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EXHIBIT 10.22
NANOGEN, INC
RESTRICTED STOCK ISSUANCE AGREEMENT
AGREEMENT made as of this 7th day of November, 1997, by and
between Nanogen, Inc., a California corporation (the "Corporation), and
__________, an individual resident in the State of California ("Purchaser").
I. PURCHASE OF SHARES
1.1 PURCHASE. The Purchaser hereby purchases, and the Corporation
hereby sells to Purchaser, ________ shares (the "Shares") of the Corporation's
common stock ("Common Stock") at a purchase price of $0.60 per share (the
"Purchase Price") with a vesting start date of May 16, 1997 (the "Vesting Start
Date").
1.2 PAYMENT. Concurrently with the execution of this Agreement,
the Purchaser shall deliver to the Corporation (i) a promissory note in the
amount of $_________ (the "Promissory Note") in substantially the form attached
hereto as Exhibit A, which Promissory Note shall be secured by a first priority
security interest pursuant to a stock pledge agreement; (ii) the Stock Pledge
Agreement in substantially the form attached hereto as Exhibit B; and (iii) a
duly-executed blank Assignment Separate from Certificate (in the form attached
hereto as Exhibit C).
1.3 DELIVERY OF CERTIFICATES. Subject to the terms of the Stock
Pledge Agreement, the certificates representing the Shares hereunder shall be
held in escrow by the Secretary of the Corporation as provided in Article VII
hereof.
1.4 SHAREHOLDER RIGHTS. Until such time as the Corporation
actually exercises its repurchase right, rights of first refusal or special
purchase right under this Agreement, Purchaser (or any successor in interest)
shall have all the rights of a shareholder (including voting and dividend
rights) with respect to the Shares, including the Shares held in escrow under
Article VII, subject, however, to the transfer restrictions of Article IV.
II. SECURITIES LAW COMPLIANCE
2.1 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with Purchaser in reliance upon Purchaser's representation to the Company, which
by Purchaser's execution of this Agreement Purchaser hereby confirms, that the
Shares are being acquired for investment for Purchaser's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that Purchaser has no present intention of selling, granting any
participation in or otherwise distributing the same. By executing this
Agreement, Purchaser further represents that Purchaser does not have any
contract,
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undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Shares. Purchaser represents that she has full power and authority to enter into
this Agreement.
2.2 DISCLOSURE OF INFORMATION. Purchaser believes she has
received all the information she considers necessary or appropriate for deciding
whether to purchase the Shares. Purchaser acknowledges that the Company has not
prepared any financial statements. Purchaser further represents that she has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Shares.
2.3 INVESTMENT EXPERIENCE. Purchaser is an investor in securities
of companies in the early development stage and acknowledges that she is able to
fend for herself, can bear the economic risk of her investment and has such
knowledge and experience in financial or business matters that she is capable of
evaluating the merits and risks of the investment in the Shares.
2.4 PERSONAL KNOWLEDGE. As of Purchaser's execution of this
Agreement, Purchaser (i) has a preexisting personal and business relationship
with the Company, (ii) is thoroughly familiar with the Company's operations and
its financial condition and (iii) has such knowledge and experience in financial
and business matters (including experience with investments of a similar
nature), that Purchaser is capable of evaluating the merits and risks of an
investment in the Shares. PURCHASER RECOGNIZES THAT THE PURCHASE OF THE SHARES
IS A SPECULATIVE INVESTMENT THAT INVOLVES A HIGH DEGREE OF RISK AND IS SUITABLE
ONLY FOR PERSONS WITH THE FINANCIAL CAPABILITY OF MAKING AND HOLDING LONG-TERM
INVESTMENTS NOT READILY REDUCIBLE TO CASH.
2.5 EXEMPTION FROM REGISTRATION. The Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
are accordingly being issued to Purchaser in reliance upon the exemption from
such registration provided by Rule 701 of the Securities and Exchange Commission
for stock issuances under compensatory agreements.
2.6 RESTRICTED SECURITIES.
(a) Purchaser hereby confirms that Purchaser has been
informed that the Shares are restricted securities under the 1933 Act and may
not be resold or transferred unless the Shares are first registered under the
Federal securities laws or unless an exemption from such registration is
available. Accordingly, Purchaser hereby acknowledges that Purchaser is prepared
to hold the Shares for an indefinite period and that Purchaser is aware that
Rule 144 of the Securities and Exchange Commission issued under the 1933 Act is
not presently available to exempt the sale of the Shares from the registration
requirements of the 1933 Act.
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(b) Upon the expiration of the ninety (90)-day period
immediately following the date on which the Corporation first becomes subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Shares, to the extent vested under Article V, may be
sold (without registration) pursuant to the applicable requirements of Rule 144.
If Purchaser is at the time of such sale an affiliate of the Corporation for
purposes of Rule 144 or was such an affiliate during the preceding three (3)
months, then the sale must comply with all the requirements of Rule 144
(including the volume limitation on the number of shares sold, the
broker/market-maker sale requirement and the requisite notice to the Securities
and Exchange Commission); however, the two-year holding period requirement of
the Rule will not be applicable. If Purchaser is not at the time of the sale an
affiliate of the Corporation nor was such an affiliate during the preceding
three (3) months, then none of the requirements of Rule 144 (other than the
broker/market-maker sale requirement for Shares held for less than three (3)
years following payment in cash of the Purchase Price therefor) will be
applicable to the sale.
(c) Should the Corporation not become subject to the
reporting requirements of the Exchange Act, then Purchaser may, provided he/she
is not at the time an affiliate of the Corporation (nor was such an affiliate
during the preceding three (3) months), sell the Shares (without registration)
pursuant to paragraph (k) of Rule 144 after the Shares have been held for a
period of three (3) years following the payment in cash of the Purchase Price
for such shares.
2.7 DISPOSITION OF SHARES. Purchaser hereby agrees that Purchaser
shall make no disposition of the Shares (other than a permitted transfer under
paragraph 4.1) unless and until there is compliance with all of the following
requirements:
(a) Purchaser shall have notified the Corporation of the
proposed disposition and provided a written summary of the terms
and conditions of the proposed disposition.
(b) Purchaser shall have complied with all requirements of
this Agreement applicable to the disposition of the Shares.
(c) Purchaser shall have provided the Corporation with
written assurances, in form and substance satisfactory to the
Corporation, that (i) the proposed disposition does not require
registration of the Shares under the 1933 Act or (ii) all
appropriate action necessary for compliance with the registration
requirements of the 1933 Act or of any exemption from
registration available under the 1933 Act (including Rule 144)
has been taken.
The Corporation shall not be required (i) to transfer on its books any
Shares which have been sold or transferred in violation of the provisions of
this Article II nor (ii) to treat as the owner of the Shares, or otherwise to
accord voting or dividend rights to, any transferee to whom the Shares have been
transferred in contravention of this Agreement.
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2.8 RESTRICTIVE LEGENDS. In order to reflect the restrictions on
disposition of the Shares, the stock certificates for the Shares will be
endorsed with restrictive legends, including one or more of the following
legends:
(i) "The shares represented by this certificate
have not been registered under the Securities Act of 1933, as
amended. The shares may not be sold or offered for sale in the
absence of (a) an effective registration statement for the shares
under such Act, (b) a 'no action' letter of the Securities and
Exchange Commission with respect to such sale or offer, or (c)
satisfactory assurances to the Corporation that registration
under such Act is not required with respect to such sale or
offer."
(ii) "The shares represented by this certificate
are unvested and accordingly may not be sold, assigned,
transferred, encumbered, or in any manner disposed of except in
conformity with the terms of a written agreement dated as of
November 7, 1997, between the Corporation and the registered
holder of the shares (or the predecessor in interest to the
shares). Such agreement grants certain repurchase rights and
rights of first refusal to the Corporation (or its assignees)
upon the sale, assignment, transfer, encumbrance or other
disposition of the Corporation's shares or upon termination of
service with the Corporation. The Corporation will upon written
request furnish a copy of such agreement to the holder hereof
without charge."
III. SPECIAL TAX PROVISIONS
3.1 SECTION 83(B) ELECTION. The Purchaser understands that under
Section 83 of the Code, the excess of the fair market value of the Shares on the
date any forfeiture restrictions applicable to such shares lapse over the
Purchase Price for such Shares will be reportable as ordinary income on such
lapse date. For this purpose, the term "forfeiture restrictions" includes the
right of the Corporation to repurchase the Shares pursuant to the Repurchase
Right provided under Article V of this Agreement. Purchaser understands that
he/she may elect under Section 83(b) of the Internal Revenue Code of 1986, as
amended (the "Code") to be taxed at the time the Shares are acquired hereunder,
rather than when and as such Shares cease to be subject to such forfeiture
restrictions. Such election must be filed with the Internal Revenue Service
within thirty (30) days after the date of this Agreement. Even if the fair
market value of the Shares on the date of this Agreement equals the Purchase
Price paid (and thus no tax is payable), the election must be made to avoid
adverse tax consequences in the future. The form for making this election is
attached as Exhibit D hereto. Purchaser understands that failure to make this
filing within the thirty (30)-day period will result in the recognition of
ordinary income by the Purchaser as the forfeiture restrictions lapse.
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3.2 PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE
RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER
SECTION 83(B), EVEN IF PURCHASER REQUESTS THE CORPORATION OR ITS REPRESENTATIVES
TO MAKE THIS FILING ON HIS/HER BEHALF. This filing should be made by registered
or certified mail, return receipt requested, and Purchaser must retain two (2)
copies of the completed form for filing with his/her State and Federal tax
returns for the current tax year and an additional copy for his/her personal
records.
IV. TRANSFER RESTRICTIONS
4.1 RESTRICTION ON TRANSFER. Purchaser shall not transfer,
assign, encumber or otherwise dispose of any of the Shares which are subject to
the Corporation's Repurchase Right under Article V. In addition, Shares which
are released from the Repurchase Right shall not be transferred, assigned,
encumbered or otherwise made the subject of disposition in contravention of the
Corporation's First Refusal Right under Article VI. Such restrictions on
transfer, however, shall not be applicable to (i) a gratuitous transfer of the
Shares made to the Purchaser's spouse or issue, including adopted children, or
to a trust for the exclusive benefit of the Purchaser or the Purchaser's spouse
or issue, provided and only if the Purchaser obtains the Corporation's prior
written consent to such transfer, (ii) a transfer of title to the Shares
effected pursuant to the Purchaser's will or the laws of intestate succession or
(iii) a transfer to the Corporation in pledge as security for any purchase-money
indebtedness incurred by the Purchaser in connection with the acquisition of the
Shares.
4.2 TRANSFEREE OBLIGATIONS. Each person (other than the
Corporation) to whom the Shares are transferred by means of one of the permitted
transfers specified in paragraph 4.1 must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Corporation that such
person is bound by the provisions of this Agreement and that the transferred
shares are subject to (i) both the Corporation's Repurchase Right and the
Corporation's First Refusal Right granted hereunder and (ii) the market
stand-off provisions of paragraph 4.4, to the same extent such Shares would be
so subject if retained by the Purchaser.
4.3 DEFINITION OF OWNER. For purposes of Articles IV, V, VI and
VII of this Agreement, the term "Owner" shall include the Purchaser and all
subsequent holders of the Shares who derive their chain of ownership through a
permitted transfer from the Purchaser in accordance with paragraph 4.1.
4.4 MARKET STAND-OFF PROVISIONS.
(a) In connection with any underwritten public offering by
the Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Owner shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing
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transactions with respect to, any Shares without the prior written consent of
the Corporation or its underwriters. Such limitations shall be in effect for
such period of time from and after the effective date of such registration
statement as may be requested by the Corporation or such underwriters; provided,
however, that in no event shall such period exceed one hundred-eighty (180) days
in connection with Corporation's initial public offering or ninety (90) days in
connection with any subsequent public offering.
(b) Owner shall be subject to the market stand-off
provisions of this paragraph 4.4 provided and only if the then-current officers
and directors of the Corporation are also subject to similar arrangements.
(c) In the event of any stock dividend, stock split,
recapitalization or other change affecting the Corporation's outstanding Common
Stock effected without receipt of consideration, then any new, substituted or
additional securities distributed with respect to the Shares shall be
immediately subject to the provisions of this paragraph 4.4, to the same extent
the Shares are at such time covered by such provisions.
(d) In order to enforce the limitations of this paragraph
4.4, the Corporation may impose stop-transfer instructions with respect to the
Shares until the end of the applicable stand-off period.
V. REPURCHASE RIGHT
5.1 GRANT.
(a) The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day period
following the date the Purchaser ceases for any reason to remain in Service or
(if later) during the sixty (60)-day period following the execution date of this
Agreement, to repurchase at the Purchase Price all or (at the discretion of the
Corporation and with the consent of the Purchaser) any portion of the Shares in
which the Purchaser has not acquired a vested interest in accordance with the
vesting provisions of paragraph 5.3 below (such shares to be hereinafter called
the "Unvested Shares"). For purposes of this Agreement, the Purchaser shall be
deemed to remain in Service for so long as the Purchaser continues to be
employed by the Corporation or any parent or subsidiary corporation on a
full-time basis.
(b) For purposes of this Section 5.1 and all other
provisions of this Agreement, the following provisions shall be in effect:
(i) The Purchaser shall be deemed to be employed on
a full-time basis by the Corporation for so long as the
Purchaser renders at least thirty (30) hours of service
per week to the Corporation or one or more of its parents
or subsidiaries.
(ii) A leave of absence (regardless of the reason
therefor) shall be deemed to constitute the cessation of
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full-time employment as of the commencement date of the
leave, unless such leave is authorized by the Corporation
in writing and the Purchaser returns to work prior to the
expiration date of such leave. Accordingly, the Purchaser
shall receive credit for full-time employment during a
leave of absence only if the leave is authorized by the
Corporation and the Purchaser returns to work prior to the
expiration date of the leave.
5.2 EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right shall
be exercisable by written notice delivered to the Owner of the Unvested Shares
prior to the expiration of the applicable sixty (60)-day period specified in
paragraph 5.1. The notice shall indicate the number of Unvested Shares to be
repurchased and the date on which the repurchase is to be effected, such date to
be not more than thirty (30) days after the date of notice. To the extent one or
more certificates representing Unvested Shares may have been previously
delivered out of escrow to the Owner, then Owner shall, prior to the close of
business on the date specified for the repurchase, deliver to the Secretary of
the Corporation the certificates representing the Unvested Shares to be
repurchased, each certificate to be properly endorsed for transfer. The
Corporation shall, concurrently with the receipt of such stock certificates
(either from escrow in accordance with paragraph 7.3 or from Owner as herein
provided), pay to Owner in cash or cash equivalents an amount equal to the
original Purchase Price paid by Owner hereunder for the Unvested Shares which
are to be repurchased.
5.3 TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right
shall terminate with respect to any Unvested Shares for which it is not timely
exercised under paragraph 5.2. In addition, the Repurchase Right shall
terminate, and cease to be exercisable, with respect to any and all Shares in
which the Purchaser vests in accordance with the schedule below. Accordingly, as
the Purchaser continues in the employ of the Company, the Owner shall acquire a
vested interest in, and the Repurchase Right shall lapse with respect to, the
Shares in installments in accordance with the following provisions:
(i) The Purchaser shall not acquire any vested interest
in, nor shall the Repurchase Right lapse with respect to, any
Shares unless and until the Purchaser has completed twelve (12)
months of Service measured from the Vesting Start Date.
(ii) Upon the completion of the twelve (12) month Service
period specified in subparagraph (i) above, the Purchaser shall
acquire a vested interest in, and the Repurchase Right shall
lapse with respect to, 25% of the Shares.
(iii) The Purchaser shall acquire a vested interest in,
and the Repurchase Right shall lapse with respect to, the
remaining Shares in a series of successive equal monthly
installments over each of the next thirty-six (36)
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months of Service completed by the Purchaser after the initial
vesting date under subparagraph (ii) above.
All Shares as to which the Repurchase Right lapses shall,
however, continue to be subject to (i) the First Refusal Right under Article VI
and (ii) the market stand-off and other transfer restrictions of Article IV.
5.4 FRACTIONAL SHARES. No fractional shares shall be repurchased
by the Corporation. Accordingly should the Repurchase Right extend to a
fractional share (in accordance with the vesting computation provisions of
paragraph 5.3) at the time the Purchaser ceases Service, then such fractional
share shall be added to any fractional share in which the Purchaser is at such
time vested in order to make one whole vested share no longer subject to the
Repurchase Right.
5.5 ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of
any stock dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration, then any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which is
by reason of any such transaction distributed with respect to the Shares shall
be immediately subject to the Repurchase Right, but only to the extent the
Shares are at the time covered by such right. Appropriate adjustments to reflect
the distribution of such securities or property shall be made to the number of
Shares at the time subject to the Repurchase Right hereunder and to the price
per share to be paid upon the exercise of the Repurchase Right in order to
reflect the effect of any such transaction upon the Corporation's capital
structure; provided, however, that the aggregate Purchase Price shall remain the
same.
5.6 CORPORATE TRANSACTION. The Repurchase Right granted under
this Article V shall automatically lapse in its entirety immediately prior to
the consummation of any of the following shareholder-approved transactions (a
"Corporate Transaction"):
(i) a merger or consolidation in which more than fifty
percent (50%) of the Corporation's outstanding voting stock is
transferred to a person or persons different from those who held
the stock immediately prior to such transaction,
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets, or
(iii) a merger or consolidation in which the Corporation
is not the surviving entity (other than a transaction effected
primarily to change the State in which the Corporation is
incorporated, or to create a holding company structure).
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VI. RIGHT OF FIRST REFUSAL
6.1 GRANT. The Corporation is hereby granted the right of first
refusal (the "First Refusal Right"), exercisable ln connection with any proposed
transfer of the Shares in which the Purchaser has vested in accordance with the
vesting provisions of Article V. For purposes of this Article VI, the term
"transfer" shall include any sale, assignment, pledge, encumbrance or other
disposition for value of the Shares intended to be made by the Owner, but shall
not include any of the permitted transfers under paragraph 4.1.
6.2 NOTICE OF INTENDED DISPOSITION. In the event the Owner
desires to accept a bona fide third-party offer for any or all of the Shares
(the shares subject to such offer to be hereinafter called the "Target Shares"),
Owner shall promptly (i) deliver to the Corporate Secretary of the Corporation
written notice (the "Disposition Notice") of the terms and conditions of the
offer, including the purchase price and the identity of the third-party offeror
and (ii) provide satisfactory proof that the disposition of the Target Shares to
such third-party offeror would not be in contravention of the provisions set
forth in Articles II and IV of this Agreement.
6.3 EXERCISE OF RIGHT. The Corporation (or its assignees) shall,
for a period of twenty-five (25) days following receipt of the Disposition
Notice, have the right to repurchase any or all of the Target Shares specified
in the Disposition Notice upon substantially the same terms and conditions
specified therein or upon terms and conditions which do not materially vary from
those specified therein. Such right shall be exercisable by delivery of written
notice (the "Exercise Notice") to Owner prior to the expiration of the
twenty-five (25)-day exercise period. If such right is exercised with respect to
all the Target Shares specified in the Disposition Notice, then the Corporation
(or its assignees) shall effect the repurchase of the Target Shares, including
payment of the purchase price, not more than five (5) business days after
delivery of the Exercise Notice; and at such time Owner shall deliver to the
Corporation the certificates representing the Target Shares to be repurchased,
each certificate to be properly endorsed for transfer. To the extent any of the
Target Shares are at the time held in escrow under Article VII, the certificates
for such shares shall automatically be released from escrow and delivered to the
Corporation for purchase.
6.4 NON-EXERCISE OF RIGHT. In the event the Exercise Notice is
not given to Owner within twenty-five (25) days following the date of the
Corporation's receipt of the Disposition Notice, Owner shall have a period of
thirty (30) days thereafter in which to sell or otherwise dispose of the Target
Shares to the third-party offeror identified in the Disposition Notice upon
terms and conditions (including the purchase price) no more favorable to such
third-party offeror than those specified in the Disposition Notice; provided,
however, that any such sale or disposition must not be effected in contravention
of the provisions of Article II of this Agreement. To the extent any of the
Target Shares are at the time held in escrow under Article VII, the certificates
for such shares shall automatically be released from escrow and surrendered to
the Owner. The third-party offeror shall acquire the Target Shares free and
clear of the Corporation's Repurchase Right under Article V and the
Corporation's First Refusal Right hereunder, but the acquired shares shall
remain subject to (i) the securities law restrictions of paragraph 2.2(a) and
(ii) the market stand-off
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provisions of paragraph 4.4. In the event Owner does not effect such sale or
disposition of the Target Shares within the specified thirty (30) day period,
the Corporation's First Refusal Right shall continue to be applicable to any
subsequent disposition of the Target Shares by Owner until such right lapses in
accordance with paragraph 6.7.
6.5 PARTIAL EXERCISE OF RIGHT. In the event the Corporation (or
its assignees) makes a timely exercise of the First Refusal Right with respect
to a portion, but not all, of the Target Shares specified in the Disposition
Notice, Owner shall have the option, exercisable by written notice to the
Corporation delivered within thirty (30) days after the date of the Disposition
Notice, to effect the sale of the Target Shares pursuant to one of the following
alternatives:
(i) sale or other disposition of all the Target Shares to
the third-party offeror identified in the Disposition Notice, but
in full compliance with the requirements of paragraph 6.4, as if
the Corporation did not exercise the First Refusal Right
hereunder; or
(ii) sale to the Corporation (or its assignees) of the
portion of the Target Shares which the Corporation (or its
assignees) has elected to purchase, such sale to be effected in
substantial conformity with the provisions of paragraph 6.3.
Failure of Owner to deliver timely notification to the
Corporation under this paragraph 6.5 shall be deemed to be an election by Owner
to sell the Target Shares pursuant to alternative (i) above.
6.6 RECAPITALIZATION/MERGER.
(a) In the event of any stock dividend, stock split,
recapitalization or other transaction affecting the Corporation's outstanding
Common Stock as a class effected without receipt of consideration, then any new,
substituted or additional securities or other property which is by reason of
such transaction distributed with respect to the Purchased Shares shall be
immediately subject to the Corporation's First Refusal Right hereunder, but only
to the extent the Purchased Shares are at the time covered by such right.
(b) The Corporation's First Refusal Right shall terminate
in the event of any of the following transactions:
(i) a merger or consolidation in which more than
fifty percent (50%) of the Corporation's outstanding
voting stock is transferred to a person or persons
different from those who held the stock immediately prior
to such transaction,
(ii) the sale, transfer or other disposition of all
or substantially all of the Corporation's assets, or
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(iii) a merger or consolidation in which the
Corporation is not the surviving entity (other than a
transaction effected primarily to change the State in
which the Corporation is incorporated, or to create a
holding company structure).
6.7 LAPSE. The First Refusal Right under this Article VI shall
lapse and cease to have effect upon the earliest to occur of (i) the first date
on which shares of the Corporation's Common Stock are held of record by more
than five hundred (500) persons, (ii) a determination is made by the
Corporation's Board of Directors that a public market exists for the outstanding
shares of the Corporation's Common Stock, or (iii) a firm commitment
underwritten public offering pursuant to an effective registration statement
under the 1933 Act, covering the offer and sale of the Corporation's Common
Stock in the aggregate amount of at least $5,000,000. However, the market
stand-off provisions of paragraph 4.4 shall continue to remain in full force and
effect following the lapse of the First Refusal Right hereunder.
VII. ESCROW
7.1 DEPOSIT. Subject to the terms of the Stock Pledge Agreement,
the certificates for any Unvested Shares purchased hereunder shall be deposited
in escrow with the Corporation to be held in accordance with the provisions of
this Article VII. Each deposited certificate shall be accompanied by a duly
executed Assignment Separate from Certificate in the form of Exhibit A. The
deposited certificates, together with any other assets or securities from time
to time deposited with the Corporation pursuant to the requirements of this
Agreement, shall remain in escrow until such time or times as the certificates
(or other assets and securities) are to be released or otherwise surrendered for
cancellation in accordance with paragraph 7.3. Upon delivery of the certificates
(or other assets and securities) to the Corporation, the Owner shall be issued
an instrument of deposit acknowledging the number of Unvested Shares (or other
assets and securities) delivered in escrow to the Corporation.
7.2 RECAPITALIZATION. All regular cash dividends on the Unvested
Shares (or other securities at the time held in escrow) shall be paid directly
to the Owner and shall not be held in escrow. However, in the event of any stock
dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration, any new, substituted or additional securities or other property
which is by reason of such transaction distributed with respect to the Unvested
Shares shall be immediately delivered to the Corporation to be held in escrow
under this Article VII, but only to the extent the Unvested Shares are at the
time subject to the escrow requirements of paragraph 7.1.
7.3 RELEASE/SURRENDER. The Unvested Shares, together with any
other assets or securities held in escrow hereunder, shall be subject to the
following terms and conditions relating to their release from escrow or their
surrender to the Corporation for repurchase and cancellation:
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(i) Should the Corporation (or its assignees) elect to
exercise the Repurchase Right under Article V with respect to any
Unvested Shares, then the escrowed certificates for such Unvested
Shares (together with any other assets or securities issued with
respect thereto) shall be delivered to the Corporation,
concurrently with the payment to the Owner, in cash or cash
equivalent (including the cancellation of any purchase-money
indebtedness), of an amount equal to the aggregate Purchase Price
for such Unvested Shares, and the Owner shall cease to have any
further rights or claims with respect to such Unvested Shares (or
other assets or securities attributable to such Unvested Shares).
(ii) Should the Corporation (or its assignees) elect to
exercise its First Refusal Right under Article VI with respect to
any vested Target Shares held at the time in escrow hereunder,
then the escrowed certificates for such Target Shares (together
with any other assets or securities attributable thereto) shall,
concurrently with the payment of the paragraph 6.3 purchase price
for such Target Shares to the Owner, be surrendered to the
Corporation, and the Owner shall cease to have any further rights
or claims with respect to such Target Shares (or other assets or
securities).
(iii) Should the Corporation (or its assignees) elect not
to exercise its First Refusal Right under Article VI with respect
to any Target Shares held at the time in escrow hereunder, then
the escrowed certificates for such Target Shares (together with
any other assets or securities attributable thereto) shall be
surrendered to the Owner for disposition in accordance with the
provisions of paragraph 6.4.
(iv) As the interest of the Purchaser in the Unvested
Shares (or any other assets or securities attributable thereto)
vests in accordance with the provisions of Article V, the
certificates for such vested shares (as well as all other vested
assets and securities) shall be released from escrow and
delivered to the Owner in accordance with the following schedule:
a. The initial release of vested shares (or other
vested assets and securities) from escrow shall be effected
within thirty (30) days following the expiration of the initial
twelve (12)-month period measured from the Vesting Start Date
under paragraph 5.3.
b. Subsequent releases of vested shares (or other
vested assets and securities) from escrow shall be
effected at semi-annual intervals thereafter, with the
first such semi-annual
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release to occur six (6) months after the initial
paragraph 5.3 vesting date.
c. Upon the Purchaser's cessation of Service, any
escrowed Shares (or other assets or securities) in which
the Purchaser is at the time vested shall be promptly
released from escrow.
d. Upon any earlier termination of the
Corporation's Repurchase Right in accordance with the
applicable provisions of Article V, the Shares (or other
assets or securities) at the time held in escrow hereunder
shall promptly be released to the Owner as fully-vested
shares or other property.
(v) All Shares (or other assets or securities) released
from escrow in accordance with the provisions of subparagraph
(iv) shall nevertheless remain subject to (I) the Corporation's
First Refusal Right under Article VI until such right lapses
pursuant to paragraph 6.7, (II) the restrictions on transfer,
including the market stand-off provision, of Article IV, until
such provisions terminate in accordance with their terms and
(III) the Special Purchase Right under Article VIII.
VIII. MARITAL DISSOLUTION OR LEGAL SEPARATION
8.1 GRANT. In connection with the dissolution of the Purchaser's
marriage or the legal separation of the Purchaser and the Purchaser's spouse,
the Corporation shall have the right (the "Special Purchase Right"), exercisable
at any time during the thirty (30)-day period following the Corporation's
receipt of the required Dissolution Notice under paragraph 8.2, to purchase from
the Purchaser's spouse, in accordance with the provisions of paragraph 8.3, all
or any portion of the Shares which would otherwise be awarded to such spouse in
settlement of any community property or other marital property rights such
spouse may have in such shares.
8.2 NOTICE OF DECREE OR AGREEMENT. The Purchaser shall promptly
provide the Secretary of the Corporation with written notice (the "Dissolution
Notice") of (i) the entry of any judicial decree or order resolving the property
rights of the Purchaser and the Purchaser's spouse in connection with their
marital dissolution or legal separation or (ii) the execution of any contract or
agreement relating to the distribution or division of such property rights. The
Dissolution Notice shall be accompanied by a copy of the actual decree of
dissolution or settlement agreement between the Purchaser and the Purchaser's
spouse which provides for the award to the spouse of one or more Shares in
settlement of any community property or other marital property rights such
spouse may have in such shares.
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8.3 EXERCISE OF SPECIAL PURCHASE RIGHT. The Special Purchase
Right shall be exercisable by delivery of the Purchase Notice to the Purchaser
and the Purchaser's spouse within thirty (30) days after the Corporation's
receipt of the Dissolution Notice. The Purchase Notice shall indicate the number
of shares to be purchased by the Corporation, the date such purchase is to be
effected (such date to be not less than five (5) business days, nor more than
ten (10) business days, after the date of the Purchase Notice), and the fair
market value to be paid for such Shares. The Purchaser (or the Purchaser's
spouse, to the extent such spouse has physical possession of the Shares) shall,
prior to the close of business on the date specified for the purchase, deliver
to the Corporate Secretary of the Corporation the certificates representing the
shares to be purchased, each certificate to be properly endorsed for transfer.
To the extent any of the shares to be purchased by the Corporation are at the
time held in escrow under Article VII, the certificates for such shares shall be
promptly delivered out of escrow to the Corporation. The Corporation shall,
concurrently with the receipt of the stock certificates, pay to the Purchaser's
spouse (in cash or cash equivalents) an amount equal to the fair market value
specified for such shares in the Purchase Notice.
If the Purchaser's spouse does not agree with the fair market
value specified for the shares in the Purchase Notice, then the spouse shall
promptly notify the Corporation in writing of such disagreement and the fair
market value of such shares shall thereupon be determined by an appraiser of
recognized standing selected by the Corporation and the spouse. If they cannot
agree on an appraiser within twenty (20) days after the date of the Purchase
Notice, each shall select an appraiser of recognized standing, and the two
appraisers shall designate a third appraiser of recognized standing whose
appraisal shall be determinative of such value. The cost of the appraisal shall
be shared equally by the Corporation and the Purchaser's spouse. The Closing
shall then be held on the fifth business day following the completion of such
appraisal; provided, however, that if the appraised value is more than fifteen
percent (15%) greater than the fair market value specified for the shares in the
Purchase Notice, the Corporation shall have the right, exercisable prior to the
expiration of such five (5) business-day period, to rescind the exercise of the
Special Purchase Right and thereby revoke its election to purchase the shares
awarded to the spouse.
8.4 LAPSE. The Special Purchase Right under this Article VIII
shall lapse and cease to have effect upon the earlier to occur of (i) the first
date on which the First Refusal Right under Article VI lapses or (ii) the
expiration of the thirty (30)-day exercise period specified in paragraph 8.3, to
the extent the Special Purchase Right is not timely exercised in accordance with
such paragraph.
IX. GENERAL PROVISIONS
9.1 ASSIGNMENT. The Corporation may assign its Repurchase Right
under Article V, its First Refusal Right under Article VI and/or its Special
Purchase Right under Article VIII to any person or entity selected by the
Corporation's Board of Directors, including (without limitation) one or more
shareholders of the Corporation, provided that, if the assignee of the
Repurchase Right is other than a one hundred percent (100%) owned subsidiary
corporation of the Corporation or the parent corporation owning one hundred
percent (100%) of the Corporation, then such assignee must make a cash payment
to the
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Corporation, upon the assignment of the Repurchase Right, in an amount equal to
the excess (if any) of (i) the fair market value of the Unvested Shares at the
time subject to the assigned Repurchase Right over (ii) the aggregate repurchase
price payable for Unvested Shares thereunder.
9.2 DEFINITIONS. For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary
corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall
be considered to be a PARENT corporation of the Corporation,
provided each such corporation in the unbroken chain (other than
the Corporation) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
(ii) Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation
shall be considered to be a SUBSIDIARY of the Corporation,
provided each such corporation (other than the last corporation)
in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
9.3 NOTICES. Any notice required in connection with (i) the
Repurchase Right, the First Refusal Right or the Special Purchase Right or (ii)
the disposition of any Shares covered thereby shall be given in writing and
shall be deemed effective upon personal delivery or upon deposit in the United
States mail, registered or certified, postage prepaid and addressed to the party
entitled to such notice at the address indicated below such party's signature
line on this Agreement or at such other address as such party may designate by
ten (10) days advance written notice under this paragraph 9.3 to all other
parties to this Agreement.
9.4 NO WAIVER. The failure of the Corporation (or its assignees)
in any instance to exercise the Repurchase Right granted under Article V, or the
failure of the Corporation (or its assignees) in any instance to exercise the
First Refusal Right granted under Article VI or the failure of the Corporation
(or its assignees) in any instance to exercise the Special Purchase Right
granted under Article VIII, shall not constitute a waiver of any other
repurchase rights and/or rights of first refusal that may subsequently arise
under the provisions of this Agreement or any other agreement between the
Corporation and the Purchaser or the Purchaser's spouse. No waiver of any breach
or condition of this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition, whether of like or different nature.
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9.5 CANCELLATION OF SHARES. If the Corporation (or its assignees)
shall make available, at the time and place and in the amount and form provided
in this Agreement, the consideration for the Shares to be repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Corporation (or its assignees) shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been delivered as required
by this Agreement.
9.6 NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement
shall confer upon the Purchaser any right to continue in the Service of the
Corporation (or any parent or subsidiary corporation employing or retaining
Purchaser) for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any parent or subsidiary
corporation employing or retaining Purchaser) or the Purchaser, which rights are
hereby expressly reserved by each, to terminate the Purchaser's Service at any
time for any reason whatsoever, with or without cause.
9.7 RIGHT TO OFFSET. The Corporation may apply any amount
otherwise due and payable to the Purchaser hereunder to the payment (including
as a prepayment) of any and all amounts owed to the Corporation under the
Promissory Note (whether or not then due and payable) and shall remit to
Purchaser only such amounts which are in excess of the amount of such payment.
X. MISCELLANEOUS PROVISIONS
10.1 PURCHASER UNDERTAKING. Purchaser hereby agrees to take
whatever additional action and execute whatever additional documents the
Corporation may in its judgment deem necessary or advisable in order to carry
out or effect one or more of the obligations or restrictions imposed on either
the Purchaser or the Shares pursuant to the express provisions of this
Agreement.
10.2 AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof.
10.3 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, as such laws
are applied to contracts entered into and performed in such State without resort
to that State's conflict-of- laws rules.
10.4 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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10.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and the Purchaser and the Purchaser's legal
representatives, heirs, legatees, distributees, assigns and transferees by
operation of law, whether or not any such person shall have become a party to
this Agreement and have agreed in writing to join herein and be bound by the
terms and conditions hereof.
10.6 COMPANY COUNSEL. PURCHASER EXPRESSLY ACKNOWLEDGES AND AGREES
THAT THIS AGREEMENT HAS BEEN PREPARED BY THE COMPANY'S COUNSEL WHICH COUNSEL HAS
REPRESENTED THE INTERESTS OF THE COMPANY AND NOT THOSE OF PURCHASER WITH RESPECT
TO THIS AGREEMENT, THAT PURCHASER IS NOT RELYING ON ANY REPRESENTATION OR ADVICE
FROM THE COMPANY OR ITS COUNSEL OR FROM ANY OTHER INVESTOR IN THE COMPANY ABOUT
THIS AGREEMENT, ITS CONTENT OR EFFECT AND THAT PURCHASER HAS BEEN ENCOURAGED TO
SEEK INDEPENDENT COUNSEL TO REVIEW THIS AGREEMENT ON BEHALF OF PURCHASER.
PURCHASER REPRESENTS THAT HE HAS REVIEWED THIS AGREEMENT, AND SPECIFICALLY
ACKNOWLEDGES THAT THE VESTING OF THE SHARES UNDER THIS AGREEMENT IS EARNED ONLY
BY CONTINUING EMPLOYMENT OR SERVICE TO THE COMPANY AT THE WILL OF THE COMPANY.
10.7 POWER OF ATTORNEY. Purchaser's spouse hereby appoints
Purchaser his true and lawful attorney in fact, for him and in his name, place
and ▇▇▇▇▇, and for his use and benefit, to agree to any amendment or
modification of this Agreement and to execute such further instruments and take
such further actions as may reasonably be necessary to carry out the intent of
this Agreement. Purchaser's spouse further gives and grants unto Purchaser as
his attorney in fact full power and authority to do and perform every act
necessary and proper to be done in the exercise of any of the foregoing powers
as fully as he might or could do if personally present, with full power of
substitution and revocation, hereby ratifying and confirming all that Purchaser
shall lawfully do and cause to be done by virtue of this power of attorney.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first indicated above.
NANOGEN, INC.
By
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PURCHASER
--------------------------------
c/o Nanogen, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
The undersigned spouse of Purchaser has read and hereby approves the
foregoing Restricted Stock Issuance Agreement. In consideration of the
Corporation's granting the Purchaser the right to acquire the Shares in
accordance with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms and provisions of such Agreement, including,
(specifically) the right of the Corporation (or its assignees) to purchase any
and all interest or right the undersigned may otherwise have in such shares
pursuant to community property laws or other marital property rights.
------------------------------------------
Purchaser's Spouse
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EXHIBIT A
PROMISSORY NOTES
A-1
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PROMISSORY NOTE SECURED BY
STOCK PLEDGE AGREEMENT
$____________ San Diego, California
November 7, 1997
For value received, the undersigned ("Maker") hereby promises to pay to
Nanogen, Inc., a California corporation ("Holder") at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, the principal amount of
___________________________ Dollars ($__________), together with interest
thereon from the date hereof at the rate of 6.01% per annum, interest to be
compounded semi-annually.
The performance of the Maker's obligations under this Promissory Note
are secured by the pledge of shares of the common stock of Holder (the "Pledged
Shares") pursuant to the terms of that certain Stock Pledge Agreement entered
into by and between the Maker and the Holder of even date herewith (the "Stock
Pledge Agreement").
All principal and accrued interest under this Promissory Note shall be
due and payable in a lump sum on November 7, 2002.
Payment shall be made in lawful tender of the United States. Except as
otherwise provided herein or by applicable law, all payments shall be applied
first to any unpaid enforcement or collection costs, then to accrued interest
but unpaid interest, and the remainder shall be applied to principal.
This Promissory Note may be prepaid in whose or in part at any time
without premium or penalty. Partial prepayments shall not postpone or delay the
date of any subsequent payment.
Each of the following events shall constitute a default ("Default")
under this Promissory Note:
(a) The Maker's failure to pay when due any payment of principal or
interest due under this Note;
(b) The Maker's failure to perform or observe any of the terms or
conditions of the Stock Pledge Agreement;
(c) The Maker's failure to perform or observe any of the terms or
conditions of the Restricted Stock Issuance Agreement between Maker and Holder
of even date herewith;
(d) The Maker's failure to perform or observe any of the terms or
conditions of any other agreement between Maker and Holder;
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(e) The making by the Maker of any assignment for the benefit of
creditors or the voluntary appointment (at the request or with the consent of
the Maker) of a receiver, custodian, liquidator or trustee in bankruptcy of any
of the Maker's property, or the filing by the Maker of a petition in bankruptcy
or other similar proceeding under any law for relief of debtors; or
(f) The filing against the Maker of a petition in bankruptcy or other
similar proceeding under any law for relief of debtors, or the involuntary
appointment of a receiver, custodian, liquidator or trustee in bankruptcy of the
property of the Maker, if such petition or appointment is not vacated or
discharged within sixty (60) calendar days after the filing or making thereof.
Upon the occurrence of any Default, the Holder may, at its option,
declare the entire unpaid principal balance and accrued interest to be
immediately due and payable, without notice to the Maker. The Maker further
understands that this is a full recourse promissory note and that the Holder
may, at its option, proceed against assets of the undersigned other that the
Pledged Stock (as defined in the Stock Pledge Agreement) under the Stock Pledge
Agreement in the event of a default.
The Maker promises to pay all costs and expenses (including reasonable
attorneys' fees) incurred by the Holder in the exercise or enforcement of any
right under this Promissory Note.
The acceptance by Holder of any payment hereunder which is less than the
payment in full of all amounts due and payable at the time of such payment shall
not constitute a waiver of the right to accelerate at that time or any
subsequent time or nullify any prior acceleration without the express written
consent of Holder except as and to the extent otherwise provided by law.
The Maker waives diligence, presentment, protest and demand and also
notice of protest, demand, dishonor and nonpayment of this Promissory Note, and
expressly agrees that this Promissory Note, or any payment hereunder, may be
extended from time to time and consents to the acceptance of security, if any,
or the release of security, if any, from this Promissory Note, all without in
any way affecting the liability of the Maker.
The right to plead any and all statutes of limitations as a defense to
any demand on this Promissory Note or any agreement to the same, or any
instrument securing this Promissory Note, or any and all obligations or
liabilities arising out of or in connection with this Promissory Note, is
expressly waived by the Maker to the fullest extent permitted by law.
No extension of the time for the payment of this Promissory Note, or any
installment hereof, made by agreement by the Holder hereof with any person now
or hereafter liable for the payment of this Promissory Note shall affect the
original liability under the terms of this Promissory Note by the Maker even if
it is not a party to such agreement.
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If Holder should institute collection efforts, of any nature whatsoever,
to attempt to collect any and all amounts due hereunder upon the default of the
Maker, the Maker shall be liable to pay to Holder immediately and without demand
all reasonable costs and expenses of collection incurred by Holder, including
without limitation reasonable attorneys fees, whether or not suit or other
action or proceeding be instituted and specifically including but not limited to
collection efforts that may be made through a bankruptcy court, and all such
sums shall be fully secured by the Pledged Stock pursuant to the Stock Pledge
Agreement.
The provisions of this Promissory Note are intended by the Maker to be
severable and divisible and the invalidity or unenforceability of a provision or
term herein shall not invalidate or render unenforceable the remainder of this
Promissory Note or any part thereof.
This Promissory Note shall be governed by and construed and interpreted
in accordance with the internal laws of the State of California.
THE "MAKER"
---------------------------------------
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EXHIBIT B
STOCK PLEDGE AGREEMENT
B-1
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STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ("Agreement") is entered into as of November
7, 1997, by and between Nanogen, Inc., a California corporation ("Secured
Party") and ______________("Pledgor"), with reference to the following facts:
A. Contemporaneously with the execution of this Agreement and pursuant
to a certain Restricted Stock Issuance Agreement dated as of November 7, 1997,
by and between Pledgor and Secured Party (the "Stock Purchase Agreement"),
Pledgor is delivering a Secured Promissory Note to Secured Party in the original
principal amount of _____________________________ Dollars ($__________) (the
"Promissory Note"), in order to evidence a loan which Secured Party has agreed
to make to Pledgor in connection with Pledgor's purchase of shares of Secured
Party's Common Stock pursuant to the Stock Purchase Agreement.
B. Pledgor is required by the Stock Purchase Agreement to secure its
Obligations under the Promissory Note by granting Secured Party a first priority
security interest in the shares of Common Stock of Secured Party being acquired
by Pledgor under the Stock Purchase Agreement, and any and all new or additional
securities of Secured Party subsequently acquired by or distributed to Pledgor.
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions contained herein, the parties hereby agree as follows:
1. Security. The term "Pledged Stock" shall mean ______________________
(_______) shares of Common Stock of Secured Party evidenced by Stock Certificate
No. ___, registered in the name of Pledgor, together with all certificates,
options, rights or other securities of Secured Party acquired by Pledgor
including any distributions issued as an addition to, in substitution or in
exchange for, or on account of, any such shares, and all proceeds of the
foregoing, as further described in and subject to the provisions of Section 4
below, now or hereafter owned or acquired by Pledgor, and any and all new or
additional securities subsequently distributed to Pledgor by Secured Party.
2. Grant of Security Interest. As security for full and timely payment,
performance and satisfaction of the Obligations (as defined in Section 3 below),
Pledgor hereby grants to Secured Party a first priority security interest in the
Pledged Stock. Upon the execution hereof, the Pledged Stock and any related
stock powers shall be deposited with Secured Party.
3. Obligations of Pledgor. As used herein, the term "Obligations" shall
mean: (a) all of Pledgor's obligations, covenants and agreements under the
Promissory Note and (b) all of Pledgor's obligations, covenants and agreements
under this Agreement.
4. Pledged Stock. In the event Pledgor shall become entitled to receive
or shall receive, in connection with any of the Pledged Stock, (a) any stock
certificate, including any
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certificate representing a stock dividend or any certificate in connection with
any increase or reduction of capital, reclassification, merger, consolidation,
sale of assets, combination of shares, stock split or spin-off, (b) any option,
warrant or right, whether as an addition to or in substitution of any of the
Pledged Stock, or otherwise, (c) any dividend or distribution payable in
property, including securities issued as a dividend on the Pledged Stock, or (d)
any other distributions of any kind whatsoever, Pledgor shall accept same as
encumbered by the security interest created hereby, and shall deliver same
forthwith to Secured Party in the exact form received, including as appropriate,
Pledgor's endorsement or appropriate stock powers duly executed in blank, to be
held by Secured Party, as a part of the Pledged Stock subject to the terms
hereof.
5. Representations and Warranties of Pledgor. Pledgor warrants and
represents to Secured Party that (a) Pledgor is the legal and beneficial owner
of all of the Pledged Stock, (b) all of the shares of the Pledged Stock are
owned by Pledgor free of any pledge, mortgage, lien or security interest of any
kind, except as created hereby, and (c) upon execution and delivery by Pledgor
of this Agreement and upon delivery of the Pledged Stock to Secured Party, this
Agreement shall create a valid and perfected first priority security interest in
the Pledged Stock, and the proceeds thereof, subject to no prior security
interest.
6. Transfer of Interests. Pledgor hereby covenants that, until such time
as the Obligations have been fully paid, performed and satisfied, Pledgor will
not sell, convey or otherwise dispose of any of the Pledged Stock or any
interest therein, or create, incur or permit to exist any pledge, mortgage,
lien, charge, encumbrance or any security interest whatsoever in or with respect
to any of the Pledged Stock, or the proceeds thereof, other than the security
interest created hereby.
7. Default. As used herein, the term "Default" shall mean the failure of
full and timely payment or performance and satisfaction of any of the
Obligations.
8. Rights of Secured Party. Upon the occurrence of a Default, Secured
Party may, at its option, do any one or more of the following: (a) declare all
indebtedness of Pledgor to Secured Party to be immediately due and payable,
whereupon all unpaid principal and interest on the Promissory Note shall become
and be immediately due and payable; (b) exercise any and all of the rights and
remedies of a secured party as provided for by the California Commercial Code;
(c) proceed by an action or actions at law or in equity to recover the
indebtedness secured hereby or to foreclose this Agreement and sell the
collateral, or any portion thereof, pursuant to a judgment or decree of a court
or courts of competent jurisdiction; (d) proceed immediately to have any or all
of the Pledged Stock registered in Secured Party's name or in the name of a
nominee; (e) exercise all voting rights with respect to the Pledged Stock and
all other corporate rights, including any rights of conversion, exchange,
subscription or other rights, privileges or options pertaining thereto as if
Secured Party were the absolute owner thereof, including, without limitation,
the right to exchange any or all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other readjustment of
Pledgor; (f) enforce one or more remedies hereunder, successively or
concurrently; and (g) proceed immediately to dispose of and
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realize upon the Pledged Stock, or any part thereof, and in connection
therewith, sell or otherwise dispose of and deliver the Pledged Stock, or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange, broker's board or at any of Secured Party's offices or elsewhere, at
such prices and on such terms as Secured Party may deem best, for cash or on
credit, or for future delivery without assumption of any credit risk, with the
right of Secured Party or any purchaser to purchase at any such sale either the
whole or any part of the Pledged Stock (in connection with any such sale or
disposition, Secured Party need not give more than thirty (30) calendar days
notice of the time and place of any public sale or of the time after which a
private sale may take place, which notice Pledgor hereby acknowledges to be
reasonable).
9. Proceeds. The proceeds of any disposition of all or any part of the
Pledged Stock, as provided in Section 8 above, shall be applied as follows: (a)
first, to the costs and expenses incurred in connection therewith or incidental
thereto, including reasonable attorneys' fees and legal expenses; (b) second, to
the satisfaction of the Obligations; (c) third, to the payment of any other
amounts required by applicable law; and (d) fourth, to Pledgor to the extent of
any surplus remaining.
10. Private Sale. Pledgor recognizes and acknowledges that Secured Party
may be unable to effect a public sale of all or a part of the Pledged Stock and
may elect to resort to one or more private sales to purchasers who will be
obligated to agree, among other things, to acquire the Pledged Stock for their
own account, for investment, and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sales may be at prices and
on terms less favorable than those of public sales, and agrees that such private
sales shall be deemed to have been made in a commercially reasonable manner and
that Secured Party has no obligation to delay sale of any Pledged Stock to
permit Pledgor to register it for public sale under the Securities Act of 1933,
as amended.
11. Release of Pledged Stock. Upon the execution hereof, Pledgor shall
deliver to Secured Party, the stock certificate or certificates representing the
Pledged Stock, including Pledgor's endorsement thereon or appropriate stock
powers duly executed in blank, to be held in accordance with the terms of this
Agreement. Provided all indebtedness secured hereunder shall at the time have
been paid in full, the Pledged Stock shall be released from pledge and returned
to Pledgor upon the full and final satisfaction of Pledgor's obligations under
the Promissory Note and this Agreement.
12. Partial Release of Pledged Stock. Provided that there are no unpaid
enforcement or collection costs due and payable under the terms of the
Promissory Note, and provided further that Pledgor executes such documents,
agreements and certificates as may reasonably be required by Holder in order to
effectuate the partial release contemplated herein, a portion of the shares of
Pledged Stock shall be released from pledge and returned to Pledgor upon receipt
of a prepayment under the Promissory Note. The number of shares of Pledged Stock
to be released from pledge and returned to Pledgor shall be that number of
shares of Pledged Stock which bears the same ratio to the total number of shares
of Pledged Stock as the amount of prepayment under the Promissory Note bears to
the total of the
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principal and accrued interest then payable under the Promissory Note, provided
that no fractional shares shall be released from pledge under this paragraph 12.
13. Irrevocable Proxy and Power of Attorney. To further secure
Obligations hereunder, Pledgor grants the irrevocable proxy and power of
attorney set forth in this Section 13 to Secured Party for the purposes set
forth below. Pledgor hereby irrevocably constitutes and appoints Secured Party,
any person or entity who becomes the successor to Secured Party, or any officer
of Secured Party or such successor (the "Attorneys"), and each of the foregoing
acting singly, in each case with full power of substitution and resubstitution,
the true and lawful agent and attorney-in-fact of such Purchaser, with full
power and authority in such Purchaser's name, place and stead, to vote the
shares of Pledged Stock in favor of any corporate transaction which has
otherwise been approved by the shareholders of Secured Party and in which (i)
more than fifty percent (50%) of the outstanding shares of the common stock of
Secured Party will be acquired by a single purchaser or a group of purchasers
acting in concert, (ii) all or substantially all of the assets of Holder are
acquired by a single purchaser or group of purchasers, and (iii) Holder merges
with or into another organization; and to do and perform each and every other
act and thing whatsoever requisite, necessary or appropriate to be done to carry
out the purposes of this paragraph 13 as fully to all intents and purposes as
Pledgor might or could do if personally present, Pledgor hereby ratifying all
that such attorney-in-fact shall do or cause to be done by these presents. It is
expressly understood and intended by Pledgor that the irrevocable proxy and
power of attorney granted in this paragraph 13 is coupled with an interest,
irrevocable and may be delegated by said Attorneys. The irrevocable proxy and
power of attorney shall survive the death or incapacity of such Pledgor and
shall continue until all Pledged Shares have been released from pledge
hereunder.
14. Voting Rights. Except as set forth in Paragraph 13 hereof, so long
as no default shall have occurred or exist under this Agreement, Secured Party
shall have no voting rights with respect to the Pledged Stock.
15. Written Notices. Pledgor agrees to promptly deliver to Secured Party
a copy of all written notices received by Pledgor with respect to the Pledged
Stock.
16. Performance by Pledgor. Upon full payment and performance of all of
the Obligations by Pledgor and upon payment of all additional costs and expenses
provided herein, this Agreement shall terminate and Secured Party shall deliver
or caused to be delivered to Pledgor (except as set forth in the Stock Purchase
Agreement or otherwise), such of the Pledged Stock as shall not have been sold
or otherwise disposed of pursuant to this Agreement.
17. Remedies. The rights and remedies provided herein are cumulative and
are in addition to, and not exclusive of, any rights or remedies provided in
other instruments and agreements between Secured Party and Pledgor, or as
provided by law, including, without limitation, the rights and remedies of a
secured party under the California Commercial Code.
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18. Successors and Assigns. This Agreement is binding upon and shall
inure to the benefit of the parties hereto, and their successors and assigns.
19. Governing Law. This Agreement has been accepted and is performable
within San Diego County, California. This Agreement shall be governed and
construed in accordance with the internal laws of the State of California.
20. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given on the
third business day after mailing within the United States, postage prepaid, by
registered or certified mail, return receipt requested, addressed as follows:
If to Pledgor: _____________________
c/o Nanogen, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Secured Party: Nanogen, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Each of the parties hereto shall be entitled to specify a different address by
giving written notice to the other parties hereto in accordance with this
Section 20.
21. Entire Agreement. This Agreement and any other agreement expressly
referred to herein supersedes any and all other agreements, either oral or in
writing, among the parties hereto, with respect to the subject matter hereof and
contains all of the covenants and agreements among the parties with respect to
the subject matter hereof.
22. Waiver: Modification. No term or condition of this Agreement shall
be deemed to have been waived nor shall there be any estoppel to enforce any
provision of this Agreement except by written instrument of the party charged
with such waiver or estoppel. No amendment or modification of this Agreement
shall be deemed effective unless and until executed in writing by all of the
parties hereto.
23. Severability. All agreements and covenants contained herein are
severable and in the event that any of them shall be held to be invalid by any
court of competent jurisdiction, this Pledge Agreement shall be interpreted as
if such invalid agreements or covenants were not contained herein.
24. Delay; Time of Essence. No failure or delay by a party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, and
no single or partial exercise thereof shall preclude any other or further
exercise or the exercise of any other right, power, or privilege. Time is of the
essence of each and every provision of this Agreement of which time is an
element.
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25. Attorneys' Fees. In any action or proceeding brought to enforce or
interpret any provision of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
PLEDGOR: SECURED PARTY:
Nanogen, Inc.
____________________________ By:_________________________________
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EXHIBIT C
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto NANOGEN, INC. (the "Corporation") _____________________
(_______) shares of the Common Stock of the Corporation standing in his or her
name on the books of the Corporation represented by Certificate No. ________ and
does hereby irrevocably constitute and appoint _____________ as Attorney to
transfer the said stock on the books of the Corporation with full power of
substitution in the premises.
Dated: ___________________
Signature ___________________________
INSTRUCTION: Please do not fill in blanks other than the signature line. The
purpose of this assignment is to enable the Corporation to exercise the
Repurchase Right set forth in the Agreement without requiring additional
signatures on the part of the Purchaser.
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EXHIBIT D
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is ______
shares of the common stock of Nanogen, Inc.
(3) The property was issued on November 7, 1997.
(4) The taxable year in which the election is being made is the calendar
year 1997.
(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right lapses in a series of annual
and monthly installments over a four (4) year period.
(6) The fair market value at the time of transfer (determined without regard
to any restriction other than a restriction which by its terms will
never lapse) is $____ per share.
(7) The amount paid for such property is $0.60 per share.
(8) A copy of this statement was furnished to Nanogen, Inc. for whom
taxpayer rendered the service underlying the transfer of property.
(9) This statement is executed as of: November 10, 1997.
------------------------------ -----------------------------
Spouse (if any) Taxpayer
This form must be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax returns. The filing must be made
within 30 days after the execution date of the Restricted Stock Issuance
Agreement.
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