Document:

Exhibit 10.02

 Exhibit 10.02 
 EMPLOYMENT AGREEMENT OF RICHARD J. HENDRIX 
 THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of April 30, 2008, is hereby entered into by and between FBR Capital Markets Corporation, a Virginia corporation with its principal place of business at 1001 19
th street North, Arlington, VA 22209 (“FBCM” or the “Company”) and Richard J. Hendrix, residing at the address set
forth on the signature page hereof (the “Executive”). 
 WHEREAS, the Executive currently serves as the President and Chief
Operating Officer of the Company. Executive has resigned his positions with Friedman, Billings, Ramsey Group, Inc. (“FBR Group”), of which FBCM is a majority-owned subsidiary, and Executive no longer serves as an officer or employee
of FBR Group; and 
 WHEREAS, the Company and the Executive wish to continue Executive’s employment relationship with FBCM on the terms
set forth below: 
 Accordingly, the parties hereto agree as follows: 
 1. Term. The Company hereby agrees to continue to employ the Executive, and the Executive hereby accepts such employment, for an initial term
commencing as of the date this Agreement is executed and continuing until December 31, 2010, unless sooner terminated in accordance with the provisions of Section 5 or Section 6; with such term to renew automatically for two
successive one-year periods following the initial term in accordance with the terms of this Agreement (subject to termination as aforesaid) unless either party notifies the other party of non-renewal in writing prior to six months before the
expiration of the initial term and each successive annual renewal term, as applicable (the period during which the Executive is employed hereunder being hereinafter referred to as the “Term”). 
 2. Duties. 
 2.1. During the Term,
the Executive shall be employed as President and Chief Operating Officer of the Company, and shall report only to (i) Eric F. Billings for so long as he is the Company’s Chief Executive Officer, or (ii) the Company’s Board of
Directors or its executive committee. The Executive shall faithfully perform for the Company the duties of said offices and shall perform such other duties of an executive, managerial or administrative nature as shall be reasonably commensurate with
his positions and specified and designated from time to time by the Chief Executive Officer of the Company (the “Chief Executive Officer”), including but not limited to serving as an officer and/or director of one or more
subsidiaries of the Company from time to time. The Executive shall devote all of his business time and efforts to the performance of his duties hereunder. The Executive shall have the right to engage in various activities outside of his employment
with the Company including charitable and community activities and making personal investments that do not constitute corporate opportunities, and, with the approval of the Chief Executive Officer, serving as a director of one or more other
companies so long as such activities do not interfere with Executive’s ability to perform his duties hereunder. 
 2.2. The Executive
agrees that he shall immediately resign all positions and duties he currently holds with FBR Group and shall devote substantially all of his business time and efforts to performing the duties as described in Section 2.1 above. 
 3. Intentionally omitted. 
 4.
Compensation and Benefits. 
 4.1. Annual Salary. The Company shall pay the Executive during the Term a base salary at a
minimum rate of $750,000 (Seven Hundred Fifty Thousand United States Dollars and no/100s) per annum (the “Annual Salary”), in accordance with the customary payroll practices of the Company applicable to senior executives. The
Company may, in its sole discretion, periodically raise the amount of the Executive’s Annual Salary. Any such increased salary shall constitute the “Annual Salary” as of the time of the increase. 

 4.2. Eligibility for Bonus Plans. The Executive shall be eligible to participate in any
performance bonus plans or programs or long-term incentive plans or programs existing as of the date of this Agreement, including the existing 2008 executive performance bonus plan that has been approved by the Compensation Committee of the Board of
Directors, or adopted by the Compensation Committee of the Board of Directors of the Company or the Board of Directors of the Company during the Term for the benefit of the Company’s executive management team. 
 4.3. Benefits-In General. The Executive shall be permitted during the Term to participate in any group life, hospitalization or disability
insurance plans, health programs, retirement plans, fringe benefit programs and other benefits or insurance plans that may be available to other senior executives of the Company generally in accordance with the terms of such plans or programs.

 4.4. Expenses-In General. The Company shall pay or reimburse the Executive for all ordinary and reasonable out-of-pocket expenses
actually incurred (and, in the case of reimbursement, paid) by the Executive during the Term in the performance of the Executive’s services under this Agreement, in accordance with the Company’s policies regarding such reimbursements. The
Company shall reimburse reasonable fees and expenses incurred by the Executive for participation in professional and trade associations and reasonable expenses incurred in connection with business development and client entertainment activities.
Payments and reimbursement under this Section 4.4 shall be made no later than March 15 of the calendar year following the year in which the Executive incurred the expense. 
 5. Termination upon Death or Disability. If the Executive dies during the Term, the Term shall terminate as of the date of the Executive’s
death, and the obligations of the Company to or with respect to the Executive shall terminate in their entirety upon such date except as otherwise provided under this Section 5. If the Executive is unable to perform substantially and
continuously the duties assigned to him due to a disability as defined for purposes of the Company’s long-term disability plan then in effect, or, if no such plan is in effect, by virtue of ill health or other disability for more than 180
consecutive or non-consecutive days out of any consecutive 12-month period, the Company shall have the right, to the extent permitted by law, to terminate the employment of the Executive upon notice in writing to the Executive, and the obligations
of the Company to or with respect to the Executive shall terminate in their entirety upon such date except as otherwise provided under this Section 5. Upon termination of employment due to the Executive’s death or disability, the Executive
(or the Executive’s estate or beneficiaries in the case of the death of the Executive) shall be entitled to receive (i) any Annual Salary and other benefits actually earned and accrued under this Agreement prior to the date of termination;
(ii) any amount earned and accrued, but not yet paid, prior to the date of termination under any bonus, equity or long term incentive plan of the Company then in effect (inclusive of full and nonforfeitable vesting of any and all equity,
performance-based, or long-term incentive awards, including but not limited to the restricted stock units awarded to the Executive by the Company on February 20, 2008), and (iii) reimbursement under this Agreement for expenses incurred
prior to the date of termination. For purposes of clauses (i) and (ii) above, the parties understand and agree that, to the extent any approved performance bonus plan, program or arrangement in which Executive is a participant specifies a
performance period or performance goals that have not yet been completed or achieved, as the case may be, as of the date of termination, no bonus, whether pro rata or otherwise, shall not be deemed to be earned and accrued by Executive under
such performance bonus plan, program or arrangement. Upon any termination under this Section 5, the Executive shall be deemed to have resigned from all positions he then holds with the Company and any of its subsidiaries. 
 6. Certain Terminations of Employment; Certain Benefits. 
 6.1. Termination by the Company for Cause; Termination by the Executive without Good Reason. 
 (a) For purposes of this Agreement, “Cause” shall mean the Executive’s: 
  

	 	(i)	conviction of, indictment for or formal admission to or plea of nolo contendere with respect to, a felony or a crime of moral turpitude, dishonesty, breach of trust, fraud,
misappropriation, embezzlement or unethical business conduct (but only if the Board of Directors reasonably determines, after considering all related facts and circumstances, that such indictment, conviction or plea has materially and adversely
affected or is reasonably likely to materially and adversely affect the Company’s business or reputation), or any crime involving the Company; 

  

 2 

	 	(ii)	continued willful misconduct or willful or gross neglect in the performance of his duties hereunder, following written notice of such misconduct or neglect and failure to remedy
such misconduct or neglect within 15 days after delivery of such notice; provided, however, the Board of Directors shall have the discretion (A) to require a remedial period that is shorter than 15 days to remedy certain misconduct or
neglect that the Board reasonably determines can be remedied in less than 15 days or (B) to offer no opportunity to remediate conduct or neglect that the Board reasonably determines to be incapable of being cured; 

  

	 	(iii)	continued failure to materially adhere to the clear directions of the Company, to adhere to the Company’s written policies, or to devote substantially all of his business time
and efforts to the Company in accordance with and subject to the provisions of Section 2 hereof, and failure to cure such failure within 15 days after delivery of written notice of such failure; provided, however, the Board of
Directors shall have the discretion (A) to require a remedial period that is shorter than 15 days to remedy certain failures that the Board reasonably determines can be remedied in less than 15 days or (B) to offer no opportunity to
remediate failures that the Board reasonably determines to be incapable of being cured; 

  

	 	(iv)	continued failure to substantially perform the duties properly assigned to the Executive by the Company (other than any such failure resulting from his Disability) and failure
to cure such failure within 15 days after delivery of written notice of such failure; provided, however, the Board of Directors shall have the discretion (A) to require a remedial period that is shorter than 15 days to remedy certain
failures that the Board reasonably determines can be remedied in less than 15 days or (B) to offer no opportunity to remediate failures that the Board reasonably determines to be incapable of being cured; or 

  

	 	(v)	material and willful breach of any of the terms and conditions of this Agreement and failure to cure such breach within 15 days following written notice from the Company specifying
such breach; provided, however, the Board of Directors shall have the discretion (A) to require a remedial period that is shorter than 15 days to remedy certain breaches that the Board reasonably determines can be remedied in less than
15 days or (B) to offer no opportunity to remediate breaches that the Board reasonably determines to be incapable of being cured. 

 (b) If the Company terminates the Executive for Cause, or the Executive terminates his employment and the termination by the Executive is not for Good Reason in accordance with Section 6.2 hereof, the Executive
shall receive: (i) any Annual Salary and other benefits actually earned and accrued, but not yet paid, under this Agreement prior to the date of termination, (ii) reimbursement under this Agreement for expenses incurred prior to the date
of termination which shall be paid in accordance with the Company’s policies or Section 4.4, and (iii) all rights and benefits under any retirement or other benefit plan or program (in accordance with their terms and conditions) that
are vested as of the date of termination. The Executive shall have no further rights to any other compensation or benefits under this Agreement on or after any termination of the Executive’s employment pursuant to this Section 6.1, and any
unvested rights, benefits or incentive awards shall be forfeited as of the date of termination. 
 (c) Upon any termination
under this Section 6.1, the Executive shall resign from all positions he then holds with the Company and any of its subsidiaries. 
 6.2. Termination by the Company without Cause; Termination by the Executive for Good Reason. 
 (a) For
purposes of this Agreement, “Good Reason” shall mean: 
  

	 	(i)	 a “Change in Control” of the Company as that term is defined in the Company’s then current long-term incentive plan, followed within one
(1) year following the Change in Control (it being agreed and understood that this provision will survive any expiration of the Term of this Agreement that occurs during such one (1) year period following a Change in Control for the
remaining portion of such one (1) year period) by any demotion of the Executive or any material diminution in the Executive’s authority, duties and responsibilities, or the 

  

 3 

	 	 
assignment to the Executive of duties materially inconsistent with the Executive’s position or positions with the Company; provided, however,
that any merger or business combination of the Company solely with FBR Group or any other affiliate of the Company or any sale, distribution or other disposition (other than as provided for in the next clause) by FBR Group of its ownership interest
in the Company shall not be deemed to be a Change in Control for purposes of this Agreement; and provided further that a sale of the control position owned directly or indirectly by FBR Group shall constitute a Change in Control for purposes
of this Agreement unless an investment group involving Crestview Partners, the Company, or their affiliates, officers, and directors is the buyer of the FBR Group’s interest and no single entity or person directly or indirectly owns more than
fifty percent (50%) of the Company; 

  

	 	(ii)	a reduction of more than ten percent (10%) in the Annual Salary of the Executive; 

  

	 	(iii)	any demotion or material reduction or diminution in the duties or authority of the Executive; or 

  

	 	(iv)	the Company’s breach of any material provision of this Agreement and subsequent failure to cure such breach within 30 days after receiving written notice from the Executive of
such breach, provided that the Executive has provided the Company with such notice no later than 30 days from the date of the Company’s alleged breach. 

 (b) If the Company terminates the Executive’s employment without Cause, or the Executive terminates his employment for Good Reason,
(i) the Executive shall receive any Annual Salary and other benefits actually earned and accrued under this Agreement prior to the date of termination; (ii) the Executive shall receive any amount earned but not yet paid prior to the date
of termination under any bonus, equity or long term incentive plan of the Company then in effect, and shall receive all vested rights and benefits under any retirement or other benefit plan or program (in accordance with their terms and conditions);
(iii) the Executive shall receive reimbursement under this Agreement for expenses incurred prior to the date of termination which shall be paid in accordance with the Company’s policies or Section 4.4; (iv) the Executive shall
receive a single-sum cash payment equal to two (2) times the average total Annual Salary and performance bonuses earned by and paid to the Executive with respect to the two fiscal years preceding the date of termination, including, in the event
of a date of termination under this Section 6.2(b) prior to payment to the Executive of any performance bonus relating to the 2009 fiscal year, the annual salary and performance bonus paid to Executive by FBR Group for the 2007 and 2006 fiscal
years, as applicable, as reflected in the Company’s 2008 annual proxy statement, but in any event excluding the retention incentive payment paid to the Executive pursuant to that certain Retention Incentive Agreement dated as of the date hereof
(provided that the single lump-sum payment payable pursuant to this clause (iv) shall not be less than $4.5 million if the date of termination occurs prior to payment to the Executive of any annual performance bonus relating to the 2009 fiscal
year), (v) all unvested incentive equity or equity-based awards held by Executive, including any performance-based cash or equity-based awards that are not intended to qualify as “performance based compensation” under
Section 162(m) of the Code based on a performance measurement period beginning after January 1, 2009, shall immediately vest and any time-based forfeiture restrictions on incentive equity or equity-based awards held by Executive shall
immediately lapse; provided, however, that unvested incentive equity or equity-based awards that are intended to qualify as “performance based compensation” under Section 162(m) of the Code based on a performance measurement
period beginning after January 1, 2009, shall vest and be earned only upon achievement of the applicable performance goals or objectives (but disregarding any requirement for Executive’s continued employment); and (vi) for a period of
five years after termination of employment, such continuing coverage of the Executive and his “qualified beneficiaries” (as defined in Section 4980B of the Internal Revenue Code (“COBRA”) under the group health plans the
Executive and his qualified beneficiaries would have received under this Agreement as would have applied in the absence of such termination, provided that the Company shall in no event be required to provide such coverage to Executive or a qualified
beneficiary after such time as the Executive or the qualified beneficiary, as applicable, is no longer eligible to continued coverage under COBRA. For the portion of such five year period after Executive or a qualified beneficiary is no longer
eligible to elect continuing coverage under the Company’s group health plans under COBRA, the Company shall reimburse the health insurance 

  

 4 

 
premiums incurred by the Executive under a private health insurance plan that provides substantially similar benefits for Executive and his qualified
beneficiaries and is reasonably acceptable to the Company, provided that the Company shall in no event be required to provide or reimburse the cost of any benefits otherwise required by this clause after such time as the Executive or the qualified
beneficiary, as applicable becomes entitled to receive benefits of the same type from another employer or recipient of the Executive’s services. Except as provided in Section 8.1, any amount payable under clauses (i), (ii), (iv) and
(v) shall be paid within ten (10) days after Executive’s termination of employment and a reimbursement of Executive for health insurance premiums shall be paid on the first day of the calendar quarter following Executive’s
payment of the premiums. For purposes of clauses (i) and (ii) above, the parties understand and agree that, to the extent any approved performance bonus plan, program or arrangement in which Executive is a participant specifies a
performance period or performance goals that have not yet been completed or achieved, as the case may be, as of the date of termination, no bonus, whether pro rata or otherwise, shall not be deemed to be earned and accrued by Executive under
such performance bonus plan, program or arrangement. 
 (c) Upon any termination under this Section 6.2, the Executive
shall resign from all positions he then holds with the Company and any of its subsidiaries. 
 7. Covenants of the Executive.

 7.1. Covenant Against Competition; Other Covenants. The Executive acknowledges that (i) the Executive’s work for the
Company has given and will continue to give him access to the confidential affairs and proprietary information of the Company; (ii) the covenants and agreements of the Executive contained in this Section 7 are essential to the business and
goodwill of the Company, and (iii) the Company would not have entered into this Agreement but for the covenants and agreements set forth in this Section 7. Accordingly, the Executive covenants and agrees that: 
 (a) During and after the period of the Executive’s employment with the Company and its affiliates, the Executive shall keep secret
and retain in strictest confidence, except in connection with the business and affairs of the Company and its affiliates and as otherwise required by law, all confidential matters relating to the business and affairs of the Company its affiliates
learned by the Executive heretofore or hereafter directly or indirectly from the Company or any of its affiliates (the “Confidential Company Information”); and shall not disclose such Confidential Company Information to anyone
outside of the Company except as required by law or with the Company’s express written consent and except for Confidential Company Information which is, at the time of receipt, or thereafter becomes, publicly known through no wrongful act of
the Executive. 
 (b) The Executive agrees that during the Term and for a period of twelve (12) months following the
termination of the Executive’s employment with the Company either by the Company with or without Cause or by the Executive with or without Good Reason (the “Restricted Period”), the Executive shall not, without the express written
consent of the Company, directly or indirectly, anywhere in the United States, own an interest in, join, operate, control or participate in, be connected as an owner, officer, executive, employee, partner, member, manager, shareholder, or principal
of or with, or otherwise aid or assist in any manner whatsoever, any corporation or other entity that competes with the Company or its subsidiaries in the capital markets, financial advisory and/or institutional sales and trading business.
Notwithstanding the foregoing, the Executive may (i) own up to one percent (1%) of the outstanding stock of a publicly held corporation which is or is affiliated with an entity or person that is in competition with the Company or its
subsidiaries or (ii) be an officer, executive, employee, partner, member, manager, shareholder, or principal of or with a private equity fund or a third-party asset management firm. The restrictions of this Section 7.1(c) shall not apply
if the Executive’s employment with the Company is terminated for any reason by the Company or the Executive effective during the 12 month period immediately following a Change in Control. 
 (c) During the Term and the Restricted Period, (i) the Executive shall not, without the Company’s prior written consent,
directly or indirectly, knowingly (A) solicit or encourage to leave the employment or other service of the Company, or any of its affiliates, any employee or independent contractor thereof or (B) hire (on behalf of the Executive or any
other person or entity) any employee who has left the employment of the 

  

 5 

 
Company or any of its affiliates within the twelve month period which follows the termination of such employee’s employment with the Company and its
affiliates, and (ii) the Executive will not, whether for his own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with the Company’s or any of its affiliates’
relationship with, or endeavor to entice away from the Company or any of its affiliates, any person who during the Term is or was, within the preceding year, a customer or client of the Company or any of its affiliates, nor shall Executive aid or
assist in any manner whatsoever any person, firm, corporation or other business in doing any of the things described in clauses (i) or (ii) above. 
 7.2. Rights and Remedies upon Breach. The Executive acknowledges and agrees that any breach by him of any of the provisions of Section 7.1 (the “Restrictive Covenants”) would result in
irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if the Executive breaches, or threatens to commit a breach of, any of the provisions of Section 7.1, the Company and its affiliates, in
addition to, and not in lieu of, any other rights and remedies available to the Company and its affiliates under law or in equity (including, without limitation, the recovery of damages), shall have the right and remedy to have the Restrictive
Covenants specifically enforced by any court having equity jurisdiction, including, without limitation, the right to an entry against the Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of such covenants. 
 8. Other Provisions. 
 8.1. Code Section 409A. Notwithstanding any other provision of this Agreement, no payment will be made under this Agreement before the
earlier of the Executive’s death or the date (the “Delayed Payment Date”) that is six months after the Executive’s termination of employment if (i) the Executive is a “specified employee” (as defined in
Section 409A of the Code) at the time his employment terminates, (ii) the payment constitutes deferred compensation that is subject to Section 409A of the Code, and (iii) the payment is due on account of the Executive’s
separation from service for a reason other than Executive’s death or because the Executive is “disabled” (as defined in Section 409A of the Code). Any and all payments that are delayed until after the Delayed Payment Date shall
be paid within fourteen (14) days after such date, and shall not in any way affect any other payments, benefits, or rights of the Executive under this Agreement. 
 8.2. Code Section 280G. 
 (a) This Section 8.2 applies only if it is
determined that the Executive’s receipt of benefits or payments that the Executive is entitled to receive under this Agreement, taking into account other benefits or payments that the Executive is entitled to receive under other plans,
agreements or arrangements (which, together with the payments and benefits due under this Agreement, are referred to as the “Payments”), would subject the Executive to tax under Section 4999 of the Code. 
 (b) The independent accounting firm engaged to audit the Company’s financial statements immediately before the Change in Control (the
“Accounting Firm”), must determine whether some amount of the Payments would meet the definition below of a “Reduced Amount.” If the Accounting Firm determines that there is a Reduced Amount, the Payments must be reduced to such
Reduced Amount, but not below zero. If the Accounting Firm determines that there is a Reduced Amount, and that the Payments must be reduced, the Company must promptly notify the Executive of that determination and furnish the Executive a copy of the
detailed calculations prepared by the Accounting firm. Any reduction required under this subsection (b) shall be effected by first reducing Payments that are not subject to Section 409A of the Code (by first reducing any such Payments that
are not payable in cash and then by reducing any such Payments payable in cash) and thereafter reducing Payments that are subject to Section 409A of the Code. All determinations made by the Accounting Firm under this section are binding on the
Executive and the Company. 
 (c) If the Accounting Firm determines that there is not a Reduced Amount, the Payments shall not
be reduced and the Company will make a tax indemnification payment (the “Additional Payment”) to the Executive in an amount sufficient to hold the Executive harmless from any and all federal, state and local 

  

 6 

 
income or excise taxes that the Executive incurs as a result of incurring any excise tax imposed under Section 4999 of the Code and the Executive’s
receipt of the tax indemnification payment. The Additional Payment shall be paid to the Executive, in a single cash payment, within ten days after the Executive’s payment of the excise tax imposed under Section 4999 of the Code with
respect to the Payments. 
 (d) As a result of the uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm under this Section, it is possible that amounts will have been paid or distributed to or for the benefit of the Executive which should not have been so paid or distributed under this
Section 8.2 (“Overpayment”) or that additional amounts which will not have been paid or distributed to or for the benefit of the Executive could have been so paid or distributed under this Section 8.2 (“Underpayments”),
in each case, consistent with the calculation of the Reduced Amount. If the Accounting Firm, based either upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Executive which the Accounting Firm believes has
a high probability of success or controlling precedent or other substantial authority, determines that an Overpayment has been made, any such Overpayment, and any portion of an Additional Payment previously paid to the Executive that is attributable
to the Overpayment, must be treated (if permitted by applicable law) for all purposes as a loan ab initio for which the Executive must repay the Company together with interest at the applicable federal rate under Section 7872(f)(2) of
the Code; provided, however, that no such loan may be deemed to have been made and no amount shall be payable by the Executive to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which the Executive
is subject to tax under Section 1 or 4999 of the Code or generate a refund of such taxes. If the Accounting Firm, based upon controlling precedent or other substantial authority, determines that that an Underpayment has occurred, the Accounting
Firm must promptly notify the Company and the Executive of the amount of the Underpayment and the Company must pay such amount (plus any tax indemnification determined under subsection (c) on the Underpayment), together with interest at the
applicable federal rate under Section 7872(f)(2) of the Code, to the Executive. 
 (e) For purposes of this
Section 8.2, (i) “Net After Tax Receipt” means the Present Value of some or all of the Payments net of all taxes imposed on the Executive with respect thereto under Sections 1 and 4999 of the Code, determined by applying the
highest marginal rate under Section 1 of the Code which applied to the Executive’s taxable income for the immediately preceding taxable year, (ii) “Present Value” means the value determined in accordance with
Section 280G(d)(4) of the Code, and (iii) “Reduced Amount” means the smallest aggregate amount of the Payments which (a) is less than the sum of all of the Payments and (b) results in aggregate Net After Tax Receipts
which are equal to or greater than the Net After Tax Receipts which would result if the portion of the Payments paid to the Executive were any other amount less than the total Payments. 
 8.3. Non-Disparagement. The Executive agrees that he/she will not (except as reasonably required by law), whether during or after the
Executive’s employment with the Company, make any statement, orally or in writing, regardless of whether such statement is truthful, nor take any action, that (a) in any way could disparage the Company or any officer, executive, director,
partner, manager, member, principal, employee, representative, or agent of the Company, or which foreseeably could or reasonably could be expected to harm the reputation or goodwill of any of those persons or entities, or (b) in any way,
directly or indirectly, could knowingly cause, encourage or condone the making of such statements or the taking of such actions by anyone else. 
 8.4. Severability. The Executive acknowledges and agrees that (i) he has had an opportunity to seek advice of counsel in connection with this Agreement and (ii) the Restrictive Covenants are reasonable in geographical and
temporal scope and in all other respects. If it is determined that any of the provisions of this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the
provisions of this Agreement shall not thereby be affected and shall be given full effect, without regard to the invalid portions. 
 8.5.
Duration and Scope of Covenants. If any court or other decision-maker of competent jurisdiction determines that any of the Executive’s covenants contained in this Agreement, including, without limitation, any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration or geographical scope 

  

 7 

 
of such provision, then, after such determination has become final and unappealable, the duration or scope of such provision, as the case may be, shall be
reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced. 
 8.6. Enforceability; Jurisdiction; Arbitration. Any controversy or claim arising out of or relating to this Agreement or the breach of this Agreement (other than a controversy or claim arising under Section 7, and to the extent
necessary for the Company or its affiliates, where applicable, to avail itself of the rights and remedies referred to in Section 7.2) that is not resolved by the Executive and the Company (or its affiliates, where applicable) shall be
submitted to arbitration in the Washington, D.C. area in accordance with Virginia law and the procedures of the American Arbitration Association. The determination of the arbitrator(s) shall be conclusive and binding on the Company (or its
affiliates, where applicable) and the Executive and judgment may be entered on the arbitrator(s)’ award in any court having jurisdiction. 
 8.7. Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, sent by facsimile or electronic transmission, or sent by certified, registered or express mail,
postage prepaid. Any such notice shall be deemed given when so delivered personally, or sent by facsimile or electronic transmission or, if mailed, five days after the date of deposit in the United States mails as follows: 
  

	 	(i)	If to the Company, to: 

  

	 	 	FBR Capital Markets Corporation 

	 	  
	 1001 19th Street
North 

	 	 	Arlington, VA 22209 

	 	 	Attention: General Counsel 

  

	 	 	with a copy to: 

  

	 	 	Daniel LeBey 

	 	 	Hunton & Williams LLP 

	 	 	Riverfront Plaza, East Tower 

	 	 	951 East Byrd Street 

	 	 	Richmond, VA 23219 

	 	 	Attention: Daniel M. LeBey 

  

	 	(ii)	If to the Executive, to the address set forth on the signature page hereof. 

  

	 	 	with a copy to: 

  

	 	 	Paul Hastings Law Firm 

	 	  
	 875 15th St. NW, 10
th Floor 

	 	 	Washington DC, 20005 

	 	 	Attention: J. Mark Poerio, Esq. 

 Any such person may by written notice
given in accordance with this Section 8.4 to the other parties hereto designate another address or person for receipt by such person of notices hereunder. 
 8.8. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto. No
prior or contemporaneous agreements were reached or entered between the parties. 
 8.9. Waivers and Amendments. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties or. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege nor any single or partial exercise of any such right, power or privilege, preclude any other or further exercise thereof or the exercise of any other
such right, power or privilege. 
  

 8 

 8.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE COMMONWEALTH OF VIRGINIA WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAW WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE COMMONWEALTH OF VIRGINIA. 
 8.11. Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case
of the Executive) and assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred, subject to Section 6.2(a)(i),
pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company; provided, however, that the assignee or transferee is the successor
to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. 
 8.12. Withholding. The Company shall be entitled to withhold from any payments or deemed payments any amount of tax withholding it determines to
be required by law. 
 8.13. Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original but all such counterparts together shall constitute one and the same instrument. Each counterpart may consist of two copies hereof each signed by one of the parties hereto. 
 8.14. Survival. The provisions of Section 7 and any other provisions of this Agreement expressly impose obligations that survive termination
of Executive’s employment hereunder, and the other provisions of this Section 7 to the extent necessary to effectuate the survival of such provisions, shall survive termination of this Agreement and any termination of the Executive’s
employment hereunder. 
 8.15. Existing Agreements. The Executive represents to the Company that he is not subject or a party to any
employment or consulting agreement, non-competition covenant or other agreement, covenant or understanding which might prohibit him from executing this Agreement or limit his ability to fulfill his responsibilities hereunder. 
 8.16. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement. 
 IN WITNESS WHEREOF, the parties hereto have signed their names as of the day and year first above written. 
  

					
	FBR CAPITAL MARKETS CORPORATION
		
	By:	 	/S/    ERIC F. BILLINGS
		 	Name:	 	Eric F. Billings
		 	Title:	 	Chief Executive Officer

					
	
	EXECUTIVE
			
	Signature:	 		 	/S/    RICHARD J. HENDRIX
		 		 	Richard J. Hendrix

  

 9Amendment and Exchange Agreement

 Exhibit 10.2 
 AMENDMENT AND EXCHANGE AGREEMENT 
 AMENDMENT AND EXCHANGE AGREEMENT (the
“Agreement”), dated as of March 13, 2008, by and among Nanogen Inc., a Delaware corporation, with headquarters located at 10398 Pacific Center Court, San Diego, California 92121 (the “Company”), and
                                 (the “Investor”). 
 WHEREAS: 
 A. The Company, the
Investor and certain other investors (the “Other Investors”, and collectively with the Investor, the “Investors”) are parties to that certain Securities Purchase Agreement, dated as of August 26, 2007 (the
“Existing Securities Purchase Agreement”), pursuant to which, among other things, the Investors purchased from the Company (i) 6.25% senior convertible notes due 2010 (the “Existing Notes”), which are
convertible into shares (the “Existing Conversion Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), pursuant to that certain first supplemental indenture, dated
August 27, 2007 (the “First Supplemental Indenture”), which supplements the Indenture dated August 27, 2007, by and between the Company and Bank of New York Trust Company, N.A., as trustee (the “Trustee”)
(such indenture, as modified by any supplement and amendment thereto as of the date hereof, the “Indenture”) and (ii) three series of warrants, which are exercisable into shares of Common Stock. 
 B. The Company and the Investor desire to enter into this Agreement, pursuant to which, among other things, on the Closing Date (as defined below), the
Company and the Investor shall exchange a portion of such Investor’s Existing Notes for the Company’s 9.75% Senior Secured Convertible Notes in an aggregate principal amount as is set forth opposite such Investor’s name in column
(3) of the Schedule of Investors attached hereto and in the form attached hereto as Exhibit A (the “Exchanged Notes”), which shall be convertible into shares of Common Stock (the “Exchanged Conversion
Shares”). 
 C. The exchange of the Existing Notes of the Investor for the Exchanged Notes is being made in reliance upon the
exemption from registration provided by Section 3(a)(9) of the 1933 Act. 
 D. As additional consideration for the transactions
contemplated hereby, any Exchanged Notes issued hereunder will be secured by a first priority, perfected security interest in certain of the assets of the Company and the stock and assets of each of the Company’s subsidiaries, as evidenced by
the security agreement attached hereto as Exhibit B (the “Security Agreement”, and together with any ancillary documents related thereto, collectively the “Security Documents”). 
 E. The accrued and unpaid interests under the Existing Notes prior to the issuance of the Exchanged Notes will be included as additional interest
obligations under the Exchange Notes, and the Company will pay such additional interest on the first interest payment date pursuant to the terms of the Exchanged Notes. 

 F. Concurrently herewith each of the Other Investors is also entering into agreements identical to this
Agreement (the “Other Agreements”) (other than proportional changes (the “Proportionate Changes”) in the numbers reflecting the different principal amount of such Investor’s Existing Notes) with the Company and
surrendering its Existing Notes for Exchanged Notes and identical to Exchanged Notes of the Investor hereunder (other than the Proportionate Changes). 
 G. In connection with the transactions contemplated hereby, the Investor is also entering into that certain Consent and Agreement with the Company, pursuant to which the Investor provides the Company with a consent
under the Indenture to complete certain royalty assignment transaction. 
 H. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings ascribed to them in the Existing Securities Purchase Agreement as amended hereby. 
 NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the Company and the Investor hereby agree as follows: 
  

	 	1.	EXCHANGE OF EXISTING NOTE AND ISSUANCE OF EXCHANGED NOTES. 

 (a) Exchange. Subject to satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below, at the Closing, (x) the Investor shall surrender to the Company its Existing Note (or such other
documentation reasonably satisfactory to the Company that the Investor held such Existing Note as a Physical Security and that the Investor’s Existing Note has been lost or destroyed) in an aggregate principal amount as set forth opposite such
Investor’s name in column (4) on the Schedule of Investors attached hereto and the Company shall issue and deliver to the Investor an Exchanged Note with that aggregate principal amount set forth opposite the Investor’s name in column
(3) of the Schedule of Investors attached hereto, and (y) immediately following the Closing Date (as defined below), in accordance with Section 3.07 of the First Supplemental Indenture, the Existing Note of the Investor shall be
reduced to the aggregate principal amount as is set forth opposite such Investor’s name in column (5) of the Schedule of Investors attached hereto. The Investor acknowledges that the Exchanged Note shall include all Interest, Late Charges,
fees and other amounts payable in respect of the portion of the Existing Note cancelled upon issuance of the Exchanged Note (the “Exchanged Interest”) and that notwithstanding anything to the contrary in the Indenture no such Exchanged
Interest shall be payable in respect of the Existing Notes (as reduced pursuant to the foregoing exchange) or the Indenture but shall be payable solely upon the terms of the Exchanged Note. 
 (b) Closing Date. The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York Time, on
March 20, 2008, subject to notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 5 and 6 below (or such earlier or later date as is mutually agreed to by the Company and the Investor). The Closing shall
occur on the Closing Date at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022. 
  

 2 

 (c) Waiver of Right of First Refusal. Solely with respect to the issuance by the
Company of the Exchanged Notes contemplated hereunder, the Investor hereby waives its rights pursuant to Section 4(m) of the Existing Securities Purchase Agreement, and the Company shall not be obligated to make any offer to the Investor
pursuant to Section 4(m) thereof. 
  

	 	2.	AMENDMENTS TO TRANSACTION DOCUMENTS. 

 (a) Amendment to Existing Securities Purchase Agreement. Subject to the modifications set forth in Schedules 2(a) and 3(b) hereof, and except for Section 1, 6 and 7 of the Existing Securities Purchase Agreement, the
Existing Securities Purchase Agreement is hereby amended as follows: 
 (i) All references to “Notes” shall include
the “Exchanged Notes” (as defined in those certain Amendment and Exchange Agreements, each by any between the Company and a Buyer, dated as of March 13, 2008 (the “Amendment Agreements”)”; 
 (ii) All references to “Conversion Shares” shall include the “Exchanged Conversion Shares (as defined in the Amendment
Agreements)”; 
 (iii) The defined term “Transaction Documents” is hereby amended to include the Amendment
Agreements and the Security Documents; 
 (iv) All references to “Securities Purchase Agreement” shall mean, and are
hereby replaced by “Securities Purchase Agreement, as amended by the Amendment Agreements”; 
 (v) On the Closing
Date, Section 4 of the Existing Securities Purchase Agreement is hereby amended by adding the following: 
 “(p)
Collateral Agent. Each Buyer hereby (a) appoints Portside Growth & Opportunity Fund, as the collateral agent hereunder, under the Exchanged Notes and under the other Security Documents (in such capacity, the “Collateral
Agent”), and (b) authorizes the Collateral Agent (and its officers, directors, employees and agents) to take such action on such Buyer’s behalf in accordance with the terms hereof and thereof. The Collateral Agent shall not have,
by reason hereof or any of the other Transaction Documents, a fiduciary relationship in respect of any Buyer. Neither the Collateral Agent nor any of its officers, directors, employees and agents shall have any liability to any 

  

 3 

 
Buyer for any action taken or omitted to be taken in connection hereof or any other Transaction Document except to the extent caused by its own gross
negligence or willful misconduct, and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral Agent and all of its officers, directors, employees and agents (collectively, the “Indemnitees”) from and against
any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such Indemnitee, whether direct, indirect
or consequential, arising from or in connection with the performance by such Indemnitee of the duties and obligations of Collateral Agent pursuant hereto or any of the Transaction Documents. The Collateral Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the holders of a majority in principal amount of the Exchanged Notes
then outstanding, and such instructions shall be binding upon all holders of Exchanged Notes; provided, however, that the Collateral Agent shall not be required to take any action which, in the reasonable opinion of the Agent, exposes
the Agent to liability or which is contrary to this Agreement or any other Transaction Document or applicable law. The Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Transaction Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it. 
 (q) Successor Collateral Agent. 

(i) The Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other Transaction
Documents at any time by giving at least thirty (30) Business Days’ prior written notice to the Company and each holder of Exchanged Notes. Such resignation shall take effect upon the acceptance by a successor Collateral Agent of
appointment pursuant to clauses (ii) and (iii) below or as otherwise provided below. 
 (ii) Upon any such notice of
resignation, the holders of a majority in principal amount of the Exchanged Notes then outstanding shall appoint a successor collateral agent. Upon the acceptance of any appointment as collateral agent hereunder by a successor agent, such successor
collateral agent shall thereupon 

  

 4 

 
succeed to and become vested with all the rights, powers, privileges and duties of the collateral agent, and the Collateral Agent shall be discharged from
its duties and obligations under this Agreement and the other Transaction Documents. After the Collateral Agent’s resignation hereunder as the collateral agent, the provisions of this Section 4(q) shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Collateral Agent under this Agreement and the other Transaction Documents. 
 (iii) If a successor collateral agent shall not have been so appointed within said thirty (30) Business Day period, the Collateral Agent shall then appoint a successor collateral agent who shall serve as the
collateral agent until such time, if any, as the holders of a majority in principal amount of the Exchanged Notes then outstanding appoint a successor collateral agent as provided above.” 
 (b) Ratifications. Except as otherwise expressly provided herein, (i) the Securities Purchase Agreement and each other
Transaction Document is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that on and after the Closing Date (A) all references in the Existing Securities Purchase Agreement to the
“Securities Purchase Agreement”, “hereto”, “hereof”, “this Agreement”, “hereunder” or words of like import referring to the Securities Purchase Agreement shall mean the Existing Securities Purchase
Agreement as amended by this Agreement and the Other Agreements, and (B) all references in the other Transaction Documents to the “Securities Purchase Agreement”, “thereto”, “thereof”, “thereunder” or
words of like import referring to the Securities Purchase Agreement shall mean the Existing Securities Purchase Agreement as amended by this Agreement and the Other Agreements, and (ii) the execution, delivery and effectiveness of this
Agreement shall not operate as an amendment of any right, power or remedy of the Investor under any Transaction Document, nor constitute an amendment of any provision of any Transaction Document. 
  

	 	3.	REPRESENTATIONS AND WARRANTIES. 

 (a) Investor Representations. The Investor hereby represents and warrants to the Company as to the Exchanged Notes and the Exchanged Conversion Shares as set forth in Section 2 of the Securities Purchase Agreement as if such
representations and warranties were made as of the date hereof (except for representations and warranties that speak as of a specific date, which shall remain true and correct as of such specific date) and set forth in their entirety in this
Agreement. 
 (b) Company Representations. 
 (i) The Company represents and warrants to the Investor as set forth in Section 3 of the Securities Purchase Agreement as if such

  

 5 

 
representations and warranties were made as of the date hereof (except for representations and warranties that speak as of a specific date, which shall
remain true and correct as of such specific date, and except as set forth in a Disclosure Schedule attached hereto) and set forth in their entirety in this Agreement. Such representations and warranties to the transactions thereunder and the
securities issued thereby are hereby deemed for purposes of this Agreement to be references to the transactions hereunder and the issuance of the securities hereby, references therein to “Closing Date” being deemed references to the
Closing Date as defined in Section 1(b) above, and references to “the date hereof” being deemed references to the date of this Agreement. 
 (ii) The Company further represents and warrants to the Investor as of the date hereof as follows: 
 (1) Neither the Company nor any Subsidiary is or, after giving effect to the issuance of the Exchanged Notes and the offer and sale of the Exchanged Conversion Shares contemplated hereunder and the application of the net proceeds from such
sale, will be an “investment company” within the meaning of such term under the 1940 Act, and the rules and regulations of the SEC thereunder. 
 (2) Other than the sale and issuance of the Securities (as defined in the Existing Securities Purchase Agreement), the Company has not sold or issued any securities that would be integrated with the issuance and
offering of the Securities (as defined in the Securities Purchase Agreement) contemplated by this Agreement pursuant to the 1933 Act, the Rules and Regulations or the interpretations thereof by the SEC. None of the Company, its Subsidiaries, any of
their affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this issuance and offering of the
Securities (as defined in the Securities Purchase Agreement) to require approval of stockholders of the Company for purposes of any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any
exchange or automated quotation system on which any of the securities of the Company are listed or designated. Other than the sale and issuance of the Securities (as defined in the Existing Securities Purchase Agreement), none of the Company, its
Subsidiaries, their affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would cause the issuance and offering of the Securities (as defined in the Securities Purchase Agreement)
to be integrated with other offerings for purposes of any such applicable stockholder approval provisions. 
 (3) The
aggregate Indebtedness owed by all Subsidiaries to the Company as of the date hereof is approximately $155,016,000. 
  

 6 

 (4) The aggregate Indebtedness owed by all Subsidiaries to the Company as of the Closing
Date shall not exceed $ 175,016,000. 
 (c) No Event of Default. The Company represents and warrants to the Investor
that after giving effect to the terms of this Agreement and the Other Agreements, no Default or Event of Default (as defined in the Indenture) shall have occurred and be continuing as of the date hereof. 
 (d) Public Information. At any time during the period commencing on the Closing Date and ending at such time that all of the
Securities can be sold without the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if a registration statement is not available for the resale of all of the Securities and the
Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c)(1) (a “Public Information Failure”) then, as partial relief for the damages to any holder of Securities by reason of any such
delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash equal to two percent (2.0%) of
the aggregate Purchase Price of such holder’s Securities on the day of a Public Information Failure and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public
Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144. The payments to which a holder shall be entitled pursuant to this Section 3(d) are referred to herein as “Public
Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Public Information Failure Payments are incurred and (II) the third Business Day
after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest
at the rate of 1.5% per month (prorated for partial months) until paid in full. 
 (e) Holding Period. For the
purposes of Rule 144(d), the Company acknowledges that the holding period of the Existing Notes (including the corresponding Existing Conversion Shares) may be tacked onto the holding period of the Exchanged Notes (including the corresponding
Exchanged Conversion Shares). The Company agrees not to take a position contrary to this Section 3(e). The Company agrees to take all actions, including, without limitation, the issuance by its legal counsel of any necessary legal opinions,
necessary to issue to the Exchanged Conversion Shares that are freely tradable on an Eligible Market without restriction and not containing any restrictive legend without the need for any action by the Investor. 
  

	 	4.	FEES AND EXPENSES. 

 [PORTSIDE ONLY] [At the
Closing, the Company shall reimburse the Investor for its legal and due diligence fees and expenses in connection with the preparation and negotiation of this Agreement and the related documents by paying such amount to Schulte Roth & Zabel
LLP (the “Investor Counsel Expense”).] 
  

 7 

 On the First Monthly Installment Date (as defined in the Notes), the Company shall reimburse the Investor
for 
 (a) its legal and due diligence fees and expenses in connection with the preparation and negotiation of this Agreement
in an amount up to $10,000 subject to the provision documents and other evidence reasonably satisfactory to Company of the fees and expenses so incurred. Except as otherwise set forth in this Agreement, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. 
 (b) United States taxes payable by the Investor or any of its affiliates, shareholders or members as a consequence of the exchange of the
Existing Notes for the Exchanged Notes (but not including any taxes payable as a consequence of payments under the Exchanged Notes), subject to certification by the Investor of the amount of taxable gains or income subject to taxation, the rate of
taxation, relative proportion of domestic and foreign tax payers, and the amount of taxes so payable; provided, further that the maximum amount of taxes reimbursable pursuant to this paragraph (b) shall not exceed an amount, in the aggregate,
equal to 0.5% of the principal amount of the Exchanged Notes and Existing Notes held by such Investor immediately following the Closing, which aggregate amount is set forth opposite such Investor’s name in column (7) of the Schedule of
Investors attached hereto. The Company shall pay all stamp and other non-income taxes and duties levied in connection with the issuance of the Exchanged Notes. 
  

	 	5.	CONDITIONS TO COMPANY’S OBLIGATIONS HEREUNDER. 

 The obligations of the Company to the Investor hereunder are subject to the satisfaction of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any
time in its sole discretion by providing the Investor with prior written notice thereof: 
 (a) The Investor shall have
executed this Agreement and delivered the same to the Company. 
 (b) The Investor shall have delivered to the Company,
pursuant to the Indenture and this Agreement, such principal amount of its Existing Note being exchanged at the Closing or such other documentation reasonably satisfactory to the Company that the Investor held such Existing Note as a Physical
Security and that the Investor’s Existing Note has been lost or destroyed. 
 (c) The representations and warranties of
the Investor in Section 3(a) hereof shall be true and correct as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date). 
  

 8 

	 	6.	CONDITIONS TO THE INVESTOR’S OBLIGATIONS HEREUNDER. 

 The obligations of the Investor hereunder are subject to the satisfaction of each of the following conditions, provided that these conditions are for the Investor’s sole benefit and may be waived by the Investor at any time in its sole
discretion by providing the Company with prior written notice thereof: 
 (a) The Company shall have duly executed and
delivered to the Investor (i) this Agreement and the Other Agreements, (ii) each of the Security Documents, and (iii) the Exchanged Notes (allocated in such principal amounts as the Investor shall request) being issued to the Investor
at the Closing pursuant to this Agreement. 
 (b) Each of the Other Investors shall have (i) executed the Other
Agreements, (ii) satisfied or waived all conditions to the closings contemplated by such agreements and (iii) surrendered such principal amount of their Existing Notes being exchanged at the Closing or such other documentation reasonably
satisfactory to the Company that such Other Investor held such Existing Note as a Physical Security (as defined in the First Supplemental Indenture) and that such Other Investor’s Existing Note has been lost or destroyed. 
 (c) The Investor shall have received the opinion of Morgan, Lewis & Bockius LLP, the Company’s counsel, dated as of the
Closing Date, in substantially the form of Exhibit C attached hereto. 
 (d) The Company shall have delivered to the
Holder Part A of Schedule I to the Security Agreement. 
 (e) The Company shall have delivered to the Investor a copy of the
Irrevocable Transfer Agent Instructions, in the form of Exhibit D attached hereto, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent. 
 (f) The Company shall have delivered to the Investor a certificate (or a fax or pdf copy of such certificate) evidencing the formation and
good standing of the Company and each of its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within ten (10) days of the Closing Date.

 (g) The Company shall have delivered to the Investor a certificate (or a fax or pdf copy of such certificate) evidencing
the Company’s qualification as a foreign corporation and good standing issued by the Secretary of State of California, which is the only jurisdiction in which the Company conducts business and is required to so qualify, as of a date within ten
(10) days of the Closing Date. 
  

 9 

 (h) The Company shall have delivered to the Investor a certified copy of the Certificate
of Incorporation as certified by the Secretary of State of the State of Delaware (or a fax or pdf copy of such certificate) within ten (10) days of the Closing Date. 
 (i) The Company shall have delivered to the Investor a certificate, executed by the Secretary of the Company and dated as of the Closing
Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s Board of Directors in a form reasonably acceptable to the Investor, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as
in effect at the Closing, in the form attached hereto as Exhibit E. 
 (j) The representations and warranties of the
Company in Section 3(b) shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as
of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Investor
shall have received a certificate, executed by the Chief Executive Officer or Chief Financial Officer of the Company, dated as of the Closing Date, to the foregoing effect in the form attached hereto as Exhibit F. 
 (k) The Company shall have delivered to the Investor a letter from the Company’s transfer agent certifying the number of shares of
Common Stock outstanding as of a date within five days of the Closing Date. 
 (l) The Common Stock (I) shall be
designated for quotation or listed on the Principal Market and (II) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor, except as set forth in the Company’s filings
with the SEC, shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by falling below the minimum listing maintenance requirements
of the Principal Market. 
 (m) In accordance with the terms of the Security Documents, the Company shall have delivered to
the Collateral Agent (i) certificates representing the Company’s U.S. Subsidiaries’ shares of capital stock to the extent such subsidiary is a corporation or otherwise has certificated capital stock, along with duly executed blank
stock powers and (ii) appropriate financing statements on Form UCC-I to be duly filed in such office or offices as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests purported to be created
by each Security Document. 
  

 10 

 (n) Within two (2) Business Days prior to the Closing, the Company shall have
delivered or caused to be delivered to the Investor (i) true copies of UCC search results, listing all effective financing statements which name as debtor the Company or any of its Subsidiaries filed in the prior five years to perfect an
interest in any assets thereof, together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Investor, shall cover any of the Collateral (as defined in the Security Documents) and the results of
searches for any tax lien and judgment lien filed against such Person or its property, which results, except as otherwise agreed to in writing by the Investors and except with respect to any Permitted Liens (as defined in the Exchanged Notes) shall
not show any such Liens (as defined in the Security Documents); 
 (o) [PORTSIDE ONLY] [The Company shall have delivered or
caused to be delivered Schulte Roth & Zabel LLP an amount in United States dollars and in immediately available funds, by one or more wire transfers to an account designated in writing by the Schulte Roth & Zabel LLP for such
purpose, equal to the Investor Counsel Expense.] 
 (p) The Company shall have delivered to such Buyer such other documents
relating to the transactions contemplated by this Agreement as such Buyer or its counsel may reasonably request. 
  

	 	7.	MISCELLANEOUS. 

 (a) Disclosure
of Transactions and Other Material Information. On or before 8:30 a.m., New York City time, on the first Business Day following the date of this Agreement (the “8-K Filing Time”), the Company shall issue a press release and file
a Current Report on Form 8-K describing the terms of the transactions contemplated hereby in the form required by the 1934 Act and attaching the material Transaction Documents that have not previously been filed with the SEC by the Company
(including, without limitation, this Agreement, the Other Agreements, the Security Documents and the form of the Exchanged Notes) as exhibits to such filing (including all attachments, the “8-K Filing”). Also included in the 8-K
Filing, (x) the Company shall announce that it has engaged an investment banker to explore strategic alternatives, including, without limitation, the sale of the Company and (y) the Company shall set forth the book value of the Company as
of December 31, 2007. As of immediately following the filing of the 8-K Filing with the SEC, the Investor shall not be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any of their
respective officers, directors, employees or agents, that is not disclosed in the 8-K Filing or in prior filings with the SEC. For so long as the Exchanged Notes and the Warrants (as defined in the Securities Purchase Agreement) are outstanding,
other than notices required to be delivered pursuant to Section 4(m) of the Securities Purchase Agreement, the Company 

  

 11 

 
shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide the
Investor with any material, nonpublic information regarding the Company or any of its Subsidiaries from and after the filing of the 8-K Filing with the SEC without the express written consent of the Investor. For so long as the Exchanged Notes and
the Warrants are outstanding, if the Investor has, or believes it has, received any such material, nonpublic information regarding the Company or any of its Subsidiaries provided in breach of the preceding sentence, it shall provide the Company with
written notice thereof in which case the Company shall, within five (5) Trading Days (as defined in the Exchanged Notes) of receipt of such notice, make public disclosure of any such material, nonpublic information provided in breach of the
preceding sentence. In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein or in the
Transaction Documents, the Investor shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company, its
Subsidiaries, or any of its or their respective officers, directors, employees or agents. The Investor shall not have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or
agents for any such disclosure. Subject to the foregoing, neither the Company, its Subsidiaries nor the Investor shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however,
that the Company shall be entitled, without the prior approval of the Investor, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law, regulation or any Eligible Market on which the Company’s securities are then listed or quoted (provided that in the case of clause (i) the Investor shall be consulted by the Company
in connection with any such press release or other public disclosure prior to its release). Without the prior written consent of the Investor, neither the Company nor any of its Subsidiaries or affiliates shall disclose the name of the Investor in
any filing, announcement, release or otherwise other than in connection with the Registration Statement unless such disclosure is required by law, regulation or any Eligible Market on which the Company’s securities are then listed or quoted.

 (b) Blue Sky. If required, the Company, on or before the Closing Date, shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to the Investor at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the
United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Investor on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale
of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date. 
 (c) Stockholder Approval. The Company shall provide each stockholder entitled to vote at the next annual meeting of stockholders of the Company (the “Stockholder Meeting”), which shall be
promptly called and held not later than 

  

 12 

 
June 30, 2008 (the “Stockholder Meeting Deadline”), a proxy statement, substantially in the form which has been previously reviewed by
the Buyers and Schulte Roth & Zabel LLP, at the expense of the Company, not to exceed $10,000, soliciting each such stockholder’s affirmative vote at the Stockholder Meeting for approval of resolutions (the “Stockholder
Resolutions”) providing for the Company’s issuance of all of the Securities as described in the Transaction Documents in accordance with applicable law and the rules and regulations of the Principal Market (such affirmative approval
being referred to herein as the “Stockholder Approval”), and the Company shall use its best efforts to solicit its stockholders’ approval of such resolutions and to cause the Board of Directors of the Company to recommend to
the stockholders that they approve such resolutions. The Company shall be obligated to seek to obtain the Stockholder Approval by the Stockholder Meeting Deadline. 
 (d) Dilutive Issuances. For so long as any Exchanged Notes remain outstanding, unless or until the Stockholder Approval has been
obtained, the Company shall not, in any manner, enter into or affect any Dilutive Issuances (as defined in the Exchanged Notes). 
 (e) Mandatory Redemption. Pursuant to Section 8(a) of the Exchanged Notes, on the date that is the later of (i) the Closing Date and (ii) one Business Day following the closing of the DRT Transaction (as defined in the
Exchanged Notes), the Company shall pay to the Investor its share of the Monthly Installment Amount (as defined in the Exchanged Notes), which is equal to the amount set forth opposite the Investor’s name in column (6) of the Schedule of
Investors attached hereto, in United States dollars and in immediately available funds by wire transfer to an account designated in writing by the Investor for such purpose. 
 (f) Post-Closing Security Documents. On or prior to thirty (30) calendar days after the Closing Date, the Company shall have
delivered to the Investor the schedules to the Security Agreement in a form reasonably satisfactory to the Required Holders. On or prior to fourteen (14) calendar days after the Closing Date, the Company shall have delivered to the Collateral
Agent certificates representing the Company’s non-U.S. Subsidiaries’ shares of capital stock to the extent such subsidiary is a corporation or otherwise has certificated capital stock, along with duly executed blank stock powers.

 (g) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that
would cause the application of the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit, action 

  

 13 

 
or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.  
 (h) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto
with the same force and effect as if the signature were an original, not a facsimile signature. 
 (i) Headings. The
headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. 
 (j) Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions
of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in
good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). 
 (k) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. 
 (l)
Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 
  

 14 

 (m) No Strict Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. 
 (n) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns in accordance with the terms of the Existing Securities
Purchase Agreement. 
 (o) Notices. Any notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be: 
 If to the Company: 
 Nanogen Inc. 
 10398 Pacific Center Court 
 San Diego, California 92121 
 Telephone: (858) 410-4600 
 Facsimile: (858) 410-4949 
 Attention: David Ludvigson 
 with a copy (for informational purposes only) to: 
 Morgan, Lewis & Bockius LLP 
 One Market, Spear Street Tower 
 San Francisco, CA 94605 
 Telephone: (415) 442-1091 
 Facsimile: (415) 442-1001 
 Attention: Scott D. Karchmer, Esq. 
 If to the Transfer Agent: 
 Computershare Investor Services 
 250 Royall Street 
 Canton, MA 02021 
 Telephone: (877) 282-1168 
 Facsimile: (781) 575-3606 
 Attention: Jeff Seiders 
  

 15 

 If to the Investor, to its address and facsimile number set forth on the Schedule of
Investors, with copies to such Investor’s representatives as set forth on the Schedule of Investors 
 with a copy (for informational
purposes only) to: 
 Schulte Roth & Zabel LLP 
 919 Third Avenue 
 New York, New York 10022 
 Telephone: (212) 756-2000 
 Facsimile: (212) 593-5955 
 Attention: Eleazer N. Klein, Esq. 
 or to such other address and/or facsimile number and/or to the attention of such other
Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or
other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an
overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively. 
 (p) Remedies. The Investor and each holder of the Securities shall have all rights and remedies set forth in the Transaction
Documents and all rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore,
the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to the Investor. The Company therefore agrees that the
Investor shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security. 
 (q) Independent Nature of Investor’s Obligations and Rights. The obligations of the Investor under this Agreement or any other
Transaction Document are several and not joint with the obligations of any other Investor, and the Investor shall not be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document. Nothing
contained herein or in this Agreement or any other Transaction Document, and no action taken by the Investor pursuant hereto, shall be deemed to constitute such Investor and other Investors as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that such Investor and the other Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement or any other Transaction

  

 16 

 
Document and the Company acknowledges that the Investors are not acting in concert or as a group with respect to such obligations or the transactions
contemplated by Agreement and any other Transaction Document. The Company and the Investor confirms that the Investor has independently participated in the negotiation of the transactions contemplated hereby with the advice of its own counsel and
advisors. The Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Document, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such purpose. 
 (r) Most Favored Nation. The
Company hereby represents and warrants as of the date hereof and covenants and agrees from and after the date hereof that none of the terms offered to any Person with respect to any amendment, settlement or waiver (each a “Settlement
Document”) relating to the terms, conditions and transactions contemplated hereby, is or will be more favorable to such Person than those of the Investor and this Agreement shall be, without any further action by the Investor or the
Company, deemed amended and modified in an economically and legally equivalent manner such that the Investor shall receive the benefit of the more favorable terms contained in such Settlement Document. Notwithstanding the foregoing, the Company
agrees, at its expense, to take such other actions (such as entering into amendments to the Transaction Documents) as the Investor may reasonably request to further effectuate the foregoing. 
 [Signature Page Follows] 
  

 17 

 IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature page to
this Amendment and Exchange Agreement to be duly executed as of the date first written above. 
  

			
	COMPANY:
	
	NANOGEN, INC.
		
	By:	 	 
		 	Name:
		 	Title: 

 IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature page to
this Amendment and Exchange Agreement to be duly executed as of the date first written above. 
  

			
	INVESTOR:
		
	By:	 	
		
	By:	 	 
		 	Name:
		 	Title: 

 Exhibit A 
 Exchanged Note 

 Exhibit B 
 Security Agreement 

 Exhibit C 
 Opinions from Morgan Lewis 

 Exhibit D 
 Irrevocable Transfer Agent Instructions 

 Exhibit E 
 Secretary’s Certificate 

 Exhibit F 
 Officer’s Certificate 

 Schedule 2(a) and 3(b) 
 Modification to the Company’s Covenants in Section 4 of Securities Purchase Agreement. 
  

	 	•	 	 The term “Notes” in Section 4(b) shall mean the Existing Notes. 

  

	 	•	 	 The term “Securities” in Section 4(c) shall have the meaning as set forth in the Existing Securities Purchase Agreement.

  

	 	•	 	 The term “Securities” in Section 4(d) shall have the meaning as set forth in the Existing Securities Purchase Agreement.

 Modification to Company Representations in Section 3 of Securities Purchase Agreement 
  

	 	•	 	 Insert the phrase “except as set forth in the Disclosure Schedule attached to the Amendment and Exchange Agreement dated March 13, 2008 between the
Company and the Buyers” immediately after the sentence “The Company represents and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date” in Section 3. 

  

	 	•	 	 The term “Securities” in Section 3(a) shall have the meaning as set forth in the Existing Securities Purchase Agreement.

  

	 	•	 	 The term “Securities” in Section 3(b)(ii) shall have the meaning as set forth in the Existing Securities Purchase Agreement.

  

	 	•	 	 The term “Irrevocable Transfer Agent Instruction” in Section 3(d) shall refer to the Irrevocable Transfer Agent Instruction attached as Exhibit
[            ] in this Agreement. 

  

	 	•	 	 The first sentence of Section 3(f) shall read as follows: 

 As of the date hereof and as of the Closing Date, the Company has or will have, as the case may be, an authorized, issued and outstanding capitalization as is set forth in Schedule 3(f) to the Amendment Agreement
(subject to the issuance of shares of Common Stock upon exercise of stock options and warrants disclosed as outstanding in the Registration Statement and the Prospectus and the grant or issuance of options or shares under existing equity
compensation plans or stock purchase plans described in the Registration Statement or the Prospectus), and such authorized capital stock conforms to the description thereof set forth in the Registration Statement and the Prospectus. 

	 	•	 	 The term “Securities” in Section 3(g)(i) shall have the meaning as set forth in the Existing Securities Purchase Agreement.

  

	 	•	 	 The term “Securities” in Section 3(g)(ii) shall have the meaning as set forth in the Existing Securities Purchase Agreement.

  

	 	•	 	 The term “Securities” in Section 3(h) shall have the meaning as set forth in the Existing Securities Purchase Agreement.

  

	 	•	 	 The term “Securities” in Section 3(x) shall have the meaning as set forth in the Existing Securities Purchase Agreement.

  

	 	•	 	 The term “Securities” in Section 3(hh) shall have the meaning as set forth in the Existing Securities Purchase Agreement.

 Schedule of Exceptions to the Securities Purchase Agreement as Referenced in the 
 Amendment and Exchange Agreement 
 Schedule
3(g)(i): Disclosure 
 As of the date hereof, the Company believes it will file a Form 12b-25 on or about March 18, 2008 to report its inability
to file its Annual Report on Form 10-K by the initial filing deadline of March 17, 2008. This is due to the fact that the Company’s registered independent public accountants have not yet completed the review of the Company’s
consolidated financial statements for the fiscal year ended December 31, 2007. The delay is primarily due to the additional time required to analyze certain accounting treatment relating to the Company’s investments in Jurilab Ltd. in 2005
and 2006 (see below). The Company’s auditors are finalizing the audited financial statements and it is anticipated that the Form 10-K, along with the audited financial statements, will be filed on or prior to the 15th calendar day following the
prescribed due date of the Company’s 2007 Form 10-K. 
 Schedule 3(j): Financial Statement 
 In December 2007, the Company received a comment letter from the SEC resulting from the SEC’s review of the Company’s Form 10-K for fiscal year end
December 31, 2006 and Form 10-Q for fiscal quarter ended September 30, 2007 public filings. The SEC comment letter contained nine questions, eight of which have been resolved. The currently unresolved SEC comment relates to accounting for
the Company’s investment in Jurilab. In a series of investments in 2005 and 2006, the Company invested approximately $3 million in equity in exchange for approximately 29% of the outstanding stock of Jurilab. Under FIN46 “Variable Interest
Entity” rules, the Company consolidated Jurilab’s results until Q3-07, at which point Jurilab received a significant investment from a separate third party. From the initial investment and continuing through the deconsolidation, the
Company recorded 100% of their losses. Upon deconsolidation, the Company recognized a non-cash gain of $5.8 million, which represented losses incurred by Jurilab during this time which were in excess of the investment. The methodology used to
consolidate and deconsolidate Jurilab are being reviewed. It is possible this may result in a restatement of financial statement of prior periods. Although the net impact of the entries are not expected to result in a cumulative change in the income
statement, there could be a material shifting of which period during which gains and losses were recorded on the financial statement. 
 The Company expects
that the audit report of its registered independent public accountants for the Company’s consolidated financial statements for the fiscal year ended December 31, 2007 will contain a “going concern” note. 
 Schedule 3(l): Weaknesses or Changes in Internal Accounting Controls 
 Our auditors are currently testing our internal controls as of December 31, 2007. Although they have not yet completed the audit, we expect that auditors will include a material weakness qualification to their opinion. The
qualification is due to two primary factors: the accounting for Jurilab accounting (as discussed above), and inventory valuation policies and procedures. 

 
Although we believe the auditors will be able to conclude that the inventory balances are reasonably stated in accordance with GAAP, the auditors are expect
to recommend improvement in the policies and procedures used to perform internal valuation testing and the documentation for the review and approval of such processes. 
 Schedule 3(m): Sarbanes-Oxley 
 Refer to item (l) above. 
 Schedule 3(s): Contracts 
 The Company and its subsidiary,
Epoch Biosciences, Inc., have not paid rent due in February and March 2008 under real property leases for their facilities in San Diego, California and Bothell, Washington. On March 10, 2008, the Company received a notice of default from the
landlord of its San Diego premise. The monthly rent for Nanogen is approximately $114,000 per month, and for Epoch is approximately $73,000 per month. 
 Schedule 3(y): Internal Accounting Controls 
 See responses to (l) and (m) above. 
 Schedule 3(ff): Listing 
 On November 27, 2007, Nanogen,
Inc. (the “Company”) received a letter from the NASDAQ Stock Market advising that for the previous 30 consecutive business days, the bid price of the Company’s common stock (the “Common Stock”) had closed below the minimum
$1.00 per share requirement for continued inclusion on the NASDAQ Global Market pursuant to NASDAQ Marketplace Rule 4450(a)(5). This notification has no effect on the listing of the Common Stock at this time. The content of the letter, which sets
forth the process by which the Company may regain compliance, are described in detail in the Company’s Current Report on Form 8-K filed on November 30, 2007.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]