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                                  [LETTERHEAD]

CONFIDENTIAL                                                               COPY

June 18, 1997
Revised: July 16, 1997

Mr. John J. King, II
Chief Operating Officer
Rosetta Biosystems, Inc.
12040 116th Avenue NE
Kirkland, WA 98034

Dear John:

We are pleased to present the following equipment financing proposal to Rosetta
Biosystems, Inc.:

BORROWER:         ROSETTA BIOSYSTEMS, INC.

LENDER:           Lease Management Services, Inc.

EQUIPMENT:        A master line of credit for $1 .500, 000 equipment per the
                  attached list, including:

                  GREATER THAN OR EQUAL TO  $795,000 lab & scientific equipment
                  LESS THAN OR EQUAL TO      475,000 computers, furniture,
                                                     phone, network, & similar
                  LESS THAN OR EQUAL TO      230,000 leaseholds, application
                                                     software & similar
                                            --------
                                          $1,500,000

                  Previously-purchased and used equipment may be Included in
                  this line. All equipment is subject to Lender's final
                  approval.

TERM &
PAYMENT:          OPTION 1: Forty-two (42) months at 2.630% of equipment cost,
                  payable monthly in advance for each loan schedule, plus a 15%
                  balloon at end of term. [Subject to satisfactory credit
                  review, the balloon may be paid over 9 months at 1,740% per
                  month.]

                  OPTION 2: Forty-eight (48) months at 2.640% of equipment cost,
                  payable monthly in advance for each loan schedule, plus a
                  $1.00 payment at end of term.

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                  OPTION 3: Forty-eight (48) months at 2.579% of equipment cost,
                  payable monthly in advance for each loan schedule, plus a 5%
                  balloon at end of term.

                  The yield in this transaction will be adjusted relative to any
                  increase in comparable term U.S. treasury maturities. The
                  payment factor for each schedule will be set at the time it is
                  documented and will be FIXED for the term. The payment factors
                  above are based on the average of the Federal Reserve 3- and
                  5-year treasuries (6.09%) for the week ending July11, 1997.

STRUCTURE:        Secured loan, Borrower retains title and keeps depreciation.
                  Borrower will grant Lender a first security interest in the
                  equipment to be financed.

WARRANT:          In consideration for this financing, Borrower shall grant to
                  Lender a warrant to purchase Borrower's common or preferred
                  stock. The warrant shall be for 2.5% of equipment cost at
                  Borrower's Series A price of $4.00/share. The warrant will be
                  for the greater of 6,250 shares or the number of shares based
                  pro rate on the actual amount of equipment financed. [For
                  example, if $1,200,000 equipment is financed, the warrant will
                  be for 7,500 shares (i.e. $1.2MM x 2.5% DIVIDED BY $4.00).]
                  The warrant may be exercised by cash or net issue and will
                  include standard, anti-dilution provisions. The exercise
                  period shall end 72 months from the date of Issue.

COVENANT:         No additional collateral will be required except in the event
                  Borrower's unrestricted cash, excluding long-term debt, falls
                  below the appropriate benchmark below. In that event, Borrower
                  will provide to Lender a cash security deposit equivalent to
                  12.5% of original, aggregate equipment cost, but in no event
                  to exceed the remaining gross receivable.

                  PRE-IPO BENCHMARK: unrestricted cash, excluding long-term
                  debt, must be equal to the greater of $2,000,000 or 6 months'
                  cash needs. ["6 months' cash needs" will be defined as the
                  cash burn for the 3 months just completed, multiplied by a
                  factor of 2.3.]

                  POST-IPO BENCHMARK: unrestricted cash, excluding long-term
                  debt, must be equal to the greater of $5,000,000 or 10 months'
                  cash needs, ["10 months' cash needs" will be defined as the
                  cash burn for the 3 months just completed, multiplied by a
                  factor of 3.6.]

                  Interest will be accrued at 5.0% annually and will be paid
                  with the return of the deposit.


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                  This deposit will be released when Borrower's unrestricted
                  cash, excluding long-term debt recovers and is greater than
                  the appropriate benchmark above for at least one quarter and
                  continues to remain greater. (Or, will be returned immediately
                  if Borrower's new equity or other non-refundable cash is great
                  enough to clearly keep Borrower above the appropriate
                  benchmark for at least three quarters.)

                  Verification of achievement of benchmarks is to be acceptable
                  to Lender. Return of deposits prior to end of term Is
                  contingent upon receipt of all payments and financials to date
                  as agreed, no default under any financial obligation, and no
                  material adverse change.

CONTINGENCIES:

                  1)       Standard documentation satisfactory to Borrower and
                           Lender.

                  2)       Releases against this credit line are contingent upon
                           Borrower providing evidence of reasonable performance
                           against the 4/7/97 operating plan or subsequent
                           Board-approved plan acceptable to Lender. This credit
                           line, unless extended in writing, expires 7/31/98.

                  3)       Throughout the loan term, Borrower will provide
                           monthly financials within 30 days of each month-end,
                           and annually, an audited statement within 90 days of
                           fiscal year end or at such time as Borrower's Board
                           receives the audit. All such financial statements are
                           to be prepared using generally accepted accounting
                           principles.

                  4)       Complete equipment specifications are to be provided
                           to Lender before each takedown.

                           Invoices must be less than 45 days old OR refunded
                           within 45 days of credit approval.

                           All equipment is to be located at Borrower's Seattle
                           area facilities unless Lender gives prior approval to
                           do otherwise.

                           Custom equipment; upgrades to equipment to which
                           Lender does not have clear title or first security
                           interest: disposables and "soft costs" such as sales
                           tax, freight, and installation are excluded from this
                           line.

                  5)       Subject to final approval by Lenders Credit
                           Committee.


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                  6)       This is a statement of mutual intent and not an
                           agreement to finance. The terms set forth above are
                           not therefore binding until a loan agreement is
                           executed between Borrower and Lender for specific
                           items of equipment.

COMMITMENT
FEE:              $10,000.00 commitment fee. This fee shall be fully credited
                  pro-rata to schedules as financed. All or a portion of said
                  fee will be forfeited if this transaction is approved by
                  Lender and not executed by Borrower as called for in this
                  proposal. However, in the event Borrower uses the line hi good
                  faith but does not use the entire line, then any remaining fee
                  will be applied to any new line agreed to by Borrower and
                  Lender prior to 9/30/98. The entire fee will be returned to
                  Borrower promptly in the event Lender fails to approve this
                  transaction.

If the terms of this proposal meet with your approval, please sign and return
with your commitment fee, and we will proceed. Unless previously accepted, this
proposal will expire 7/21/97.

We look forward to meeting your equipment financing needs and beginning a
mutually rewarding relationship.

Sincerely,                          ACCEPTED:  Rosetta Biosystems, Inc.

/s/ Barbara Kaiser                  By: /s/ John J. King
                                       --------------------------------

Barbara B. Kaiser                   Title: Sr. Vice President & COO
EVP/General Manager                        ----------------------------

                                    Date: 7/21/97
                                          -------
PRICING:
         Option 1:
                    ---
         Option 2:   X
                    ---
         Option 3:
                    ---


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