Sample Business Contracts


Master Loan and Security Agreement - Nanogen Inc. and Transamerica Business Credit Corp.

Loan Forms


                                                               Customer No. 1242

                       MASTER LOAN AND SECURITY AGREEMENT

         THIS AGREEMENT dated as of June 14, 1999, is made by Nanogen, Inc. (the
"Borrower"), a Delaware corporation having its principal place of business and
chief executive office at 10398 Pacific Center Court, San Diego, California,
92121 in favor of Transamerica Business Credit Corporation, a Delaware
corporation (the "Lender"), having its principal office at Riverway II, West
Office Tower, 9399 West Higgins Road, Rosemont, Illinois 60018.

         WHEREAS, the Borrower has requested that the Lender make Loans to it
from time to time; and

         WHEREAS, the Lender has agreed to make such Loans on the terms and
conditions of this Agreement.

         NOW, THEREFORE, in consideration of the promises and to induce the
Lender to extend credit, the Borrower hereby agrees with the Lender as follows:

                  SECTION 1. DEFINITIONS.

         As used herein, the following terms shall have the following meanings,
and shall be equally applicable to both the singular and plural forms of the
terms defined:

AGREEMENT shall mean this Master Loan and Security Agreement together with all
schedules and exhibits hereto, as amended, supplemented, or otherwise modified
from time to time.

APPLICABLE LAW shall mean the laws of the State of Illinois (or any other
jurisdiction whose laws are mandatorily applicable notwithstanding the parties'
choice of Illinois law) or the laws of the United States of America, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.

BUSINESS DAY shall mean any day other than a Saturday, Sunday, or public holiday
or the equivalent for banks in New York City.

CODE shall have the meaning specified in Section 8(d).

COLLATERAL shall have the meaning specified in Section 2.

COLLATERAL ACCESS AGREEMENT shall mean any landlord waiver, mortgagee waiver,
bailee letter, or similar acknowledgement of any warehouseman or processor in
possession, of any Equipment

EFFECTIVE DATE shall mean the date on which all of the conditions specified in
Section 3.3 shall have been satisfied.

EQUIPMENT shall have the meaning specified in Section 2.


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EVENT OF DEFAULT shall mean any event specified in Section 7.

FINANCIAL STATEMENTS shall have the meaning specified in Section 6.1.

GAAP shall mean generally accepted accounting principles in the United States of
America, as in effect from time to time.

LOANS shall mean the loans and financial accommodations made by the Lender to
the Borrower in accordance with the terms of this Agreement and the Notes.

LOAN DOCUMENTS shall mean, collectively, this Agreement, the Notes, and all
other documents, agreements, certificates, instruments, and opinions executed
and delivered in connection herewith and therewith as the same may be modified,
extended, restated, or supplemented from time to time.

MATERIAL ADVERSE CHANGE shall mean, with respect to any Person, a material
adverse change in the business, prospects, operations, results of operations,
assets, liabilities, or condition (financial or otherwise) of such Person taken
as a whole that would have an impact on the Borrower's ability to repay the
Obligations.

MATERIAL ADVERSE EFFECT shall mean, with respect to any Person, a material
adverse effect on the business, prospects, operations, results of operations,
assets, liabilities, or condition (financial or otherwise) of such Person taken
as a whole that would have an impact on the Borrower's ability to repay the
Obligations.

NOTE shall mean each Promissory Note made by the Borrower in favor of the
Lender, as amended, supplemented, or otherwise modified from time to time.

OBLIGATIONS shall mean all indebtedness, obligations, and liabilities of the
Borrower under the Notes and under this Agreement, whether on account of
principal, interest, indemnities, fees (including, without limitation, attorneys
fees, remarketing fees, origination fees, collection fees, and all other
professional fees), costs, expenses, taxes, or otherwise.

PERMITTED LIENS shall mean such of the following as to which no enforcement,
collection, execution, levy, or foreclosure proceeding shall have been
commenced: (a) liens for taxes, assessments, and other governmental charges or
levies or the claims or demands of landlords, carriers, warehousemen, mechanics,
laborers, materialmen, and other like Persons arising by operation of Law in the
ordinary course of business for sums which are not yet due and payable, or liens
which are being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are maintained to the
extent required by GAAP; (b) deposits or pledges to secure the payment of
worker's compensation, unemployment insurance, or other social security benefits
or obligations, public or statutory obligations, surety or appeal bonds, bid or
performance bonds, or other obligations of a like nature incurred in the
ordinary course of business; (c) licenses, restrictions, or covenants for or on
the use of the Equipment which do not materially impair either the use of the
Equipment in the operation of the business of the Borrower or the value of the
Equipment; and (d) attachment or judgment liens that do not constitute an Event
of Default.


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PERSON shall mean any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, entity, party,
or government (including any division, agency, or department thereof), and the
successors, heirs, and assigns of each.

SCHEDULE shall mean each Schedule In the form of Schedule A hereto delivered by
the Borrower to the Lender from time to time.

SOLVENT means, with respect to any Person, that as of the date as to which such
personal solvency is measured:

                  (a)      it has sufficient capital to conduct its business;
                           and

                  (b)      it is able generally to meet its debts as they
                           mature.

TAXES shall have the meaning specified in Section 5.5.

                  SECTION 2. CREATION OF SECURITY INTEREST; COLLATERAL. The
Borrower hereby assigns and grants to the Lender a continuing general, first
priority lien on, and security interest in, all the Borrower's right title, and
interest in and to the collateral described in the next sentence (the
"Collateral") to secure the payment and performance of all the Obligations. The
Collateral consists of all equipment set forth on all the Schedules delivered
from time to time under the terms of this Agreement (the "Equipment"), together
with all present and future additions, parts, accessories, attachments,
substitutions, repairs, improvements, and replacements thereof or thereto, and
any and all proceeds thereof, including, without limitation, proceeds of
insurance and all manuals, blueprints, knowhow, warranties, and records in
connection therewith, all rights against suppliers, warrantors, manufacturers,
sellers, or others in connection therewith, and together with all substitutes
for any of the foregoing. Notwithstanding anything contained above to the
contrary, Lender's security interest in the Collateral shall not include any
inventions or knowhow derived by the Borrower or employees, consultants or
agents of the Borrower from the use of the equipment, provided such knowhow or
inventions do not become a part of the Collateral.

                  SECTION 3. THE CREDIT FACILITY.

                           SECTION 3.1 BORROWINGS. Each Loan shall be in an
amount not less than $75,000, and in no event shall the sum of the aggregate
Loans made exceed $5,000,000.00. The term of each Loan and the payment amount of
each Loan shall be in accordance with each Note executed by Borrower in favor of
Lender. Each Loan shall be made up of 100% of the Equipment value approved by
Lender in its sole discretion and which Equipment will secure all Loans of
Borrower. Notwithstanding anything herein to the contrary, the Lender shall be
obligated to make the initial Loan and each other Loan only after the Lender, in
its sole discretion, determines that the applicable conditions for borrowing
contained in Sections 3.3 and 3.4 are satisfied. The timing and financial scope
of Lender's obligation to make Loans hereunder are limited as set forth in a
commitment letter executed by Lender and Borrower, dated as of March 5, 1999 and
attached hereto as Exhibit A (the "Commitment Letter").

                           SECTION 3.2 APPLICATION OF PROCEEDS. The Borrower
shall not directly or indirectly use any proceeds of the Loans, or cause,
assist, suffer, or permit the use of any




                                      -3-
<PAGE>


proceeds of the Loans, for any purpose other than for the purchase, acquisition,
installation, or upgrading of Equipment including tenant improvements to the
extent permitted in the Commitment Letter and approved by Lender or the
reimbursement of the Borrower for its purchase, acquisition, installation, or
upgrading of Equipment, including tenant improvements to the extent permitted in
the Commitment Letter and approved by Lender.

                           SECTION 3.3 CONDITIONS TO INITIAL LOAN.

                  (a) The obligation of the Lender to make the initial Loan is
subject to the Lender's receipt of the following, each dated the date of the
initial Loan or as of an earlier date acceptable to the Lender, in form and
substance satisfactory to the Lender and its counsel:

                           (i) completed requests for information (Form UCC-11)
                  listing all effective Uniform Commercial Code financing
                  statements naming the Borrower as debtor and all tax lien,
                  judgment, and litigation searches for the Borrower as the
                  Lender shall deem necessary or desirable;

                           (ii) Uniform Commercial Code financing statements
                  (Form UCC-1) duly executed by the Borrower (naming the Lender
                  as secured party and the Borrower as debtor and in form
                  acceptable for filing in all jurisdictions that the Lender
                  deems necessary or desirable to perfect the security interests
                  granted to it hereunder) and, if applicable, termination
                  statements or other releases duly filed in all jurisdictions
                  that the Lender deems necessary or desirable to perfect and
                  protect the priority of the security interests granted to it
                  hereunder in the Equipment related to such initial Loan;

                           (iii) a Note duly executed by the Borrower evidencing
                  the amount of such Loan;

                           (iv) a Collateral Access Agreement duly executed by
                  the lessor or mortgagee, as the case may be, of each premises
                  where the Equipment is located, provided that if such
                  Collateral Access Agreement is obtained prior to the first
                  draw under the loan, then this condition shall be deemed
                  satisfied;

                           (v) certificates of insurance required under Section
                  5.4 of this Agreement together with loss payee endorsements
                  for all such policies naming the Lender as lender loss payee
                  and as an additional insured;

                           (vi) a certificate of the Secretary or an Assistant
                  Secretary of the Borrower ("Secretary's Certificate")
                  certifying (A) that attached to the Secretary's Certificate is
                  a true, complete, and accurate copy of the resolutions of the
                  Board of Directors of the Borrower (or a unanimous consent of
                  directors in lieu thereof) authorizing the execution,
                  delivery, and performance of this Agreement, the other Loan
                  Documents, and the transactions contemplated hereby and
                  thereby, and that such resolutions have not been amended or
                  modified since the date of such certification and are in full
                  force and effect; (B) the incumbency, names, and true
                  signatures of the officers of the Borrower authorized to sign
                  the Loan Documents to which it is a party; (C) that attached
                  to the Secretary's Certificate is a true and


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<PAGE>


                  correct copy of the Articles or Certificate of Incorporation
                  of the Company, as amended, which Articles or Certificate of
                  Incorporation have not been further modified, repealed or
                  rescinded and are in full force and effect; (D) that attached
                  to the Secretary's Certificate of the Borrower is a true and
                  correct copy of the Bylaws, as amended, which Bylaws of the
                  Company have not been further modified repealed or rescinded
                  and are in full force and effect; and (E) that attached to the
                  Secretary's Certificate of the Borrower is a valid Certificate
                  of Good Standing issued by the Secretary of the State of the
                  Borrower's state of incorporation;

                           (vii) the opinion of counsel for the Borrower
                  covering such matters incident to the transactions
                  contemplated by this Agreement as the Lender may reasonably
                  require; and

                           (viii) such other agreements and instruments as the
                  Lender deems necessary in its sole and absolute discretion in
                  connection with the transactions contemplated hereby, provided
                  such additional agreements and instruments do not impose any
                  additional financial covenants on Borrower.

                  (b) There shall be no pending or, to the knowledge of the
Borrower after due inquiry, threatened litigation in writing, proceeding,
inquiry, or other action (i) seeking an injunction or other restraining order,
damages, or other relief with respect to the transactions contemplated by this
Agreement or the other Loan Documents or thereby or (ii) which affects or could
affect the business, prospects, operations, assets, liabilities, or condition
(financial or otherwise) of the Borrower, except in the case of clause (ii),
where such litigation, proceeding, inquiry, or other action could not be
expected to have a Material Adverse Effect in the judgment at of the Lender.

                  (c) The Borrower shall have paid all fees and expenses
required to be paid by it to the Lender as of such date.

                  (d) The security interests in the Equipment related to the
Loans granted in favor of the Lender under this Agreement shall be upon filing
UCC-1 Financing Statements be duly perfected and shall constitute first priority
liens.

                           SECTION 3.4 CONDITIONS PRECEDENT TO EACH LOAN. The
obligation of the Lender to make each Loan is subject to the satisfaction of the
following conditions precedent:

                  (a) the Lender shall have received the documents, agreements,
and instruments set forth in Section 3.3(a)(i) through (v) applicable to such
Loan, each in form and substance satisfactory to the Lender and its counsel and
each dated the date of such Loan or as of an earlier date acceptable to the
Lender;

                  (b) the Lender shall have received a Schedule of the Equipment
related to such Loan, in form and substance satisfactory to the Lender and its
counsel, and the security interests in such Equipment related to such Loan
granted in favor of the Lender under this Agreement shall have been duly
perfected and shall constitute first priority liens;


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<PAGE>


                  (c) all representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct on and as of
the date of such Loan as if then made, other than representations and warranties
that expressly relate solely to an earlier date, in which case they shall have
been materially true and correct as of such earlier date;

                  (d) no Event of Default or event which with the giving of
notice or the passage of time, or both, would constitute an Event of Default
shall have occurred and be continuing or would result from the making of the
requested Loan as of the date of such request; and

                  (e) the Borrower shall be deemed to have hereby reaffirmed and
ratified all security interests, liens, and other encumbrances heretofore
granted by the Borrower to the Lender in connection with its Obligations.

                  SECTION 4. THE BORROWER'S REPRESENTATIONS AND WARRANTIES.

                           SECTION 4.1 GOOD STANDING; QUALIFIED TO DO BUSINESS.
The Borrower (a) is duly organized, validly existing, and in good standing under
the laws of the State of its organization, (b) has the power and authority to
own its properties and assets and to transact the businesses in which it is
presently, or proposes to be, engaged, and (c) is duly qualified and authorized
to do business and is in good standing in every jurisdiction in which the
failure to be so qualified could have a Material Adverse Effect on (i) the
Borrower, (ii) the Borrower's ability to perform its obligations under the Loan
Documents, or (iii) the rights of the Lender hereunder.

                           SECTION 4.2 DUE EXECUTION, ETC. The execution,
delivery, and performance by the Borrower of each of the Loan Documents to which
it is a party are within the powers of the Borrower, do not contravene the
organizational documents, if any, of the Borrower, and do not (a) violate any
law or regulation, or any order or decree of any court or governmental
authority, (b) conflict with or result in a breach of, or constitute a default
under, any material indenture, mortgage, or deed of trust or any material lease,
agreement, or other instrument binding on the Borrower or any of its properties,
or (c) require the consent authorization by, or approval of or notice to or
filing or registration with any governmental authority or other Person. This
Agreement is, and each of the other Loan Documents to which the Borrower is or
will be a party, when delivered hereunder or thereunder, will be, the legal,
valid, and binding obligation of the Borrower enforceable against the Borrower
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by general principles of equity.

                           SECTION 4.3 SOLVENCY; NO LIENS. The Borrower is
Solvent and will be Solvent upon the completion of all transactions contemplated
to occur hereunder (including, without limitation, the Loan to be made on the
Effective Date); the security interests granted herein constitute and shall at
all times constitute the first and only liens on the Collateral other than
Permitted Liens; and the Borrower is, or will be at the time additional
Collateral is acquired by it, the absolute owner of the Collateral with full
right to pledge, sell, consign, transfer, and create a security interest
therein, free and clear of any and all claims or liens in favor of any other
Person other than Permitted Liens.


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<PAGE>


                           SECTION 4.4 NO JUDGMENTS, LITIGATION. Except as shown
on the Schedule of Exceptions attached hereto as Exhibit B; as such schedules
may be amended from time to time, no judgments are outstanding against the
Borrower nor is there now pending or, to the best of the Borrower knowledge
after diligent inquiry, threatened in writing any litigation, contested claim,
or governmental proceeding by or against the Borrower except judgments and
pending or threatened litigation, contested claims, and governmental proceedings
which would not, in the aggregate, have a Material Adverse Effect on the
Borrower.

                           SECTION 4.5 NO DEFAULTS. The Borrower is not in
default or has not received a notice of default under any material contract
lease, or commitment to which it is a party or by which it is bound, except as
set forth in the Schedule of Exceptions. The Borrower knows of no dispute
regarding any contract, lease, or commitment which could have a Material Adverse
Effect on the Borrower.

                           SECTION 4.6 COLLATERAL LOCATIONS. On the date hereof,
each item of the Collateral is located at the place of business specified in the
applicable Schedule, except for relocations to vendors and others as may be
permitted, in advance, by the Lender.

                           SECTION 4.7 NO EVENTS OF DEFAULT. No Event of Default
has occurred and is continuing nor has any event occurred which, with the giving
of notice or the passage of time, or both, would constitute an Event of Default.

                           SECTION 4.8 NO LIMITATION ON LENDER'S RIGHTS. Except
as permitted herein, none of the Collateral is subject to contractual
obligations that may restrict or inhibit the Lender's rights or abilities to
sell or dispose of the Collateral or any part thereof after the occurrence of an
Event of Default.

                           SECTION 4.9 PERFECTION AND PRIORITY OF SECURITY
INTEREST. This Agreement creates a valid and, upon the Borrower's acquisition of
Equipment and completion of all required filings of financing statements,
perfected first priority and exclusive security interest in the Collateral,
securing the payment of all the Obligations, except Permitted Liens.

                           SECTION 4.10 MODEL AND SERIAL NUMBERS. The Schedules
set forth the true and correct serial number of each item of Equipment that
constitutes Collateral.

                           SECTION 4.11 ACCURACY AND COMPLETENESS OF
INFORMATION. All data, reports, and information heretofore, contemporaneously,
or hereafter furnished by or on behalf of the Borrower in writing to the Lender
or for purposes of or in connection with this Agreement or any other Loan
Documents or any transaction contemplated hereby or thereby, are or will be true
and accurate in all material respects on the date as of which such data,
reports, and information are dated or certified and not incomplete by omitting
to state any material fact necessary to make such data, reports, and information
not misleading at such time. There are no facts now known to the Borrower which
individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect and which have not been specified herein, in the Financial
Statements, or in any certificate, opinion, or other written statement
previously furnished by the Borrower to the Lender.

                           SECTION 4.12 PRICE OF EQUIPMENT. The cost of each
item of Equipment does not exceed the fair and usual price for such type of
equipment purchased in like quantity and


                                      -7-
<PAGE>


reflects all discounts, rebates and allowances for the Equipment (including,
without limitation, discounts for advertising, prompt payment, testing, or other
services) given to the Borrower by the manufacturer, supplier, or any other
person.

                  SECTION 5. COVENANTS OF THE BORROWER.

                           SECTION 5.1 EXISTENCE, ETC. The Borrower shall: (a)
maintain a yearly accounting cycle, (b) maintain in full force and effect all
material licenses, bonds, franchises, leases, trademarks, patents, contracts,
and other rights necessary or desirable to the conduct of its business unless
the failure to do so could not reasonably be expected to have a Material Adverse
Effect on the Borrower, (c) continue in, and limit its operations to,
substantially the same general lines of business as those presently conducted by
it and (d) materially comply with all applicable laws and regulations of any
federal, state, or local governmental authority, except for such laws and
regulations the violation of which would not, in the aggregate, have a Material
Adverse Effect on the Borrower.

                           SECTION 5.2 NOTICE TO THE LENDER. As soon as
possible, and in any event within ten days after the Borrower learns of the
following, the Borrower will give written notice to the Lender of (a) any
proceeding instituted or threatened to be instituted by or against the Borrower
in any federal, state, local, or foreign court or before any commission or other
regulatory body (federal, state, local, or foreign) involving a sum, together
with the sum involved in all other similar proceedings, in excess of $150,000 in
the aggregate, (b) any contract that is terminated or amended and which has had
or could reasonably be expected to have a Material Adverse Effect on the
Borrower, (c) the occurrence of any Material Adverse Change with respect to the
Borrower, and (d) the occurrence of any Event of Default or event or condition
which, with notice or lapse of time or both, would constitute an Event of
Default, together with a statement of the action which the Borrower has taken or
proposes to take with respect thereto.

                           SECTION 5.3 MAINTENANCE OF BOOKS AND RECORDS. The
Borrower will maintain books and records pertaining to the Collateral in such
detail, form, and scope as the Lender shall require in its commercially
reasonable judgment. The Borrower agrees that the Lender or its agents may upon
48 hours prior notice, unless there is an Event of Default in which case no
prior notice shall be required enter upon the Borrower's premises during normal
business hours, and at any time upon the occurrence and continuance of an Event
of Default, for the purpose of inspecting the Collateral and any and all records
pertaining thereto. A representative of the Borrower may accompany the Lender
during any such inspection.

                           SECTION 5.4 INSURANCE. The Borrower will maintain
insurance on the Collateral under such policies of insurance, with such
insurance companies, in such amounts, and covering such risks as are at all
times satisfactory to the Lender. All such policies shall be made payable to the
Lender, in case of loss, under a standard noncontributory "lender" or "secured
party" clause and are to contain such other provisions as the Lender may
reasonably require to protect the Lender's interests in the Collateral and to
any payments to be made under such policies. Certificates of insurance policies
are to be delivered to the Lender, premium paid (which may be payable in
installments), with the loss payable endorsement in the Lender's favor, and
shall provide for not less than thirty days' prior written notice to the Lender,
of any cancellation of coverage. The Borrower and Borrower's insurance company
shall not alter in any way the insurance required


                                      -8-
<PAGE>


by Lender, as described herein or in the insurance schedule attached hereto,
without the written consent of Lender. If the Borrower fails to maintain such
insurance, the Lender may arrange: for (at the Borrower's expense and without
any responsibility on the Lender's part for) obtaining the insurance. Unless the
Lender shall otherwise agree with the Borrower in writing, the Lender shall have
the sole right, in the name of the Lender or the Borrower, to the claims under
any insurance policies, to receive and give acquittance for any payments that
may be payable thereunder, and to execute any endorsements, receipts, releases,
assignments, reassignments, or other documents that may be necessary to effect
the collection, compromise, or settlement of any claims under any such insurance
policies, provided Borrower has not made such claims as requested by Lender and
provided Borrower has provided Lender adequate assurances, as determined by
Lender in its sole discretion, that the value of Lender's Collateral has not
been affected.

                           SECTION 5.5 TAXES. The Borrower will pay, when due,
all taxes, assessments, claims, and other charges ("Taxes") lawfully levied or
assessed against the Borrower or the Collateral other than Taxes that are being
diligently contested in good faith by the Borrower by appropriate proceedings
promptly instituted and for which an adequate reserve is being maintained by the
Borrower in accordance with GAAP. If any Taxes remain unpaid after the date
fixed for the payment thereof, or if any lien shall be claimed therefor, then,
without notice to the Borrower, but on the Borrower's behalf, the Lender may pay
such Taxes, and the amount thereof shall be included in the Obligations, except
to the extent such Taxes are being diligently contested in good faith by the
Borrower by appropriate proceedings promptly instituted and for which an
adequate reserve is being maintained by the Borrower in accordance with GAAP.

                           SECTION 5.6 BORROWER TO DEFEND COLLATERAL AGAINST
CLAIMS; FEES ON COLLATERAL. The Borrower will defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest
therein. The Borrower will not permit any notice creating or otherwise relating
to liens on the Collateral or any portion thereof to exist or be on file in any
public office other than Permitted Liens. The Borrower shall promptly pay, when
payable, all transportation, storage, and warehousing charges and license fees,
registration fees, assessments, changes, permit fees, and taxes (municipal,
state, or federal) which may now or hereafter be imposed upon the ownership,
leasing, renting, possession, sale, or use of the Collateral, other than taxes
on or measured by the Lender's income and fees, assessments, charges, and taxes
which are being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are maintained to the
extent required by GAAP.

                           SECTION 5.7 NO CHANGE OF LOCATION, STRUCTURE, OR
IDENTITY. The Borrower will not (a) change the location of its chief executive
office or establish any place of business other than those specified herein or
(b) move or permit the movement of any item of Collateral from the location
specified in the applicable Schedule, except that the Borrower may change its
chief executive office and keep Collateral at other locations within the United
States provided that the Borrower has delivered to the Lender (i) prior written
notice thereof and (ii) duly executed financing statements and other agreements
and instruments (all in form and substance satisfactory to the Lender) necessary
or, in the opinion of the Lender, desirable to perfect and maintain in favor of
the Lender a first priority security interest in the Collateral. Notwithstanding
anything to the contrary in the immediately preceding sentence, the Borrower may
keep any Collateral consisting of motor vehicles or rolling stock at any
location in the United States provided


                                      -9-
<PAGE>


that the Lender's security interest in any such Collateral is conspicuously
marked on the certificate of title thereof and the Borrower has complied with
the provisions of Section 5.9.

                           SECTION 5.8 USE OF COLLATERAL; LICENSES; REPAIR. The
Collateral shall be operated by competent qualified personnel in connection with
the Borrower's business purposes, for the purpose for which the Collateral was
designed and in accordance with applicable operating instructions, laws, and
government regulations, and the Borrower shall use every reasonable precaution
to prevent loss or damage to the Collateral from fire and other hazards. The
Collateral shall not be used or operated for personal, family, or household
purposes. The Borrower shall procure and maintain in effect all orders,
licenses, certificates, permits, approvals, and consents required by federal,
state, or local laws or by any governmental body, agency, or authority in
connection with the delivery, installation, use, and operation of the
Collateral. The Borrower shall keep all of the Equipment in a satisfactory state
of repair and satisfactory operating condition in accordance with industry
standards, and will make all repairs and replacements when and where necessary
and practical. The Borrower will not waste or destroy the Equipment or any part
thereof, and will not be negligent in the care or use thereof. All Equipment
shall not be annexed or affixed to or become put of any realty without the
Lender's prior written consent except that any tenant improvements, which shall
be approved by Lender prior to funding may be annexed or affixed to or become
part of the realty.

                           SECTION 5.9 FURTHER ASSURANCES. The Borrower will,
promptly upon request by the Lender, execute and deliver or use its best efforts
to obtain any document required by the Lender (including, without limitation,
warehouseman or processor disclaimers, mortgagee waiver, landlord disclaimers,
or subordination agreements with respect to the Obligations and the Collateral),
give any notices, execute and file any financing statements, mortgages, or other
documents (all in form and substance satisfactory to the Lender), mark any
chattel paper, deliver any chattel paper or instruments to the Lender, and take
any other actions that are necessary or, in the opinion of the Lender, desirable
to perfect or continue the perfection and the first priority of the Lender's
security interest in the Collateral, to protect the Collateral against the
rights, claims, or interests of any Persons, or to effect the purposes of this
Agreement. The Borrower hereby authorizes the Lender, as Lender shall deem
necessary in its good faith business judgment as necessary to protect its
security interest hereunder, to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of the Borrow or where permitted by law. A
carbon, photographic, or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law. To the extent required under this
Agreement, the Borrower will pay all costs incurred in connection with any of
the foregoing.

                           SECTION 5.10 NO DISPOSITION OF COLLATERAL. The
Borrower will not in any way hypothecate or create or permit to exist any lien,
security interest, charge, or encumbrance on or other interest in any of the
Collateral, except for the lien and security interest granted hereby and
Permitted Liens which are junior to the lien and security interest of the
Lender, and the Borrower will not sell, transfer, assign, pledge, collaterally
assign, exchange, or otherwise dispose of any of the Collateral, except Borrower
may dispose of the Collateral provided (1) it is in the ordinary course of
business; (2) new collateral of at least equal value approved by Lender shall be
substituted for the collateral disposed of by Borrower ("Substituted
Collateral"); and (3) that Borrower executes any and all documents and,
instruments necessary to insure that Lender has a


                                      -10-
<PAGE>


perfected first security interest in the Substituted Collateral. In the event
the Collateral, or any part thereof, is sold, transferred assigned, exchanged,
or otherwise disposed of in violation of these provisions, the security interest
of the Lender shall continue in such Collateral or part thereof notwithstanding
such sale, transfer, assignment, exchange, or other disposition, and the
Borrower will hold the proceeds thereof in a separate account for the benefit of
the Lender. Following such a sale, the Borrower will transfer such proceeds to
the Lender in kind.

                           SECTION 5.11 NO LIMITATION ON LENDER'S RIGHTS. The
Borrower will not enter into any contractual obligations which may restrict or
inhibit the Lender's rights or ability to sell or otherwise dispose of the
Collateral or any part thereof.

                           SECTION 5.12 PROTECTION OF COLLATERAL. Upon notice to
the Borrower (provided that if an Event of Default has occurred and is
continuing the Lender need not give any notice), the Lender shall have the right
at any time to make any payments and do any other acts the Lender may deem
necessary to protect its security interests in the Collateral, including,
without limitation, the rights to satisfy, purchase, contest, or compromise any
encumbrance, charge, or lien which, in the reasonable judgment of the Lender,
appears to be prior to or superior to the security interests granted hereunder,
and appear in, and defend any action or proceeding purporting to affect its
security interests in, or the value of, any of the Collateral. The Borrower
hereby agrees to reimburse the Lender for all payments made and expenses
incurred under this Agreement including fees, expenses, and disbursements of
attorneys and paralegals (including the allocated costs of in-house counsel)
acting for the Lender, including any of the foregoing payments under, or acts
taken to protect its security interests in, any of the Collateral, which amounts
shall be secured under this Agreement, and agrees it shall be bound by any
payment made or act taken by the Lender hereunder absent the Lender's gross
negligence or willful misconduct. The Lender shall have no obligation to make
any of the foregoing payments or perform any of the foregoing acts.

                           SECTION 5.13 DELIVERY OF ITEMS. The Borrower will (a)
promptly (but in no event later than three Business Days) after its receipt
thereof, deliver to the Lender any documents or certificates of title issued
with respect to any property included in the Collateral, and any promissory
notes, letters of credit or instruments related to or otherwise in connection
with any property included in the Collateral, which in any such case come into
the possession of the Borrower, or shall cause the issuer thereof to deliver any
of the same directly to the Lender, in each case with any necessary endorsements
in favor of the Lender and (b) deliver to the Lender by facsimile as soon as
available copies of any and all press releases and other similar communications
issued by the Borrower.

                           SECTION 5.14 SOLVENCY. The Borrower shall be and
remain Solvent at all times.

                           SECTION 5.15 FUNDAMENTAL CHANGES. The Borrower shall
not (a) amend or modify its name, unless the Borrower delivers to the Lender
thirty days prior to any such proposed amendment or modification written notice
of such amendment or modification and within ten days before such amendment or
modification delivers executed Uniform Commercial Code financing statements (in
form and substance satisfactory to the Lender) or (b) merge or consolidate with
any other entity or make any material change in its capital structure (excluding
issuance of new securities for new proceeds), in each case without the Lender's
prior written consent which


                                      -11-
<PAGE>


shall not be unreasonably withheld or delayed or (c) permit a change, which
change results from, a single transaction or series of related transactions, but
specifically excluding (1) sales in the public market over a period of more than
20 days and (2) sale of newly issued securities to investors, in more than 45%
of the ownership of any equity interests of the Borrower on the date hereof or
more than 45% of such interests become subject to any contractual, judicial, or
statutory lien, charge, security interest or encumbrance. In the event that
Lender declines to consent to any transaction described in (b) or (c) of this
Section 5.15 or an Event of Default has occurred pursuant to Section 7 (g), and
Borrower proceeds with such transaction, Borrower shall within five (5) Business
Days from consummation of the transaction, prepay the Notes by paying an amount
equal to the present value of the remaining payments (principal and interest)
due thereunder discounted at 8% simple interest per annum, together with all
interest fees and other amounts payable on the amount so prepaid or in
connection therewith to the date of such prepayment. For purposes of Section 7
below, Borrower shall only be deemed to have failed to observe its Obligations
and been in default under this Section 5.15 if Borrower fails to make such
prepayment within the five (5) Business Day period set forth above.

                           SECTION 5.16 ADDITIONAL REQUIREMENTS. The Borrower
shall take all such further actions and execute all such further documents and
instruments as the Lender may reasonably request to protects its rights under
this Agreement.

                  SECTION 6. FINANCIAL STATEMENTS. Until the payment and
satisfaction in full of all Obligations, the Borrower shall deliver to the
Lender the following financial information:

                           SECTION 6.1 ANNUAL FINANCIAL STATEMENTS. As soon as
available, but not later than 120 days after the end of each fiscal year of the
Borrower and its consolidated subsidiaries, the consolidated balance sheet,
income statement, and statements of cash flows and shareholders equity for the
Borrower and its consolidated subsidiaries (the "Financial Statements") for such
year, audited by independent certified public accountants; and

                           SECTION 6.2 QUARTERLY FINANCIAL STATEMENTS. As soon
as available, but not later than 60 days after the end of each of the first
three fiscal quarters in any fiscal year of the Borrower and its consolidated
subsidiaries, the Financial Statements for such fiscal quarter, together with a
certification duly executed by a responsible officer of the Borrower that such
Financial Statements have been prepared in accordance with GAAP and are fairly
stated in all material respects (subject to normal year-end audit adjustments).

                  SECTION 7. EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an Event of Default hereunder:

                  (a) the Borrower shall fail to pay within two days of notice
of nonpayment any amount required to be paid by the Borrower under or in
connection with any Note and this Agreement,

                  (b) any material representation or warranty made or deemed
made by the Borrower under or in connection with any Loan Document or any
Financial Statement shall prove to have been false or incorrect in any material
respect when made;


                                      -12-
<PAGE>


                  (c) the Borrower shall fail to perform or observe (i) any of
the terms, covenants or agreements contained in Sections 5.4, 5.7, 5.10, 5.14,
or 5.15 hereof or (ii) any other term, covenant, or agreement contained in any
Loan Document (other than the other Events of Default specified in this Section
7) and such failure remains unremedied for the earlier of fifteen days from (A)
the date on which the Lender has given the Borrower written notice of such
failure or (B) the date on which the Borrower knew of such failure;

                  (d) dissolution, liquidation, winding up, or cessation of the
Borrower's business, failure of the Borrower generally to pay its debts in
accordance with Borrower's customary practice, admission in writing by the
Borrower of its inability generally to pay its debts as they mature, or calling
of a meeting of the Borrower's creditors for purposes of compromising any of the
Borrower's debts;

                  (e) the commencement by or against the Borrower of any
bankruptcy, insolvency, arrangement, reorganization, receivership, or similar
proceedings under any federal or state law and, in the case of any such
involuntary proceeding, such proceeding remains undismissed or unstayed for
sixty days following the commencement thereof, or any action by the Borrower is
taken authorizing any such proceedings;

                  (f) an assignment for the benefit of creditors is made by the
Borrower, whether voluntary or involuntary, the appointment of a trustee,
custodian, receiver, or similar official for the Borrower or for any substantial
property of the Borrower, or any action by the Borrower authorizing any such
proceeding;

                  (g) the Borrower shall default in (i) the payment of principal
or interest on any indebtedness in excess of $200,000 (other than the
Obligations) beyond the period of grace, if any, provided in the instrument or
agreement under which such indebtedness was created; or (ii) the observance or
performance of any other agreement or condition relating to any such
indebtedness or contained in any instrument or agreement relating thereto, or
any other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of such
indebtedness to cause, with the giving of notice if required, such indebtedness
to become due prior to its stated maturity and such default affects Borrower's
ability to repay the Obligations to Lender as determined by Lender in its
reasonable business judgment; or. (iii) any loan or other agreement under which
the Borrower has received financing from Transamerica Corporation or any of its
affiliates and provided Borrower does not cure such default described in this
Paragraph 7 (g) as provided in Section 5.15;

                  (h) the Borrower suffers or sustains a Material Adverse
Change;

                  (i) any tax lien, other than a Permitted Lien, is filed of
record against the Borrower and is not bonded or discharged within five Business
Days;

                  (j) any judgment which has had or could reasonably be expected
to have a Material Adverse Effect on the Borrower and such judgment shall not be
stayed, vacated, bonded, or discharged within sixty days;

                  (k) any material covenant, agreement or obligation, as
determined in the sole discretion of the Lender, made by the Borrower and
contained in or evidenced by any of the Loan


                                      -13-
<PAGE>


Documents shall cease to be enforceable, or shall be determined to be
unenforceable, in accordance with its terms; the Borrower shall deny or
disaffirm the Obligations under any of the Loan Documents or any liens granted
in connection therewith; or any liens granted on any of the Collateral in favor
of the Lender shall be determined to be void, voidable, or invalid, or shall not
be given the priority contemplated by this Agreement, provided any such instance
materially affects Lender's security interest or ability to be repaid; or

                  SECTION 8. REMEDIES. If any Event of Default shall have
occurred and be continuing:

                  (a) The Lender may, without prejudice to any of its other
rights under any Loan Document or Applicable Law, declare all Obligations to be
immediately due and payable (except with respect to any Event of Default set
forth in Section 7(f) hereof, in which case all Obligations shall automatically
become immediately due and payable without necessity of any declaration) without
presentment, representation, demand of payment or protest, which are hereby
expressly waived.

                  (b) The Lender after the fifth day following an Event of
Default which has not been cured as provided above in this Section may take
possession of the Collateral and, for that purpose may enter, with the aid and
assistance of any person or persons, any premises where the Collateral or any
part hereof is, or may be placed, and remove the same.

                  (c) The obligation of the Lender, if any, to make additional
Loans or financial accommodations of any kind to the Borrower shall immediately
terminate.

                  (d) The Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein (or in any Loan
Document) or otherwise available to it, all the rights and remedies of a secured
party under the applicable Uniform Commercial Code (the "Code") whether or not
the Code applies to the affected Collateral and also may (i) require the
Borrower to, and the Borrower hereby agrees that it will at its expense and upon
request of the Lender forthwith, assemble all or part of the Collateral as
directed by the Lender and make it available to the Lender at a place to be
designated by the Lender that is reasonably convenient to both parties and (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Lender's
offices or elsewhere, for cash, on credit, or for future delivery, and upon such
other terms as the Lender may deem commercially reasonable. The Borrower agrees
that, to the extent notice of sale shall be required by law, at least ten days
notice to the Borrower of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.

                  (e) All cash proceeds received by the Lender in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Lender, be held by the Lender as
collateral for, or then or at any time thereafter applied in whole or in part by
the Lender against all or any part of the Obligations in such order as the
Lender shall elect. Any


                                      -14-
<PAGE>


surplus of such cash or cash proceeds held by the Lender and remaining after the
full, and final payment of all the Obligations shall be paid over to the
Borrower or to such other Person to which the Lender may be required under
applicable law, or directed by a court of competent jurisdiction, to make
payment of such Surplus.

                  SECTION 9. MISCELLANEOUS PROVISIONS.

                           SECTION 9.1 NOTICES. Except as otherwise provided
herein, all notices, approvals, consents, correspondence, or other
communications required or desired to be given hereunder shall be given in
writing and shall be delivered by overnight courier, hand delivery, or certified
or registered mail postage prepaid, if to the Lender, then to Transamerica
Technology Finance Division, 76 Batterson Park Road, Farmington, Connecticut
06032, Attention: Assistant Vice President Lease Administration, with a copy to
the Lender at Riverway II, West Office Tower, 9399 West Higgins Road, Rosemont,
Illinois 60018, Attention: Legal Department, and if to the Borrower, then to
Nanogen, Inc., 10398 Pacific Center Court, San Diego, California 92121,
Attention: Chief Financial Officer and General Counsel and a copy to Pillsbury
Madison & Sutro LLP, 11975 El Camino Real, Suite 200, San Diego, CA 92130-2593,
Attention: Eric A. Kremer, Esq. or such other address as shall be designated by
the Borrower or the Lender to the other party in accordance herewith. All such
notices and correspondence shall be effective when received.

                           SECTION 9.2 HEADINGS. The headings in the Agreement
are for purposes of reference only and shall not affect the meaning or
construction of any provision of this Agreement.

                           SECTION 9.3 ASSIGNMENTS. The Borrower shall not have
the right to assign any Note or this Agreement or any interest therein unless
the Lender shall have given the Borrower prior written consent and the Borrower
and its assignee shall have delivered assignment documentation in form and
substance satisfactory to the Lender in its sole discretion. The Lender may
assign its rights and delegate its obligations under any Note or this Agreement.

                           SECTION 9.4 AMENDMENTS, WAIVERS, AND CONSENTS. Any
amendment or waiver of any provision of this Agreement and any consent to any
departure by the Borrower from any provision of this Agreement shall be
effective only by a writing signed by the Lender and shall bind and benefit the
Borrower and the Lender and their respective successors and assigns, subject, in
the case of the Borrower, to the first sentence of Section 9.3. Any amendment of
any provision of this Agreement shall be effective only be a writing signed by;
the Lender and Borrower.

                           SECTION 9.5 INTERPRETATION OF AGREEMENT. Time is of
the essence in each provision of this Agreement of which time is an element. All
terms not defined herein or in a Note shall have the meaning set forth in the
applicable Code, except where the context otherwise requires. To the extent a
term or provision of this Agreement conflicts with any Note, or any term or
provision thereof, and is not dealt with herein with more specificity, this
Agreement shall control with respect to the subject matter of such term or
provision. Acceptance of or acquiescence in a course of performance rendered
under this Agreement shall not be relevant in determining the meaning of this
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.


                                      -15-
<PAGE>


                           SECTION 9.6 CONTINUING SECURITY INTEREST. This
Agreement shall, create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until the indefeasible payment in full
of the Obligations, (ii) be binding upon the Borrower and its successors and
assigns and (iii) inure, together with the rights and remedies of the Lender
hereunder, to the benefit of the Lender and its successors, transferees, and
assigns.

                           SECTION 9.7 REINSTATEMENT. To the extent permitted by
law, this Agreement and the rights and powers granted to the Lender hereunder
and under the Loan Documents shall continue to be effective or be reinstated if
at any time any amount received by the Lender in respect of the Obligations is
rescinded or must otherwise be restored or returned by the Lender upon the
insolvency, bankruptcy, dissolution, liquidation, or reorganization of the
Borrower or upon the appointment of any receiver, intervenor, conservator,
trustee, or similar official for the Borrower or any substantial part of its
assets, or otherwise, all as though such payments had not been made.

                           SECTION 9.8 SURVIVAL OF PROVISIONS. All
representations, warranties, and covenants of the Borrower contained herein
shall survive the execution and delivery of this Agreement and shall terminate
only upon the full and final payment and performance by the Borrower of the
Obligations secured hereby.

                           SECTION 9.9 INDEMNIFICATION. The Borrower agrees to
indemnify and hold harmless the Lender and its directors, officers, agents,
employees, and counsel from and against any and all costs, expenses, claims, or
liability incurred by the Lender or such Person hereunder and under any other
Loan Document or in connection herewith or therewith, unless such claim or
liability shall be due to willful misconduct or gross negligence on the part of
the Lender or such Person.

                           SECTION 9.10 COUNTERPARTS; TELECOPIED SIGNATURES.
This Agreement may be executed in counterparts, each of which when so executed
and delivered shall be an original, but both of which shall together constitute
one and the same instrument. This Agreement and each of the other Loan Documents
and any notices given in connection herewith or therewith may be executed and
delivered by telecopier or other facsimile transmission all with the same form
and effect as if the same was a fully executed and delivered original manual
counterpart,

                           SECTION 9.11 SEVERABILITY. In case any provision in
or obligation under this Agreement or any Note or any other Loan Document shall
be invalid, illegal, or unenforceable in any jurisdiction, the validity,
legality, and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

                           SECTION 9.12 DELAYS; PARTIAL EXERCISE OF REMEDIES. No
delay or omission of the Lender to exercise any right or remedy hereunder,
whether before or after the happening of any Event of Default, shall impair any
such right or shall operate as a waiver thereof or as a waiver of any such Event
of Default. No single or partial exercise by the Lender of any right or remedy
shall preclude any other or further exercise thereof, or preclude any other
right or remedy.


                                      -16-
<PAGE>


                           SECTION 9.13 ENTIRE AGREEMENT. The Borrower and the
Lender agree that this Agreement, the Schedule hereto, and the Commitment Letter
are the complete and exclusive statement and agreement between the parties with
respect to the subject matter hereof, superseding all proposals and prior
agreements, oral or written, and all other communications between the parties
with respect to the subject matter hereof. Should there exist any inconsistency
between the terms of the Commitment Letter and this Agreement, the terms of this
Agreement shall prevail.

                           SECTION 9.14 SETOFF. In addition to and not in
limitation of all rights of offset that the Lender may have under Applicable
Law, and whether or not the Lender has made any demand or the Obligations of the
Borrower have matured, the Lender shall have the right to appropriate and apply
to the payment of the Obligations or the Borrower all, deposits and other
obligations then or thereafter owing by the Lender to or for the credit of the
account of the Borrower.

                           SECTION 9.15 WAIVER OF JURY TRIAL. THE BORROWER AND
THE LENDER IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

                           SECTION 9.16 GOVERNING LAW. THE VALIDITY,
INTERPRETATION, AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN, ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

                           SECTION 9.17 VENUE; SERVICE OF PROCESS. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITUATED IN COOK COUNTY,
OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER. HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY WAIVES, IN
CONNECTION WITH ANY SUCH ACTION OR PROCEEDING, (a) ANY OBJECTION, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND (b) THE RIGHT
TO INTERPOSE ANY NONCOMPULSORY SETOFF, COUNTERCLAIM, OR CROSSCLAIM. THE BORROWER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT THE ADDRESS
FOR IT SPECIFIED IN SECTION 9.1 HEREOF. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER


                                      -17-
<PAGE>


JURISDICTION, SUBJECT IN EACH INSTANCE TO THE PROVISIONS HEREOF WITH RESPECT TO
RIGHTS AND REMEDIES.

                           SECTION 9.18 The Lender agrees to promptly execute
and file such financing statement terminations and/or releases as may be
necessary upon satisfaction of the Obligations and as to any Collateral disposed
of by the Borrower as described in Section 5.10.

         IN WITNESS WHEREOF, the undersigned Borrower has caused this Agreement
to be duly executed and delivered by its proper and duly authorized officer as
of the date first set forth above.

                                        NANOGEN, INC.


                                        By: /s/ Daniel Burgess
                                            ------------------------------------
                                                Name:    Daniel Burgess
                                                Title:   Vice President, Finance
                                                         Chief Financial Officer
                                                Federal Tax ID:  33-0489621



Accepted as of the 14 day
of June 1999


By:  /s/ Gary P. Moro
   ---------------------------------
         Name:  Gary P. Moro
         Title: Vice President




                                      -18-
<PAGE>


March 5, 1999


Mr. Dan Burgess
Chief Financial Officer
Nanogen, Inc.
10398 Pacific Center Court
San Diego, California 92121

Dean Dan:

Transamerica Business Credit Corporation - Technology Finance Division
("Lender") is pleased to offer financing for the Equipment described in this
letter to Nanogen, Inc. ("Borrower"). This Commitment supersedes all prior
correspondence, proposals, and oral or other communications relating to
financing arrangements between Borrower and lender, and is subject to the terms
and conditions set forth below.

The outline of this offer is as follows:

LENDER:                    Transamerica Business Credit Corporation - Technology
                           Finance Division and/or its affiliates, successOrs or
                           assigns.

BORROWER:                  Nanogen, Inc.

EQUIPMENT COST:            Not to exceed $5,000,000 in the aggregate.

EQUIPMENT:                 Scientific laboratory and test equipment, computer
                           equipment, and furniture. Up to $1,000,000 may be
                           used to finance tenant improvements. All Equipment is
                           subject to approval by Lender prior to funding.

COLLATERAL:                Lender shall receive a perfected first priority
                           security interest in the Equipment described above,
                           including, without limitation, all additions,
                           improvements, repairs, appurtenances, accessions,
                           substitutions and attachments, and all cash and
                           non-cash proceeds (including insurance proceeds) of
                           the foregoing (the "Collateral").

LOCATION OF COLLATERAL:    San Diego, California

EXPECTED FUNDING DATE:     Through December 31, 1999.

LOAN TERM:                 Each Loan Term will commence upon delivery of the
                           equipment or upon each delivery of items of equipment
                           having an aggregate cost of not less than $75,000,
                           and will continue through 60 months from the first
                           day of the month next following or coincident with
                           commencement of that Loan Term.


                                      -1-
<PAGE>


PAYMENT TERMS:             For 60 Month Equipment, Monthly Payments equal to
                           2.06864% of original principal amount of each Loan
                           will be payable monthly in advance. The first Monthly
                           Payment will be due and payable on or before
                           commencement of each Loan Term.

BALLOON PAYMENT:           At the end of each Loan Term, the Borrower will be
                           obligated to make one final Balloon Payment equal to
                           5% of the original principal amount of each Loan,
                           plus any other amounts then due and owing to Lender.

ADJUSTMENT TO
PAYMENT TERMS:             Lender shall adjust the rates set forth above as of
                           the date each Loan Term commences commensurate to the
                           change in the weekly average of the interest rates of
                           five-year U.S. Treasury Securities (as published in
                           the Wall Street Journal) from the week ending
                           December 25, 1998 to the week preceding the
                           commencement of that Loan Term. As of the date each
                           Loan Term commences, the Monthly Payment will be
                           fixed for that entire Loan Term. A schedule of the
                           actual Monthly Payments will be provided by the
                           Lender following commencement of each Loan Term.

INTERIM PAYMENT:           An Interim Payment will accrue from the date each
                           Loan Term commences until the next following first
                           day of a month (unless the Loan Term commences on the
                           first day of a month). The Interim Payment will be
                           interest only calculated based on the interest rate
                           applicable for the respective note as determined by
                           the interest calculated above.

INSURANCE:                 Prior to any delivery of equipment, the Borrower will
                           furnish a insurance certificate acceptable to the
                           Lender covering the Collateral including primary, all
                           risk (excluding flood and earthquake coverage),
                           physical damage, property damage and bodily injury
                           with appropriate loss payee and additional insured
                           endorsements in favor of the Lender.

CONDITIONS PRECEDENT
TO LENDING:                Each Loan will be subject to the following:
                           1.      No material adverse change in the
                                   financial condition, operations or
                                   prospects of the Borrower prior to
                                   funding. The Lender reserves the
                                   right to rescind any unused portion
                                   of its commitment in the event of a
                                   material adverse change in the
                                   financial condition, operation or
                                   prospects of the Borrower.


                                      -2-
<PAGE>


                           2.      Completion of the documentation and
                                   final terms of the proposed
                                   financing satisfactory to Lender and
                                   Lender's counsel.

                           3.      Results of all due diligence,
                                   including lien, judgment and tax
                                   search and other matters Lender may
                                   request shall be satisfactory to
                                   Lender and Lender's counsel.

                           4.      Receipt of Lender of duly executed
                                   loan documentation in form and
                                   substance satisfactory to lender and
                                   its counsel.

                           5.      Lender shall receive a valid and
                                   perfected first priority lien and
                                   security interest in the Equipment
                                   and lender shall have received
                                   satisfactory evidence that there are
                                   no liens on the Equipment except as
                                   expressly permitted herein.

ADDITIONAL COVENANTS:      There will be no actual or threatened conflict with,
                           or material violation of, any regulatory statute,
                           standard or rule relating to the Borrower, its
                           present or future operations, or the Equipment.

                           Borrower will be required to provide quarterly
                           financial information. All information supplied by
                           the Borrower will be correct and will not omit any
                           statement necessary to make the information supplied
                           not be misleading. There will be no material breach
                           of the representations and warranties of the Borrower
                           in the Loan.

EXPENSES:                  All costs and expenses incurred by the Lender in
                           connection with the underwriting and closing the
                           Loans will be paid by the Borrower whether or not any
                           Loans are consummated and funds are advanced by the
                           Lender. Such expenses shall be limited to $5,000
                           without the consent of the Borrower.

LAW:                       This letter and the proposed Loan are intended to be
                           governed by and construed in accordance with Illinois
                           law without regard to its conflict of law provisions.

INDEMNITY:                 Borrower agrees to indemnify and to hold harmless
                           Lender, and its officers, directors and employees
                           against all claims, damages, liabilities and expenses
                           which may be incurred by or asserted against any such
                           person in connection with or arising out of this
                           letter and the transactions contemplated hereby,
                           other than claims, damages, liability, and expense
                           resulting from such person's gross negligence or
                           willful misconduct.

CONFIDENTIALITY:           This letter is delivered to you with the
                           understanding that neither it nor its substance shall
                           be disclosed publicly or privately to any third
                           person except those who are in a confidential
                           relationship to


                                      -3-
<PAGE>


                           you (such as your legal counsel and accountants), or
                           where the same is required by law and then only on
                           the basis that it not be further disclosed, which
                           conditions Borrower and its agents agree to be bound
                           by upon acceptance of this letter.

                           Without limiting the generality of the foregoing,
                           none of such persons shall use or refer to lender or
                           to any affiliate name in any disclosures made in
                           connection with any of the transactions without
                           Lender's prior written consent.

                           Upon completion of the initial takedown by Borrower,
                           the Borrower will no longer be required to obtain
                           Lender's prior written consent to disclose the
                           transaction contemplated hereby. In addition, the
                           Borrower agrees to provide camera ready artwork of
                           typestyles and logos of the Borrower for use in
                           promotional material by the Lender.

CONDITIONS OF ACCEPTANCE:  This Commitment Letter is intended to be a summary of
                           the most important elements of the agreement to enter
                           into a loan transaction with Borrower, and it is
                           subject to all requirements and conditions contained
                           in Loan documentation proposed by Lender or its
                           counsel in the course of closing the Loans described
                           herein. Not every provision that imposes duties,
                           obligations, burdens, or limitations on Borrower is
                           contained herein, but shall be contained in the final
                           Loan documentation satisfactory to Lender and its
                           counsel.

                           EACH OF THE PARTIES HERETO IRREVOCABLY AND
                           UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
                           ANY SUIT, ACTION, PROCEEDING OR COUNTERCLAIM ARISING
                           OUT OF OR RELATED TO THIS LETTER OR THE TRANSACTION
                           DESCRIBED IN THIS LETTER.

APPLICATION FEE:           The $20,000 Application Fee previously paid will be
                           first applied to the reasonable costs and expenses of
                           the Lender in connection with the transaction (capped
                           at $5,000), and any remainder shall be applied pro
                           rata (based on the amount of each funding to the
                           total amount of this commitment) to the second
                           month's payment due under each Loan.

COMMITMENT EXPIRATION:     This commitment shall expire on March 10, 1999 unless
                           prior thereto either extended in writing by the
                           Lender or accepted as provided below by the Borrower.



                                      -4-
<PAGE>


Should you have any questions, please call me. If you wish to accept this
Commitment, please so indicate by signing and returning the enclosed duplicate
copy of this letter to me by March 10, 1999.

                                              Yours truly,

                                              TRANSAMERICA BUSINESS CREDIT
                                              CORP  - TECHNOLOGY FINANCE
                                              DIVISION



                                              By   /s/ Robert D. Pomeroy, Jr.
                                                 ------------------------------
                                                       Robert D. Pomeroy, Jr.
                                                       Executive Vice President

Accepted this 9th the day of March, 1999

NANOGEN, INC.



By   /s/ Daniel Burgess
   ------------------------------
Name:    Daniel Burgess
Title    Vice President, Finance




                                      -5-
<PAGE>


                                    EXHIBIT B

                             SCHEDULE OF EXCEPTIONS


         This Schedule of exceptions (this "Schedule") is being delivered to
Transamerica Business Credit Corporation, a Delaware corporation ("Lender"), by
Nanogen, Inc., a Delaware corporation ("Borrower"), pursuant to the terms of
that certain Master Loan and Security Agreement dated June 14, 1999 between
Lender and Borrower (the "Agreement") (to which this Schedule is attached as
EXHIBIT "B").

         Terms with initial letters capitalized and not otherwise defined herein
have their respective meanings as set forth in the Agreement.

         The section numbers in this Schedule correspond to the section numbers
in the Agreement; however, any information disclosed herein under any section
number shall be deemed to be disclosed and incorporated into any other section
number under the Agreement where such disclosure would be appropriate.

         The disclosure of any matter or document in this Schedule shall not
imply any representation, warranty or undertaking not expressly given in the
Agreement nor shall such disclosure be taken as extending the scope of any
representation, warranty or undertaking set forth in the Agreement.

SECTION 4.4

         Borrower is in a dispute with its landlord, Killroy Realty Corporation
("Landlord"), involving certain repairs to Borrower's leased premises. Borrower
has asserted a claim against Landlord that Landlord is responsible for the cost
of certain repairs. No action has been filed by Borrower in this matter, and
Borrower and Landlord are currently discussing a settlement of the dispute.
However, if a settlement is not reached, this dispute might result in
litigation.

         Borrower has received letters from the owners of patents suggesting
that Borrower consider entering into license agreements. Borrower has not
received any correspondence from any such owner expressly stating that Borrower
is violating any valid patent rights.


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