CFO Employment Agreement

Exhibit 10.1


EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated December 20, 2004, is made by and between NANOGEN, INC., a Delaware corporation (hereinafter the "Company"), and Robert Saltmarsh, (hereinafter "Executive").


WHEREAS, the Company and Executive wish to set forth in this Agreement the terms and conditions under which Executive will be employed by the Company; and


WHEREAS, the Company wishes to be assured that Executive will be available to the Company for an additional three (3) years after December 20, 2004.


NOW, THEREFORE, the Company and Executive, in consideration of the mutual promises set forth herein, agree as follows:


ARTICLE I .


TERM OF AGREEMENT


A. Commencement Date . The terms of this Agreement shall govern Executive's employment with the Company from December 20, 2004 ("Commencement Date") and this Agreement shall expire after a period of three (3) years from the Commencement Date, unless terminated earlier pursuant to Article 6.


B. Renewal . The term of this Agreement shall be automatically renewed for successive, additional three (3) year terms unless either party delivers written notice to the other at least ninety (90) days prior to the expiration date of this Agreement of an intention to terminate this Agreement or to renew it for a term of less than three (3) years but not less than (1) year. If the term of this Agreement is renewed for a term of less than three (3) years, then thereafter the term of this Agreement shall be automatically renewed for successive, additional identical terms unless either party delivers a written notice to the other at least ninety (90) days prior to a termination date of this Agreement of an intention to terminate this Agreement or to renew it for a different term of not less than one (1) year. Any renewal bonus will be negotiated as mutually agreed to at the time of any renewal of this Agreement.

If this Agreement is not renewed at the end of any term hereof by the Company for any reason except death, disability or retirement of Executive, notwithstanding anything herein elsewhere contained, Executive shall be paid his salary, as provided for in Section 3.A hereof, and receive the other benefits applicable under Article 4 hereof, for an additional six (6) months after the termination date hereof.


ARTICLE II.

EMPLOYMENT DUTIES

A. Title/Responsibilities . Executive hereby accepts employment with the Company pursuant to the terms and conditions hereof. Executive agrees to serve the Company in the position of Chief Financial Officer upon appointment as such by the Board of Directors or a committee of the Board of Directors. Executive shall have the powers and duties commensurate with such position, including but not limited to, hiring personnel necessary (in the judgment of the Board of Directors) to carry out the responsibilities for such position.

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B. Full Time Attention . Executive shall devote his best efforts and his full business time and attention to the performance of the services customarily incident to such office and to such other services as the Board may reasonably request.

C. Other Activities . Except upon the prior written consent of the Board of Directors, Executive shall not during the period of employment engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be competitive with, or that might place him in a competing position to that of the Company or any other corporation or entity that directly or indirectly controls, is controlled by, or is under common control with the Company (an "Affiliated Company"), provided that Executive may own less than two percent of the outstanding securities of any such publicly traded competing corporation.


ARTICLE III.

COMPENSATION

A. Base Salary . Executive shall receive a Base Salary at an annual rate of two hundred forty thousand dollars ($240,000), payable in accordance with the Company's customary payroll practices. The Company's Board of Directors shall provide Executive with annual performance reviews, and, thereafter, Executive shall be entitled to such Base Salary as the Board of Directors may from time to time establish in its sole discretion.

B. Achievement Bonus . The Company shall pay Executive an Achievement Bonus of up to 50% of Executive's Base Salary annually based upon achievement by the Company of its corporate goals as established and determined by the Board of Directors annually and for other achievements by the Company or the Executive during the year as approved by the Compensation Committee. The Board of Directors or Compensation Committee, as applicable, shall, in their respective sole discretion, determine whether such corporate or other goals have been attained or other achievements have occurred.

C. Transaction Bonus . In addition, in the event of a transaction involving a Change in Control, in a transaction approved by the Company's Board of Directors, which transaction results in the receipt by the Company's stockholders of consideration with a value representing, in the sole judgment of the Board of Directors, a significant premium over the average of the closing prices per share of the Company's common stock as quoted on the Nasdaq National Market for 20 trading days ending one day prior to the public announcement of such transaction (a "Change in Control Transaction"), Executive shall be paid a Transaction Bonus at the closing of such a transaction in the amount equal to one (1) times 50% of Executive's Base Salary in effect immediately preceding the closing of such a transaction. Executive shall also be paid said Transaction Bonus if the Company enters into a transaction approved by the Board of Directors which is not a Change in Control Transaction, but which, nonetheless, involves a significant change in the ownership of the Company or the composition of the Board of Directors of the Company, and which results in significant additional value for the Company's stockholders, as determined by the Board of Directors in its sole discretion and as specifically designated a significant event by the Board of Directors (a "Significant Event"). In the event Executive receives a Transaction Bonus, no Achievement Bonus will be paid to Executive in the year in which such Transaction Bonus is paid.


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If the Company enters into a transaction which is a Change in Control Transaction, then all of the Executive's stock options received before the date of the transaction shall become exercisable in full and all of the shares of the common stock of the Company awarded to Executive under the Company's 1997 Stock Incentive Plan and become fully vested. If the Company enters into a transaction which is not a Change in Control Transaction but which is a Significant Event, then the Board of Directors may, in its sole discretion, determine that all, or a portion, of the Executive's stock options received before the effective date of the transaction shall become exercisable in full and all, or a portion, of the shares of the common stock of the Company awarded to Executive under the Company's 1997 Stock Incentive Plan shall become fully vested.


D. Withholdings . All compensation and benefits to Executive hereunder shall be subject to all federal, state, local and other withholdings and similar taxes and payments required by applicable law.


ARTICLE IV.

EXPENSE ALLOWANCES AND FRINGE BENEFITS

A. Vacation . Executive shall be entitled to three (3) weeks, plus one (1) additional day for each completed year of employment with the Company, of annual paid vacation during the term of this Agreement.


B. Benefits . During the term of this Agreement, the Company shall also provide Executive with the usual health insurance benefits and life insurance it generally provides to its other senior management e ...