AGREEMENT REGARDING PREFERRED STOCK

This Agreement Regarding Preferred Stock is made and entered into as of November 8, 2011, by and among Third Security Senior Staff 2008 LLC, a Virginia limited liability company, Third Security Staff 2010 LLC, a Virginia limited liability company, and Third Security Incentive 2010 LLC, a Virginia limited liability company (collectively the “Holders” and each individually a “Holder”), and Transgenomic, Inc., a Delaware corporation (the “Company”).

WHEREAS, the Company and the Holders previously entered into that certain Series A Convertible Preferred Stock Purchase Agreement dated as of December 29, 2010 (the “Purchase Agreement”) pursuant to which the Holders purchased 2,586,205 shares of Series A Convertible Preferred Stock of the Company (the “Series A Preferred”) and received warrants (“Warrants”) to purchase an aggregate of 1,293,102 shares of Series A Preferred;

WHEREAS, in connection with entering into the Purchase Agreement, the Holders and the Company entered into a Registration Rights Agreement, dated December 29, 2010 (the “Registration Rights Agreement”), pursuant to which the Company agreed to provide certain registration rights to the Holders with respect to the securities issuable upon conversion of the Series A Preferred, including any Series A Preferred issued in connection with the exercise of any Warrants;

WHEREAS, the Board of Directors of the Company has adopted Resolutions setting forth (i) a proposed amendment of the Certificate of Incorporation of the Company, attached hereto as Exhibit A, changing the Certificate of Designation of the Series A Preferred by deleting in its entirety: (a) Section 4(e)(v) thereof captioned: Adjustment of Conversion Rate after a “Diluting Issue” and (b) Section 5 thereof captioned: Optional Redemption, declaring the advisability of the amendment, and directing that the proposed Amendment be considered at the next annual meeting of the stockholders of the Company (the “Certificate Amendment”); and (ii) a proposed Amendment to the Registration Rights Agreement, attached hereto as Exhibit B, to amend the definition of “Registrable Securities” to include the shares of Common Stock issued to the Holders in connection with the transaction contemplated hereby (the “Rights Amendment,” and, together with the Certificate Amendment, the “Amendments”);

2.             Issuance of Common Stock to Holders.  Promptly upon the full execution of this Agreement, and in consideration for the waiver of certain rights by the Holders pursuant to paragraph 4 below, Company shall issue to each Holder, in proportion to their respective ownership of the Series A Preferred, the number of shares of Common Stock determined by dividing $300,000 by the last trading price for the Common Stock as of the date of this Agreement.  In the event such calculation results in a fractional share to be issued to any Holder, such fractional share shall be rounded up to the next whole share.

3.           Approval of Amendments and Voting Agreement.  The Company and each Holder consents to and approves the Amendments, subject to any requisite stockholder approval.  The Company agrees to recommend to its stockholders the approval of the Certificate Amendment and to submit such proposal to its stockholders at its next Annual Meeting of Stockholders, which the Company agrees it will hold no later than May 31, 2012.  Each Holder agrees to vote the shares of Series A Preferred, including the Warrant Shares, if any, and Common Stock owned of record by such Holder in favor of the Certificate Amendment at the Annual Meeting. In addition, each Holder agrees not to transfer, prior to the Annual Meeting, any of the Series A Preferred, Warrant Shares or Warrants owned by such Holder unless the Transferee agrees to and assumes the obligations of such Holder under this Agreement as they relate to the Series A Preferred, Warrant Shares and Warrants held by or transferred or issued to such Transferee or becomes a Holder as provided in Section 11 of this Agreement.