Exhibit 10.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated
February 19, 2007 is made by and between NANOGEN, INC., a Delaware corporation
(hereinafter the “Company”), and Graham Lidgard (hereinafter “Executive”) and
shall, except as otherwise provided herein, be effective as of January 1, 2007
(the “Effective Date”).

WHEREAS, the Executive is currently a party to an employment agreement with the
Company dated January 24, 2003 (the “Prior Agreement”);

WHEREAS, the Company desires to continue the Executive’s employment with the
Company, and the Executive is willing to continue in such employment status; and

WHEREAS, the Company and the Executive desire to amend and restate the terms and
conditions of the Prior Agreement and continue Executive’s employment with the
Company upon the amended and restated terms and conditions of this Agreement.

NOW, THEREFORE, the Company and Executive, in consideration of the mutual
promises set forth herein, hereby agree as follows:

ARTICLE I

TERM OF AGREEMENT

Section 1.01 Commencement Date. The terms of this Agreement shall govern
Executive’s employment with the Company for the period commencing on the
Effective Date and terminating on the date this Agreement expires in accordance
with its terms. This Agreement shall expire upon the expiration of the
three-(3) year period measured from the Effective Date, unless terminated
earlier pursuant to Article VI or renewed for an additional period pursuant to
Section 1.02 below.

Section 1.02 Renewal. The term of this Agreement shall be automatically renewed
for successive one (1) year periods, beginning with the expiration of the
initial three (3)-year period specified in Section 1.01 above, unless either
party delivers written notice of non-renewal to the other at least ninety
(90) days prior to the next scheduled expiration date of this Agreement.

Section 1.03 Non-Renewal. If notice of non-renewal is given, the term of this
Agreement shall expire on the next scheduled expiration date. If this Agreement
is not renewed by the Company at the end of any applicable term hereunder for
any reason except the Executive’s death, disability or retirement and the
Executive’s employment with the Company terminates as a result of such
non-renewal, then Executive shall become entitled to receive the severance
benefits set forth in Section 6.04 in accordance with the terms and conditions
of such section.

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ARTICLE II

EMPLOYMENT DUTIES

Section 2.01 Title/Responsibilities. Executive hereby agrees to continue in
employment with the Company pursuant to the terms and conditions of this
Agreement. Executive shall serve the Company in the position of Senior Vice
President, Research & Development and shall have the powers and duties
commensurate with such position. Executive shall be provided with the support
personnel necessary (in the judgment of the Board of Directors) for the
Executive to carry out the responsibilities of such position.

Section 2.02 Full Time Attention. Executive shall devote his best efforts and
his full business time and attention to the performance of the services
customarily incident to his position with the Company and to such other services
as the Board of Directors may reasonably request.

Section 2.03 Other Activities. Except with the prior written consent of the
Board of Directors, Executive shall not during his period of employment with the
Company engage, directly or indirectly, in any other business activity (whether
or not pursued for pecuniary advantage) that is or may be competitive with, or
might otherwise place him in a competing position to, the Company or any other
corporation or entity that directly or indirectly controls, is controlled by, or
is under common control with the Company (an “Affiliated Company”), provided
that Executive may own less than two percent of the outstanding securities of
any such publicly traded competing corporation.

ARTICLE III

COMPENSATION

Section 3.01 Base Salary. Executive shall receive a Base Salary at an annual
rate of $290,460 payable in accordance with the Company’s customary payroll
practices. The Board of Directors shall provide Executive with annual
performance reviews, and, thereafter, Executive shall be entitled to such Base
Salary as the Board of Directors may from time to time establish in its sole
discretion.

Section 3.02 Achievement Bonus. Executive shall be eligible for an Achievement
Bonus each fiscal year of up to 40% of his Base Salary tied to the Company’s
achievement of the corporate goals established for that year by the Board of
Directors and the achievement of such other goals set for the Company or
Executive for such year by the Compensation Committee. The Board of Directors or
Compensation Committee, as applicable, shall, in its respective sole discretion,
determine whether such corporate or other goals have been attained or other
achievements have occurred. Any Achievement Bonus to which Executive becomes
entitled for a particular fiscal year shall be paid by the fifteenth (15th) day
of the third calendar month following the close of that fiscal year or as soon
thereafter as administratively practicable if payment cannot be made by such
date by reason of unforeseen circumstances.

 

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Section 3.03 Transaction Bonus. Should the Company, during the period of
Executive’s employment pursuant to this Agreement, enter into a transaction
approved by the Board of Directors which is not a Change in Control (as defined
in Section 6.07 of this Agreement) but which, nonetheless, involves a change in
the ownership of the Company or the composition of the Company’s Board of
Directors that the full Board of Directors determines in its sole discretion
constitutes a significant event which results in significant additional value
for the Company’s stockholders, as determined by the Board of Directors in its
sole discretion, such as the addition of a major new investor or investor group
or the formation of a significant joint venture (a “Significant Event”), then
Executive shall become entitled to a lump-sum Transaction Bonus in a cash amount
equal to 50% of the annual rate of Base Salary in effect for him immediately
preceding the effective date of the Significant Event. In the event Executive
receives a Transaction Bonus, no Achievement Bonus will be paid to Executive for
the year for which such Transaction Bonus is paid. Any Transaction Bonus to
which Executive becomes entitled shall be paid as soon as administratively
practicable following the effective date of the Significant Event, but in no
event later than the close of the calendar year in which the Significant Event
occurs or (if later) the fifteenth (15th) day of the third calendar month
following the effective date of such Significant Event.

Section 3.04 Accelerated Vesting.

A. All stock options granted to Executive prior to the December 12, 2006, to the
extent outstanding but not otherwise vested at the time of a Change in Control,
shall, immediately prior to such Change in Control, vest and become exercisable
as to all the underlying shares as fully-vested shares, and all other equity
awards made to Executive under the Company’s 1997 Stock Incentive Plan (or any
subsequent plan) prior to December 12, 2006 and unvested at the time of such
Change in Control shall, immediately prior to such Change in Control, vest in
full. Stock options or other equity awards granted to Executive on or after the
December 12, 2006 shall be subject to such accelerated vesting provisions tied
to a Change in Control as the Board of Directors or Compensation Committee may
establish at the time of grant and set forth in the documentation for each such
grant. However, each outstanding stock option or other equity award granted to
Executive on or after the December 12, 2006 shall vest in full immediately prior
to a Change in Control, to the extent the following conditions are satisfied
with respect to each such stock option or equity award:

(i) the stock option is not to be assumed by the successor corporation (or its
parent company) or otherwise continued in effect pursuant to the terms of the
Change in Control,

(ii) the stock option is not to be replaced with a substitute option or cash
incentive plan that preserves the spread existing at the time of the Change in
Control on any shares for which the option is not otherwise at that time vested
and exercisable (the excess of the fair market value of those shares over the
applicable exercise price) and which vests at the same or faster rate as the
vesting schedule applicable to such option, and

 

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(iii) the equity award is not to be assumed by the successor corporation (or its
parent company) or otherwise continued in effect pursuant to the terms of the
Change in Control or is not to be replaced with a cash incentive plan that
preserves the economic value of the award at the time of the Change in Control
and which vests at the same or faster rate as the vesting schedule applicable to
that award.

B. If the Company enters into a transaction which is not a Change in Control but
which is a Significant Event, then the Board of Directors may, in its sole
discretion, determine that all, or a portion, of the stock options granted to
Executive before the effective date of such transaction shall vest and become
exercisable on an accelerated basis at the time of such Significant Event and
that all or a portion of any other outstanding equity award made to Executive
under the Company’s 1997 Stock Incentive Plan (or any subsequent plan) shall
also vest at that time.

Section 3.05 Withholding. All compensation and benefits payable to Executive
pursuant to this Agreement shall be subject to all federal, state, local and
other withholdings and similar taxes and payments required by applicable law.

ARTICLE IV

EXPENSE ALLOWANCES AND FRINGE BENEFITS

Section 4.01 Vacation. Executive shall be entitled to three (3) weeks of annual
paid vacation during the term of this Agreement, plus one (1) additional day of
paid vacation for each additional year of the Executive’s employment with the
Company, up to a maximum of twenty-five (25) days.

Section 4.02 Benefits. During the term of this Agreement, the Company shall also
provide Executive with the same health care benefits and life insurance coverage
which the Company provides other senior management employees, to the extent
Executive meets the eligibility criteria for coverage under such programs.
Executive shall also have the right to participate in and to receive benefits
from accident, disability, medical, pension, bonus, stock, profit-sharing and
savings plans and similar benefits now or hereafter made available generally to
employees of the Company, to the extent Executive satisfies the applicable
eligibility requirements for such plans and benefits. Executive shall during the
term of this Agreement be entitled to receive, at a minimum, standard medical
and dental benefits similar to those typically afforded to individuals in
similar positions and officer status with similar-sized biotechnology companies,
provided the amount and extent of such medical and dental benefits to which
Executive is so entitled shall be governed by the Company’s specific benefit
plan, as it may be amended from time to time.

Section 4.03 Business Expense Reimbursement. During the term of this Agreement,
Executive shall be entitled to receive proper reimbursement for all reasonable
out-of-pocket expenses incurred by him (in accordance with the policies and
procedures established by the Company for its senior executive officers) in
performing services hereunder, provided Executive properly accounts therefore
and provides all requested

 

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documentation for such expenses. The reimbursement shall be provided to
Executive as soon as administratively practicable following the Executive’s
submission of such accounting and documentation to the Company.

ARTICLE V

CONFIDENTIALITY

Section 5.01 Proprietary Information. Executive represents and warrants that he
has executed and delivered to the Company the Company’s standard Proprietary
Information, Inventions and Dispute Resolution Agreement (the “Proprietary
Information Agreement”) in form acceptable to the Company’s counsel. Such
Proprietary Information Agreement shall continue to remain in full force and
effect in accordance with its terms.

Section 5.02 Return of Property. All documents, records, apparatus, equipment
and other physical property which is furnished to or obtained by Executive in
the course of his employment with the Company shall be and remain the sole
property of the Company. Executive agrees that, upon the termination of his
employment, he shall return all such property (whether or not it pertains to
Proprietary Information as defined in the Proprietary Information Agreement),
and agrees not to make or retain copies, reproductions or summaries of any such
property.

ARTICLE VI

TERMINATION

Section 6.01 By Death. Executive’s period of employment with the Company shall
terminate automatically upon his death. In such event, the Company shall pay to
Executive’s beneficiaries or his estate, as the case may be, (i) any accrued but
unpaid Base Salary, (ii) any bonus compensation to the extent earned and unpaid
and not otherwise subject to any post-employment deferral period, (iii) any
benefits under any plans of the Company in which Executive is a participant to
the full extent Executive is entitled to receive such benefits at the time his
death or termination of employment, (iv) any accrued but unpaid vacation pay,
calculated on the basis of the rate of Base Salary in effect for Executive at
the time of such termination of employment, and (v) any unreimbursed business
expenses incurred by Executive in connection with his duties hereunder for which
Executive is entitled to reimbursement pursuant to Section 4.03, all to the date
of termination (collectively “Accrued Compensation”). Executive shall not be
entitled to any other compensation or reimbursement of any kind, other than
pursuant to Section 6.06 below, and thereafter the Company’s obligations
hereunder shall terminate.

Section 6.02 By Disability. If Executive is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not

 

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less than twelve (12) months and the Company is not able to make any reasonable
accommodation for Executive’s continued employment, then the Company may
terminate Executive’s employment on the ninetieth (90th) day of such incapacity.
In such event, the Company shall pay to Executive all Accrued Compensation, and
shall, as severance compensation, continue to pay Base Salary to Executive based
on the annual rate in effect for him at time of such termination of employment,
until such time (but not more than ninety (90) days following the date of such
termination) as Executive shall become entitled to receive disability income
payments under the disability income plan maintained by the Company, which plan
shall provide for full payment of Executive’s Base Salary during the period of
disability. Executive shall not be entitled to any other compensation or
reimbursement of any kind, other than pursuant to Section 6.06 below, and
thereafter the Company’s obligations hereunder shall terminate. Nothing in this
Section 6.02 shall affect Executive’s rights under any disability income plan in
which he is a participant.

Section 6.03 By Company for Cause. The Company may terminate Executive’s
employment for Cause (as defined below), without liability, at any time with or
without advance notice to Executive. The Company shall pay all Accrued
Compensation to Executive at the time of such termination. Executive shall not
be entitled to any other compensation or reimbursement of any kind, other than
pursuant to Section 6.06 below, and thereafter the Company’s obligations
hereunder shall terminate. Termination shall be deemed to be for “Cause” in the
event such termination occurs in connection any of the following: (a) any
intentional action or intentional failure to act on the part of Executive which
was performed in bad faith and to the material detriment of the Company;
(b) Executive’s intentional refusal or intentional failure to act in accordance
with any lawful and proper direction or order of the Board of the Directors;
(c) gross negligence by Executive in carrying out the duties of employment;
(d) Executive’s conviction of a felony or a crime involving moral turpitude;
(e) a material breach by Executive of any of Executive’s fiduciary obligations
as an officer of the Company; or (f) Executive’s willful and knowing
participation in the preparation or release of false or materially misleading
financial statements relating to the Company’s operations and financial
condition or his willful and knowing submission of any false or erroneous
certification required of him under the Sarbanes-Oxley Act of 2002 or any
securities exchange on which shares of the Common Stock are at the time listed
for trading; provided, however, that in the event that any of the foregoing
events (other than the events specified in (d), (e) or (f) above) is capable of
being cured, the Company shall provide written notice to Executive describing
the nature of such event and Executive shall thereafter have five (5) business
days to cure such event.

Section 6.04 At Will. At any time, the Company may terminate Executive’s
employment, without liability, for any reason not specified in Section 6.03
above, by giving thirty (30) days advance written notice to Executive. If the
Company terminates this Agreement or the employment of Executive with the
Company other than pursuant to Section 6.01, 6.02 or 6.03, then the following
provisions of this Section 6.04 shall apply:

A. If the Company elects to terminate Executive’s employment pursuant to this
Section 6.04 prior to a Change in Control or after the expiration of the twenty
four (24)-month period measured from the effective date of a Change in Control,
the Executive shall become entitled to receive the following benefits:

(i) The Company shall pay to Executive all Accrued Compensation and shall, as
severance compensation, continue to pay Executive’s Base Salary at the rate in
effect at the time of Executive’s termination for a period of six (6) months
measured from the date of such termination.

 

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(ii) Upon the Executive’s timely election to receive continued health care
coverage under Code Section 4980B (“COBRA”), Executive shall be provided with
continued coverage under the Company’s group health plan at the Company’s
expense for the benefit of the Executive and his eligible dependents until the
earlier to occur of (a) the expiration of the six (6)-month period measured from
the first day of the calendar month following the calendar month in which the
termination of Executive’s employment occurs or (b) the first date on which the
Executive and his eligible dependents are covered under another employer’s
health benefit program without exclusion for any pre-existing medical condition.
Any additional healthcare coverage to which the Executive and his dependents may
be entitled under COBRA following the period of such continued coverage shall be
at the Executive’s and/or his dependents’ sole cost and expense.

B. If the Company or its successor elects to terminate Executive’s employment
pursuant to this 6.04 within the twenty-four (24)-month period measured from the
effective date of a Change in Control, the Executive shall become entitled to
receive the following benefits in lieu of the benefits set forth in
Section 6.04A above:

(i) The Company shall, as severance compensation, continue to pay Executive’s
Base Salary, at the higher of (a) the rate in effect at the time of Executive’s
termination and (b) the rate in effect immediately prior to the Change in
Control, for a period of twelve (12) months measured from the date of such
termination.

(ii) If the Executive’s employment is terminated in a fiscal year other than a
fiscal year for which he is awarded a Transaction Bonus, then for each full
month of employment which the Executive completes with the Company or its
successor in the fiscal year in which his termination occurs, Executive shall be
entitled to receive a cash payment equal to one-twelfth (1/12th) of the target
Achievement Bonus in effect for him for that year, irrespective of whether or
not the performance objectives for that year are attained. Such payment shall be
made in a lump sum within ten (10) business days following the date the General
Release required of the Executive pursuant to Section 6.04C below becomes
effective.

(iii) All stock options granted to Executive on or after December 12, 2006 and
outstanding at the time of such termination of employment shall immediately vest
and become exercisable as to all the underlying shares as fully-vested shares,
and all other equity awards made to Executive under the Company’s 1997 Stock
Incentive Plan (or any subsequent plan) on or after December 12, 2006 and
unvested at the time of such termination of employment shall immediately vest in
full.

 

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(iv) Upon the Executive’s timely election to receive continued health care
coverage under Code Section 4980B (“COBRA”), Executive shall be provided with
continued coverage under the Company’s group health plan at the Company’s
expense for the benefit of the Executive and his eligible dependents until the
earlier to occur of (a) the expiration of the twelve (12)-month period measured
from the first day of the calendar month following the calendar month in which
the termination of Executive’s employment occurs or (b) the first date on which
the Executive and his eligible dependents are covered under another employer’s
health benefit program without exclusion for any pre-existing medical condition.
Any additional healthcare coverage to which the Executive and his dependents may
be entitled under COBRA following the period of such continued coverage shall be
at the Executive’s and/or his dependents’ sole cost and expense.

Upon payment of the severance benefits described herein, all obligations of the
Company (or its successor) hereunder shall terminate.

C. Notwithstanding the foregoing, in order to receive any payments or benefits
under this Section 6.04, Executive must first execute and deliver to the
Company, within thirty (30) days after the effective date of his termination of
employment, a General Release and Waiver of Claims, in a form provided by the
Company that is substantially similar in all material respects to Exhibit A
hereto (a “General Release”), which is made a part of this Agreement, and such
General Release must become effective and enforceable in accordance with its
terms. During the period when payments and benefits are being paid or provided
to Executive under this Section 6.04, Executive shall not (i) engage, directly
or indirectly, in any other business activity that is competitive with, or that
otherwise places him in a competing position to, the Company or any Affiliated
Company (provided that Executive may own less than two percent (2%) of the
outstanding securities of any publicly-traded corporation), or (ii) hire,
solicit, or attempt to hire on behalf of himself or any other party any employee
or exclusive consultant of the Company. If such General Release is not executed
and delivered to the Company within the applicable thirty (30)-day period
hereunder or does not otherwise become effective and enforceable in accordance
with its terms, then no severance benefits will provided Executive under this
Section 6.04.

Section 6.05 Constructive Termination. In the event that Executive voluntarily
resigns within ninety (90) days following a material reduction of the powers and
duties of his position with the Company that results in a material decrease in
his responsibilities which are inconsistent with his position, authority and
title pursuant to this Agreement, such resignation shall be deemed a termination
of employment without Cause pursuant to Section 6.04. In the event of a Change
in Control of the Company in which the Company shall become a division or
subsidiary of a larger organization, references to the Executive’s title with
the Company shall be deemed to mean the same title with such division or
subsidiary for purposes of this Section 6.05.

Section 6.06 Deferred Compensation/Other Plan Benefits. In the event of the
Executive’s termination of employment for any reason, any benefits in which
Executive is vested at that time under any deferred compensation arrangement,
pension plan or profit sharing plan maintained by the Company or any Affiliated
Company shall be paid to Executive or his designated beneficiary at the time or
times and in the form of payment

 

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determined in accordance with the terms of each applicable plan and the
Executive’s payment election (if any) under such plan. Nothing in this Agreement
shall be deemed to accelerate the time or change the form of any such deferred
compensation payment.

Section 6.07 Change in Control. For purposes of this Agreement, a “Change in
Control” shall have occurred if, at any time during the term of Executive’s
employment hereunder, any of the following events shall occur:

(i) the consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, unless more than 50% of
the combined voting power of the continuing or surviving entity’s securities
outstanding immediately after such merger, consolidation or other reorganization
is owned in substantially the same percentages by persons who were stockholders
of the Company immediately prior to such merger, consolidation or other
reorganization;

(ii) a change in the composition of the Board, as a result of which fewer than
one-half of the incumbent members of the Board are Board members who either
(1) had been Board members 24 months prior to such change; or (2) were elected,
or nominated for election, to the Board with the affirmative votes of at least a
majority of the Board members who had been Board members 24 months prior to such
change and who were still in office at the time of the election or nomination;
or

(iii) any “person” (as such term is used in Section 13(d) and Section 14 of the
Securities Exchange Act of 1934, as amended) is or becomes through the
acquisition of securities the beneficial owner, directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company’s then outstanding securities ordinarily (and apart from rights
accruing under special circumstances) having the right to vote at elections of
directors (the “Base Capital Stock”), except that any change in the relative
beneficial ownership of the Company’s securities resulting solely from a
reduction in the aggregate number of outstanding shares of Base Capital Stock
shall be disregarded until such person increases in any manner, directly or
indirectly, such person’s beneficial ownership of any securities of the Company.
Thus, for example, any person who owns less than 50% of the outstanding Base
Capital Stock shall cause a Change in Control to occur as of any subsequent date
if such person then acquires an additional interest in the Company which, when
added to the person’s previous holdings, causes the person to hold more than 50%
of the outstanding Base Capital Stock.

The term “Change in Control” shall not include a transaction, the sole purpose
of which is to change the state of the Company’s incorporation.

 

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ARTICLE VII

LIMITATION ON BENEFITS

Section 7.01 Benefit Limit. In the event that any payments or benefits to which
Executive becomes entitled in accordance with the provisions of this Agreement
(or any other agreement with the Company or other Affiliated Company) would
otherwise constitute a parachute payment under Code Section 280G(b)(2), then
such payments and/or benefits will be subject to reduction to the extent
necessary to assure that Executive receives only the greater of (i) the amount
of those payments which would not constitute such a parachute payment or
(ii) the amount which yields Executive the greatest after-tax amount of benefits
after taking into account any excise tax imposed under Code Section 4999 on the
payments and benefits provided Executive under this Agreement (or on any other
payments or benefits to which the Executive may become entitled in connection
with any change in control or ownership of the Company or the subsequent
termination of his employment with the Company); provided, however, that for
purposes of the calculation under clause (ii) no excise tax shall be deemed to
be imposed under Code Section 4999 on any payment as to which Executive is
entitled to a Gross-Up Payment under Section 7.02 below.

Should a reduction in benefits be required to satisfy the benefit limit of this
Section 7.01, then the portion of any parachute payment otherwise payable in
cash to Executive shall be reduced to the extent necessary to comply with such
benefit limit. Should such benefit limit still be exceeded following such
reduction, then the number of shares which would otherwise vest on an
accelerated basis under each of Executive’s options (based on the amount of the
parachute payment attributable to such option under Code Section 280G) shall be
reduced to the extent necessary to eliminate such excess.

Section 7.02 Equity Award Gross-Up Payment. Equity awards granted under the
Company’s 1997 Stock Incentive Plan (the “Plan”) to Executive prior to
December 12, 2006 each contain a provision providing for a Gross-Up Payment (as
defined in the Plan) in the event the grant of such an award or the subsequent
vesting of such an award would subject Executive to the excise tax imposed by
Section 4999 of the Code. If the aggregate Parachute Value (as defined below) of
all payments or benefits made or provided (or reasonably expected to be made or
provided) to Executive under this Agreement and under all other plans and
programs of the Company, including (without limitation) the payments
attributable to the grant or accelerated vesting of Executive’s equity awards
under the Plan, (the “Aggregate Payment”) is determined to constitute a
parachute payment, as such term is defined in Code Section 280G(b)(2), then the
following formula shall be used for purposes of determining the amount of any
Gross-Up Payment (as defined in the Plan) due Executive with respect to equity
awards granted to him under the Plan prior to December 12, 2006.

(i) The Company’s independent auditors shall first determine the total excise
tax payable by the Executive under Code Section 4999, if any (the “Excise Tax”)
as a result of the Aggregate Payment.

 

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For purposes of subparagraph (i) above, the auditors shall include in the
Aggregate Payment any severance compensation under this Agreement which the
Company reasonably expects to become payable to Executive in connection with any
anticipated termination of his employment following the Change in Control and
which the auditors, in their reasonable judgment, determine will constitute a
parachute payment under Code Section 280G.

(ii) The Company’s independent auditors shall then determine the “Full Gross-Up
Payment” that would be payable to Executive on the Aggregate Payment if
Executive were entitled to receive such Full Gross-Up Payment. For clarity and
the avoidance of doubt, Executive is not entitled to receive a Full Gross-Up
Payment on the entire Aggregate Payment, and this Section 7.02 shall not be read
to impose such a liability.

For purposes of subparagraph (ii) above, the term “Full Gross-Up Payment” shall
mean an amount that, after the imposition of all penalties and all excise taxes
(including, without limitation, the Code Section 4999 excise tax) and all
federal, state and local income taxes thereon, yields a remaining sum equal to
the Excise Tax on the Aggregate Payment and interest and penalties imposed with
respect to the Excise Tax and such additional amount. The calculations by the
independent auditors under subparagraphs (i) and (ii) above shall be made and
completed within seven (7) business days following the effective date of the
Change in Control.

(iii) The dollar amount determined under subparagraph (ii) shall then be
multiplied by a fraction, the numerator of which shall be the aggregate
Parachute Value calculated for the equity awards granted to Executive under the
Plan prior to December 12, 2006, and the denominator shall be the total
Parachute Value of the Aggregate Payment. The product shall equal the amount of
any Gross-Up Payment (as defined in the Plan) due Executive with respect to
equity awards granted to him prior to December 12, 2006. Such Gross-Up Payment
shall be made to Executive within fifteen (15) business days after the effective
date of the Change in Control or as soon as administratively thereafter, but in
no event later than the last day of the calendar year in which the Change in
Control is effected or (if later) the fifteenth (15th) day of the third calendar
month following the effective date of such Change in Control.

The term “Parachute Value” shall mean the value of each payment or benefit which
is deemed to constitute a parachute payment under Code Section 280G, as such
value is determined by the Company’s independent auditors in accordance with
Section 280G of the Code and the applicable Treasury Regulations thereunder and
discounted to its present value as of the date of the Change in Control in
accordance with Code Section 280G(d)(4) and such Treasury Regulations.

 

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ARTICLE VIII

GENERAL PROVISIONS

Section 8.01 Delayed Commencement of Benefits. Notwithstanding any provision to
the contrary in this Agreement, no payment or distribution under this Agreement
or the Gross-Up Payment, to the extent such payment, distribution or Gross-Up
Payment constitutes an item of deferred compensation under Section 409A of the
Code which becomes payable by reason of the Executive’s termination of
employment with the Company, will be made to Executive prior to the earlier of
(i) the expiration of the six (6)-month period measured from the date of the
Executive’s “separation from service” (as such term is defined in Treasury
Regulations issued under Code Section 409A) or (ii) the date of Executive’s
death, if Executive is deemed at the time of such separation from service to be
a “key employee” within the meaning of that term under Code Section 416(i) and
such delayed commencement is otherwise required in order to avoid a prohibited
distribution under Code Section 409A(a)(2). Upon the expiration of the
applicable Code Section 409A(a)(2) deferral period, all payments and benefits
deferred pursuant to this Section 8.01 (whether they would have otherwise been
payable in a single sum or in installments in the absence of such deferral)
shall be paid or reimbursed to Executive in a lump sum, and any remaining
payments due under the Agreement will be paid in accordance with the normal
payment dates specified for them herein. [The Executive will be entitled to
interest on the deferred benefits and payments for the period the commencement
of those benefits and payments is delayed by reason of Code Section 409A(a)(2),
with such interest to accrue at the prime rate in effect from time to time
during that period and to be paid in a lump sum upon the expiration of the
deferral period.]

Section 8.02 Cessation of Benefits. In the event of a material breach by the
Executive of any of his obligations under Section VI.D of this Agreement or any
of his obligations under his Proprietary Information Agreement, Executive shall
cease to be entitled to any further benefits under Article VI of this Agreement,
including (without limitation) any subsequent right to receive any further cash
payments or continued health care coverage at the Company’s expense.

Section 8.03 Governing Law. The validity, interpretation, construction and
performance of this Agreement and the rights of the parties thereunder shall be
interpreted and enforced under California law without reference to principles of
conflicts of laws. The parties expressly agree that inasmuch as the Company’s
headquarters and principal place of business are located in California, it is
appropriate that California law govern this Agreement.

Section 8.04 Assignment; Successors; Binding Agreement.

A. Executive may not assign, pledge or encumber his interest in this Agreement
or any part thereof or any payment or benefit hereunder.

B. The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, operation of law or by agreement in form
and substance reasonably

 

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satisfactory to Executive, to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place.

C. This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributee, devisees and legatees. If Executive should die
while any amount is at such time payable to him hereunder, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive’s devisee, legates or other designee or, if there be
no such designee, to his estate.

Section 8.05 No Waiver of Breach. The waiver by any party of the breach of any
provision of this Agreement shall not be deemed to be a waiver of any subsequent
breach.

Section 8.06 Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

 

        To the Company:

   Nanogen, Inc.    10398 Pacific Center Court    San Diego, CA 92121    Attn:
Chief Executive Officer

        To Executive:

   Graham Lidgard    c/o Nanogen, Inc.    10398 Pacific Center Court    San
Diego, CA 92121

Section 8.07 Modification; Waiver; Entire Agreement. No provisions of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing signed by Executive and such officer as may
be specifically designated by the Board of Directors. No waiver by either party
hereto at any time of any breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.

Section 8.08 Validity. If any provision of this Agreement as applied to any
party or to any circumstance should be adjudged by a court of competent
jurisdiction to be void or unenforceable for any reason, the invalidity of that
provision shall in no way affect (to the maximum extent permissible by law) the
application of such provision under circumstances

 

13

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different from those adjudicated by the court, the application of any other
provision of this Agreement, or the enforceability or invalidity of this
Agreement as a whole. Should any provision of this Agreement become or be deemed
invalid, illegal or unenforceable in any jurisdiction by reason of the scope,
extent or duration of its coverage, then such provision shall be deemed amended
to the extent necessary to conform to applicable law so as to be valid and
enforceable or, if such provision cannot be so amended without materially
altering the intention of the parties, then such provision will be stricken, and
the remainder of this Agreement shall continue in full force and effect.

Section 8.09 Controlling Document. This Agreement supersedes any and all prior
employment agreements or consulting agreements between the Company and
Executive, but does not supersede any other agreements between Company and
Executive, including but not limited to, the Proprietary Information Agreement,
any restricted stock purchase agreement, restricted stock unit agreement, stock
option agreement or other equity award agreement entered into pursuant to the
Company’s stock plans, and the Nanogen Employees’ Handbook and Policies, except
as expressly provided herein. In case of conflict between any of the terms and
conditions of this Agreement and the documents herein referred to, the terms and
conditions of this Agreement shall control.

Section 8.10 Executive Acknowledgment. Executive acknowledges (a) that he has
consulted with or has had the opportunity to consult with independent counsel of
his own choice concerning this Agreement, and has been advised to do so by the
Company, and (b) that he has read and understands the Agreement, is fully aware
of its legal effect, and has entered into it freely based on his own judgment.

Section 8.11 Injunctive Relief. The parties agree that the services to be
rendered by Executive hereunder are of a unique nature and that in the event of
any breach or threatened breach of any of the covenants contained herein, the
damage or imminent damage to the value and the goodwill of the Company’s
business will be irreparable and extremely difficult to estimate, making any
remedy at law or in damages inadequate. Accordingly, the parties agree that the
Company shall be entitled to injunctive relief against Executive in the event of
any breach or threatened breach of any such provisions by Executive, in addition
to any other relief (including damages) available to the Company under this
Agreement or under law. Both parties further agree that the remedy specified in
this Section 8.11 is not exclusive of any other remedy for the breach by
Executive of the terms hereof.

 

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Section 8.12 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
Agreement.

Executed by the parties as of the day and year first above written.

 

NANOGEN, INC. By:  

/s/ DAVID R. SCHREIBER

  David R. Schreiber   Chairman of Compensation Committee EXECUTIVE: By:  

/s/ GRAHAM LIDGARD

  Graham Lidgard

 

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Exhibit 10.3

EXHIBIT A

FORM OF GENERAL RELEASE

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Exhibit 10.3

GENERAL RELEASE AND WAIVER OF CLAIMS

In consideration of the severance payments and other benefits to which I have
become entitled, pursuant to that certain Amended and Restated Employment
Agreement between Nanogen, Inc., a Delaware corporation (the “Company”), and
myself dated                 , 2007 (the “Employment Agreement), in connection
with the termination of my employment on this date, I,                     ,
hereby furnish the Company with the following release and waiver (“Release and
Waiver”).

I hereby release and forever discharge the Company, its officers, directors,
agents, employees, stockholders, successors, assigns and affiliates from any and
all claims, liabilities, demands, causes of action, costs, expenses, attorney
fees, damages, indemnities and obligations of every kind and nature, in law,
equity or otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising from or relating to my employment with the Company and the
termination of that employment, including (without limitation) claims of
wrongful discharge, emotional distress, defamation, fraud, breach of contract,
breach of the covenant of good faith and fair dealing, discrimination claims
based on sex, age, race, national origin, disability or any other basis under
Title VII of the Civil Rights Act of 1964, as amended, the California Fair
Employment and Housing Act, the Federal Age Discrimination in Employment Act of
1967, as amended (“ADEA”), the Americans with Disability Act, contract claims,
tort claims, and wage or benefit claims, including but not limited to, claims
for salary, bonuses, commissions, stock grants, stock options, vacation pay,
fringe benefits, severance pay or any other form of compensation (other than the
payments, rights, benefits and indemnification to which I am, pursuant to the
express provisions of the Employment Agreement, entitled in connection with my
termination of employment, my vested rights under the Company’s Section 401(k)
Plan and any worker’s compensation benefits under any Company workers’
compensation insurance policy or fund).

In releasing claims unknown to me at present, I am waiving all rights and
benefits under Section 1542 of the California Civil Code, and any law or legal
principle of similar effect in any jurisdiction: “A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor.”

This Release and Waiver does not pertain to any claims which may subsequently
arise in connection with the Company’s default in any of its severance payment
obligations under the Employment Agreement or any other obligations thereunder
which expressly survive the termination of that Agreement.

I acknowledge that, among other rights subject to his Release and Waiver, I am
hereby waiving and releasing any rights I may have under ADEA, that this release
and waiver is knowing and voluntary, and that the consideration given for this
release and waiver is in addition to anything of value to which I was already
entitled as an executive of the Company. I further acknowledge that I have been
advised, as required by the Older Workers Benefit Protection Act, that: (a) the
release and waiver granted herein does not relate to claims which may arise
after this release and waiver is executed; (b) I have the right to consult with
an attorney prior to executing this release and waiver (although I may choose
voluntarily not to do so); and if I am over 40 years old upon execution of this
(c) I have twenty-one (21) days from

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the date of termination of my employment with the Company in which to consider
this release and waiver (although I may choose voluntarily to execute this
release and waiver earlier); (d) I have seven (7) days following the execution
of this release and waiver to revoke my consent to this release and waiver; and
(e) this release and waiver shall not be effective until the seven (7)-day
revocation period has expired.

 

Date:                     , 20    

 

 

  EXECUTIVE

 

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