Sample Business Contracts

Severance Agreement and Release of Claims - Nanogen Inc. and W. J. Kitchen, Ph.D.

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         THIS AGREEMENT is entered into as of December 31, 1999, by W.J.
Kitchen, Ph.D. ("Kitchen") and NANOGEN, INC., a Delaware corporation (the

         WHEREAS, Kitchen and Nanogen, Inc. have had a business relationship
wherein Kitchen has been an officer and employee of the Company; and

         WHEREAS, Kitchen will no longer be employed as an officer of the
Company effective as of the date of this Agreement (the "severance date"), but
will act as a consultant to the Company for a six-month period commencing on the
severance date; and

         WHEREAS, Kitchen and the Company wish to end their relationship with
all actual and potential disputes between them completely and amicably resolved:

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and in consideration of the amounts to be paid by the Company to Kitchen
under this Agreement, which amounts Kitchen is not otherwise entitled to
receive, Kitchen and the Company agree as follows:

         1. SEVERANCE PAY.

                  (a) LUMP SUM PAYMENT. On the severance date, the Company will
pay Kitchen six (6) months severance pay totaling $131,875.

                  (b) SALARY ADJUSTMENT BONUS. On the severance date, the
Company will pay Kitchen six (6) months salary adjustment bonus totaling

                  (c) 1999 INCENTIVE BONUS. On the severance date, the Company
will pay Kitchen $32,969 based on performance accomplishments under the
Company's 1999 Incentive Bonus Plan.

                  (d) OTHER BENEFITS. Kitchen shall not be eligible to
participate in any of the Company's employee benefit plans (including, without
limitation, the 401(k) plan), fringe benefit programs, group insurance
arrangements or similar programs.

                  (e) TAX LIABILITY. Kitchen shall be responsible for all tax
liability associated with any payments made pursuant to this Section 1.


         (a) In order to aid the Company during the transition to new
management, Kitchen agrees to consult with the Company on a reasonable basis by
phone or in person for a period of


six (6) months following the severance date at no additional compensation.
However, in the event travel is required in connection with the provision of
such consulting services, Company shall reimburse Kitchen for all reasonable
travel and hotel expenses. It is anticipated that Kitchen will devote such time
to the performance of such services as the Company may reasonably request, with
his consent. The Company recognizes and agrees that Kitchen's consulting
services are not exclusive and he may perform services for other persons;
provided that such services do not breach Employee's Proprietary Information and
Inventions and Dispute Resolution Agreement dated October 29, 1997.

                  (b). INDEPENDENT CONTRACTOR. In performing services for the
Company pursuant to this consulting arrangement, Kitchen shall act in the
capacity of an independent contractor with respect to the Company and not as an
employee of the Company. For purposes of all employee benefit plans maintained
by the Company, Kitchen shall continue to be treated as an independent
contractor, and shall not be eligible to participate in any of said plans, even
if he is subsequently determined to be a common law employee by the Internal
Revenue Service or other state or federal agency, or by a court. Service
hereunder as a consultant shall not count as service for purposes of vesting any
options or Company stock after the severance date.

the stock options, performance shares, and restricted stock previously granted
or awarded to Kitchen under the Company's stock option and stock incentive plans
which are already vested by their terms on the severance date (108,049 shares),
Kitchen's Incentive Stock Options will become vested and exercisable with
respect to an additional five thousand nine hundred and twenty-three (5,923)
shares and an additional two thousand seven hundred and seventy eight (2,778)
performance shares. In addition, three thousand two hundred and fifty (3,250)
shares of restricted stock shall become vested on the severance date. Any
options which are Incentive Stock Options will cease to qualify for favorable
tax treatment as an Incentive Stock Option to the extent that they are exercised
more than three (3) months after the severance date, but they will continue to
be exercisable as nonqualified stock options under the terms of the applicable
option agreements. Kitchen shall be responsible for all tax liability associated
with this Section 3. Any shares of stock which are not vested on the severance
date will be repurchased by the Company for the price Kitchen paid for the

         4. COMPANY LOANS. One half of the outstanding balance on the Company's
loan to Kitchen dated March 16, 1998 for the purchase of his principal residence
will be forgiven and cancelled on the severance date, and the remaining balance
of $115,933.79 shall become payable in full on April 1, 2000. Kitchen shall be
responsible for all tax liability associated with any loan forgiveness
associated with this Section 4. Any other outstanding indebtedness of Kitchen to
the Company, including Kitchen's full recourse Promissory Note Secured By Stock
Pledge Agreement, dated December 10, 1997, in connection with the purchase of
certain Pledged Shares of Nanogen stock in the amount of $114,612.41, shall be
payable in full on the severance date.

         5. NONDISCLOSURE. During the term of this Agreement and thereafter,
Kitchen shall


not, without the prior written consent of the Board, disclose or use for any
purpose (except in the course of his service under this Agreement and in
furtherance of the business of the Company) confidential information or
proprietary data of the Company, except as required by applicable law or legal
process; provided, however, that "confidential information" shall not include
any information known generally to the public or ascertainable from public or
published information (other than as a result of unauthorized disclosure by
Kitchen) or any information of a type not otherwise considered confidential by
persons engaged in the same business or a business similar to that conducted by
the Company. Kitchen agrees to deliver to the Company at the termination of his
service, or at any other time that the Company may request, all memoranda,
notes, plans, records, reports and other documents (and copies thereof) relating
to the business of the Company which he may then possess or have under his

         6. RELEASE. Kitchen acknowledges that the severance package described
herein is given in exchange for his signing this Release, and he is not
otherwise entitled to receive such benefits from the Company. Kitchen agrees
that the severance package is in full satisfaction of any claims, liabilities,
demands or causes of action, known or unknown and he hereby releases and forever
discharges the Company and each of its past and present directors, managers,
officers, shareholders, agents, consultants, advisers, employees, attorneys,
servants, parents, subsidiaries, employee benefit plans, predecessors,
successors and assigns, and each of them separately and collectively from any
and all claims, liens, demands, causes of action, obligations, damages and
liabilities of any nature whatsoever, known or unknown, that he ever had, now
has or may hereafter claim to have against the Company, including, but not
limited to claims relating to mental, physical or emotional injuries sustained
from invasion of privacy, to defamation, to interference with prospective
economic advantage, to intentional or negligent infliction of emotional
distress, to Kitchen's employment or nonemployment by the Company, to the
termination of his employment, to any status, term or condition in such
employment, or to any physical or mental harm or distress from such employment
or from termination of such employment, including without limitation:

                  (a) Any and all claims under the federal Age Discrimination in
         Employment Act;

                  (b) Any and all claims under federal or California statutory
         or decisional law pertaining to wrongful discharge, discrimination, or
         breach of public policy, physical or mental harm or distress; and

                  (c) Any and all claims relating to the tax obligation for
         which Kitchen may become liable as a result of this Release or the
         payment of consideration referred to above.

         This Release covers only those claims that arose prior to the execution
of this Release. Execution of this Release does not bar any claim that arises
thereafter, including, but not limited to, claims for breach of this Release.
The Company releases Kitchen from any claims it may have against Kitchen,
including (but not limited to) such claims as are specified in this


Section 6. This Release recognizes the rights and responsibilities of the Equal
Employment Opportunity Commission ("EEOC") to enforce the statutes which come
under its jurisdiction and is not intended to prevent Kitchen from filing a
charge or participating in any investigation or proceeding conducted by the
EEOC; provided, however, that nothing in this section limits or affects the
finality or the scope of the release provided in this Section 6, the waiver
provided in Section 7 or the agreement to submit claims to final and binding

         7. WAIVER. The parties expressly waive all rights under Section 1542 of
the Civil Code of California which provides:


The parties agree that the possibility that such unknown claims exist was taken
into account in determining the amount of consideration to be paid for the
giving of this Release.

         8. COVENANT NOT TO SUE. The parties covenant and agree that they will
never, individually or with any person or in any way, commence, aid in any way,
except as required by due legal process, prosecute or cause or permit to be
commenced or prosecuted, any action or other proceeding based upon any claim
which is the subject of this Release. This Release shall be deemed breached and
a cause of action shall be deemed to have accrued immediately upon the
commencement or prosecution of any action or proceeding contrary to this
Release. Kitchen agrees that if he brings an action to challenge the
enforceability of this Release, he will tender to a neutral escrow, as
designated by the Company, all consideration that he received pursuant to this

         In the event of any breach of this Section 8, the aggrieved releasee
shall be entitled to recover not only the amount of judgment which may be
awarded against such releasee, but also all such other damages, costs and
expenses as may be incurred by such releasee, including court costs, attorneys'
fees and all costs and expenses, taxable or otherwise, in preparing the defense
of or defending against, or seeking or obtaining an abatement of or injunction
against, any action or proceeding brought in violation of this Section 8 and in
prosecuting any claim, counterclaim or cross-claim based hereon.

         9. NO ASSIGNMENT; AUTHORITY. The parties represent and warrant that no
other person had or has or claims any interest in the claims referred to in
Section 6 above; that they have the sole right and exclusive authority to
execute this Release; that they have the sole right to receive the consideration
paid therefor; and that they have not sold, assigned, transferred, conveyed or
otherwise disposed of any claim or demand relating to any matter covered by this

         10. NO ADMISSION. The parties acknowledge that the payment of


referred to herein, is made solely for the purpose of purchasing peace and
eliminating possible involvement in protracted litigation based upon disputed
claims that the other could make and does not constitute an admission or
concession of any liability on account of any of said claims, liability for
which is expressly denied by all releasees.

         11. CONFIDENTIALITY. The parties covenant and agree to maintain the
confidentiality of the existence and terms of this Release, including (without
limitation) the nature and payment of consideration referred to in this Release
and to make no voluntary statement, except as may be necessary for the purposes
of audit, taxation returns or other disclosures required by law.


                  (a) NOTICE. Notices and all other communications contemplated
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by U.S. certified mail, return
receipt requested and postage prepaid. In the case of Kitchen, mailed notices
shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.

                  (b) WAIVER. No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by Kitchen and by an authorized officer of the Company. No
waiver by either party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or provision at
another time.

                  (c) WHOLE AGREEMENT. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof.

                  (d) CHOICE OF LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California (other than their choice-of-law provisions).

                  (e) ARBITRATION. Any dispute arising out of or relating to
this Agreement, or the breach termination or validity thereof (including the
determination of the interpretation or scope of this agreement to arbitrate),
shall be resolved first by mediation pursuant to the Employment Mediation Rules
of the American Arbitration Association. If mediation is not successful, then
the dispute shall be resolved by a single neutral arbitrator in binding
arbitration administered by the American Arbitration Association under its Rules
for the Resolution of Employment Disputes. The arbitration shall take place in
San Diego, California, shall be governed by the United States Arbitration Act, 9
U.S.C. Section 1-16, and judgment upon the award


rendered by the arbitrator may be entered by any court having jurisdiction
thereof. The Company shall bear the costs of arbitration if Kitchen prevails. If
the Company prevails, Kitchen shall pay half the cost of the arbitration or
$500.00, whichever is less. Each party shall pay its own attorneys' fees, unless
the arbitrator orders otherwise, pursuant to applicable law.

                  (f) CONSULTATION WITH COUNSEL. Kitchen acknowledges that he
has been advised and had the opportunity to consult legal counsel prior to
signing this Agreement and that he is entering into this Agreement knowingly and

                  (g) SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

                  (h) ASSIGNMENT AND SUCCESSORS. Neither party shall assign any
right or delegate any obligation hereunder without the other party's written
consent, and any purported assignment or delegation by a party hereto without
the other party's written consent shall be void. This Agreement shall be binding
upon and inure to the benefit of the Company and its successors and Kitchen, his
heirs, executors, administrators and legal representatives.

         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer.

                                   By:  /s/ W. J. Kitchen
                                         W. J. Kitchen, Ph.D.

                                   NANOGEN, INC.

                                   By:  /s/ Harry J. Leonhardt
                                         Harry J. Leonhardt, Esq.
                                         Senior Vice President, General Counsel
                                         and Secretary