Document:

Nonqualified Stock Option Agreement between Beverly Hills Bancorp Inc. and Larry

 EXHIBIT 10.3 
 BEVERLY HILLS BANCORP 
 NONQUALIFIED STOCK OPTION AGREEMENT 
 2002 PLAN 
 THIS NONQUALIFIED STOCK
OPTION AGREEMENT (the “Agreement”) is made and entered into as of January 3, 2006, by and between Beverly Hills Bancorp Inc., a Delaware corporation (the “Company”), and Larry B. Faigin (the
“Optionee”). 
 A. Pursuant to the Plan, the Administrator has determined that it is to the advantage and best interest of
the Company to grant to Optionee this option (the “Option”) to purchase a total of Five Hundred Seventy One Thousand Four Hundred Thirty One (571,431) shares of the Common Stock of the Company (the
“Shares” or the “Option Shares”), at the price determined as provided herein, and in all respects subject to the terms, definitions and provisions of the Beverly Hills Bancorp. 2002 Equity Participation Plan (the
“Plan”) adopted by the Company, which is incorporated herein by reference. 
 B. Unless otherwise defined herein,
capitalized terms used in this Agreement shall have the meanings set forth in the Plan. 
 NOW, THEREFORE, in consideration of the mutual
agreements contained herein, the Optionee and the Company hereby agree as follows: 
 1. Grant and Terms of Stock Option. 
 1.1 Grant of Option. The Company hereby grants to the Optionee the right and option to purchase, subject to the terms and conditions set forth in
the Plan and this Agreement, all or any part of the Shares at the purchase price of $10.50 per Share. 
 1.2 Nature of the Option.
This Option is not intended by the Company and Optionee to be an Incentive Stock Option, as defined in Section 422 of the Code. Rather, it is intended to be a Nonqualified Stock Option. 
 1.3 Vesting and Exercisability. Subject to the provisions of the Plan and the other provisions of this Agreement, this Option shall vest as
follows: 
 1.3.1 40,477 shares shall vest on each of January 3, 2006, January 1, 2007 and January 1,
2008; 
 1.3.2 50,000 shares shall vest on the first day of each of the second, third and fourth calendar quarters (i.e.,
April 1, July 1 and October 1) of 2006, 2007 and 2008 
 1.3.3 The Option shall be deemed fully vested upon
termination of Optionee’s employment with the Company if Optionee’s employment with the Company is terminated by the Company without Cause (as defined below); 
  

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 1.3.4 The Option shall be deemed fully vested upon the occurrence of a Change of Control
of the Company. 
 1.4 Change of Control Defined. For purposes of this Agreement, the term “Change of Control” shall
have the meaning ascribed to such term in the employment agreement between the Company and Optionee; provided, however, that if there is no such agreement, or such agreement does not define Change of Control, a “Change of Control”
with respect to the Company shall be deemed to have if occurred upon the occurrence of any one or more of the following: 
 1.4.1 any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than any individual who is a director of the Company as of the date of this Agreement and any
affiliate of such individuals (or group of such persons), is or becomes the “beneficial owner” (as defined in Rule 3d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting
power represented by the Company’s then outstanding voting securities; or 
 1.4.2 the Company merges or consolidates
with any other corporation other than a merger or consolidation that results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or the parent corporation of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company, the surviving entity or the parent of the surviving entity, as
applicable, outstanding immediately after such merger or consolidation; or 
 1.4.3 the complete liquidation of the Company;
or 
 1.4.4 the occurrence of a transaction pursuant to which the Company no longer owns 50% or more of the outstanding voting
securities of the Company’s subsidiary First Bank of Beverly Hills. 
 1.5 Termination of Vesting. In the event of a Termination
of Service with respect to Optionee, this Option shall immediately cease vesting (except as provided in Section 1.3.3), and shall be cancelled to the extent of the number of Shares as to which this Option has not vested as of the date of
termination. 
 2. Term of Option. No portion of this Option may be exercised after January 3, 2011. Subject to Section 1.3 hereof, in the
event of Termination of Service with respect to Optionee, this Option shall be cancelled as to any unvested Shares as provided in Section 1.5, and shall terminate and be cancelled with respect to any vested Shares on the earlier of
(i) January 3, 2011, or (ii) ninety (90) days after such Termination of Service (or one (1) year in the case of such termination as a result of Optionee’s disability or death); provided, however, if Optionee’s
employment with the Company is terminated by the Company for Cause (and regardless of whether Optionee continues service as a director), this entire Option shall be cancelled and terminated as of the date of such termination and shall no longer be
exercisable as to any Shares, whether or not previously vested. For purposes of this Agreement, “Cause” shall mean (i) as such term is defined in the employment agreement between the Optionee and 

  

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the Company and (ii) if no such employment agreement exists, any of the following acts or circumstances: (a) fraud, embezzlement, theft, or
comparable dishonest activity committed by Optionee (excluding acts involving a de minimis dollar value and not related to the Company); (b) Optionee’s conviction of or entering a plea of guilty or nolo contendere to any crime
constituting a felony or any misdemeanor involving fraud, dishonesty or moral turpitude (excluding acts involving a de minimis dollar value and not related to the Company); (c) Optionee’s breach, neglect, refusal, or failure to materially
discharge Optionee’s duties (other than due to physical or mental illness) commensurate with Optionee’s title and function or Optionee’s failure to comply with the lawful directions of the Board of Directors, in any such case that is
not cured within fifteen (15) days after Optionee has received written notice thereof from the Board of Directors or the Chief Executive Officer of the Company; or (d) a willful and knowing material misrepresentation to the Board of
Directors of the Company. For purposes of this Agreement, “Termination of Employment” means the termination of Optionee’s employment with the Company and its subsidiaries unless Optionee is deemed to be in Continuous Status as
an Employee as a result of a leave of absence approved by the Board as contemplated by Section 2(j) of the Plan, and “Termination of Service” means the termination of Optionee’s service with the Company and its
subsidiaries as employee and director unless, in the case of employment, Optionee is deemed to be in Continuous Status as an Employee as a result of a leave of absence approved by the Board as contemplated by Section 2(j) of the Plan

 3. Method of Exercise. 
 3.1
Delivery of Notice of Exercise. This Option shall be exercisable by written notice in the form attached hereto as Exhibit A which shall state the election to exercise this Option, the number of Shares in respect of which this Option is
being exercised, and such other representations and agreements with respect to such Shares as may be required by the Company pursuant to the provisions of this Agreement and the Plan. Such written notice shall be signed by Optionee (or by
Optionee’s beneficiary or other person entitled to exercise this Option in the event of Optionee’s death under the Plan) and shall be delivered in person or by certified mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the exercise price. This Option shall not be deemed exercised until the Company receives such written notice accompanied by the exercise price and any other applicable terms and conditions of this Agreement are satisfied.
This Option may not be exercised for a fraction of a Share. 
 3.2 Restrictions on Exercise. No Shares will be issued pursuant to the
exercise of this Option unless and until there shall have been full compliance with all applicable requirements of the Securities Act of 1933, as amended (whether by registration or satisfaction of exemption conditions), all Applicable Laws, and all
applicable listing requirements of any national securities exchange or other market system on which the Common Stock is then listed. As a condition to the exercise of this Option, the Company may require Optionee to deliver to the Company an
Investment Representation Statement as well as any other representations necessary or appropriate, in the judgment of the Administrator, to comply with any Applicable Law. For purposes of this Agreement, the term “Applicable Laws”
means any applicable statute, ordinance, writ, judgment, injunction, rule, regulation, order or decree of any court or other governmental or regulatory body, agency or authority, federal, state, local or foreign. Without limitation, Optionee shall
purchase any shares under 

  

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this Agreement for his own account only and not with a view to, or for the sale in connection with, any distribution of the shares. 
 3.3 Method of Payment. Payment of the exercise price shall be made in full at the time of exercise: (i) in cash or by check payable to the
order of the Company; (ii) unless prohibited by law, by delivery of a properly executed exercise notice together with any other documentation as the Administrator and the Optionee’s broker, if applicable, require to effect an exercise of
the options and delivery to the Company of the sale or loan proceeds required to pay the exercise price; or (iii) subject in each case to the advance approval of the Administrator in its sole discretion, by delivery of shares of Common Stock
already owned by Optionee, by delivery of a full recourse promissory note made by Optionee in favor of the Company or by any combination of the foregoing. Shares of Common Stock used to satisfy the exercise price of this Option shall be valued at
their Fair Market Value determined on the date of exercise (or if such date is not a business day, as of the close of the business day immediately preceding such date). In addition, the Administrator may impose such other conditions in connection
with the delivery of shares of Common Stock in satisfaction of the exercise price as it deems appropriate in its sole discretion, including without limitation a requirement that the shares of Common Stock delivered have been held by the Optionee for
a specified period of time. Any promissory note delivered pursuant to this Section shall have terms and provisions (including, without limitation, those relating to the maturity date, payment schedule and interest rate) as determined by the
Administrator in its sole discretion, shall be secured by the Shares acquired and shall comply with all Applicable Laws (including, without limitation, state and federal margin requirements). 
 4. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution or to a
beneficiary designated pursuant to the Plan, and may be exercised during the lifetime of Optionee only by Optionee. During the six (6) month period after the death of Optionee, this Option may, to the extent it remained unexercised (but vested
and exercisable by Optionee in accordance with its terms) on the date of death, be exercised by Optionee’s beneficiary or other person entitled to exercise this Option in the event of Optionee’s death under the Plan. 
 2. 2002 Plan. The Company has adopted a 2002 Equity Participation Plan (such plan, together with any future amendments thereof, is referred to as the
“2002 Plan”). In the event that the 2002 Plan includes additional or alternative terms and conditions that are more favorable to Optionee, such terms and conditions are incorporated into this Agreement. 
 5. General. 
 6.1 Governing Law. This
Agreement shall be governed by and construed under the laws of the state of California applicable to Agreements made and to be performed entirely in California, without regard to the conflicts of law provisions of Oregon or any other jurisdiction.

 6.2 Notices. Any notice required or permitted under this Agreement shall be given in writing by express courier or by postage
prepaid, United States registered or certified mail, return receipt requested, to the address set forth below or to such other address for a party as that party may designate by ten (10) days advance written notice to the other parties. Notice
shall be effective upon the earlier of receipt or three (3) days after the mailing of such notice. 
  

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	If to the Company:	  	Beverly Hills Bancorp
		  	23901 Calabasas Road, Suite 1050
		  	Calabasas, California 97005 91302
		  	Attn: Chief Financial Officer

 If to Optionee, at the address set forth on the signature page. 
 6.3 Community Property. Without prejudice to the actual rights of the spouses as between each other, for all purposes of this Agreement, the
Optionee shall be treated as agent and attorney-in-fact for that interest held or claimed by his or her spouse with respect to this Option and the Option Shares and the parties hereto shall act in all matters as if the Optionee was the sole owner of
this Option and any Option Shares. This appointment is coupled with an interest and is irrevocable. 
 6.4 Modifications. This
Agreement may be amended, altered or modified only by a writing signed by the Company and the Optionee hereto. 
 6.5 Additional
Documents. Each party agrees to execute any and all further documents and writings, and to perform such other actions, which may be or become reasonably necessary or expedient to be made effective and carry out this Agreement. 
 6.6 No Third-Party Benefits. Except as otherwise expressly provided in this Agreement, none of the provisions of this Agreement shall be for the
benefit of, or enforceable by, any third-party beneficiary. 
 6.7 Successors and Assigns. Except as provided herein to the contrary,
this Agreement shall be binding upon and inure to the benefit of the parties, their respective successors and permitted assigns. 
 6.8 No
Assignment. Except as otherwise provided in this Agreement, the Optionee may not assign any of his, her or its rights under this Agreement without the prior written consent of the Company, which consent may be withheld in its sole discretion.
The Company shall be permitted to assign its rights or obligations under this Agreement, but no such assignment shall release the Company of any obligations pursuant to this Agreement. 
 6.9 Severability. The validity, legality or enforceability of the remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or unenforceable in any respect. 
 6.10 Equitable Relief. The
Optionee acknowledges that, in the event of a threatened or actual breach of any of the provisions of this Agreement, damages alone will be an inadequate remedy, and such breach will cause the Company great, immediate and irreparable injury and
damage. Accordingly, the Optionee agrees that the Company shall be entitled to injunctive and other equitable relief, and that such relief shall be in addition to, and not in lieu of, any remedies they may have at law or under this Agreement.

 6.11 Attorneys’ Fees. Should any litigation or arbitration be commenced (including any proceedings in a bankruptcy court)
between the parties hereto or their representatives concerning any provision of this Agreement or the rights and duties of any Person or entity 

  

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hereunder, the party or parties prevailing in such proceeding shall be entitled, in addition to such other relief as may be granted, to the reasonable
attorneys’ fees and costs incurred by reason of such litigation. 
 6.12 Headings. The section headings in this Agreement are
inserted only as a matter of convenience, and in no way define, limit, extend or interpret the scope of this Agreement or of any particular section. 
 6.13 Number and Gender. Throughout this Agreement, as the context may require, (a) the masculine gender includes the feminine and the neuter gender includes the masculine and the feminine; (b) the
singular tense and number includes the plural, and the plural tense and number includes the singular; (c) the past tense includes the present, and the present tense includes the past; (d) references to parties, sections, paragraphs and
exhibits mean the parties, sections, paragraphs and exhibits of and to this Agreement; and (e) periods of days, weeks or month mean calendar days, weeks or months. 
 6.14 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 6.16 Complete Agreement. This Agreement and the Plan constitute the parties’ entire agreement with respect to the subject
matter hereof and supersede all agreements, representations, warranties, statements, promises and understandings, whether oral or written, with respect to the subject matter hereof. 
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth herein above. 
  

			
	 Beverly Hills Bancorp Inc.

		
	By:	 	  
	Name:	 	
	Its:	 	

 Optionee acknowledges and agrees that the vesting of shares pursuant to Section 1.2
hereof is earned only by continuous status as a director and/or employee (not through the act of being hired or retained, being granted this option or acquiring shares hereunder). Optionee further acknowledges and agrees that this Option, the
transactions contemplated hereunder and the vesting schedule set forth herein do not constitute an express or implied promise of continued engagement as an employee of the Company for the vesting period, for any period, or at all. Nothing in this
Agreement or the Plan shall limit in any manner whatsoever the right or power of the Company or the Optionee to terminate Optionee’s relationship with the Company with or without cause. 
 Optionee acknowledges receipt of a copy of the Plan. Optionee represents that he is familiar with the terms and provisions of the Plan, and hereby
accepts this option subject to all of the terms and provisions thereof. Optionee also acknowledges that the grant of this option, the purchase of shares upon exercise of this option, and the sale of such shares has important 

  

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tax implications. Optionee has reviewed the Plan and this option in their entirety, has had an opportunity and has been encouraged to obtain the advice of
his or her independent legal counsel and tax advisor prior to executing this option and fully understands all provisions of this option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the board
or the administrator upon any questions arising under the Plan. 
  

	
	
	   
	Larry B. Faigin
	
	 Address:

	  
	  
	  

 CONSENT OF SPOUSE TO AGREEMENT 
 By his or her signature below, the spouse of Optionee affirms that he/she has read in its entirety and agrees to be bound by all of the terms and
conditions of the foregoing Agreement and the Plan. 
  

	
	
	   
	 Name:

  

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 EXHIBIT A 
 NOTICE OF EXERCISE OF STOCK OPTION 
  

			
	 Beverly Hills Bancorp
	 	
		 	23901 Calabasas Road, Suite 1050
		 	Calabasas, California 97005 91302
	 Attn: Chief Financial Officer

		
	Ladies and Gentlemen:	 	
	
	 The undersigned hereby elects to exercise the option indicated below:

	
	 Date of Option: ___________, 200____

	 Type of Option: Nonqualified Stock Option

	 Number of Shares Being Exercised: ____________

	 Exercise Price Per Share: $__________

	 Total Exercise Price: $_____________

	 Method of Payment: ______________

 Enclosed herewith is payment in full of the total exercise price. 
 I represent that I am purchasing the shares for my own account and not with a view to, or for the sale in connection with, any distribution of the
shares. 
 My exact name, current address and social security number for purposes of the stock certificates to be issued and the shareholder
list of the Company are: 
  

			
		
	Name:	 	  
		
	Address:	 	  
		 	  

					
		
	Social Security Number:	 	  

  

					
		 		 	 Sincerely,

			
	 Dated:                                     
    
	 		 	   
		 		 	 (Optionee’s Signature)

  

 -8-Form of Convertible Promissory Note

 Exhibit 4.1 
 THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE BLUE SKY LAW OR REGULATION (THE “STATE ACT”). THESE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS THEY HAVE FIRST BEEN REGISTERED UNDER THE ACT AND UNDER ANY APPLICABLE STATE ACT OR UNLESS COUNSEL ACCEPTABLE TO THE COMPANY HAS GIVEN AN OPINION THAT SUCH REGISTRATION IS NOT REQUIRED.

 NANOGEN, INC. 
 CONVERTIBLE PROMISSORY NOTE 
 CONVERTIBLE PROMISSORY NOTE 
  

					
	€ 6,102,427.50	 		 	May 1, 2006
		 		 	San Diego, California

 FOR VALUE RECEIVED Nanogen, Inc., a Delaware corporation (“Company”), promises to pay to the order of
Amplimedical S.p.A. (“Investor”) in lawful money of the European Union the principal sum of 6,102,427.50 Euros (six million one hundred two thousand four hundred twenty seven and 50/100 euros). 
 DEFINITIONS 
 Unless otherwise defined herein, capitalized
terms shall have the meanings set forth in the Agreement. For the purpose of this Note: 
 “Agreement” shall mean Asset Purchase Agreement, dated
April 19, 2006, among Amplimedical S.p.A, Amplifon S.p.A., Nanogen Advanced Diagnostics, S.r.L. and the Company. 
 “Default Rate” shall mean
an annual interest rate equal to fourteen percent (14%). 
 “First Rate” shall mean an annual interest rate equal to six percent (6%). 

“Second Rate” shall mean an annual interest rate equal to ten percent (10%). 
 “Maturity Date” shall mean April 19, 2007. 
 “Note” shall mean this Convertible Promissory Note.

 “Registration Price” shall mean the average closing price as quoted on the Nasdaq National Market on one share of the common stock of the
Company for the ten consecutive trading days ending on the date when the Registration Statement is declared effective by the US Securities and Exchange Commission (converted to Euros at the exchange rate stated in the Financial Times two Business
Days prior to the date when the Registration Statement is declared effective by the US Securities and Exchange Commission). 
 “Signing Price”
shall mean the average closing price as quoted on the Nasdaq National Market on one share of the common stock of the Company for the ten consecutive trading days ending two Business Days prior to the Effective Date (converted to Euros at the
exchange rate stated in the Financial Times two Business Days prior to the Effective Date). 

 SECTION 1 - PAYMENTS 
 1.1 Interest Rates. This Note shall bear interest on the unpaid principal balance hereof as follows: 
 (a) during the period beginning on the date of this Note and ending on the date sixty (60) days after the date of this Note, this Note shall not bear interest; 
 (b) during the period beginning sixty-one (61) days after the date of this Note and ending on the date one hundred eighty (180) days after the
date of this Note, at the First Rate; 
 (c) during the period beginning one hundred eighty-one (181) days after the date of this Note
and ending on the date the principal under this Note is paid in full, at the Second Rate. 
 Interest shall be computed on the basis of
twelve 30-day months and the actual number of days elapsed in any partial month. 
 1.2 Interest Payment. The interest accrued under
this Note shall be due and payable monthly in arrears beginning on the first business day of the first full month after the date that is sixty-one (61) days after the date of this Note. 
 1.3 Maturity. The then outstanding principal balance hereunder together with all accrued and unpaid interest and all other charges due
hereunder shall be due and payable on the Maturity Date. 
 1.4 Default Interest. Notwithstanding anything to the contrary contained
herein, if at any time or from time to time any amount of interest or principal payable hereunder (including the entire principal balance hereunder, when applicable) is not paid when due, the Company shall pay Investor interest at the Default Rate
on such overdue amount from the date such amount is due. Such interest shall be payable with the payment of such overdue amount. 
 1.5
Form of Payments. Except as set forth in Section 4 below, payments hereunder shall be made in lawful money of the European Union by check or wire transfer of funds, at Investor’s option, payable to Investor, or to such agent
for Investor, as Investor may from time to time direct. 
 1.6 Application of Payments. All payments made under this Section 1,
Section 2 or otherwise made pursuant to this Note shall be applied first to any costs and expenses currently due (including attorneys’ fees, late charges), then to interest currently due, then to principal. 
 SECTION 2 - PREPAYMENT 
 2.1
Prepayment. The Company may prepay the outstanding principal balance hereunder in whole or in part, together with all accrued and unpaid interest and all other charges due hereunder at any time and without penalty. 
 2.2 Prepayment Reward. To the extent the Company prepays outstanding principal under this Note, prepayments shall be credited against principal
amounts as follows: 
 (a) prior to and through the date sixty (60) days from the date of this Note, the Company shall be deemed to have
paid one Euro for each 0.9 Euros actually prepaid; 
  

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 (b) on or after the date sixty-one (61) days from the date of this Note and through the date one
hundred eighty (180) days from the date of this Note, the Company shall be deemed to have paid one Euro for each 0.95 Euros actually prepaid; 
 (c) on or after the date one hundred eighty-one (181) days from the date of this Note and before Maturity Date, the Company shall be deemed to have paid one Euro for each 0.98 Euros actually prepaid. 
 SECTION 3 - DEFAULT 
 3.1 Event of
Default. An “Event of Default” shall occur hereunder in the event that: 
 (a) the Company shall fail to make the full and
punctual payment of any amount due under Section 1 hereunder on the date when due, which failure is not cured on or before the tenth (10th) business day after receipt of written notice of such failure, or 
 (b) the Company shall cause or permit a default to occur in the timely performance or observance of any of the other terms, covenants or conditions of
this Note or Section 4.2(e)(vi) of the Agreement, which default is not cured within the applicable cure period, if any, or within ten (10) business days of receipt of written notice of such default, if none is specified; 
 (c) the Company shall fail to cause the Registration Statement to be declared effective by the SEC on or prior to the date that is six (6) months
after the date of this Note or, during the Registration Period, the effectiveness of the Registration Statement lapses for any reason (including, without limitation, the issuance of a SEC stop order) or is unavailable to the Investor for sale of all
of the shares of common stock issuable upon conversion of this Note pursuant to Section 4 below in accordance with the terms of the Agreement, and such lapse or unavailability continues for a period of fifteen (15) consecutive days or for
more than an aggregate of thirty (30) days in any 180-day period; 
 (d) the Company’s common stock shall be suspended from trading
or fail to be listed on the Nasdaq National Market for a period of five (5) consecutive trading days or for more than an aggregate of fifteen (15) trading days in any 180-day period; or 
 (e) the Company shall be subject to a final judgment or judgments for the payment of money aggregating in excess of $1,000,000 and which judgments are
not, within sixty (60) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within sixty (60) days after the expiration of such stay; provided, however, that any judgment which is covered by
insurance or an indemnity from a creditworthy party shall not be included in calculating the $1,000,000 amount set forth above. 
 3.2.
Acceleration. Investor may, at its option exercisable in its sole and absolute discretion by notice to the Company at any time during the existence of an Event of Default, declare immediately due and payable the entire principal amount
outstanding hereunder together with all interest and other charges due hereunder. 
 3.3. Remedies. The remedies of Investor as
provided herein or at law or in equity shall be cumulative and concurrent, and may be pursued singly, successively or together at the sole discretion of Investor, and may be exercised as often as occasion therefor shall occur. The failure at any
time to exercise any right or remedy shall not constitute a waiver of the right to exercise the right or remedy at any other time. 
  

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 SECTION 4 - CONVERSION 
 4.1 Right of the Investor to Convert. Subject to Section 4.8, at any time and upon irrevocable written notice to the Company the Investor shall have the right to convert all unpaid principal amount and all
accrued and unpaid interest under this Note into the number of shares of common stock of the Company calculated as follows: total unpaid principal and accrued and unpaid interest divided by the applicable Conversion Price in accordance with
Section 4.3. 
 4.2 Right of the Company to Convert. Subject to Section 4.8, so long as an Event of Default is not in
existence, at any time after the Registration Statement is declared effective by the US Securities and Exchange Commission and upon written notice to the Investor, the Company shall have the right to convert all unpaid principal amount and all
accrued and unpaid interest under this Note into the number of shares of common stock of the Company calculated as follows: total unpaid principal and accrued and unpaid interest divided by the applicable Conversion Price in accordance with
Section 4.3. 
 4.3 Conversion Price. The “Conversion Price” for the conversion of unpaid principal and accrued and
unpaid interest shall be the Signing Price, except that it shall be the Registration Price if (a) the Registration Statement is declared effective after the date 60 days after the date of this Note and (b) the Registration Price exceeds
the Signing Price or the Signing Price Exceeds the Registration Price by more than 10%. If the Company at any time on or after the date of this Note subdivides (by any stock split, stock dividend, recapitalization or otherwise) its outstanding
shares of common stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time on or after the date of this Note combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares of common stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. 
 4.4 Fractional Shares. No fractional shares shall be issued upon conversion of this Note. In lieu of the Company issuing any fractional shares to
Investor upon the conversion of this Note, the Company shall pay to Investor an amount equal to the product obtained by multiplying the applicable Conversion Price by the fraction of a share not issued pursuant to this Section 4. 
 4.5 Effect of Conversion. Upon conversion of this Note in accordance with this Section 4 and the payment of any amounts specified in this
Section 4, the Company shall be forever released from all its obligations and liabilities under this Note. 
 4.6 No Stockholder
Rights. Nothing contained in this Note shall be construed as conferring upon the Investor or any other person the rights to vote or to consent to or to receive notice as a stockholder in respect of meetings of stockholders for the
election of directors of Company or an other matters or any other rights whatsoever as a stockholder of Company; and no dividends or distributions shall be payable or accrued in respect to any shares obtainable hereunder, until, and only to the
extent that, this Note shall have been converted into common stock of the Company. 
 4.7 Reservation of Shares. So long as the Note
is outstanding, the Company shall take all actions necessary to reserve and keep available out of its authorized and unissued common stock, solely for the purpose of effecting the conversion of this Note, the number of shares of common stock as
shall from time to time be necessary to effect the conversion of all amounts then outstanding under this Note. 
 4.8 Limitation on Shares
issued upon Conversion. In the event that a conversion of this Note pursuant to Sections 4.1 or 4.2 would result in the issuance of a number of shares equal to or greater than ten percent (10%) of the shares of the Company’s common
stock outstanding as of the date of the 
  

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 Agreement (subject to proportional adjustment for stock splits, stock dividends, recapitalizations, reverse stock splits,
combinations and the like and hereinafter referred to as the “10% Limit”), then the amount of unpaid principal and accrued and unpaid interest converting pursuant to Sections 4.1 or 4.2 will automatically be reduced to such amount which
will convert into one share less than the 10% Limit. In the event that the amount of principal and interest converted into shares of the Company’s common stock pursuant to this Note is limited by the foregoing sentence, any unpaid principal and
accrued and unpaid interest that is not converted into shares of common stock shall be paid by the Company at the time of the conversion in accordance with Section 1.5 and on the prepayment terms set forth in Section 2.2(a), (b) and
(c) of this Note. 
 SECTION 5 - WAIVER 
 Presentment for payment, demand, notice of dishonor, protest and notice of protest, stay of execution and all other suretyship defenses to payment generally are hereby waived by the Company. No extension or indulgence or release of
collateral granted from time to time shall be construed as a novation of this Note or as a reinstatement of the indebtedness evidenced hereby or as a waiver of the rights of Investor herein. All payments due hereunder shall be paid without offset or
deduction of any kind, and the Company hereby waives the right to set off against the indebtedness to Investor any sum of money, claim, liability or obligation Investor may owe or the Company may assert against Investor. 
 SECTION 6 - CHOICE OF LAW AND FORUM; ARBITRATION; SEVERABILITY; USURY 
 This Note shall be governed by and construed in accordance with the laws of Italy. Any and all disputes arising out of this Note and the performance thereof shall be deferred to arbitration according to the rules of
Article 806 of the Italian Code of Civil Procedure. The arbitration shall be “in law - di diritto”; the seat of the arbitration shall be Milan, and the arbitration panel shall be composed by three arbiters, two appointed by the Company and
the Investor, respectively and the third by the previously appointed arbiters. In the case either the Company or the Investor fails to appoint its own arbiter or in the event of the two previously appointed arbiters fail to appoint the third
arbiter, the president of the Milan Bar Association shall appoint the missing arbiter(s). If any provision of this Note is held to be invalid or unenforceable by the arbitration panel or a court of competent jurisdiction, the other provisions of
this Note shall remain in full force and effect. Accordingly, all agreements between the Company and Investor, whether now existing or hereafter arising, and whether written or oral, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of the maturity of this Note or otherwise, shall the amount paid or agreed to be paid to Investor or the holder of this Note for the use, forbearance or detention of the money loaned pursuant hereto or
otherwise, or for the payment or performance of any covenant or obligation contained herein, exceed the maximum amount permissible under applicable law. If, from any circumstance or contingency whatsoever, fulfillment of any provision hereof or of
any other document executed in connection herewith, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then the obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstance or contingency Investor shall ever receive as interest or otherwise an amount which would exceed the maximum rate of interest permitted by applicable law, the amount of such excess shall be applied to a
reduction of the indebtedness evidenced by this Note, and not to the payment of interest, and if such excessive interest exceeds such indebtedness, the amount of such excessive interest shall be refunded to the Company. If at any time this Note
prescribes a rate of interest in excess of the maximum rate permitted by law, all sums paid or agreed to be paid to Investor for the use, forbearance or detention of the money loaned pursuant to this Note shall be amortized, prorated, allocated and
spread throughout the full term of such indebtedness until payment in full, so that the actual rate of interest on account of such indebtedness is uniform throughout the term hereof. 
  

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 SECTION 7 - NOTICES 
 Any notice, demand or request required under this Note shall be given in writing at the addresses set forth below by personal service; facsimile; overnight courier; or certified, first class mail, return receipt requested: 
  

			
	(a)	 	To the Company, as follows:
		
		 	Nanogen, Inc.
		 	10398 Pacific Center Court
		 	San Diego, CA 92121
		 	Attention: Chief Financial Officer
		 	Telephone: (858) 410-4771
		 	Facsimile: (858) 410-4949
		
	(b)	 	To Investor, as follows:
		
		 	Amplimedical, S.p.A.
		 	Via Ripamonti no. 131/133
		 	Milan, Italy
		 	Telephone: 02.45.79.021
		 	Facsimile: 02.48.82.102

 Any notice, demand or request shall be deemed received as follows: (i) if sent by personal service, at the
time such personal service is effected; (ii) if sent by facsimile, upon the sender’s receipt of a confirmation report generated by the sender’s facsimile machine indicating receipt by the recipient’s facsimile machine;
(iii) if sent by overnight courier, on the business day immediately following deposit with the overnight courier; and (iv) if sent by mail, on the date of delivery or refusal of delivery as indicated on the return receipt. The Company and
Investor each may, from time to time, change the address at which such written notices or elections, communications, requests or other documents or demands are to be mailed, by giving the other party written notice of such change, addressed in the
manner hereinabove provided. 
 SECTION 8 - MISCELLANEOUS 
 8.1 Costs. The Company shall reimburse Investor for all reasonable attorneys’ fees and costs and expenses, incurred by Investor in connection with the enforcement of Investor’s rights under this Note,
including, without limitation, reasonable attorneys’ fees, costs and expenses for trial, appellate proceedings, out-of-court negotiations, workouts and settlements or for enforcement of rights under any state or federal statute, including
without limitation, reasonable attorneys’ fees, costs and expenses incurred to protect insolvency proceedings such as (but not limited to) seeking relief from stay in a bankruptcy proceeding. 
 8.2. Modification. Neither this Note nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing executed by the party against which enforcement of the termination, amendment, supplement, waiver or modification is sought. 
 8.3. Assignments, Successors. Neither this Note nor any of the rights, interests or obligations hereunder may be assigned, by operation of law or otherwise, in whole or in part, by Company or the Investor
without the prior written consent of the other party. Notwithstanding the foregoing, Investor may assign this Note to an Affiliate as defined in Rule 501(a) under the 1933 Act, 
  

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 provided that ten (10) days prior to the assignment the Investor shall give the Company written notice of the
proposed assignment, including a description of the manner and circumstances in reasonable detail, and the assignee shall agree to the covenants and representations and warranties as set forth in Section 4.3(b) and (c) of the Agreement. As
used herein, the terms “Company” and “Investor” shall be deemed to include their respective successors and assigns whether by voluntary action of the parties or by operation of law. All of the rights, privileges and obligations
hereof shall inure to the benefit of and bind such successors and assigns. 
 IN WITNESS WHEREOF, the undersigned have caused this Note to be duly executed
and delivered as of the date first set forth above. 
  

			
	Nanogen, Inc.
		
	 By:
	 	 /s/ David G. Ludvigson

		 	 David G. Ludvigson
 President and Chief Operating
Officer

  

 7

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