt by the Borrower of
the Notice of Conversion (the "DELIVERY DATE"). In the case of the exercise of
the conversion rights set forth herein the conversion privilege shall be deemed
to have been exercised and the Conversion Shares issuable upon such conversion
shall be deemed to have been issued upon the date of receipt by the Borrower of
the Notice of Conversion. The Holder shall be treated for all purposes as the
record holder of such Common Stock, unless the Holder provides the Borrower
written instructions to the contrary.

          3.4. LATE PAYMENTS. The Borrower understands that a delay in the
delivery of the shares of Common Stock in the form required pursuant to this
Article beyond the Delivery Date could result in economic loss to the Holder. As
compensation to the Holder for such loss, the Borrower agrees to pay late
payments to the Holder for late issuance of such shares in the form required
pursuant to this Article III upon conversion of the Note, in the amount equal to
$500 per business day after the Delivery Date. The Borrower shall pay any
payments incurred under this Section in immediately available funds upon demand.

          3.5. ADJUSTMENT PROVISIONS. The Fixed Conversion Price and number and
kind of shares or other securities to be issued upon conversion determined
pursuant to Section 3.1 shall be subject to adjustment from time to time upon
the happening of certain events while this conversion right remains outstanding,
as follows:

               A.   RECLASSIFICATION,  ETC. If the Borrower at any time shall,
by reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number

                                        4


of such securities and kind of securities as would have been issuable as the
result of such change with respect to the Common Stock immediately prior to such
reclassification or other change.

               B.   STOCK SPLITS, COMBINATIONS AND DIVIDENDS. If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Fixed Conversion Price shall be proportionately reduced in
case of subdivision of shares or stock dividend or proportionately increased in
the case of combination of shares, in each such case by the ratio which the
total number of shares of Common Stock outstanding immediately after such event
bears to the total number of shares of Common Stock outstanding immediately
prior to such event.

               C.   SHARE ISSUANCES. Subject to the provisions of this Section
3.5, if the Borrower shall at any time prior to the conversion or repayment in
full of the Principal Amount issue any shares of Common Stock to a person other
than the Holder (except (i) pursuant to Subsections A or B above; (ii) pursuant
to options, warrants, or other obligations to issue shares outstanding on the
date hereof as disclosed to Holder in writing; or (iii) pursuant to options that
may be issued under any employee incentive stock option and/or any qualified
stock option plan adopted by the Borrower) for a consideration per share (the
"Offer Price") less than the Fixed Conversion Price in effect at the time of
such issuance, then the Fixed Conversion Price shall be immediately reset
pursuant to the formula below. For purposes hereof, the issuance of any security
of the Borrower convertible into or exercisable or exchangeable for Common Stock
shall result in an adjustment to the Fixed Conversion Price at the time of
issuance of such securities. If the Borrower issues any additional shares
pursuant to this Subsection then, and thereafter successively upon each such
issue, the Fixed Conversion Price shall be adjusted by multiplying the then
applicable Fixed Conversion Price by the following fraction:

                                      A + B
                          (A + B) + [((C - D) X B) / C]

              A = Actual shares outstanding prior to such offering
                     B = Actual shares sold in the offering
                           C = Fixed Conversion Price
                                 D = Offer Price

               D.   COMPUTATION  OF  CONSIDERATION.  For  purposes  of any
computation respecting consideration received pursuant to Subsection C above,
the following shall apply:

                    (a)  in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Borrower for any underwriting of the issue or otherwise
in connection therewith;

                    (b)  in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash shall be

                                        5


deemed to be the fair market value thereof as determined in good faith by the
Board of Directors of the Borrower (irrespective of the accounting treatment
thereof); and

                    (c)  Upon any such exercise, the aggregate consideration
received for such securities shall be deemed to be the consideration received by
the Borrower for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Borrower upon the conversion or
exchange thereof (the consideration in each case to be determined in the same
manner as provided in clauses (a) and (b) of this Subsection (D)).

          3.6. RESERVATION OF SHARES. During the period the conversion right
exists, the Borrower will reserve from its authorized and unissued Common Stock
a sufficient number of shares to provide for the issuance of Common Stock upon
the full conversion of this Note. The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable. The
Borrower agrees that its issuance of this Note shall constitute full authority
to its officers, agents, and transfer agents who are charged with the duty of
executing and issuing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the conversion of this Note.

          3.7. REGISTRATION  RIGHTS.  The Holder has been granted  registration
rights with respect to the shares of Common Stock issuable upon conversion of
this Note as more fully set forth in a Registration Rights Agreement dated the
date hereof.

                                   ARTICLE IV
                                EVENTS OF DEFAULT

          The occurrence of any of the following events is an Event of Default
("EVENT OF DEFAULT"):

          4.1. FAILURE TO PAY PRINCIPAL, INTEREST OR OTHER FEES. The Borrower
fails to pay when due any installment of principal, interest or other fees
hereon or on any other promissory note issued pursuant to the Security
Agreement, when due in accordance with the terms of such note.

          4.2. BREACH OF  COVENANT.  The  Borrower  breaches any covenant or
other term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of thirty (30) days after the occurrence
thereof.

          4.3. BREACH OF  REPRESENTATIONS  AND WARRANTIES.  Any material
representation or warranty of the Borrower made herein, or the Security
Agreement, or in any Ancillary Agreement shall be materially false or
misleading.

          4.4. STOP TRADE. An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for 5 consecutive days or 5
days during a period of 10 consecutive days, excluding in all cases a suspension
of all trading on a Principal Market, provided that the Borrower shall not have
been able to cure such trading suspension within 30 days of the notice thereof
or list the Common Stock on another Principal Market within 60 days of such
notice. The "Principal Market" for the Common Stock shall include the NASD OTC
Bulletin Board, NASDAQ SmallCap Market, NASDAQ National Market System,

                                        6


American Stock Exchange, or New York Stock Exchange (whichever of the foregoing
is at the time the principal trading exchange or market for the Common Stock),
or any securities exchange or other securities market on which the Common Stock
is then being listed or traded.

          4.5. DEFAULT  UNDER  RELATED  AGREEMENT.  The  occurrence of an Event
of Default under and as defined in the Security Agreement.

          4.6  FAILURE TO DELIVER COMMON STOCK OR REPLACEMENT NOTE. The
Borrower's failure to timely deliver Common Stock to the Holder pursuant to and
in the form required by this Note, and Section 9 of the Securities Purchase
Agreement, or if required, a replacement Note if such failure to timely deliver
Common Stock shall not be cured within two (2) Business Days or such failure to
deliver a replacement Note is not cured within seven (7) Business Days.

          4.7  PAYMENT GRACE PERIOD. The Borrower shall have a three (3)
business day grace period to pay any monetary amounts due under this Note or the
Security Agreement or any Related Document, after which grace period the Default
Rate shall apply to the monetary amounts due.

                                    ARTICLE V
                                DEFAULT PAYMENTS

          5.1. DEFAULT PAYMENT. If an Event of Default occurs, the Holder, at
its option, may elect, in addition to all rights and remedies of Holder under
the Security Agreement and all obligations of Borrower under the Security
Agreement, to require the Borrower to make a Default Payment ("DEFAULT
PAYMENT"). The Default Payment shall be the outstanding principal amount of the
Note, plus accrued but unpaid interest, all other fees then remaining unpaid,
and all other amounts payable hereunder.

          5.2. DEFAULT PAYMENT DATE AND DEFAULT NOTICE PERIOD. The Default
Payment shall be due and payable on the fifth business day after an Event of
Default as defined in Article IV ("DEFAULT PAYMENT DATE") has occurred and is
continuing beyond any applicable grace period. The period between the date upon
which of an Event of Default has occurred and is continuing beyond any
applicable grace period and the Default Payment Date shall be the "DEFAULT
PERIOD." If during the Default Period, the Borrower cures the Event of Default,
the Event of Default will no longer exist and any additional rights the Holder
had triggered by the occurrence and continuance of an Event of Default will no
longer exist. If the Event of Default is not cured during the Default Notice
Period, all amounts payable hereunder shall be due and payable on the Default
Payment Date, all without further demand, presentment or notice, or grace
period, all of which hereby are expressly waived.

          5.3. DEFAULT INTEREST RATE. Following the occurrence and during the
continuance of an Event of Default, interest on this Note shall automatically be
increased to the Default Rate, and all outstanding Obligations, including unpaid
interest, shall continue to accrue interest from the date of such Event of
Default at such interest rate until such Event of Default is cured or waived.

          5.4. CUMULATIVE REMEDIES.  The remedies under this Note shall be
cumulative.

                                        7


                                   ARTICLE VI
                                  MISCELLANEOUS

          6.1. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
of the Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege. All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

          6.2. NOTICES. Any notice herein required or permitted to be given
shall be in writing and provided in accordance with the terms of the Security
Agreement.

          6.3. AMENDMENT PROVISION. The term "Note" and all reference thereto,
as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented, and any successor instrument as it may be amended or supplemented.

          6.4. ASSIGNABILITY. This Note shall be binding upon the Borrower and
its successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns, and may be assigned by the Holder in accordance with the
requirements of the Security Agreement.

          6.5. COST OF COLLECTION. If default is made in the payment of this
Note, the Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.

          6.6. GOVERNING LAW. This Note 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 individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note 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 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 unenforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Holder
from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court order in favor of Holder.

          6.7. MAXIMUM PAYMENTS. Nothing contained herein 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 required to be paid or other

                                        8


charges hereunder exceed the maximum permitted by such law, any payments in
excess of such maximum shall be credited against amounts owed by the Borrower to
the Holder and thus refunded to the Borrower.

          6.8. SECURITY INTEREST. The Holder of this Note has been granted a
security interest in certain assets of the Borrower more fully described in a
Security Agreement dated as of the date hereof.

          6.9. CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Note 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 Note to favor any party
against the other.

       [Balance of page intentionally left blank; signature page follows.]

                                        9


          IN WITNESS WHEREOF, the Borrower has caused this Secured Revolving
Note to be signed in its name effective as of this day of December 3, 2003.


                                        TRANSGENOMIC, INC.


                                        By:   /s/ Michael J. Draper
                                            ---------------------------------
                                             Name: Michael J. Draper
                                             Title: CFO


WITNESS:


     /s/ Keith A. Johnson
- ----------------------------------------

                                       10

EX-10.3

                                                                    Exhibit 10.3

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THIS NOTE AND THE COMMON SHARES 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 UNDER SAID ACT
AND ANY APPLICABLE STATES SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO TRANSGENOMIC, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

                   SECURED CONVERTIBLE MINIMUM BORROWING NOTE

          FOR VALUE RECEIVED, TRANSGENOMIC, INC., a Delaware corporation (the
"BORROWER") promises to pay 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, Fax: 345-949-9877 (the "HOLDER") or its registered
assigns, on order, the sum of TWO MILLION DOLLARS ($2,000,000), or, if
different, the aggregate principal amount of all "Loans" (as such term is
defined in the Security Agreement referred to below), together with any accrued
and unpaid interest hereon, on December 3, 2006 (the "MATURITY DATE").

          Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in the Security Agreement between Borrower and
the Holder dated as of December 3, 2003 (as amended, modified and supplemented
from time to time, the "SECURITY AGREEMENT").

The following terms shall apply to this Secured Convertible Minimum Borrowing
Note (the "Note"):

                                    ARTICLE I
                                    INTEREST

          1.1.   INTEREST RATE AND PAYMENTS. Subject to Sections 5.3 and 6.7
hereof, interest payable on this Note shall accrue at a rate per annum equal to
the "prime rate" published in THE WALL STREET JOURNAL from time to time, plus
two percent (2.00%), but in no event less than six percent (6%) per annum (the
"CONTRACT RATE"). The Prime Rate shall be increased or decreased as the case may
be for each increase or decrease in the Prime Rate in an amount equal to such
increase or decrease in the Prime Rate; each change to be effective as of the
day of the change in such rate in accordance with the terms of the Security
Agreement. The Contract Rate shall be further adjusted from time to time as
follows: if (i) the Borrower shall have registered the shares of the Borrower's
common stock underlying the conversion of this Note and that certain warrant
issued to Holder of even date herewith on a registration statement declared
effective by the Securities Exchange Commission, and (ii) the volume weighted
average price of the Common Stock as reported by Bloomberg, L.P. on the
Principal Market for any of the ten (10) trading days immediately preceding a
Interest Payment Date (defined below) exceeds the


then applicable Fixed Conversion Price by a multiple of at least fifteen percent
(15%), then the Contract Rate for the succeeding calendar month shall
automatically be reduced by twenty five basis points (25 b.p.) for such period
for each such multiple of fifteen percent (15%). Interest shall be payable
monthly in arrears commencing on January 1, 2004 and on the first day of each
consecutive calendar month thereafter, (each, an "INTEREST PAYMENT DATE").

                                   ARTICLE II
            ADVANCES, BORROWER CONVERSION RIGHTS, PAYMENTS UNDER NOTE

          2.1.   MECHANICS OF ADVANCES. All Loans evidenced by this Note shall
be made in accordance with the terms and provisions of the Security Agreement.

          2.2.   BORROWER'S CONVERSION RIGHTS. Subject to the terms hereof, the
Borrower shall have the sole option to determine whether to satisfy payment of
any payment of principal or interest when due either in cash or in shares of
Common Stock (as defined in the Security Agreement), or a combination of both.
Each month by the tenth (10th) day of such month, the Borrower shall deliver to
the Holder a written irrevocable notice in the form of Exhibit A attached hereto
electing to pay the amount specified therein payable on the first day of the
next month in either cash or Common Stock, or a combination of both (each, a
"REPAYMENT ELECTION NOTICE"). Each Repayment Election Notice shall be delivered
to the Holder not later than the tenth (10th) day of the month prior to the
applicable payment date (the date by which such notice is required to be given
being hereinafter referred to as the "NOTICE DATE"). If, for any amount which is
due on any repayment date, a Repayment Election Notice is not delivered to the
Holder by the applicable Notice Date for such repayment date, then the amount
due on such repayment date shall be paid in cash. If the Borrower repays all or
a portion of the amount due on any payment date in shares of Common Stock, the
number of such shares to be issued for such payment date shall be the number
determined by dividing (x) the amount to be paid in shares of Common Stock, by
(y) the Fixed Conversion Price. For purposes hereof, subject to Section 3.5
hereof, the "FIXED CONVERSION PRICE" means $2.20.

          2.3.   NO EFFECTIVE REGISTRATION. Notwithstanding anything to the
contrary herein, the Borrower shall be prohibited from exercising its right to
repay any amount hereunder in shares of Common Stock if at any time from the
Call Date (defined below) for such payment through the date upon which such
payment is made by delivery of certificates for shares of Common Stock (i) there
fails to exist an effective current Registration Statement (as defined in the
Registration Rights Agreement) on Form S-3 covering the resale of shares of
Common Stock to be issued, or (ii) an Event of Default hereunder exists and is
continuing, unless such requirement is otherwise waived in writing by the Holder
in whole or in part at the Holder's option.

          2.4.   COMMON STOCK PAYMENT GUIDELINES. Notwithstanding anything to
the contrary herein, if the Borrower has elected to make a payment hereunder in
shares of Common Stock and the closing price of the Common Stock as reported by
Bloomberg, L.P. on the Principal Market for any of the eleven (11) trading days
preceding the scheduled payment date was less than 110% of the Fixed Conversion
Price, then the Holder shall have the option to refuse to accept any portion of
such payment in shares of Common Stock.

                                        2


          2.5.   OPTIONAL PAYMENTS IN COMMON STOCK. Subject to Section 2.2
hereof, if the Borrower elects to pay interest or prepay principal and the
average closing price of the Common Stock on the Principal Market is greater
than 110% of the Fixed Conversion Price for a period of at least five (5)
consecutive trading days, then the Borrower may, AT ITS SOLE OPTION, provide the
Holder written notice (a "CALL NOTICE") requiring the conversion at the Fixed
Conversion Price of (a) in the case of interest, all interest due and payable
for the current calendar month and (b) in the case of principal, all or a
portion of the outstanding principal of this Note (subject to compliance with
Section 2.3 and 3.2), together with accrued interest on the principal amount
being prepaid, in each case, as of the date set forth in such Call Notice (the
"CALL DATE"). The Call Date shall be (a) in the case of interest, at least
eleven (11) trading days prior to the first day of the immediately succeeding
calendar month and (b) in the case of principal, at least eleven (11) trading
days following the date of the Call Notice. On the Call Date the Borrower shall
deliver to the Holder certificates evidencing the shares of Common Stock issued
in satisfaction of the principal and/or interest being retired. Notwithstanding
the foregoing, the Borrower's right to issue shares of Common Stock in payment
of obligations under this Note shall be subject to the limitation that the
number of shares of Common Stock issued at the Fixed Conversion Price in
connection with any Call Notice shall not exceed 25% of the aggregate dollar
trading volume of the Common Stock for the ten (10) trading days immediately
preceding the Call Date (as such volume is reported by Bloomberg, L.P. If the
closing price of the Common Stock is below 110% of the Fixed Conversion Price
during the ten (10) trading day period immediately preceding the Call Date, then
the Holder will then be required to convert only such amount of the Note as
shall equal twenty five percent (25%) of the aggregate dollar trading volume (as
such volume is reported by Bloomberg L.P.) for each day that the closing price
of the Common Stock exceeded 110% of the then applicable Fixed Conversion Price.
The Borrower shall not be permitted to give the Holder more than one Call Notice
under this Note during any 22-day period.

          2.6.   OPTIONAL PREPAYMENT IN CASH. The Borrower will have the option
of prepaying this Note in full or in part at any time in an amount equal to 103%
of the amount being prepaid subject to the prepayment fees under Section 16 of
the Security Agreement in the event this Note is paid in full.

                                   ARTICLE III
                           HOLDER'S CONVERSION RIGHTS

          3.1.   OPTIONAL CONVERSION. Subject to the terms of this Article III,
the Holder shall have the right, but not the obligation, at any time until the
Maturity Date, or thereafter during an Event of Default (as defined in Article
V), and, subject to the limitations set forth in Section 3.2 hereof, to convert
all or any portion of the outstanding Principal Amount and/or accrued interest
and fees due and payable into fully paid and nonassessable shares of the Common
Stock at the Fixed Conversion Price. The shares of Common Stock to be issued
upon such conversion are herein referred to as the "CONVERSION SHARES."

          3.2.   CONVERSION LIMITATION. Notwithstanding anything contained
herein to the contrary, the Holder shall not be entitled to convert pursuant to
the terms of this Note an amount that would be convertible into that number of
Conversion Shares which, when added to the number of shares of Common Stock
otherwise beneficially owned by such Holder including

                                        3


those issuable upon exercise of warrants held by such Holder would exceed 4.99%
of the outstanding shares of Common Stock of the Borrower 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 Shares limitation described
in this Section 3.2 shall automatically become null and void without any notice
to Borrower 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
Borrower.

          3.3.   MECHANICS OF HOLDER'S CONVERSION. In the event that the Holder
elects to convert this Note into Common Stock, the Holder shall give notice of
such election by delivering an executed and completed notice of conversion
("NOTICE OF CONVERSION") to the Borrower and such Notice of Conversion shall
provide a breakdown in reasonable detail of the Principal Amount, accrued
interest and fees that are being converted. Each date on which a Notice of
Conversion is delivered or telecopied to the Borrower in accordance with the
provisions hereof shall be deemed a Conversion Date (the "CONVERSION DATE"). On
each Conversion Date and in accordance with its Notice of Conversion, the Holder
shall make the appropriate reduction to the Principal Amount, accrued interest
and fees as entered in its records and shall provide written notice thereof to
the Borrower within two (2) Business Days after the Conversion Date. A form of
Notice of Conversion to be employed by the Holder is annexed hereto as Exhibit
A. 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
two (1) Business Days 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
Holder's designated broker with the Depository Trust Corporation ("DTC") through
its Deposit Withdrawal Agent Commission ("DWAC") system within three (3)
Business Days after receipt by the Borrower of the Notice of Conversion (the
"DELIVERY DATE"). In the case of the exercise of the conversion rights set forth
herein the conversion privilege shall be deemed to have been exercised and the
Conversion Shares issuable upon such conversion shall be deemed to have been
issued upon the date of receipt by the Borrower of the Notice of Conversion. The
Holder shall be treated for all purposes as the record holder of such Common
Stock, unless the Holder provides the Borrower written instructions to the
contrary.

          3.4.   LATE PAYMENTS. The Borrower understands that a delay in the
delivery of the shares of Common Stock in the form required pursuant to this
Article beyond the Delivery Date could result in economic loss to the Holder. As
compensation to the Holder for such loss, the Borrower agrees to pay late
payments to the Holder for late issuance of such shares in the form required
pursuant to this Article III upon conversion of the Note, in the amount equal to
$500 per business day after the Delivery Date. The Borrower shall pay any
payments incurred under this Section in immediately available funds upon demand.

          3.5.   ADJUSTMENT PROVISIONS. The Fixed Conversion Price and number
and kind of shares or other securities to be issued upon conversion determined
pursuant to Section 2.2 shall be subject to adjustment from time to time upon
the happening of certain events while this conversion right remains outstanding,
as follows:

                 A.    RECLASSIFICATION, ETC. If the Borrower at any time shall,
by reclassification or otherwise, change the Common Stock into the same or a
different number of

                                        4


securities of any class or classes, this Note, as to the unpaid Principal Amount
and accrued interest thereon, shall thereafter be deemed to evidence the right
to purchase an adjusted number of such securities and kind of securities as
would have been issuable as the result of such change with respect to the Common
Stock immediately prior to such reclassification or other change.

                 B.    STOCK SPLITS, COMBINATIONS AND DIVIDENDS. If the shares
of Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Fixed Conversion Price shall be proportionately reduced in
case of subdivision of shares or stock dividend or proportionately increased in
the case of combination of shares, in each such case by the ratio which the
total number of shares of Common Stock outstanding immediately after such event
bears to the total number of shares of Common Stock outstanding immediately
prior to such event.

                 C.    SHARE ISSUANCES. Subject to the provisions of this
Section 3.5, if the Borrower shall at any time prior to the conversion or
repayment in full of the Principal Amount issue any shares of Common Stock to a
person other than the Holder (except (i) pursuant to Subsections A or B above;
(ii) pursuant to options, warrants, or other obligations to issue shares
outstanding on the date hereof as disclosed to Holder in writing; or
(iii) pursuant to options that may be issued under any employee incentive stock
option and/or any qualified stock option plan adopted by the Borrower) for a
consideration per share (the "Offer Price") less than the Fixed Conversion Price
in effect at the time of such issuance, then the Fixed Conversion Price shall be
immediately reset pursuant to the formula below. For purposes hereof, the
issuance of any security of the Borrower convertible into or exercisable or
exchangeable for Common Stock shall result in an adjustment to the Fixed
Conversion Price at the time of issuance of such securities. If the Borrower
issues any additional shares pursuant to this Subsection then, and thereafter
successively upon each such issue, the Fixed Conversion Price shall be adjusted
by multiplying the then applicable Fixed Conversion Price by the following
fraction:

                                      A + B
                          (A + B) + [((C - D) X B) / C]

              A = Actual shares outstanding prior to such offering
                     B = Actual shares sold in the offering
                           C = Fixed Conversion Price
                                 D = Offer Price

                 D.    COMPUTATION OF CONSIDERATION.  For purposes of any
computation respecting consideration received pursuant to Subsection C above,
the following shall apply:

                       (a)  in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such cash, provided
that in no case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Borrower for any underwriting of the issue or
otherwise in connection therewith;

                                        5


                       (b)  in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors of the Borrower
(irrespective of the accounting treatment thereof); and

                       (c)  Upon any such exercise, the aggregate consideration
received for such securities shall be deemed to be the consideration received by
the Borrower for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Borrower upon the conversion or
exchange thereof (the consideration in each case to be determined in the same
manner as provided in clauses (a) and (b) of this Subsection (D)).

          3.6.   RESERVATION OF SHARES. During the period the conversion right
exists, the Borrower will reserve from its authorized and unissued Common Stock
a sufficient number of shares to provide for the issuance of Common Stock upon
the full conversion of this Note. The Borrower represents that upon issuance,
such shares will be duly and validly issued, fully paid and non-assessable. The
Borrower agrees that its issuance of this Note shall constitute full authority
to its officers, agents, and transfer agents who are charged with the duty of
executing and issuing stock certificates to execute and issue the necessary
certificates for shares of Common Stock upon the conversion of this Note.

          3.7.   REGISTRATION RIGHTS. The Holder has been granted registration
rights with respect to the shares of Common Stock  issuable  upon  conversion
of this Note as more fully set forth in a  Registration  Rights  Agreement
dated the date hereof.

                                   ARTICLE IV
                                EVENTS OF DEFAULT

          The occurrence of any of the following events is an Event of Default
("EVENT OF DEFAULT"):

          4.1.   FAILURE TO PAY PRINCIPAL, INTEREST OR OTHER FEES. The Borrower
fails to pay when due any installment of principal, interest or other fees
hereon or on any other promissory note issued pursuant to the Security
Agreement, when due in accordance with the terms of such note.

          4.2.   BREACH OF  COVENANT.  The  Borrower  breaches any covenant or
other term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of thirty (30) days after the occurrence
thereof.

          4.3.   BREACH OF REPRESENTATIONS  AND WARRANTIES.  Any material
representation or warranty of the Borrower made herein, or the Security
Agreement, or in any Ancillary Agreement shall be materially false or
misleading.

          4.4.   STOP TRADE. An SEC stop trade order or Principal Market trading
suspension of the Common Stock shall be in effect for 5 consecutive days or 5
days during a period of 10 consecutive days, excluding in all cases a suspension
of all trading on a Principal Market, provided that the Borrower shall not have
been able to cure such trading suspension within 30 days of the notice thereof
or list the Common Stock on another Principal Market

                                        6


within 60 days of such notice. The "Principal Market" for the Common Stock shall
include the NASD OTC Bulletin Board, NASDAQ SmallCap Market, NASDAQ National
Market System, American Stock Exchange, or New York Stock Exchange (whichever of
the foregoing is at the time the principal trading exchange or market for the
Common Stock), or any securities exchange or other securities market on which
the Common Stock is then being listed or traded.

          4.5.   DEFAULT  UNDER  RELATED  AGREEMENT.  The  occurrence  of an
Event of Default  under and as defined in the Security Agreement.

          4.6.   FAILURE TO DELIVER COMMON STOCK OR REPLACEMENT NOTE. The
Borrower's failure to timely deliver Common Stock to the Holder pursuant to and
in the form required by this Note, and Section 9 of the Security Agreement, or
if required, a replacement Note if such failure to timely deliver Common Stock
shall not be cured within two (2) Business Days or such failure to deliver a
replacement Note is not cured within seven (7) Business Days.

          4.7.   PAYMENT GRACE PERIOD. The Borrower shall have a three (3)
business day grace period to pay any monetary amounts due under this Note or the
Security Agreement or any Related Document, after which grace period the Default
Rate shall apply to the monetary amounts due.

                                    ARTICLE V
                                DEFAULT PAYMENTS

          5.1.   DEFAULT PAYMENT. If an Event of Default occurs, the Holder, at
its option, may elect, in addition to all rights and remedies of Holder under
the Security Agreement and all obligations of Borrower under the Security
Agreement, to require the Borrower to make a Default Payment ("DEFAULT
PAYMENT"). The Default Payment shall be the outstanding principal amount of the
Note, plus accrued but unpaid interest, all other fees then remaining unpaid,
and all other amounts payable hereunder.

          5.2.   DEFAULT PAYMENT DATE AND DEFAULT NOTICE PERIOD. The Default
Payment shall be due and payable on the fifth business day after an Event of
Default as defined in Article IV ("DEFAULT PAYMENT DATE") has occurred and is
continuing beyond any applicable grace period. The period between the date upon
which of an Event of Default has occurred and is continuing beyond any
applicable grace period and the Default Payment Date shall be the "DEFAULT
PERIOD." If during the Default Period, the Borrower cures the Event of Default,
the Event of Default will no longer exist and any additional rights the Holder
had triggered by the occurrence and continuance of an Event of Default will no
longer exist. If the Event of Default is not cured during the Default Notice
Period, all amounts payable hereunder shall be due and payable on the Default
Payment Date, all without further demand, presentment or notice, or grace
period, all of which hereby are expressly waived.

          5.3.   DEFAULT INTEREST RATE. Following the occurrence and during the
continuance of an Event of Default, interest on this Note shall automatically be
increased to the Default Rate, and all outstanding Obligations, including unpaid
interest, shall continue to accrue interest from the date of such Event of
Default at such interest rate applicable to such Obligations until such Event of
Default is cured or waived.

                                        7


          5.4.   CUMULATIVE REMEDIES.  The remedies under this Note shall be
cumulative.

                                   ARTICLE VI
                                  MISCELLANEOUS

          6.1.   FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the
part of the Holder hereof in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.

          6.2.   NOTICES.  Any notice  herein  required  or  permitted  to be
given  shall be in writing  and  provided in accordance with the terms of the
Security Agreement.

          6.3.   AMENDMENT  PROVISION.  The term "Note" and all reference
thereto,  as used throughout this  instrument, shall mean this instrument as
originally  executed,  or if later amended or supplemented,  then as so amended
or  supplemented,  and any successor instrument as it may be amended or
supplemented.

          6.4.   ASSIGNABILITY.  This Note shall be binding upon the Borrower
and its  successors  and assigns,  and shall inure to the  benefit of the Holder
and its  successors  and  assigns,  and may be  assigned  by the Holder in
accordance  with the requirements of the Security Agreement.

          6.5.   COST OF  COLLECTION.  If default is made in the payment of this
Note,  the Borrower  shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.

          6.6.   GOVERNING LAW. This Note 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 individual signing this Note on behalf of the
Borrower agree to submit to the jurisdiction of such courts. The prevailing
party shall be entitled to recover from the other party its reasonable
attorney's fees and costs. In the event that any provision of this Note 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 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 unenforceability of any other provision of this
Note. Nothing contained herein shall be deemed or operate to preclude the Holder
from bringing suit or taking other legal action against the Borrower in any
other jurisdiction to collect on the Borrower's obligations to Holder, to
realize on any collateral or any other security for such obligations, or to
enforce a judgment or other court order in favor of Holder.

          6.7.   MAXIMUM PAYMENTS. Nothing contained herein shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum

                                        8


permitted by applicable law. In the event that the rate of interest required to
be paid or other charges hereunder exceed the maximum permitted by such law, any
payments in excess of such maximum shall be credited against amounts owed by the
Borrower to the Holder and thus refunded to the Borrower.

          6.8.   SECURITY  INTEREST.  The Holder of this Note has been  granted
a security  interest in certain  assets of the Borrower more fully described in
the Security Agreement.

          6.9.   CONSTRUCTION. Each party acknowledges that its legal counsel
participated in the preparation of this Note 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 Note to favor any party
against the other.

       [Balance of page intentionally left blank; signature page follows.]

                                        9


          IN WITNESS WHEREOF, the Borrower has caused this Secured Convertible
Minimum Borrowing Note to be signed in its name effective as of this 3rd day of
December, 2003.

                                        TRANSGENOMIC, INC.


                                        By: /s/ Michael J. Draper
                                           -------------------------------------
                                           Name: Michael J. Draper
                                           Title: CFO

WITNESS:


     /s/ Keith A. Johnson
- ----------------------------------------

                                       10

EX-10.4

                                                                    Exhibit 10.4

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS WARRANT AND THE COMMON STOCK 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 UNDER SAID ACT OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO TRANSGENOMIC, INC. THAT SUCH REGISTRATION
IS NOT REQUIRED.

                              Right to Purchase 550,000 Shares of Common
                              Stock of Transgenomic, Inc. (subject to adjustment
                              as provided herein)

                          COMMON STOCK PURCHASE WARRANT

No. 2003-1                                 Issue Date:  December 3, 2003

          Transgenomic, Inc., a corporation organized under the laws of the
State of Delaware (the "Company"), hereby certifies that, for value received,
LAURUS MASTER FUND, LTD., or assigns (the "Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company from and after the Issue
Date of this Warrant and at any time or from time to time before 5:00 p.m., New
York time, through seven (7) years after such date (the "Expiration Date"), up
to 550,000 fully paid and nonassessable shares of Common Stock (as hereinafter
defined), $.01 par value, of the Company, at the Exercise Price (as defined
below). The number and character of such shares of Common Stock and the Exercise
Price are subject to adjustment as provided herein.

          As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:

          (a)    The term "Company" shall include Transgenomic, Inc. and any
corporation which shall succeed or assume the obligations of Transgenomic, Inc.
hereunder.

          (b)    The term "Common Stock" includes (a) the Company's Common
Stock, par value $.01 per share, and (b) any other securities into which or for
which any of the securities described in (a) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.

          (c)    The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person (corporate
or otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

          (d)     The term "Exercise Price" shall be as follows:



                 a.     200,000 shares at $2.25 per share;

                 b.     200,000 shares at $2.44 per share; and

                 c.     150,000 shares at $2.82 per share.

     2.   EXERCISE OF WARRANT.

          2.1    NUMBER OF SHARES ISSUABLE UPON EXERCISE. From and after the
date hereof through and including the Expiration Date, the Holder shall be
entitled to receive, upon exercise of this Warrant in whole or in part, by
delivery of an original or fax copy of the exercise notice attached hereto as
Exhibit A (the "Exercise Notice"), shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.

          2.2    FAIR MARKET VALUE. Fair Market Value of a share of Common Stock
as of a particular date (the "Determination Date") shall mean:

          (a)    If the Company's Common Stock is traded on an exchange or is
quoted on the National or SmallCap Market of The Nasdaq Stock Market,
Inc.("Nasdaq"), then the closing or last sale price, respectively, reported for
the last business day immediately preceding the Determination Date.

                 (b)    If the Company's Common Stock is not traded on an
exchange or on the Nasdaq but is traded on the NASD OTC Bulletin Board or BBX
Exchange, then the mean of the average of the closing bid and asked prices
reported for the last business day immediately preceding the Determination Date.

                 (c) Except as provided in clause (d) below, if the Company's
Common Stock is not publicly traded, then as the Holder and the Company agree or
in the absence of agreement by arbitration in accordance with the rules then in
effect of the American Arbitration Association, before a single arbitrator to be
chosen from a panel of persons qualified by education and training to pass on
the matter to be decided.

                 (d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation, dissolution
or winding up pursuant to the Company's charter, then all amounts to be payable
per share to holders of the Common Stock pursuant to the charter in the event of
such liquidation, dissolution or winding up, plus all other amounts to be
payable per share in respect of the Common Stock in liquidation under the
charter, assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of the Warrant are outstanding at the
Determination Date.

     3.  PROCEDURE FOR EXERCISE.

          3.1    DELIVERY OF STOCK CERTIFICATES, ETC. ON EXERCISE. The Company
agrees that the shares of Common Stock purchased upon exercise of this Warrant
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within



3 business days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the Holder, or as such Holder (upon payment by such holder of any
applicable transfer taxes) may direct in compliance with applicable securities
laws, a certificate or certificates for the number of duly and validly issued,
fully paid and nonassessable shares of Common Stock (or Other Securities) to
which such Holder shall be entitled on such exercise, plus, in lieu of any
fractional share to which such holder would otherwise be entitled, cash equal to
such fraction multiplied by the then Fair Market Value of one full share,
together with any other stock or other securities and property (including cash,
where applicable) to which such Holder is entitled upon such exercise pursuant
to Section 1 or otherwise.

          3.2    EXERCISE.

          (a)    Payment may be made either in (i) cash or by certified or
official bank check payable to the order of the Company equal to the applicable
aggregate Exercise Price, (ii) by delivery of the Warrant, Common Stock and/or
Common Stock receivable upon exercise of the Warrant in accordance with Section
(b) below, or (iii) by a combination of any of the foregoing methods, for the
number of Common Shares specified in such form (as such exercise number shall be
adjusted to reflect any adjustment in the total number of shares of Common Stock
issuable to the holder per the terms of this Warrant) and the Holder shall
thereupon be entitled to receive the number of duly authorized, validly issued,
fully-paid and non-assessable shares of Common Stock (or Other Securities)
determined as provided herein.

          (b)    Notwithstanding any provisions herein to the contrary, if the
Fair Market Value of one share of Common Stock is greater than the Exercise
Price (at the date of calculation as set forth below), in lieu of exercising
this Warrant for cash, the Holder may elect to receive shares equal to the value
(as determined below) of this Warrant (or the portion thereof being exercised)
by surrender of this Warrant at the principal office of the Company together
with the properly endorsed Exercise Notice in which event the Company shall
issue to the Holder a number of shares of Common Stock computed using the
following formula:

          X=Y (A-B)
              -----
                A

     Where X =   the number of shares of Common Stock to be issued to the Holder

          Y=     the number of shares of Common Stock purchasable under
                 the Warrant or, if only a portion of the Warrant is
                 being exercised, the portion of the Warrant being
                 exercised (at the date of such calculation)

          A=     the Fair Market Value of one share of the Company's Common
                 Stock (at the date of such calculation)

          B=     Exercise Price (as adjusted to the date of such calculation)



     4.   EFFECT OF REORGANIZATION, ETC.; ADJUSTMENT OF EXERCISE PRICE.

          4.1    REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at any time
or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.

          4.2    DISSOLUTION. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrant after the effective date of
such dissolution pursuant to Section 3.1 to a bank or trust company having its
principal office in New York, NY, as trustee for the Holder of the Warrant.

          4.3    CONTINUATION OF TERMS. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 5. In the
event this Warrant does not continue in full force and effect after the
consummation of the transactions described in this Section 4, then only in such
event will the Company's securities and property (including cash, where
applicable) receivable by the holders of the Warrant be delivered to the Trustee
as contemplated by Section 4.2.

     5.  EXTRAORDINARY EVENTS REGARDING COMMON STOCK.

          5.1    RECLASSIFICATION, ETC. If the Company at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Warrant shall
thereafter be deemed to evidence the right to be issued an adjusted number of
such securities and kind of securities as would have been issuable as the result
of such change with respect to the Common Stock immediately prior to such
reclassification or other change.



          5.2    STOCK SPLITS, COMBINATIONS AND DIVIDENDS. If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Exercise Price shall be proportionately reduced in case of
subdivision of shares or stock dividend or proportionately increased in the case
of combination of shares, in each such case by the ratio which the total number
of shares of Common Stock outstanding immediately after such event bears to the
total number of shares of Common Stock outstanding immediately prior to such
event.

          5.3    SHARE ISSUANCES. Subject to the provisions of this Section, if
the Company shall at any time issue any shares of Common Stock to a person other
than the Holder (except (a) pursuant to Sections 5.1 or 5.2 above; (b) pursuant
to options, warrants, or other obligations to issue shares outstanding on the
date hereof as disclosed to Holder in writing; or (c) pursuant to options that
may be issued under any employee incentive stock option and/or any qualified
stock option plan adopted by the Company) for a consideration per share (the
"Offer Price") less than the Exercise Price in effect at the time of such
issuance, then the Exercise Price shall be immediately reset pursuant to the
formula below. For purposes hereof, the issuance of any security of the Company
convertible into or exercisable or exchangeable for Common Stock shall result in
an adjustment to the Exercise Price at the time of issuance of such securities.
If the Company issues any additional shares pursuant to this Section then, and
thereafter successively upon each such issue, the Exercise Price shall be
adjusted by multiplying the then applicable Exercise Price by the following
fraction:

                                      A + B
                          (A + B) + [((C - D) X B) / C]

              A = Actual shares outstanding prior to such offering
                     B = Actual shares sold in the offering
                               C = Exercise Price
                               D = Offering price

          5.4    COMPUTATION OF CONSIDERATION. For purposes of any computation
respecting consideration received pursuant to Section 5.3 above, the following
shall apply:

                 (a)    In the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or otherwise
in connection therewith;

                 (b)    In the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair market value thereof as determined in
good faith by the Board of Directors of the Company (irrespective of the
accounting treatment thereof); and

                 (c)    Upon any such exercise, the aggregate consideration
received for such securities shall be deemed to be the consideration received by
the Company for the issuance



of such securities plus the additional minimum consideration, if any, to be
received by the Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner as provided in
clauses (a) and (b) of this Section 5.4).

     6. In the event that the Company shall (a) issue additional shares of the
Common Stock as a dividend or other distribution on outstanding Common Stock,
(b) subdivide its outstanding shares of Common Stock, (c) combine its
outstanding shares of the Common Stock into a smaller number of shares of the
Common Stock or (d) issue any shares of Common Stock to a Person other than the
Holder (other than (i) pursuant to Subsections (a), (b) or (c) above or (ii)
pursuant to options, warrants or other obligations to issue shares outstanding
on the date hereof or (iii) any shares issued for incentive stock options or
NonQualified stock options in each case under the Company's Employee Stock
Option Plan) for a consideration per share or having an exercise, conversion or
exchange price less than the Exercise Price in effect at the time of such
issuance, then, in each such event, the Exercise Price shall, simultaneously
with the happening of such event, be adjusted by multiplying the then Exercise
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such event and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after such event, and the product so obtained shall thereafter be the Exercise
Price then in effect. The Exercise Price, as so adjusted, shall be readjusted in
the same manner upon the happening of any successive event or events described
herein in this Section 4. The number of shares of Common Stock that the holder
of this Warrant shall thereafter, on the exercise hereof as provided in Section
1, be entitled to receive shall be increased to a number determined by
multiplying the number of shares of Common Stock that would otherwise (but for
the provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the Exercise Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the
Exercise Price in effect on the date of such exercise.

     7.   CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrant, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Exercise Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the holder of the Warrant and any
Warrant agent of the Company (appointed pursuant to Section 11 hereof).

     8.   RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF WARRANT. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrant.



     9.   ASSIGNMENT; EXCHANGE OF WARRANT. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a "Transferor") with respect to any
or all of the Shares. On the surrender for exchange of this Warrant, with the
Transferor's endorsement in the form of Exhibit B attached hereto (the
"Transferor Endorsement Form") and together with evidence reasonably
satisfactory to the Company demonstrating compliance with applicable securities
laws, which shall include, without limitation, a legal opinion from the
Transferor's counsel that such transfer is exempt from the registration
requirements of applicable securities laws, the Company at its expense) but with
payment by the Transferor of any applicable transfer taxes) will issue and
deliver to or on the order of the Transferor thereof a new Warrant of like
tenor, in the name of the Transferor and/or the transferee(s) specified in such
Transferor Endorsement Form (each a "Transferee"), calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face or faces of the Warrant so surrendered by the Transferor.

     10.  REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

     11.  REGISTRATION RIGHTS. The Holder of this Warrant has been granted
certain registration rights by the Company. These registration rights are set
forth in a Registration Rights Agreement entered into by the Company and
Purchaser of the Company's Convertible Note (the "Note") at or prior to the
issue date of this Warrant.

     12.  MAXIMUM EXERCISE. The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which, when added to (i) the number of shares of Common Stock otherwise
beneficially owned by the Holder and its affiliates on an exercise date, and
(ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this proviso is being made on
an exercise date, would result in beneficial ownership by the Holder and its
affiliates of more than 4.99% of the outstanding shares of Common Stock of the
Company on such date. For the purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to
aggregate exercises which would result in the issuance of more than 4.99%. The
restriction described in this paragraph may be revoked upon 75 days prior notice
from the Holder to the Company and is automatically null and void upon an Event
of Default under the Note.

     13.  WARRANT AGENT. The Company may, by written notice to the each holder
of the Warrant, appoint an agent for the purpose of issuing Common Stock (or
Other Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.



     14.  TRANSFER ON THE COMPANY'S BOOKS. Until this Warrant is transferred on
the books of the Company, the Company may treat the registered holder hereof as
the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

     15.  NOTICES, ETC. All notices and other communications from the Company to
the Holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such holder or, until any such Holder furnishes to the
Company an address, then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.

     16.  VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may at any time
during the term of this Warrant reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

     17.  MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be governed by and construed in accordance with
the laws of State of New York without regard to principles of conflicts of laws.
Any action brought concerning the transactions contemplated by this Warrant
shall be brought only in the state courts of New York or in the federal courts
located in the state of New York; provided, however, that the Holder may choose
to waive this provision and bring an action outside the state of New York. The
individuals executing this Warrant on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that any provision of this Warrant 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 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 this Warrant.
The headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision. The Company acknowledges that legal
counsel participated in the preparation of this Warrant 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
Warrant to favor any party against the other party.

          IN WITNESS WHEREOF, the Company has executed this Warrant under seal
as of the date first written above.

                                        TRANSGENOMIC, INC.


                                        By:  /s/ Michael J. Draper
                                           -------------------------------------
                                           Name: Michael J. Draper
                                           Title: CFO



Witness:

     /s/ Keith A. Johnson
- ----------------------------------------

EX-10.5

                                                                    Exhibit 10.5

                          REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this "Agreement") is made and
entered into as of December 3, 2003, by and between Transgenomic, Inc., a
Delaware corporation (the "Company"), and Laurus Master Fund, Ltd. (the
"Purchaser").

          This Agreement is made pursuant to the Security Agreement, dated as of
the date hereof, among the Purchaser, the Company (the "Security Agreement"),
and pursuant to the Notes and the Warrants.

          The Company and the Purchaser hereby agree as follows:

     1.   DEFINITIONS. Capitalized terms used and not otherwise defined herein
that are defined in the Security Agreement shall have the meanings given such
terms in the Security Agreement. As used in this Agreement, the following terms
shall have the following meanings:

          "EFFECTIVENESS DATE" means the 105th day following the applicable
Filing Date.

          "EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2(a).

          "FILING DATE" means, with respect to each Registration Statement
required to be filed hereunder, no later than thirty days following the funding
by Purchaser of (1) the Loans on the initial funding date and (2) each
$2,000,000 tranche of Loans thereafter.

          "HOLDER" or "HOLDERS" means the Purchaser or any of its affiliates or
transferees to the extent any of them hold Registrable Securities.

          "INDEMNIFIED PARTY" shall have the meaning set forth in Section 5(c).

          "INDEMNIFYING PARTY" shall have the meaning set forth in Section 5(c).

          "LOSSES" shall have the meaning set forth in Section 5(a).

          "NOTES" has the meaning given to the term Minimum Borrowing Notes as
set forth in the Security Agreement.

          "PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

          "PROSPECTUS" means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the



Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

          "REGISTRABLE SECURITIES" means the shares of Common Stock issued upon
the conversion of each Note and issuable upon exercise of the Warrants.

          "REGISTRATION STATEMENT" means each registration statement required to
be filed hereunder, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.

          "RULE 144" means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

          "RULE 415" means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

          "RULE 424" means Rule 424 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

          "WARRANTS" means the Common Stock purchase warrants issued pursuant to
the Security Agreement.

     2.   REGISTRATION.

          (a)    On or prior to each Filing Date, the Company shall prepare and
file with the Commission a Registration Statement covering the Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415. Each Registration Statement shall be on Form S-3 (except if the Company is
not then eligible to register for resale the Registrable Securities on Form S-3,
in which case such registration shall be on another appropriate form in
accordance herewith). The Company shall cause each Registration Statement to
become effective and remain effective as provided herein. The Company shall use
its reasonable commercial efforts to cause each Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event no later than the Effectiveness Date, and shall
keep each Registration Statement continuously effective under the Securities Act
until the date which is the earlier date of when (i) all Registrable Securities
have been sold or (ii) all Registrable Securities may be sold immediately
without registration under the Securities Act and without volume restrictions
pursuant to Rule 144(k), as determined by the counsel to the Company pursuant to
a written opinion letter to such effect, addressed and acceptable to the
Company's transfer agent and the affected Holders (the "Effectiveness Period").

          (b)    If: (i) any Registration Statement is not filed on or prior to
the applicable Filing Date; (ii) a Registration Statement filed hereunder is not
declared effective by the

                                        2


Commission by the Effectiveness Date; (iii) after a Registration Statement is
filed with and declared effective by the Commission, such Registration Statement
ceases to be effective (by suspension or otherwise) as to all Registrable
Securities to which it is required to relate at any time prior to the expiration
of the Effectiveness Period (without being succeeded immediately by an
additional registration statement filed and declared effective) for a period of
time which shall exceed 30 days in the aggregate per year or more than 20
consecutive calendar days (defined as a period of 365 days commencing on the
date such Registration Statement is declared effective); or (iv) the Common
Stock is not listed or quoted, or is suspended from trading on any Trading
Market for a period of three (3) consecutive Trading Days (provided the Company
shall not have been able to cure such trading suspension within 30 days of the
notice thereof or list the Common Stock on any of the NASD OTC Bulletin Board,
BBX Exchange, NASDAQ SmallCap Market, the Nasdaq National Market, American Stock
Exchange or New York Stock Exchange (the "Trading Market"))(any such failure or
breach being referred to as an "Event," and for purposes of clause (i) or (ii)
the date on which such Event occurs, or for purposes of clause (iii) the date
which such 30 day or 20 consecutive day period (as the case may be) is exceeded,
or for purposes of clause (iv) the date on which such three (3) Trading Day
period is exceeded, being referred to as "Event Date"), then until the
applicable Event is cured, the Company shall pay to each Holder an amount in
cash, as liquidated damages and not as a penalty, equal to 1.0% for each thirty
(30) day period (prorated for partial periods) on a daily basis of the original
principal amount of each applicable Note. Such liquidation damages shall be paid
not less than each thirty (30) days during an Event and within three (3) days
following the date on which such Event has been cured by the Company.

     3.   REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions hereof to effect the registration of the Registrable Securities
under the Act, the Company will, as expeditiously as possible:

          (a)    prepare and file with the SEC a registration statement with
respect to such securities, promptly as possible respond to any comments
received from the SEC and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as herein provided), and promptly provide to
the Purchaser copies of all filings and SEC letters of comment;

          (b)    prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the registration
statement and to keep such registration statement effective until the earlier
of: (i) six months after the latest exercise period of the Warrants; (ii) four
years after the Closing Date, or (iii) the date on which the Purchaser has
disposed of all of the Registrable Securities covered by such registration
statement in accordance with the Purchaser's intended method of disposition set
forth in such registration statement for such period;

          (c)    furnish to the Purchaser such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as the Purchaser reasonably may request to facilitate
the public sale or disposition of the securities covered by such registration
statement;

                                        3


          (d)    use its commercially reasonable efforts to register or qualify
the Purchaser's Registrable Securities covered by such registration statement
under the securities or "blue sky" laws of such jurisdictions as the Purchaser,
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;

          (e)    list the Registrable Securities covered by such registration
statement with any securities exchange on which the Common Stock of the Company
is then listed;

          (f)    immediately notify the Purchaser at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing; and

          (g)    make available for inspection by the Purchaser and any
attorney, accountant or other agent retained by the Purchaser, all publicly
available, non-confidential financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all publicly available, non-confidential
information reasonably requested by the attorney, accountant or agent of the
Purchaser.

     4.   REGISTRATION EXPENSES. All expenses relating to the Company's
compliance with Sections 2 and 3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and expenses
(including reasonable counsel fees) incurred in connection with complying with
state securities or "blue sky" laws, fees of the NASD, transfer taxes, fees of
transfer agents and registrars, fees of, and disbursements incurred by, one
counsel for the Holders, and costs of insurance are called "Registration
Expenses". All selling commissions applicable to the sale of Registrable
Securities, including any fees and disbursements of any special counsel to the
Holders beyond those included in Registration Expenses, are called "Selling
Expenses." The Company shall be responsible for all Registration Expenses.

     5.   INDEMNIFICATION.

          (a)    In the event of a registration of any Registrable Securities
under the Securities Act pursuant to this 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 this Agreement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or

                                        4


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 the
Purchaser or any such person in writing specifically for use in any such
document.

          (b)    In the event of a registration of the Registrable Securities
under the Securities Act pursuant to this 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 which was
furnished in writing by the Purchaser to the Company expressly for use in (and
such information is contained in) the registration statement under which such
Registrable Securities were registered under the Securities Act pursuant to this
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 the Purchaser
specifically for use in any such document. Notwithstanding the provisions of
this paragraph, the Purchaser shall not be required to indemnify any person or
entity in excess of the amount of the aggregate net proceeds received by the
Purchaser of Registrable Securities in connection with any such registration
under the Securities Act.

          (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 5(c) and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 5(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 5(c) for any legal expenses subsequently

                                        5


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 parties 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.

          (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 5(c) 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 5(c) 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 5(c); 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 11(f) of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent misrepresentation.

     6.   REPRESENTATIONS AND WARRANTIES.

          (a)    The Common Stock of the Company is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act and the Company has timely filed all
proxy statements, reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act. The Company has filed (i) its
Annual Report on Form 10-K for the fiscal year ended December 31, 2002 and (ii)
its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2003,
June 30, 2003 and September 30, 2003 (collectively, the "SEC Reports"). The
Company is eligible to file with the Commission a registration statement on Form
S-3 pursuant to Instruction I.B.3 thereof. 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 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. The
financial statements of

                                        6


the Company included in the SEC Reports comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission or other applicable rules and regulations with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed) and fairly present in all material respects the financial condition,
the results of operations and the cash flows of the Company and its
subsidiaries, on a consolidated basis, as of, and for, the periods presented in
each such SEC Report.

          (b)    The Company Common Stock is listed for trading on the Nasdaq
National Market 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 the Nasdaq National Market or that the Common Stock does not meet
all requirements for the continuation of such listing.

          (c)    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 Common Stock
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.

          (d) The Registrable Securities are restricted securities under the
Securities Act 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
Registrable Securities at such time as the Registrable Securities are registered
for public sale or an exemption from registration is available, except as
required by federal or state securities laws.

          (e)    The Company understands the nature of the Registrable
Securities issuable upon the conversion of each Note and the exercise of each
Warrant and recognizes that the Registrable Securities may have a potential
dilutive effect. The Company specifically acknowledges that its obligation to
issue the Registrable Securities 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.

          (f)    Except for agreements made in the ordinary course of business,
there is no agreement that has not been filed with the SEC as an exhibit to a
registration statement or to a form required to be filed by the Company under
the Securities Exchange Act the breach of which could have a material and
adverse effect on the Company and its subsidiaries, or would prohibit or
otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement in any material respect.

                                        7


          (g)    The Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock for the full conversion of each Note
and exercise of each Warrant.

     7.   MISCELLANEOUS.

          (a)    REMEDIES. In the event of a breach by the Company or by a
Holder,of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.

          (b)    NO PIGGYBACK ON REGISTRATIONS. Except as and to the extent
specified in Schedule 6(b) hereto, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include
securities of the Company in any Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right for inclusion of shares in the
Registration Statement to any of its security holders. Except as and to the
extent specified in Schedule 6(b) hereto, the Company has not previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person that has not been fully satisfied.

          (c)    COMPLIANCE. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the Registration Statement.

          (d)    DISCONTINUED DISPOSITION. Each Holder agrees by its acquisition
of such Registrable Securities that, upon receipt of a notice from the Company
of the occurrence of a Discontinuation Event, such Holder will forthwith
discontinue disposition of such Registrable Securities under the applicable
Registration Statement until such Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph. For purposes of this Section 7(d), a "Discontinuation Event" shall
mean when the Commission notifies the Company whether there will be a "review"
of such Registration Statement and whenever the Commission comments in writing
on such Registration Statement (the Company shall provide true and complete
copies thereof and all written responses thereto to each of the Holders); (iii)
any request by the Commission or any other Federal or state governmental
authority for amendments or supplements to such Registration Statement or
Prospectus or for additional information; (iv) the issuance by the Commission of
any stop order suspending the effectiveness of such Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (v) the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any Proceeding for such purpose; and (vi)
the occurrence of any event or passage of time that makes the financial
statements included in such Registration Statement

                                        8


ineligible for inclusion therein or any statement made in such Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any 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.

          (e)    PIGGY-BACK REGISTRATIONS. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any such
Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights and subject to the consent of
any selling stockholder(s) under such registration statement.

          (f)    AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of the then outstanding Registrable Securities. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of certain Holders
and that does not directly or indirectly affect the rights of other Holders may
be given by Holders of at least a majority of the Registrable Securities to
which such waiver or consent relates; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the immediately preceding sentence.

          (g)    NOTICES. Any notice or request hereunder may be given to the
Company or Purchaser at the respective addresses set forth below or as may
hereafter be specified in a notice designated as a change of address under this
Section 7(g). Any notice or request hereunder shall be given by registered or
certified mail, return receipt requested, hand delivery, overnight mail or
telecopy (confirmed by mail). Notices and requests shall be, in the case of
those by hand delivery, deemed to have been given when delivered to any officer
of the party to whom it is addressed, in the case of those by mail or overnight
mail, deemed to have been given when deposited in the mail or with the overnight
mail carrier, and, in the case of a telecopy, when confirmed. The address for
such notices and communications shall be as follows:

          If to the Company:

                   Transgenomic, Inc.
                   12325 Emmet Street

                                        9


                   Omaha, Nebraska 68164
                   Attention: Chief Financial Officer
                   Facsimile: (402) 452-5401

          With a copy to:

                   Kutak Rock LLP
                   1650 Farnam Street
                   Omaha, NE 68102
                   Attention:  Steven Amen
                   Telephone: (402) 346-6000
                   Telecopier: (402) 346-1148


          If to a Purchaser:

                   To the address set forth under
                   such Purchaser name on the
                   signature pages hereto.

          If to any other Person who is then the registered Holder:

                   To the address of such Holder as it
                   appears in the stock transfer books
                   of the Company

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

          (h)    SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Holder may assign their respective rights hereunder in the
manner and to the Persons as permitted under the Notes.

          (i)    EXECUTION AND COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.

          (j)    GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement

                                       10


shall be commenced exclusively in the state and federal courts sitting in the
City of New York, Borough of Manhattan. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, Borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such Proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its reasonable attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.

          (k)    CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

          (l)    SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

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

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
                           SIGNATURE PAGES TO FOLLOW]

                                       11


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

                                        TRANSGENOMIC, INC.


                                        By:  /s/ Michael J. Draper
                                           -------------------------------------
                                           Name: Michael J. Draper
                                           Title: CFO

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
                     SIGNATURE PAGE OF PURCHASER TO FOLLOW]

                                       12


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

                                        LAURUS MASTER FUND, LTD.


                                        By:  /s/ David Grin
                                           -------------------------------------
                                           Name:  David Grin
                                           Title:

                                        Address for Notice:
                                        825 Third Avenue
                                        New York, New York 10022
                                        Attention:  David Grin

                                       13

EX-10.6

                                                                    Exhibit 10.6

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS WARRANT AND THE COMMON STOCK 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 UNDER SAID ACT OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO TRANSGENOMIC, INC. THAT SUCH REGISTRATION
IS NOT REQUIRED.

                              Right to Purchase 45,918 Shares of Common Stock of
                              Transgenomic, Inc.

                          COMMON STOCK PURCHASE WARRANT

Issue Date:  December 3, 2003

          Transgenomic, Inc., a corporation organized under the laws of the
State of Delaware (the "Company"), hereby certifies that, for value received, TN
Capital Equities, Ltd., or assigns (the "Holder", or "TN"), is entitled, subject
to the terms set forth below, to purchase from the Company from and after the
Issue Date of this Warrant and at any time or from time to time before 5:00
p.m., New York time, through five (5) years after such date (the "Expiration
Date"), up to 45,918 fully paid and nonassessable shares of Common Stock (as
hereinafter defined), $.01 par value, of the Company, at the Exercise Price (as
defined below). The number and character of such shares of Common Stock and the
Exercise Price are subject to adjustment as provided herein.

          As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:

          (a)    The term "Company" shall include Transgenomic, Inc. and any
corporation which shall succeed or assume the obligations of Transgenomic, Inc.
hereunder.

          (b)    The term "Common Stock" includes (a) the Company's Common
Stock, par value $.01 per share, and (b) any other securities into which or for
which any of the securities described in (a) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.

          (c)    The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person (corporate
or otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

          (d)    The term "Exercise Price" shall be as follows: $ 2.94.

     2.   EXERCISE OF WARRANT.


          From and after the date hereof through and including the Expiration
Date, the Holder shall be entitled to receive, upon exercise of this Warrant in
whole or in part, by delivery of an original or fax copy of the exercise notice
attached hereto as Exhibit A (the "Exercise Notice"), shares of Common Stock of
the Company.

     3.   PROCEDURE FOR EXERCISE.

          3.1    DELIVERY OF STOCK CERTIFICATES, ETC. ON EXERCISE. The Company
agrees that the shares of Common Stock purchased upon exercise of this Warrant
shall be deemed to be issued to the Holder as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within 3 business days thereafter, the Company at its expense (including
the payment by it of any



applicable issue taxes) will cause to be issued in the name of and delivered to
the Holder, or as such Holder (upon payment by such holder of any applicable
transfer taxes) may direct in compliance with applicable securities laws, a
certificate or certificates for the number of duly and validly issued, fully
paid and nonassessable shares of Common Stock (or Other Securities) to which
such Holder shall be entitled on such exercise, plus, in lieu of any fractional
share to which such holder would otherwise be entitled, cash equal to such
fraction multiplied by the then Fair Market Value of one full share, together
with any other stock or other securities and property (including cash, where
applicable) to which such Holder is entitled upon such exercise pursuant to
Section 1 or otherwise.

          3.2    EXERCISE. Payment may be made either in (i) cash or by
certified or official bank check payable to the order of the Company equal to
the applicable aggregate Exercise Price, (ii) by delivery of the Warrant, Common
Stock and/or Common Stock receivable upon exercise of the Warrant in accordance
with Section (b) below, or (iii) by a combination of any of the foregoing
methods, for the number of Common Shares specified in such form (as such
exercise number shall be adjusted to reflect any adjustment in the total number
of shares of Common Stock issuable to the holder per the terms of this Warrant)
and the Holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully-paid and non-assessable shares of Common Stock
(or Other Securities) determined as provided herein.

          3.3    CASHLESS EXERCISE. This Warrant may also be exercised by
the Holder through a cashless exercise, as described in this Section 3.3. This
Warrant may be exercised, in whole or in part, by (i) the delivery to the
Company of a duly executed Exercise Form specifying the number of Warrant Shares
to be applied to such exercise, and (ii) the surrender to a common carrier for
overnight delivery to the Company, or as soon as practicable following the date
the Holder delivers the Exercise Form to the Company, of this Warrant (or an
indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction). The number of shares of Common Stock to be issued
upon exercise of this Warrant pursuant to this Section 3.3 shall equal the value
of this Warrant (or the portion thereof being canceled) computed as of the date
of delivery of this Warrant to the Company using the following formula:

     X = Y(A-B)A

     where:
          X = the number of shares of Common Stock to be issued to the Holder
          under this Section 3.3;
          Y = the number of Warrant Shares identified in the Exercise Form as
          being applied to the subject exercise;
          A = the Current Market Price on such date; and
          B = the Exercise Price on such date

For purposes of this Section 3.3, the "Current Market Price" per share of Common
Stock on any day shall mean: (i) if the principal trading market for such
securities is a national or regional securities exchange, the closing price on
such exchange on such day; or (ii) if sales prices for shares of Common Stock
are reported by the NASDAQ National Market System or NASDAQ Small Cap Market (or
a similar system then in use), the last reported sales price (regular way) so
reported on such day; or (iii) if neither (i) nor (ii) above are applicable, and
if bid and ask prices for shares of Common Stock are reported in the
over-the-counter market by NASDAQ (or, if not so reported, by the National
Quotation Bureau), the average of the high bid and low ask prices so reported on
such day. Notwithstanding the foregoing, if there is no reported closing price,
last reported sales price, or bid and ask prices, as the case may be, for the
day in question, then the Current Market Price shall be determined as of the
latest date prior to such day for which such closing price, last reported sales
price, or bid and ask prices, as the case may be, are available, unless such
securities have not been traded on an exchange or in the over-the-counter market
for 30 or more days immediately prior to the day in question, in which case the
Current Market Price shall be determined in good faith by, and reflected in a
formal resolution of, the Board of Directors of the Company.

The Company acknowledges and agrees that this Warrant was issued on December 3,
2003 (the "Issuance Date"). Consequently, the Company acknowledges and agrees
that, if the Holder conducts a cashless exercise pursuant to this Section 3.3,
the period during which the Holder held this Warrant may, for purposes of Rule
144 promulgated under the Securities Act of 1933, as amended (the "Act"), be
"tacked" to the period during which the Holder holds the Warrant Shares received
upon such cashless exercise.



     4.   EFFECT OF REORGANIZATION.

          4.1    REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at any time
or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.

          4.2    DISSOLUTION. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrant after the effective date of
such dissolution pursuant to Section 3.1 to a bank or trust company having its
principal office in New York, NY, as trustee for the Holder of the Warrant.

          4.3    CONTINUATION OF TERMS. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 5. In the
event this Warrant does not continue in full force and effect after the
consummation of the transactions described in this Section 4, then only in such
event will the Company's securities and property (including cash, where
applicable) receivable by the holders of the Warrant be delivered to the Trustee
as contemplated by Section 4.2.

     5.   RESERVATION OF STOCK.

     The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of the Warrant, shares of Common Stock (or
Other Securities) from time to time issuable on the exercise of the Warrant.

     6.   EXCHANGE OF WARRANT.

     Subject to compliance with applicable securities laws, this Warrant, and
the rights evidenced hereby, may be transferred by any registered holder hereof
(a "Transferor") with respect to any or all of the Shares. On the surrender for
exchange of this Warrant, with the Transferor's endorsement in the form of
Exhibit B attached hereto (the "Transferor Endorsement Form") and together with
evidence reasonably satisfactory to the Company demonstrating compliance with
applicable securities laws, which shall include, without limitation, a legal
opinion from the Transferor's counsel that such transfer is exempt from the
registration requirements of applicable securities laws, the Company at its
expense) but with payment by the Transferor of any applicable transfer taxes)
will issue and deliver to or on the order of the Transferor thereof a new
Warrant of like tenor, in the name of the Transferor and/or the transferee(s)
specified in such Transferor Endorsement Form (each a "Transferee"), calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant so surrendered by the
Transferor.

     7.   REPLACEMENT OF WARRANT.



     On receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant and, in the case of any such
loss, theft or destruction of this Warrant, on delivery of an indemnity
agreement or security reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of this
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.

     8.   REGISTRATION RIGHTS.

     The Holder of this Warrant has been granted certain registration rights by
the Company. These registration rights are set forth in a Registration Rights
Agreement a copy of which is attached as Exhibit C.

     9.   WARRANT AGENT.

     The Company may, by written notice to the each holder of the Warrant,
appoint an agent for the purpose of issuing Common Stock (or Other Securities)
on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant
pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any
of the foregoing, and thereafter any such issuance, exchange or replacement, as
the case may be, shall be made at such office by such agent.

     10.  TRANSFER ON THE COMPANY'S BOOKS.

     Until this Warrant is transferred on the books of the Company, the Company
may treat the registered holder hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.

     11.  NOTICES.

     All notices and other communications from the Company to the Holder of this
Warrant shall be mailed by first class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company in writing by
such holder or, until any such Holder furnishes to the Company an address, then
to, and at the address of, the last Holder of this Warrant who has so furnished
an address to the Company.

     12.  VOLUNTARY ADJUSTMENT BY COMPANY.

     The Company may at any time during the term of this Warrant reduce the then
current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.

     13.  REPRESENTATIONS AND WARRANTIES OF TN.

     TN hereby represents and warrants to Company as follows:

          (a)    TN has all necessary power and authority under all applicable
provisions of law to execute and deliver this Agreement and the Ancillary
Agreements and to carry out their provisions. All corporate action on TN' part
required for the lawful execution and delivery of this Agreement and the
Ancillary Agreements have been or will be effectively taken prior to the Closing
Date. Upon their execution and delivery, this Agreement and the other Ancillary
Agreements will be valid and binding obligations of TN, enforceable in
accordance with their terms, except (1) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights, and (2) as limited by general
principles of equity that restrict the availability of equitable and legal
remedies.

          (b)    TN understands that the Securities are being offered and sold
pursuant to an exemption from registration contained in the 1933 Act based in
part upon TN's representations contained in this Agreement, including, without
limitation, that TN is an "accredited investor" within the meaning of Regulation
D. TN has had an opportunity to ask questions and receive answers from Company
regarding Company's business, management and financial affairs and the terms and
conditions of the offering and the Securities and to obtain additional



information (to the extent Company possessed such information or could acquire
it without unreasonable effort or expense) necessary to verify any information
furnished to TN or to which TN had access.

          (c)    TN has substantial experience in evaluating and investing in
private placement transactions of securities in companies similar to Company so
that it is capable of evaluating the merits and risks of its investment in
Company and has the capacity to protect its own interests. TN must bear the
economic risk of this investment until the Securities are sold pursuant to (i)
an effective registration statement under the 1933 Act, or (ii) an exemption
from registration is available.

          (d)    TN is acquiring the Securities for its own account and only for
investment purposes, and not as a nominee or agent and not with a view towards
or for resale in connection with their distribution.

          (e)    By reason of its, or of its management's, business and
financial experience, TN has the capacity to evaluate the merits and risks of
its investment in the Securities and to protect its own interests in connection
with the transactions contemplated in this Agreement, and the other Ancillary
Agreements. Further, TN is aware of no publication of any advertisement in
connection with the transactions contemplated in the Agreement or the other
Ancillary Agreements.

          (f)    TN will not make any resale of the Securities under any
Registration Statement (as defined in the Registration Rights Agreement) without
effectively complying with the prospectus delivery requirement under the
Securities Act.

          (g)    TN has no present intention of distributing any Securities or
any arrangement or understanding with any other persons regarding the
distribution of any Securities within the meaning of Section 2(11) of the
Securities Act. TN has no entered into any agreement, understanding or
arrangement with any broker-dealer regarding any resale of the Securities and
will promptly notify Company if it enters into such arrangement.

     14.  MISCELLANEOUS.

     This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. The
individuals executing this Warrant on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that any provision of this Warrant 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 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 this Warrant.
The headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision. The Company acknowledges that legal
counsel participated in the preparation of this Warrant 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
Warrant to favor any party against the other party.



          IN WITNESS WHEREOF, the Company has executed this Warrant under seal
as of the date first written above.

                                       TRANSGENOMIC, INC.


                                       By:    /s/ Michael J. Draper
                                          --------------------------------------
                                           Name:  Michael J. Draper
                                           Title: CFO


Witness:

        /s/ Jerry Pearson
- ---------------------------------------

EX-23.1

                                                                    EXHIBIT 23.1

                          INDEPENDENT AUDITORS' CONSENT

     We consent to the incorporation by reference in this Registration
Statement of Transgenomic, Inc. on Form S-3 of our report dated February 4, 2003
(March 31, 2003 as to the second paragraph of Note Q) (which report expresses an
unqualified opinion and includes an explanatory paragraph relating to the
Company's change in method of accounting for goodwill and other intangible
assets in connection with the adoption of Statement of Financial Accounting
Standards No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS, in 2002 and the
Company's receipt of a commitment letter for a new revolving credit agreement on
March 31, 2003), appearing in the Annual Report on Form 10-K of Transgenomic,
Inc. for the year ended December 31, 2002 and to reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.

/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP

Omaha, Nebraska
December 19, 2003