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                                                                    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
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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.

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          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

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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

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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;

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                       (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

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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.

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          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

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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.]

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          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
----------------------------------------

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