**Exhibit10.22**

** **

**SEPARATIONAGREEMENT AND RELEASE OF CLAIMS**

 

THIS SEPARATIONAND RELEASE AGREEMENT (the “Agreement”), dated December 11, 2002 is enteredinto by DR. VANCE R. WHITE (“Executive”) and NANOGEN, INC., a Delawarecorporation (the “Company”).

 

WHEREAS, Executiveand the Company have had a business relationship wherein Executive has been anofficer, employee and director of the Company; and

 

WHEREAS, Executivewishes to resign from the Company as described herein; and

 

WHEREAS, Executiveand the Company wish to end their relationship with all actual and potentialdisputes between them completely and amicably resolved:

 

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

 

1.             Leave of Absence/Resignationfrom Company.  Executive shallcontinue to be employed by the Company until December 31, 2002.  Effective December 1, 2002 Executive willresign as a member of the Board of Directors of the Company and take a leave ofabsence from the Company for medical reasons. Until December 31, 2002 he shall continue to be an employee of theCompany and be entitled the all of the benefits and obligations connectedtherewith. Executive shall resign from the Company and shall no longer beemployed as an officer, employee and director of the Company on December 31,2002 (“Severance Date”).  Executiveagrees that at all times he is employed with the Company, he will fully andfaithfully discharge the duties and responsibilities of his position with theCompany, as requested by the Company’s Executive Chairman.

 

2.             Severance Compensation.

 

(a)  Lump Sum Payment.  The Company will make a lump sum payment of$225,000 to Executive equal to nine (9) months of Executive’s base salary onthe Severance Date, minus standard tax, other required deductions and theamount of any money owed by Executive to the Company as described in Section2(b) below.

 

(b)  Loan Repayment.  Executive and the Company had previouslyentered into a Loan Agreement whereby the Company provided Executive with aloan of $150,000 for which Executive executed a Secured Promissory Note, datedJune 4, 2001 (the “Note”) to the Company and that was secured by a mortgage onExecutive’s home.  As of the SeveranceDate, the principal and interest due to the Company under the Loan is$167,329.24 (the “Outstanding Note Balance”). Pursuant to the Note, the Company shall deduct the Outstanding NoteBalance from the Lump Sum Payment described in Section 2(a).  Executive shall use any remaining

 

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amount from the Lump Sum Payment to pay taxes incurred by his receiptof such amount and for personal purposes.

 

(c)  Extend Exercise Date for Vested StockOptions.  As of the Severance Date,Executive has received either incentive stock options or nonqualified stockoptions to purchase up to 535,000 shares of the Company’s Common Stock asvarious exercise prices pursuant to the Company’s 1997 Stock Incentive Plan, asamended.  Of this amount, 229,894 shallbe vested as of the Severance Date and 305,106 shall remain unvested.   As of the Severance Date, all ofExecutive’s unvested shares shall expire and all of Executive’s vested sharesremain exercisable for a period of five (5) years from the Severance Date,subject to the restrictions described below in Section 6. Such options shall besubject to the U.S. tax laws and depending on such laws and the number ofshares that are exercisable by Executive in any given year, incentive stockoptions may lose their favorable tax treatment and become nonqualified stockoptions.  Any incentive stock optionsheld by Executive with an exercise price below the closing price of theCompany’s Common Stock on the Severance Date shall become nonqualified stockoptions on the Severance Date and any incentive stock options with an exerciseprice above the closing price of the Company’s Common Stock on the SeveranceDate shall remain incentive stock options for up to three (3) months after theSeverance Date and thereafter shall become nonqualified stock options.  Executive acknowledges and agrees that hemust consult with his own tax advisor or attorney regarding the appropriate taxtreatment for all of his incentive stock options and nonqualified stock optionsand that he is not depending on any employee of the Company to provide suchadvice.

 

3.             Other Benefits.  For a period of three months following theSeverance Date, the Company shall pay the Executive’s COBRA costs for suchbenefit plans as may be offered during that time. Currently those plans areBlue Cross PPO, Guardian Dental, VSP Vision Plan and an EAP program.  Other than as provided for in this Section3, following the Severance Date, Executive shall not be eligible to participatein any of the Company’s employee benefit plans (including, without limitation,the 401(k) plan), fringe benefit programs, and group insurance arrangements,except under COBRA, the stock option agreements and stock vesting programsdescribed in Section 2 (c) for the periods described therein.

 

4.             Tax Liability.  Executive shall be responsible for all taxliability associated with any payments made pursuant to Section 2, except asdescribed herein.

 

5.             Non-Competition.  As consideration for the severancecompensation described in Section 2 and in order to protect the Company’s tradesecret and other “confidential information” of the Company as described belowin Section 7, during a period of nine (9) months from the Severance Date,Executive shall not, other than with the prior written consent of the Board ofDirectors of the Company,  engage,directly or indirectly, in any other business activity (whether or not pursuedfor pecuniary advantage) with a company currently commercializing microarraytechnology for use in clinical molecular diagnostics, provided that Executivemay own less than two percent of the outstanding securities of any such publiclytraded competing corporation.  Anyviolation by Executive of this Section 5 shall result in the

 

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immediate cancellation of the extended exercise period for all optionsdescribed in Section 2 and the Company may thereafter take whatever other legalsteps it deems necessary to enforce this provision and protect the Company’sconfidential information.

 

6.             Nonsolicitation.  During a period of two (2) years after theSeverance Date, Executive will not directly or indirectly engage, encourage orparticipate in the solicitations of any employee or consultant of the Companyto leave the Company for any reason or to devote less than all of any suchemployee’s efforts to the affairs of the Company.

 

7.             Nondisclosure. During theterm of this Agreement and thereafter, Executive shall not, without the priorwritten consent of management, disclose or use for any purpose (except in thecourse of his service under this Agreement and in furtherance of the business ofthe 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 tothe public or ascertainable from public or published information (other than asa result of unauthorized disclosure by Executive) or any information of a typenot otherwise considered confidential by persons engaged in the same businessor a business similar to that conducted by the Company.  Executive agrees to deliver to the Companyat the termination of his service, or at any other time that the Company mayrequest, all memoranda, notes, plans, records, reports and other documents (andcopies thereof) relating to the business of the Company which he may thenpossess or have under his control. Executive’s obligations to the Company under the ProprietaryInformation, Inventions and Dispute Resolution Agreement, dated April __, 2001by and between the Company and Executive (the “Proprietary InventionsAgreement”) shall remain in full force and effect, notwithstanding the releasecontained herein, except that Section 2(f) of the Proprietary InventionsAgreement shall be replaced by Section 6 herein.

 

8.             Release. Executive acknowledgesthat the severance package described herein is given in exchange for hissigning this Agreement, and he is not otherwise entitled to receive suchbenefits from the Company.  Executiveagrees that the severance package is in full satisfaction of any claims,liabilities, demands or causes of action, known or unknown and he herebyreleases and forever discharges the Company and each of its past and presentdirectors, managers, officers, shareholders, agents, consultants, advisers,employees, attorneys, servants, parents, subsidiaries, employee benefit plans,predecessors, successors and assigns, and each of them separately andcollectively (the “Releasees”) from any and all claims, liens, demands, causesof action, obligations, damages and liabilities of any nature whatsoever, knownor unknown, that he ever had, now has or may hereafter claim to have againstthe Releasees.  The release includes,but is not limited to:

 

(a)  any and all claims relating to mental,physical or emotional injuries sustained from invasion of privacy, todefamation, to interference with prospective economic advantage, to intentionalor negligent infliction of emotional distress, to Executive’s employment ornonemployment by the Company, to the termination of his employment, to anystatus, term or condition in such employment, or to any physical or mental harmor distress from such

 

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employment or from termination of such employment;:

 

(b)  any and all claims under California statutoryor decisional law pertaining to wrongful discharge, discrimination, retaliationor breach of contract or breach of public policy;

 

(c)  any and all claims under the Fair Employmentand Housing Act, Title VII of the Civil Rights Act of 1964 or the Americanswith Disabilities Act;

 

(d)  any and all claims for costs, expenses orattorneys’ fees;

 

(e)  any claims to rehire rights; provided,however, that claims for vested benefits and claims for workers’ compensationand unemployment insurance benefits are not waived; and

 

(f)  any and all claims relating to the taxobligation for which Executive may become liable as a result of this release orthe payment of consideration referred to above.

 

Execution of thisAgreement does not bar any claims for breach of this Agreement. The Companyreleases Executive from any claims it may have against Executive prior to thedate of this Agreement, including (but not limited to) such claims as arespecified in this Section 8.  This Agreementrecognizes the rights and responsibilities of the Equal Employment OpportunityCommission (“EEOC”) to enforce the statutes which come under its jurisdictionand is not intended to prevent Executive from participating in anyinvestigation or proceeding conducted by the EEOC; provided, however, thatnothing in this section limits or affects the finality or the scope of therelease provided in this Section 8, the waiver provided in Section 9 or theagreement to submit claims to final and binding arbitration.

 

(g)  Opportunity to Revoke.  Executiveacknowledges that he is aware that he has twenty-one (21) calendar days todecide whether to enter into this agreement and release of claims, and returnthis executed agreement to the Company.  Executive agrees that he wasoffered twenty-one (21) calendar days to consider this agreement andrelease.  This period is designed to allow Executive to consult with afinancial advisor, accountant, attorney or anyone else whose advice Executiveneeds.  Executive should consult appropriate advisors, including anattorney, during this period.

 

Executive furtheracknowledges that he is aware that he may revoke this agreement and release ofclaims within seven (7) business days after it is signed and received by theCompany.  He further agrees that he is aware that in the event he timelyexercises his right of rescission he will have no rights to the severancepayment or other rights under this Agreement offered by the Company.  Ifthis agreement and release is not revoked in a writing delivered to the Companyin the time period set forth above, any severance payments due will be made onor before January 10, 2003.

 

9.             Waiver.  The parties expressly waive all rights underSection 1542 of the Civil Code

 

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of California which provides:

 

**“Ageneral release does not extend to claims which the creditor does not know orsuspect to exist in his favor at the time of executing the release, which ifknown by him must have materially affected his settlement with the debtor.”**

 

The parties agree that the possibility that such unknown claims existwas taken into account in determining the amount of consideration to be paidfor the giving of this Agreement.

 

10.           Covenant Not To Sue.  Executive covenants and agrees that he willnever, individually or with any person or in any way, commence or aid in anyway, except as required by due legal process, prosecute or cause or permit tobe commenced or prosecuted, any action or other proceeding based upon any claimwhich is the subject of this Agreement. This Agreement shall be deemed breached and a cause of action shall bedeemed to have accrued immediately upon the commencement or prosecution of anyaction or proceeding contrary to this Agreement.  Executive agrees that if he brings an action to challenge theenforceability of this Agreement, he will tender to a neutral escrow, asdesignated by the Company, all consideration that he received pursuant to thisAgreement.

 

In the event ofany breach of this Section 10, the Company shall be entitled to recovernot only the amount of judgment which may be awarded against such releasee, butalso all such other damages, costs and expenses as may be incurred by suchreleasee, including court costs, attorneys’ fees and all costs and expenses,taxable or otherwise, in preparing the defense of or defending against, orseeking or obtaining an abatement of or injunction against, any action orproceeding brought in violation of this Section 10 and in prosecuting anyclaim, counterclaim or cross-claim based hereon.

 

11.           No Assignment; Authority.  The parties represent and warrant that noother person had or has or claims any interest in the claims referred to inSection 8 above; that they have the sole right and exclusive authority toexecute this Agreement; that they have the sole right to receive theconsideration paid therefor; and that they have not sold, assigned,transferred, conveyed or otherwise disposed of any claim or demand relating toany matter covered by this Agreement.

 

12.           No Admission. The partiesacknowledge that the payment of consideration, referred to herein, is madesolely for the purpose of purchasing peace and eliminating possible involve­mentin protracted litigation based upon disputed claims that the other could makeand does not constitute an admission or concession of any liability on accountof any of said claims, liability for which is expressly denied by allreleasees.

 

13.           Confidentiality. The partiescovenant and agree to maintain the confidentiality of the existence and termsof this Agreement, including (without limitation) the nature and payment ofconsideration referred to in this Agreement and to make no voluntary statement,

 

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except as may be necessary for the purposes of audit, taxation returnsor other disclosures required by law.

 

14.       MiscellaneousProvisions.

 

(a)  Notice.  Notices and all other communications contemplated by thisAgreement shall be in writing and shall be deemed to have been duly given whenpersonally delivered or when mailed by U.S. certified mail, return receiptrequested and postage prepaid.  In thecase of Executive, mailed notices shall be addressed to him at the home addresswhich he most recently communicated to the Company in writing.  In the case of the Company, mailed noticesshall be addressed to its corporate headquarters, and all notices shall bedirected to the attention of its Assistant Secretary.

 

(b)  Waiver.  No provision of this Agreement shall be modified, waived ordischarged unless the modification, waiver or discharge is agreed to in writingand signed by Executive 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 otherparty shall be considered a waiver of any other condition or provision or ofthe same condition or provision at another time.

 

(c)  Whole Agreement.  No agreements (including any employmentagreement), representations or understandings (whether oral or written andwhether express or implied) which are not expressly set forth in this Agreementhave been made or entered into by either party with respect to the subjectmatter hereof, except that the Proprietary Inventions Agreement shall remain infull force and effect.

 

(d)  Choice of Law.  The validity, interpretation, constructionand performance of this Agreement shall be governed by the laws of the State ofCalifornia (other than choice-of-law provisions).

 

(e)  Arbitration.  Any dispute arising out of or relating tothis Agreement, or the breach termination or validity thereof (including thedetermination of the interpretation or scope of this agreement to arbitrate),shall be resolved first by mediation pursuant to the Employment Mediation Rulesof the American Arbitration Association. If mediation is not successful, then the dispute shall be resolved by asingle neutral arbitrator in binding arbitration administered by the AmericanArbitration Association under its Rules for the Resolution of EmploymentDisputes.  The arbitration shall takeplace in San Diego, California, and judgment upon the award rendered by thearbitrator may be entered by any court having jurisdiction thereof.  The Company shall bear the costs ofarbitration if Executive prevails.  Ifthe Company prevails, Executive shall pay half the cost of the arbitration or$500.00, whichever is less.  Each partyshall pay its own attorneys’ fees, unless the arbitrator orders otherwise,pursuant to applicable law, except as provided in Section 10.

 

(f)  Consultation with Counsel.   Executive acknowledges that he has been

 

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advised and had the opportunity to consult legal counsel prior tosigning this Agreement and that he is entering into this Agreement knowinglyand voluntarily.

 

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

 

(h)  Assignment and Successors.  Neither party shall assign any right ordelegate any obligation hereunder without the other party’s written consent,and any purported assignment or delegation by a party hereto without the otherparty’s written consent shall be void. This Agreement shall be binding upon and inure to the benefit of theCompany and its successors and Executive, his heirs, executors, administratorsand legal representatives.

 

IN WITNESS WHEREOF,  each of theparties has executed this Agreement, in the case of the Company by its dulyauthorized officer.

 

 
|   |   | By:               | /s/ DR. VANCE R. WHITE |   |
|--------|--------|-------------------|------------------------|--------|
|   |   |              | Dr. Vance R.  White    |
|   |   |              |                   |
|   |   | **NANOGEN, INC.** |
|   |   |              |                   |
|   |   |              |                   |
|   |   | By:               | /s/ HOWARD C. BIRNDORF |   |
|   |   |              | Howard C.  Birndorf    |
|   |   |              | Executive  Chairman    |

 

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