Sample Business Contracts

Severance Agreement and Release of Claims - Nanogen Inc. and James P. O'Connell, Ph.D.

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         THIS AGREEMENT (the "Agreement"), to be effective as of October 4,
2000, (the "Effective Date"), is entered into by James P. O'Connell, Ph.D.
("O'Connell") and NANOGEN, INC., a Delaware corporation (the "Company").

         WHEREAS, O'Connell and the Company have had a business relationship
wherein O'Connell has been an officer and employee of the Company; and

         WHEREAS, O'Connell will no longer be employed as an officer of the
Company effective as of the Effective Date (the "Severance Date"), but will act
as a consultant to the Company for a three-month period commencing on the
Severance Date; and

         WHEREAS, O'Connell 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
O'Connell under this Agreement, which amounts O'Connell is not otherwise
entitled to receive, O'Connell and the Company agree as follows:

         1.       SEVERANCE PAY.

                  (a)      LUMP SUM PAYMENT. On the Severance Date, the Company
will pay O'Connell three (3) months severance pay totaling $61,800, minus
standard tax and other required deductions.

                  (b)      OTHER BENEFITS. From and after the Severance Date,
O'Connell 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.

                  (c)      TAX LIABILITY. O'Connell 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, O'Connell agrees to consult with the Company two (2) days (or at
least sixteen (16) hours) per week by phone or in person at the discretion of
the Company for a period of three (3) months following the Severance Date at no
additional compensation. In the event travel is required in connection with the
provision of such consulting services, Company shall reimburse O'Connell for all
reasonable travel and hotel expenses. It is anticipated that O'Connell 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 O'Connell's consulting
services are not exclusive and he may perform services for other persons,
provided that such services do not breach the Company's Proprietary Information
and Inventions and Dispute Resolution Agreement.

                  (b).     INDEPENDENT CONTRACTOR. In performing services for
the Company pursuant to this consulting arrangement, O'Connell 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, O'Connell 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.

         3.       VESTING OF STOCK. As of the Severance Date, O'Connell will
have fully vested in 35,428 shares of the Company's common stock that were
previously granted or awarded to him under the Company's stock option plans
(including performance shares and restricted shares) according to their terms,
but that have not been exercised. All options will cease to be exercisable
according to their terms either within ninety (90) days or three (3) months of
the Severance Date, as applicable. O'Connell shall be responsible for all tax
liability associated with this Section 3. Any shares of stock granted pursuant
to a stock option plan which has been exercised but which is not vested on the
Severance Date, will be repurchased by the Company for the per share price that
O'Connell paid for such stock.

         4.       COMPANY LOANS. The outstanding balance on the Company loan to
O'Connell dated November 11, 1997 in the current amount of $92,267.80 for the
purchase of 159,144 shares (the "Pledged Shares") of Nanogen common stock shall
become due and payable in full on April 3, 2001. Until repayment of the loan in
full, Nanogen will keep approximately 88,413 of the Pledged Shares as collateral
for the loan.

         5.       NONDISCLOSURE. During the term of this Agreement and
thereafter, O'Connell 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 O'Connell) 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. O'Connell 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 control.

         6.       RELEASE. O'Connell acknowledges that the severance package
described herein


is given in exchange for his signing this Agreement, and he is not otherwise
entitled to receive such benefits from the Company. O'Connell 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 O'Connell'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 O'Connell may become liable as a result of this release or the
         payment of consideration referred to above.

         Execution of this release does not bar any claims for breach of this
release. The Company releases O'Connell from any claims it may have against
O'Connell, 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 O'Connell 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 entering
into this Agreement.

         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 Agreement. This Agreement 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
Agreement. O'Connell agrees that if he brings an action to challenge the
enforceability of this Agreement, 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 Agreement; 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 Agreement.

         10.      NO ADMISSION. The parties acknowledge that the payment of
consideration, 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 Agreement, including
(without limitation) the nature and payment of consideration referred to in this
Agreement 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 O'Connell, 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
Assistant 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 O'Connell 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 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. 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 O'Connell prevails. If the Company prevails, O'Connell
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. O'Connell 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 voluntarily.

                  (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 O'Connell, 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/James P. O'Connell
                                      James P. O'Connell, Ph.D.

                                  NANOGEN, INC.

                                  By: /s/Vera P. Pardee
                                      Vera P. Pardee, Esq.
                                      Vice President, Assistant General Counsel
                                      and Assistant Secretary