TRANSGENOMIC INC
LETTER AGREEMENT DATED SEPTEMBER 22, 2005
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<TYPE>EX-10.35
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<DESCRIPTION>LETTER AGREEMENT DATED SEPTEMBER 22, 2005
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<TITLE>Letter Agreement dated September 22, 2005</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 10.35 </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">September&nbsp;22, 2005 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Laurus Master Fund, Ltd. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">c/o Laurus Capital Management, L.L.C. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">825 Third Avenue, 14th Floor </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">New York, NY 10022 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Attention: Mr.&nbsp;Scott Bluestein </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Dear Scott: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">This Letter will serve as an agreement between
Transgenomic, Inc. (&#147;TBIO&#148;) and Laurus Master Fund, Ltd. (&#147;Laurus&#148;) with respect to the following matters relating to: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(i) that certain Security Agreement, dated December&nbsp;3, 2003 as amended, by and between TBIO and Laurus and the Secured Revolving Note and Secured Convertible Minimum Borrowing Notes issued by TBIO to Laurus to
evidence borrowing thereunder (the &#147;Revolving Loan&#148;); and </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) that certain Secured Convertible Term Note, dated
February&nbsp;19, 2004, between TBIO and Laurus (the &#147;Term Loan&#148;). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">In contemplation of the proposed issuance of additional
shares of Common Stock by TBIO pursuant to that certain Securities Purchase Agreement, dated September&nbsp;22, 2005, between TBIO and certain purchasers of its Common Stock (the &#147;Purchase Agreement&#148;) and in consideration of the mutual
promises and agreements made herein, TBIO and Laurus hereby agree, subject in each case to no Event of Default having occurred or continuing at any time during the term hereof, as follows: </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(a) Laurus agrees that it will not exercise any right to convert indebtedness under the Revolving Loan or the Term Loan (together the &#147;Loans&#148;)
into Common Stock of TBIO at any time from the date hereof until the Closing (as defined in the Purchase Agreement). At the time of the Closing, Laurus will have the right to convert not more than $1,000,000 of indebtedness then outstanding under
the Loans into Common Stock of TBIO at a conversion price of $1.00 per share; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(b) To the full extent such consent may be required by the
terms of either of the Loans, Laurus hereby grants its consent to the sale of Common Stock and associated Warrants pursuant to the terms of the Purchase Agreement; </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(c) TBIO shall provide three (3)&nbsp;business days prior notice to Laurus of the date upon which the
Closing will occur. Contemporaneously with the Closing, TBIO will repay all outstanding principal and accrued regular interest on the Loans, less any amount Laurus elects to convert into Common Stock at the Closing pursuant to paragraph
(a)&nbsp;above. In addition, TBIO will pay Laurus prepayment penalties in accordance with the terms of the Loans which the parties acknowledge and agree equal $323,750. Laurus agrees that no other fees, penalties, default interest, liquidated
damages or payments of any other nature that may be due under the terms of the Loans will be payable by TBIO in connection with such repayment of the Loans and that TBIO is hereby released from any liability with respect thereto. Laurus agrees to
comply with all provisions of the Loans relating to the release of security interests and liens held by it with respect to the assets of TBIO, including termination filings for financing statements file by it under state UCCs; </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(d) In consideration for the foregoing agreements and concessions made by Laurus, TBIO shall pay Laurus an additional fee equal to $500,000
contemporaneously with the Closing; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(e) TBIO agrees to register any shares of Common Stock issued to Laurus upon conversion of
indebtedness under the Loans, including shares of Common Stock and warrants issued to Laurus prior to the date of this Agreement, for resale under the Securities Act of 1933, as amended, on the same terms and conditions as it is required to register
shares of Common Stock issued at the Closing pursuant to the Purchase Agreement or any agreement referred to or executed and delivered in connection with the Purchase Agreement; and </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(f) Laurus hereby acknowledges that the occurrence of the Closing is subject to certain conditions precedent set forth in the Purchase Agreement,
including but not limited to the receipt of shareholder approval. TBIO agrees that it will use commercially reasonable efforts to complete all conditions precedent to the Closing. In the event that the Closing has not occurred within 75 days from
the date hereof, this Agreement shall be deemed null and void and of no further force or effect. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">This letter may not be amended or waived
except by an instrument in writing signed by TBIO and Laurus. This letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an
executed signature page of this letter by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof or thereof, as the case may be. This letter shall be governed by, and construed in accordance with, the laws of
the State of New York. This letter sets forth the entire agreement between the parties hereto as to the matters set forth herein and supersede all prior communications, written or oral, with respect to the matters herein. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">[Signatures are on following page] </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">If the foregoing correctly sets forth our Agreement, please have two copies of this Agreement
countersigned by a duly authorized officer of Laurus as indicated below and return one original copy to me. Thank you for your cooperating in connection with this matter. </FONT></P> <P
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<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">TRANSGENOMIC, INC.</FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By</FONT></TD>
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<TD VALIGN="bottom"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Michael A. Summers</FONT></P></TD></TR>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Michael A. Summers</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Chief Financial Officer</FONT></TD></TR>
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<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">ACCEPTED AND AGREED TO AS OF THE DATE FIRST SET FORTH ABOVE</FONT></TD></TR>
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<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">LAURUS MASTER FUND, LTD.</FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Name:</FONT></TD>
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