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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

This is Nanosys, Inc.’s initial public offering. Nanosys is selling all of the shares.

We expect the initial public offering price per share to be between $ and $ per share. Currently, no public market exists for the shares. We have applied to have our common stock quoted on the Nasdaq National Market under the symbol “NNSY.”

Investing in the common stock involves risks that are described in the “Risk Factors” section beginning on page 6 of this prospectus.

The underwriters may also purchase up to an additional shares from Nanosys at the initial public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover overallotments.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The chart shows photographs of our technology used in our development programs for solar cells, flexible electronics and time of flight mass spectrometry substrates. For each program, a photograph is shown of an isolated nanostructure typically used for the potential application, the nanostructure as set in the application, how the nanostructure connects to the other components used in the application and the proposed end device to be made by Nanosys.

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

We currently have two applications pending to register Nanosys and the Nanosys logo as our trademarks. Other service marks, trademarks and trade names referred to in this prospectus are the property of their respective owners.

You should read the following summary, together with the more detailed information regarding our company, especially the “Risk Factors” section, and our financial statements and notes to those statements appearing elsewhere in this prospectus, before deciding to invest in shares of our common stock.

We develop nanotechnology-enabled products based on our unique expertise, infrastructure and intellectual property. We plan to sell our nanotechnology-enabled products to our partners and directly to end user customers. We are developing products based on our core technology that incorporate proprietary, inorganic nanostructures with integrated functionality. We are utilizing our technology to develop potential products for multiple industries such as energy, defense, electronics, life sciences and information technology. We have established and intend to continue to establish collaborations with partners and government agencies that we believe could benefit significantly from the incorporation of nanotechnology-enabled products into their end user products. Our current collaborators include E.I. DuPont de Nemours and Company, In-Q-Tel, Inc., Intel Corporation, Matsushita Electric Works, Ltd., Science Applications International Corporation and various United States government agencies. Some of our nanotechnology-enabled product development efforts include consumables for life sciences research, solar cells, flexible electronics and non-volatile memory. We have assembled an experienced business and technical team, with development and commercialization expertise, which is supported by the members of our scientific advisory board who are recognized experts in the field of nanotechnology. We have over 200 patents and patent applications which we have licensed from educational institutions and research centers or developed internally. We believe our strong team will enable us to deliver nanotechnology-enabled products for use in multiple industries.

Nanotechnology is the ability to control or manipulate materials on the atomic scale to create structures that have novel properties and functions because of their size, shape or composition. By organizing atoms into structures of various shapes and sizes on a nanoscale, important properties including electrical, optical and physical, can be controlled. At the nanoscale, these properties can be fundamentally different than the properties of the same materials at a larger, traditional scale. When nanostructures are engineered into end user products, these products benefit from the unique properties exhibited by the nanostructures. Multiple industries are approaching the point at which their ability to economically manufacture products with increasing levels of performance and functionality is being constrained by traditional technologies. Many companies are seeking to incorporate the potential benefits of nanotechnology into their products on a timely and cost effective basis. We believe that these companies will be motivated to work with focused nanotechnology suppliers that have the expertise, infrastructure and intellectual property needed to allow these companies to incorporate nanotechnology cost effectively into their end user products.

Nanotechnology and commercialization expertise. We have assembled an experienced business and technical team with development and commercialization expertise. This team has previously commercialized a number of products based on new core technology. Our internal expertise is complemented by our scientific advisory board that includes prominent nanotechnology experts from a number of leading educational institutions and research centers.

Design and fabrication capabilities. Our proprietary computer modeling and synthesis capabilities enable us to rapidly and efficiently design and fabricate nanostructures based on our knowledge of applicable principles in chemistry, physics and engineering. We are developing processes designed for the consistent and reliable manufacture of inorganic nanostructures with desired composition, size, shape and surface chemistry and their practical and rapid integration into products.

Leverage our core technology across multiple industries and applications. We seek to employ our core technology across multiple industries and applications through collaborations to accelerate the development of our products. We believe that our core technology can simultaneously address short, medium and long-term opportunities and will reduce our dependence on any particular industry, partner or application.

Support core technology development through commercial and government funding. We have been able to fund a significant amount of our technology development through agreements with commercial partners and United States government agencies. We intend to continue to leverage commercial and government funding to support the development of our core technology and products of interest to our partners, the government and us.

Build common manufacturing capabilities to achieve economies of scale. We believe our core technology enables us to utilize a common set of manufacturing capabilities to supply our partners and customers with a variety of nanotechnology-enabled products. By building proprietary manufacturing capabilities that can be applied to multiple products, we believe we can benefit from manufacturing economies of scale to provide cost effective, high quality products to our partners and customers.

Continue to expand and leverage our intellectual property position. We believe our significant intellectual property position provides us with a competitive advantage in developing and commercializing nanotechnology-enabled products. We plan to continue to expand our intellectual property position through internally generated and licensed patent rights and other intellectual property and associations with leading experts in nanotechnology.

From our inception in July 2001 through December 31, 2003, we incurred net losses of approximately $17.0 million. Our technology and potential product applications are new and still in the early stages of development. To date, we have not successfully developed any commercially available products. We are currently in the investigation phase of all of our potential products. We do not anticipate that our first products will be commercially available for at least several years, if at all. Even if we raise additional capital from collaboration agreements, we may need additional funding for our operations and we cannot assure you that it will be available on commercially reasonable terms, if at all. Our ability to achieve profitability will depend upon many factors, including our ability to:


	•	further develop our technology to enable the development of our potential products;

	•	enter into development and commercialization agreements with appropriate partners to facilitate product development and subsequent commercialization;

	•	develop commercially viable products;


	•	alone, or with our partners, convince customers of the benefits of our technology and products;

	•	establish a commercial scale manufacturing capability for our products;

	•	avoid infringing and successfully defend any allegations of infringing the intellectual property rights of others;

	•	enforce our intellectual property rights against others;

	•	comply with government and environmental regulations;

	•	address any legal restrictions due to ethical concerns or export regulations; and

	•	hire, train and retain qualified personnel.

We were incorporated in Delaware in July 2001. Our fiscal year ends on December 31. Our principal offices are located at 2625 Hanover Street, Palo Alto, California 94304. Our telephone number is (650) 331-2100. You can access our web site at www.nanosysinc.com. Information contained on our web site is not a part of this prospectus. In this prospectus, references to “Nanosys,” “we,” “us” and “our” refer to Nanosys, Inc., a Delaware corporation.

The number of shares of common stock to be outstanding upon completion of this offering is based on 46,710,263 shares outstanding as of March 31, 2004, which includes 37,948,023 shares of preferred stock that will convert to common stock immediately prior to the closing of this offering and excludes:


	•	991,593 shares of common stock issuable upon exercise of options outstanding at a weighted average exercise price of $0.16 per share as of March 31, 2004;

	•	839,335 shares of common stock issuable upon exercise of warrants outstanding at a weighted average exercise price of $0.17 per share as of March 31, 2004;

	•	a total of 2,065,167 shares of common stock available for future issuance under our 2001 stock plan as of March 31, 2004; and

	•	a total of 3,000,000 shares of common stock available for future issuance under our 2004 stock plan, which was adopted by our board in April 2004, excluding the annual increases in the number of shares authorized under our 2004 stock plan beginning January 1, 2005. See “Executive Compensation — Incentive Plans” for a description of how these annual increases are determined.


	•	assumes the completion of a reverse for split of our outstanding capital stock prior to the effective time of this offering;

	•	assumes the conversion of our preferred stock on a one for one basis into 37,948,023 shares of common stock immediately prior to the closing of this offering;

	•	assumes the filing of our amended and restated certificate of incorporation increasing the number of shares of our authorized common stock from 53,500,000 shares to 120,000,000 shares prior to the closing of this offering;

	•	assumes the filing of our amended and restated certificate of incorporation authorizing a class of 10,000,000 shares of undesignated preferred stock prior to the closing of this offering; and

	•	assumes no exercise by the underwriters of their option to purchase additional shares of our common stock in this offering.

The following table sets forth a summary of our financial data for the periods presented. This summary financial information should be read in conjunction with “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes contained elsewhere in this prospectus.


	•	on an actual basis; and

	•	on a pro forma basis to give effect to the automatic conversion of all outstanding shares of our preferred stock into common stock immediately prior to the closing of this offering and to reflect our receipt of the estimated net proceeds from the sale of shares of common stock by us in this offering at an assumed initial public offering price of $ per share, after deducting the underwriting discount and estimated offering expenses payable by us.

Any investment in our common stock involves a high degree of risk. You should consider the risks described below carefully and all of the information contained in this prospectus before deciding whether to purchase our common stock. The risks and uncertainties described below are not the only risks we face. Risks and uncertainties that we currently deem immaterial or that are currently unknown may also affect our operations. If any of these risks actually occur, our business, financial condition and results of operations may suffer significantly. As a result, the trading price of our common stock could decline and you may lose all or part of your investment in our common stock.

We have a history of net losses, we expect to continue to incur net losses in the foreseeable future, and may never achieve profitability.

From our inception in July 2001 through December 31, 2003, we incurred net losses of approximately $17.0 million. Our losses have resulted principally from research and development and selling, general and administrative expenses associated with our operations. To date, we have not made any product sales and do not anticipate commercial product sales for the next several years. We expect our losses to continue for the foreseeable future. Our revenue to date has been generated from collaborative agreements with companies and governmental entities, as well as government grants. We cannot assure you that we will develop products or if developed, that these products will be commercially viable. We expect to incur substantial additional operating losses as a result of increases in expenses for research and product development, manufacturing and selling, general and administrative costs. In addition, upon the completion of this offering, we will incur substantial expenses to comply with our obligations as a public company. We may never achieve profitability. We may need additional funding for our operations and we cannot assure you that it will be available on commercially reasonable terms, if at all. Our ability to achieve profitability will depend upon many factors, including our ability to:


	•	further develop our technology to enable the development of our potential products;

	•	enter into development and commercialization agreements with appropriate partners to facilitate product development and subsequent commercialization;

	•	develop commercially viable products;

	•	alone, or with our partners, convince our customers of the benefits of our technology and products;

	•	establish a commercial scale manufacturing capability for our products;

	•	avoid infringing and successfully defend any allegations of infringing the intellectual property rights of others;

	•	enforce our intellectual property rights against others;

	•	comply with government and environmental regulations;

	•	address any legal restrictions due to ethical concerns or export regulations; and

	•	hire, train and retain qualified personnel.

We may need to raise additional capital in the future and if we are unable to secure adequate funds on terms acceptable to us, we may be unable to support our business requirements or build our business.

We currently anticipate that the net proceeds of this offering, together with our current cash, cash equivalents and available-for-sale securities, will be sufficient to meet our anticipated operating and capital requirements for at least the next year. Even if we raise capital from future collaboration agreements, we may need to raise additional capital in order to complete our development activities and to build our

commercial scale manufacturing facilities. We may raise additional capital through a variety of sources, including the public equity market, private financings and debt. If we raise additional capital through the issuance of equity or securities convertible into equity, our stockholders may experience dilution. Those securities may have rights, preferences or privileges senior to those of the holders of the common stock. Additional financing may not be available to us on favorable terms, if at all. If we are unable to obtain financing, or to obtain it on acceptable terms, we may be unable to successfully support our business requirements or build our business.

We are deploying new technology and, as a result, we may not be able to successfully develop our products.

Our technology is new and unproven and we are still in the early stages of investigating the feasibility of using our technology to develop our potential products. Our potential products require significant and lengthy product development efforts. To date, we have not developed any commercially available products. During our product development process, we may experience technological issues that we may be unable to overcome. Because of these uncertainties, none of our potential products may be successfully developed. If we are not able to successfully develop nanotechnology-enabled products, we will be unable to generate product revenue or build a sustainable or profitable business.

We will need to achieve commercial acceptance of our products to obtain product revenue and achieve profitability.

Even if our products are technologically feasible, we may not successfully develop commercially viable products on a timely basis, if at all. It will be at least several years before our first products are commercially available and during this period, superior competitive technologies may be introduced or customer needs may change resulting in our products being unsuitable for commercialization. Our revenue growth and achievement of profitability will depend substantially on our ability to introduce new products into the marketplace that are widely accepted by customers. If we are unable to cost effectively achieve commercial acceptance of our products, our business will be materially and adversely affected.

We are developing nanotechnology-enabled products based on nanostructures that have integrated functional properties. To date, the markets we are targeting have generally not adopted nanotechnology-enabled products. We do not know when a market for these nanotechnology-enabled products will develop, if at all. In addition, nanotechnology-enabled products may achieve some degree of market acceptance in one industry but may not achieve market acceptance in other industries for which we are developing products. If the markets we are targeting fail to accept nanotechnology-enabled products or to determine that other products were superior, we may not be able to achieve commercial acceptance of our potential products.

We plan to concurrently develop a number of products and any one or all of them may fail to achieve commercial acceptance.

We plan to concurrently develop a number of potential products utilizing our technology and know how. We expect that one or more of our potential products will not be technologically feasible or will not achieve commercial acceptance, and we cannot predict which, if any, of our products will be successfully developed or commercialized.

We have limited resources and our focus on particular nanotechnology-enabled products may result in our failure to capitalize on other opportunities.

We have limited resources available to successfully develop and commercialize our nanotechnology-enabled products. As of March 31, 2004, we had 34 employees. There is a wide array of potential applications for nanotechnology-enabled products and our limited resources require us to focus on specific products and collaborations which may never result in commercially successful products and to

To develop products for certain target markets, we depend on entering into collaborations to partially fund the development costs and leverage our partners’ financial, research and development, manufacturing, marketing and sales capabilities. We may not be able to enter into new collaborations for our target markets, which would limit our access to important financial, research and development, marketing and sales resources. The collaborations we have entered into to date are limited to investigating the feasibility of developing products for certain applications. Our partners are not obligated to extend these agreements to the development or commercialization phases regardless of whether we demonstrate that our potential products are technologically feasible. One partner may also react negatively to the non-extension of our collaboration with another partner. We will need to convince our current and future partners of the feasibility and benefits of using our nanotechnology-enabled products as part of their end user products, which may be time consuming. If we are unable to persuade our partners to use our nanotechnology-enabled products, we may not be able to commercialize our products or to generate revenues from product sales.

Even if we successfully maintain or enter into new collaborations, we may have limited or no control over our partners’ development and commercialization schedule, their efforts to complete the end user products or their marketing of the end user products. Our partners may elect not to proceed with the development of our products for a variety of reasons, including their intention to develop a competing technology, changes in strategic focus or personnel, budgetary constraints, general economic conditions, environmental concerns, changes in the marketplace, regulatory issues or other reasons. We cannot assure you that any of our partners will perform their development obligations in a timely manner or will devote sufficient resources to the collaborative effort. Even if our partners elect to proceed with the development of an end user product, they may not do so at the pace we would expect. Once end user products are commercially viable, our partners may not commit the time and resources to marketing and selling these products necessary to achieve widespread commercial acceptance. If our partners fail to provide sufficient resources to the development and commercialization of the end user products or elect not to proceed, our business will be harmed.

To use our nanotechnology-enabled products, our partners will be required to integrate these products into their final products and they may not do so successfully.

We anticipate that most of our products will be integrated into end user products by our partners. Although we intend to develop our products to be integrated with our partners’ existing manufacturing capabilities, our partners will be required to make modifications to or expand their manufacturing capabilities. Our current or future partners may not elect to integrate our products into their end user products or may not devote adequate resources to modifying their manufacturing capabilities so that our products can be successfully incorporated into their end user products.

In some cases, a partner may determine that in order to incorporate our nanotechnology-enabled products, it would be required to adopt a new manufacturing process or capability. The adoption of a new manufacturing process or capability is resource intensive and our current and future partners may not complete the adoption or devote adequate resources to the incorporation of our nanotechnology-enabled products into those new processes or capabilities.

We do not currently have the ability to manufacture nanotechnology-enabled products in volume and will not be able to commercialize products without developing volume manufacturing capabilities.

The manufacture of nanotechnology-enabled products is complex and will require long lead times to establish adequate facilities. We currently have one facility located in Palo Alto, California with limited manufacturing capabilities. To date, we have not demonstrated the ability to manufacture nanotechnology-

We do not have a sales force and must enter into distribution agreements and original equipment manufacturer agreements to sell our products.

We have not established, nor do we plan to establish, an end user product sales, marketing and support organization. We expect to enter into agreements with partners to incorporate our potential products into their end user products or enter into distribution agreements with third parties to sell our internally developed end user products. We may be unable to enter into these agreements on commercially acceptable terms, if at all. To date we have not entered into any of these agreements and we have no assurance that we will receive an adequate economic return from the sales of our products by our partners or distributors. Our partners and distributors could also sell competitive products. If we do not enter into these agreements or our partners or distributors do not perform as expected, we may be required to establish our own end user product sales, marketing or support organization. We may not be able to accomplish this in a timely or a cost effective manner. Regardless of whether we establish an end user product sales, marketing or support organization, it is unlikely that we will have the access to the potential end user customers that our potential partners or distributors would have and our ability to generate revenue and become profitable may be significantly impaired.

We are also dependent on government grants and contracts to fund the development of our products and we may not succeed if government funding priorities change or we are unable to renew our agreements.

Our strategy for developing certain aspects of our core technology and products depends in part on our ability to continue to receive government grants and enter into government contracts. We may not be awarded any future government grants or enter into future government contracts. To date, grants that we have been awarded or contracts we have entered into have been for the purpose of investigating the feasibility of nanotechnology for certain applications. The applicable government agencies are not obligated to extend these agreements and in certain cases, may terminate the funding prior to expiration, regardless of whether we have demonstrated technological feasibility or have met specified milestones. In addition, we may not be successful in securing future government contracts or grants. Government priorities regarding funding for nanotechnology may change and grant funding resources may no longer be available at previous levels. If we are unsuccessful in obtaining additional government grants and contracts or if government agencies decide to reduce or discontinue support of nanotechnology, we may be required to seek alternative sources to fund the development of our products.

We may not be able to commercialize the technology we develop under government grants or contracts.

If the applicable government agency determines that it controls the rights to the technology, we may be unable to commercialize technology that we develop under government contracts. We may also be prohibited from commercially selling certain products that we develop under government contracts or related products based on the same core technology if the government determines that the commercial availability of those products could pose a risk to national security. Any of these determinations would limit our ability to generate product revenue.

The loss of key personnel or the inability to attract, train and retain additional personnel could have a negative effect on our business.

We believe our future success will depend upon our ability to retain highly skilled personnel, including Lawrence A. Bock, our executive chairman of the board of directors, Calvin Y. H. Chow, our chief executive officer, and J. Wallace Parce, Ph.D., our chief technical officer and vice president of research. We do not have any key person life insurance for our employees. Our employees are at will and not subject to employment contracts.

As we seek to expand our operations, hiring of additional qualified technical and manufacturing personnel will be difficult due to the limited availability of qualified professionals. The number of people with experience in the field of nanotechnology is limited and we face intense competition for these types of employees. We may not be successful in attracting, training and retaining personnel in the future. Failure to attract, train and retain personnel, particularly technical and manufacturing personnel, would impair our ability to maintain and grow our business.

We are dependent on the services of our scientific advisors for some of our development activities and our business could be harmed if we were unable to utilize their services or obtain the rights to the intellectual property they develop.

We depend on the services of members of our scientific advisory board to assist us with technical and business development activities. These individuals are generally employed by universities or research centers and act as consultants to us. Because they are not our employees, we do not have access to all of their time or work product and may have difficulty obtaining the amount of time and attention from these scientific advisors that we need. These scientific advisors may also have research interests that diverge from or conflict with ours. In addition, we do not have any assurance that these scientific advisors will continue to provide services to us or, if not, that they will not provide services to our competitors. If we were unable to utilize the services of these individuals, our development efforts or our relationships with new or existing partners may be harmed. Because these individuals are employed by third parties, we also face the risk that their employers will attempt to assert that development efforts these scientific advisors have undertaken on our behalf belong to their employer. Any dispute over the ownership or rights to the intellectual property developed by these scientific advisors could disrupt our business, be costly to resolve and could prevent us from developing certain technology or applications.

We licensed a substantial portion of our core technology from educational institutions and research centers and our business could be harmed if these institutions develop important intellectual property to which we do not have rights.

We licensed a substantial portion of our core technology from educational institutions and research centers including Columbia University, Ernest Orlando Lawrence Berkeley National Laboratory, Harvard University, the Hebrew University of Jerusalem, the Massachusetts Institute of Technology, the Regents of the University of California and the University of California Los Angeles. These licenses give us the right to use certain technology previously developed by researchers at these licensors. In certain cases we also have the right to practice improvements on the licensed technology to the extent they are encompassed by the licensed patents and within our field of use. We may be unable to agree with one or more of these licensors that certain intellectual property developed by researchers at these licensors is covered by our existing licenses. In the event that the new intellectual property is not covered by our existing licenses, we would be required to negotiate a new license agreement. We may not be able to reach agreement with the licensors on the terms of the license and the terms may not permit us to sell our products at a profit after payment of royalties.

If we fail to meet our financial, technical or commercial diligence obligations under licenses granting us rights to our core technology, we may lose those rights.

Our licenses with the educational institutions and research centers require us to meet certain financial, technical or commercial diligence requirements in order to maintain our rights to a substantial portion of our technology. Our failure to meet those requirements could lead to various adverse consequences, including the loss of exclusive rights or loss of all rights to key aspects of our core technology. We depend substantially on our partners and scientific advisory board members for the development of our products and, therefore, to help to meet our diligence obligations. We cannot predict whether we will be able to meet all diligence requirements necessary to retain rights to our licensed technology. If we lose exclusive rights to the core technology, we do not know to what extent we can mitigate that loss, our partner arrangements may terminate early and our business would be harmed.

We may not be able to produce and sell our products on commercially reasonable terms if we are required to pay unanticipated royalties.

Our licenses with educational institutions and research centers include provisions intended to prevent us from having to pay multiple royalties at the full rate for the same product because the product utilizes more than one licensed patent. If these provisions do not operate as we anticipate and we are forced to pay royalties at the full rate on each patent we have licensed as it applies to a single product, we may not be able to sell our products for a profit. In addition, if our licensors were to conclude that the royalty limiting provisions did not apply to patents licensed from other licensors, we may be required to pay royalties at a higher rate to each licensor from which we have licensed technology. In either case, the cost of commercializing our products would increase.

We use hazardous materials in our business, and any claims relating to improper handling, storage or disposal of these materials could subject us to significant liabilities.

Our business involves the use of a broad range of hazardous chemicals and materials. Environmental laws impose stringent civil and criminal penalties for improper handling, disposal and storage of these materials. In addition, in the event of an improper or unauthorized release of or exposure of employees or others to hazardous materials, we could be subject to civil damages due to personal injury or property damage caused by the release or exposure. A failure to comply with environmental laws could result in fines and the revocation of environmental permits, which could prevent us from conducting our business. Accordingly, any violation of environmental laws, increase in the scope of environmental laws or failure to properly handle, store or dispose of hazardous materials could result in restrictions on our ability to operate our business and could require us to incur potentially significant costs for personal injuries, property damage and environmental cleanup and remediation.

We face competition from companies in multiple industries, as well as from the internal efforts of our current and potential partners and, if we fail to compete effectively, our business could suffer.

We compete in intensely competitive markets for end user products. The nanotechnology-enabled products we are currently developing will compete directly with products incorporating conventional materials and technologies, including traditional semiconductors manufactured on the nanoscale. We believe our potential products will face significant competition from existing manufacturers in our current target markets including:


	•	manufacturers of substrates for time of flight mass spectrometry equipment, such as Waters Corporation;

	•	manufacturers of solar cells, such as Sharp Electronics Corporation and BP plc;

	•	manufacturers of thin film electronics, such as Samsung Electronics Co., Ltd., NEC Corporation and Koninklijke Philips Electronics N.V.; and

	•	manufacturers of memory products, such as Advanced Micro Devices, Inc. and Samsung.

In addition, we may also face competition from focused nanotechnology companies, such as Evident Technologies, Inc., Konarka Technologies Inc., Nantero, Inc., NanoHorizons, Inc., Nanosolar, Inc., Quantum Dot Corporation, UltraDots, Inc. and ZettaCore, Inc. and other newly created nanotechnology companies.

We may also face significant competition from our current and future partners, such as E.I. DuPont de Nemours and Company, or DuPont, Intel and Matsushita Electric Works, which are assessing the feasibility of expanding their development and manufacturing capabilities and portfolio of intellectual property to incorporate nanotechnology-enabled components into their end user products. If our current and future partners expand their product offerings to compete directly with our nanotechnology-enabled


	•	Size and resources. Our competitors, as well as our current and future partners, may have access to substantially greater financial, engineering, manufacturing and other resources than we do, which may enable them to react more effectively to new market opportunities.

	•	Name recognition. Many of our competitors and our current and future partners have greater name recognition and market presence than we do, which may allow them to market themselves more effectively to new customers or partners.

	•	Access to information. Our current and future partners may have better access to information regarding their own manufacturing processes, which may enable them to develop nanotechnology-enabled products that can be more easily incorporated into the partners’ products.

	•	Limits of product offerings. Although we intend to offer a broad range of nanotechnology-enabled products, a current or future partner may require nanotechnology-enabled products or functionalities that we do not offer. As a result, our competitors may exploit the areas in which we do not develop product offerings.

	•	Reliance on internal manufacturing. We intend to manufacture our products internally rather than license the manufacturing of those products to our current and future partners. Our partners may conclude that we will be unable to supply the volume or quality of products they need. In addition, those partners may want to control key steps in their manufacturing process and will therefore want to manufacture the nanotechnology-enabled products themselves. In order to successfully integrate our proposed products with theirs, we may be required to rely on our partners for access to their manufacturing process and capabilities. If this access is restricted or denied, our nanotechnology-enabled products may not be competitive with products internally developed by our partners or others.

	•	Scalability of development. A significant challenge in commercializing our nanotechnology-enabled products across multiple industries and end user products will be our ability to leverage our core technology and development efforts. Most nanotechnology-enabled products require custom development to meet application specific product requirements. To minimize custom development efforts, we will need to develop nanotechnology-enabled products that utilize our common set of our core technology and can benefit from our previous development efforts. If we are unable to achieve this, our development capabilities will be less competitive.

If we do not compete successfully, our ability to develop and sell our products could be harmed and our business could suffer.

Nanotechnology-enabled products are new and may be viewed as being harmful to human health or the environment.

We intend to develop and sell nanotechnology-enabled products composed of materials, such as silicon germanium, gallium arsenide, gallium nitride, cadmium selenide or indium phosphide, because of the functions and properties of nanostructures made with those materials. Nanotechnology-enabled products have no historical safety record. Because of the size or shape of the nanostructures or because they may contain harmful elements, such as arsenic and cadmium, our products could pose a safety risk to human health or the environment. In addition, some countries have adopted regulations prohibiting or limiting the use of certain products that contain certain chemicals, which may inhibit our ability to sell some end user products containing those materials. The regulation and limitation of the kinds of materials

Public perception of ethical and social issues may limit or discourage the use of nanotechnology-enabled products, which could reduce our revenue and harm our business.

The subject of nanotechnology has received negative publicity and has aroused public debate. Government authorities could, for social or other purposes, prohibit or regulate the use of nanotechnology. Ethical and other concerns about nanotechnology could adversely affect acceptance of our potential products or lead to government regulation of nanotechnology-enabled products.

We may be unable to export our proposed products or technology to other countries, convey information about our technology to citizens of other countries or sell certain products commercially, if the products or technology is subject to United States export or other regulations.

We are developing certain nanotechnology-enabled products that we believe the United States and other governments may be interested in using for military and information gathering or antiterrorism activities. United States government export regulations may restrict us from selling or exporting these products into other countries, exporting our technology to those countries, conveying information about our technology to citizens of other countries or selling these products to commercial customers. We may be unable to obtain export licenses for products or technology if necessary. We do not currently have the ability to assess whether national security concerns would affect nanotechnology-enabled products generally or our business in particular and, if so, what procedures and policies we would have to adopt to comply with any existing or future regulations that may apply to us.

If export controls affecting our products are expanded, our business will be adversely affected.

The United States government regulates the sale and shipment of numerous technologies by United States companies to foreign countries. If the United States government places expanded export controls on our technology or products, our business would be materially and adversely affected. If the United States government determines that we have not complied with the applicable export regulations, we may face penalties in the form of fines or other punishment.

Our inability to adequately protect our nanotechnology-related intellectual property could harm our business.

Our ability to achieve commercial success will depend in part on obtaining and maintaining our nanotechnology-related intellectual property as well as successfully defending our intellectual property against third party challenges. If we or our licensors are unable to obtain and maintain patent and trade secret protection of our technology and products, our business could be harmed. In addition, we will only be able to protect our technology from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover that use.

Patents and patent applications covering a substantial portion of our core technology are owned by third party licensors. While we have certain rights to participate in the prosecution, maintenance and enforcement of those patents and patent applications, in a majority of cases, the licensors have retained the right to prosecute, maintain and enforce the patents and patent applications. We cannot be certain that the licensors will do so in the best interests of our business. Any failure of the licensors to follow our advice or take certain actions with respect to the patents and patent applications could harm our business.

We are obligated to fund the prosecution and maintenance of the patents and applications we acquired under the license agreements that we have with various licensors. In addition, in some cases, we have also agreed to indemnify the licensors for any actions we take with respect to developing the technology we have licensed that becomes subject to a third party claim. Our obligations to indemnify

Commercial application of nanotechnology is new and the scope and breadth of patent protection is uncertain. Consequently, the patent positions of nanotechnology companies have not been tested and complex legal and factual questions for which important legal principles will be developed or may remain unresolved. In addition, to date there has been relatively little litigation surrounding nanotechnology related patents, and, therefore, it is not clear whether such patents will be subject to interpretations or legal doctrines that differ from conventional patent law principles. Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third party patents.

The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep a competitive advantage. For example:


	•	we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications or issued patents;

	•	we or our licensors might not have been the first to file patent applications for these inventions;

	•	it is possible that none of our pending patent applications or none of the pending patent applications of our licensors will result in issued patents;

	•	our issued patents and issued patents of our licensors may not provide a basis for commercially viable products, may not provide us with any competitive advantages or may be challenged and invalidated by third parties;

	•	our and our licensors’ patent applications or patents may be subject to interference, opposition or similar administrative proceedings, which could result in the patent applications failing to issue or the patents deemed invalid;

	•	we may not develop additional proprietary technology that is patentable; or

	•	the patents of others may have an adverse effect on our business.

We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. Trade secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, partners and other advisors may unintentionally or willfully disclose our information to competitors. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know how.

We may become involved in litigation or other proceedings to defend or enforce our intellectual property rights, the outcome of which could have a material adverse impact on our business.

While we are not currently involved in any legal proceedings related to our intellectual property, the defense and prosecution of intellectual property suits, interferences, oppositions and related legal and administrative proceedings in the United States and elsewhere are costly, time consuming to pursue and could result in the diversion of our limited financial and managerial resources. An adverse ruling, including an adverse decision as to the priority of our inventions, could undercut or invalidate our intellectual property position, subject us to significant damages or prevent us from using the intellectual property or selling our products. Even if we prevail, we could incur substantial costs and our management’s attention may be diverted.

The industries for which we are investigating products are characterized by the existence of a large number of patents and frequent litigation based upon allegations of patent infringement. As our potential products progress toward commercialization in these markets, the possibility of an infringement claim against us or our partners increases. While we attempt to ensure that our products and the methods we employ to develop and manufacture them do not infringe other parties’ patents and other proprietary rights, competitors or other parties may assert that we infringe their proprietary rights.

In recent years, several thousand patent applications have been filed with the United States Patent and Trademark office that refer to nanoscale materials or structures. Information contained in patent applications is generally not publicly available. Consequently, we are unable to evaluate the underlying intellectual property until these patent applications become issued or published. The process to issue patents is long and certain innovations that have not yet resulted in issued patents could have been developed prior to our intellectual property. These patents, when issued, may predate our patents and may have superior rights and superior claims or otherwise be in conflict with our technology or business processes.

If a patent infringement suit were brought against us or our partners, we or they could be forced to stop or delay research, development, manufacturing or sales of the end user product or potential product that is the subject of the suit. We or our partners therefore may choose to seek, or be required to seek, a license from the third party and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our partners were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or forced to cease some aspect of our business operations, as a result of patent infringement claims. Alternatively, we could encounter delays in product introductions while we attempt to design around the patents. Our redesigned products may be inferior to our original designs or we may be unable to continue product development in the particular field.

We may become involved in litigation or other enforcement action not only as a result of alleged infringement of a third party’s intellectual property rights, but also to protect our own intellectual property rights. Under our licenses with educational institutions and research centers, we have certain rights to enforce our intellectual property rights covered by those licenses. We cannot guarantee that our licensors or their other licensees will assist us in enforcing these rights. The patent protection strategies of our licensors or their other licensees may conflict with ours. Additionally, by seeking to enforce our rights we may expose our patents to challenges, which could result in not only loss of any enforcement action or litigation proceeding, but invalidation of our patents or those of our licensors that are subject to dispute, which could have a material adverse impact on our business.

We may be subject to damages resulting from claims that we have wrongfully used the alleged trade secrets of our employees’ former employers.

Many of our employees were previously employed at universities or other companies, including our competitors or potential competitors. Although we have no current or pending claims against us, we may be subject to claims that we have relied on information that these employees have inadvertently or otherwise disclosed that represent the trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper or prevent our ability to commercialize certain potential products, which could severely harm our business. Even if we are successful, litigation could result in substantial costs and be a distraction to management.

A substantial portion of our technology is subject to government rights and retained rights of our licensors and we may not be able to prevent the loss of those rights or the grant of similar rights to third parties.

A substantial portion of our technology was licensed from educational institutions and research centers funded by various government agencies. Under these funding arrangements, a government agency may obtain rights over the technology including the right to require that a compulsory license be granted to one or more third parties selected by the government agency. The grant of a license for our core technology to a third party could have a material and adverse effect on our business. In addition, our licensors retained certain rights under the licenses including the right to grant additional licenses to a substantial portion of our core technology to third parties for noncommercial academic and research use. It is difficult to monitor and enforce these uses and we cannot predict whether the third party licensors would comply with the use restrictions of their licenses. We could incur substantial expenses to enforce our rights against them.

After the offering there will be few objective metrics by which our progress will be measured. Consequently, we expect that the market price of our common stock may fluctuate significantly. We do not expect to generate substantial revenue from the sale of our nanotechnology-enabled products for several years, if at all. In the absence of product revenue as a measure of our operating performance, we anticipate that investors and market analysts will assess our performance by considering factors such as:


	•	our ability to enter into, maintain or extend investigation phase agreements with new and existing partners;

	•	our ability to enter into or extend development and other agreements with new and existing partners to commercialize our potential products;

	•	announcements regarding the status of any or all of our collaborations or products;

	•	general and industry specific economic conditions, which may affect our partners’ development expenditures and commercialization of new products;

	•	the success or failure of our competitors’ efforts to develop competitive products;

	•	announcements regarding developments in the nanotechnology field in general;

	•	the issuance of competitive patents or disallowance or loss of our patent rights; and

	•	announcements regarding government funding and initiatives related to the development of nanotechnology.

We will not have control over many of these factors but expect that our stock price may be influenced by them. As a result, our stock price may be volatile and you may lose all or part of your investment.

If securities or industry analysts do not publish research reports about our business, of if they make adverse recommendations regarding an investment in our stock, our stock price and trading volume may decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about our business. If one or more of the analysts downgrade our stock or comment negatively on our prospects, our stock price would likely decline. If one of more of these analysts cease to cover us or our industry or fails to publish reports about our company regularly, our common stock could lose visibility in the financial markets, which could also cause our stock price or trading volume to decline.

Some of our existing stockholders can exert control over us and may not make decisions that are in the best interests of all stockholders.

After this offering, our officers, directors and holders of more than 5% of our common stock will together control approximately % of our outstanding common stock. As a result, these stockholders, if they act together, will be able to exert a significant degree of influence over our management and affairs and over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying or preventing a change in control of our company and might affect the market price of our common stock, even when such a change may be in the best interests of all stockholders.

Prior to this offering, there has been no public market for our common stock. We and the representatives of the underwriters will determine the initial public offering price of our common stock through negotiation. This price will not necessarily reflect the price at which investors in the market will be willing to buy and sell our shares following this offering. An active trading market for our common stock may not develop following this offering. You may not be able to sell your shares quickly or at prices acceptable to you if trading in our stock is not active.

We may be the subject of securities class action litigation due to future stock price volatility.

In the past, when the market price of a stock has been volatile, holders of that stock have often initiated securities class action litigation against the company that issued the stock. If any of our stockholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. The lawsuit could also divert the time and attention of our management.

We will have broad discretion in how we use the proceeds of this offering and we may not use these proceeds effectively, which may cause our stock price to decline.

Our management will have significant flexibility in using the proceeds we receive in this offering. Because substantially all of the proceeds are not required to be allocated to any specific investment or transaction, you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used in ways that will improve our business or market value.

We will incur increased costs as a result of complying with the laws and regulations affecting public companies.

Complying with existing, recently enacted and proposed changes in the laws and regulations affecting public companies, including the provisions of the Sarbanes Oxley Act of 2002 and recently adopted rules of the Securities and Exchange Commission and the Nasdaq National Market, will result in significant costs to us. In addition to the significantly higher legal, accounting and internal costs, we will incur significant costs to obtain director and officer liability insurance. The impact of these laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on our board committees or as executive officers. We are presently reviewing existing and new laws and are evaluating and monitoring developments with respect to new and proposed rules and cannot predict or estimate the amount of additional costs we may incur to comply with these rules or the timing of such costs. If we are unable to successfully comply with the new laws, regulations and rules, we could be subject to enforcement proceedings by the Securities and Exchange Commission or our common stock might be delisted from the Nasdaq National Market, either of which would cause the market price for our common stock to decline.

Provisions of our charter documents may have anti-takeover effects that could prevent a change in our control, even if this would be beneficial to stockholders.

Provisions of our amended and restated certificate of incorporation, bylaws and Delaware law could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. These provisions include:


	•	a classified board of directors, in which our board is divided into three classes with three year terms with only one class elected at each annual meeting of stockholders, which means that a holder of a majority of our common stock will need two annual meetings of stockholders to gain control of the board;

	•	a provision that prohibits our stockholders from acting by written consent without a meeting;

	•	a provision that permits only the board of directors, the chief executive officer, president or the chairman to call special meetings of stockholders; and

	•	a provision that requires advance notice of items of business to be brought before stockholders meetings.

These provisions can be amended only with the vote of the holders of 66 2/3% of our outstanding capital stock.

If you purchase common stock in this offering, you will pay more for your shares than the amounts paid by existing stockholders for their shares. As a result, you will experience immediate and substantial dilution of approximately $ per share, representing the difference between our pro forma net tangible book value per share as of December 31, 2003, after giving effect to this offering and an assumed initial public offering price of $ per share. In addition, you may experience further dilution to the extent that shares of our common stock are issued upon the exercise of stock options or warrants. Substantially all of the shares issuable upon the exercise of currently outstanding stock options will be issued at a purchase price less than the public offering price per share in this offering.

Substantially all of our outstanding shares, other than the shares sold in this offering, will be restricted from immediate resale but may be sold into the market beginning 180 days after this offering. These future sales could cause the market price of our common stock to drop significantly.

After this offering, we will have outstanding shares of common stock, based on the 46,710,263 shares outstanding at March 31, 2004. This includes the shares we are selling in this offering, all of which shares may be resold in the public market immediately. Approximately 46,710,263 outstanding shares are subject to contractual restrictions on sale until 180 days after this offering. The underwriters can waive these contractual restrictions at an earlier time upon prior announcement and allow stockholders to sell their shares. As restrictions on resale end, the market price of our stock could drop significantly if the holders of restricted shares, particularly our directors and officers, sell them or are perceived by the market as intending to sell them.

This prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our, our partners’ or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. These risks and other factors include those listed under “Risk Factors” and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined under “Risk Factors.” These factors may cause our actual results to differ materially from any forward-looking statement.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this prospectus to conform our prior statements to actual results.

We estimate that the net proceeds from the sale of shares of common stock by us in this offering will be approximately $ based on an assumed initial public offering price of $ per share and after deducting the underwriting discount and estimated offering expenses payable by us.

The primary purpose of this offering is to raise capital to fund the development of our core technology and commercialization of our nanotechnology-enabled products. We also expect to use the proceeds of this offering for general corporate purposes, including working capital, capital expenditures and potential acquisitions of complementary businesses, products and technologies. We have no present commitments or agreements with respect to any acquisitions. The amounts that we actually expend for working capital purposes will vary significantly depending on a number of factors, including future growth in revenue, if any, and the amount of cash we generate from operations. Pending these uses, we intend to invest the net proceeds in interest bearing, investment grade securities.

We have never declared or paid any dividends on our capital stock. We currently expect to retain future earnings, if any, to support the development of our business and do not anticipate paying any cash dividends in the foreseeable future. Subject to limited exceptions, we are restricted in our ability to pay dividends on or making distributions with respect to our capital stock by the covenants contained in our equipment line of credit with Silicon Valley Bank.

The following table sets forth our unaudited capitalization as of December 31, 2003. Our capitalization is presented:


	•	on an actual basis; and

	•	on a pro forma basis, to reflect the automatic conversion of all outstanding shares of our preferred stock into common stock immediately prior to the closing of this offering and to reflect our receipt of the estimated net proceeds from the sale of shares of common stock by us in this offering at an assumed initial public offering price of $ per share, after deducting the underwriting discount and estimated offering expenses payable by us.

We also consider as outstanding 870,008 shares of common stock, which are subject to our liability of $122,000 for early exercise of stock options and restricted stock purchase awards as of December 31, 2003, but these shares are not reflected in stockholders’ equity in the table above because they were subject to our right of repurchase. In addition to the shares of common stock to be outstanding after the offering, we may issue additional shares of common stock under the following plans and arrangements:


	•	832,000 shares of common stock issuable upon exercise of options and restricted stock purchase awards outstanding at a weighted average exercise price of $0.14 per share as of December 31, 2003;

	•	839,335 shares of common stock issuable upon exercise of warrants outstanding at a weighted average exercise price of $0.17 per share as of December 31, 2003;


	•	392,000 shares of common stock subject to option grants outstanding at a weighted average exercise price of $0.19 and 2,368,500 shares of common stock at a weighted average purchase price of $0.19 subject to restricted stock awards that we made between January 1, 2004 and March 31, 2004;

	•	a total of 1,695,667 shares of common stock available for future issuance under our 2001 stock plan as of December 31, 2003; and

	•	a total of 3,000,000 shares of common stock available for future issuance under our 2004 stock plan, which was adopted by our board of directors in April 2004, excluding the annual increases in the number of shares authorized under our 2004 stock plan beginning January 1, 2005. For a description of how these annual increases are determined see “Executive Compensation — Incentive Plans.”

You should read this table together with the sections of this prospectus entitled “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the financial statements and related notes beginning on page F-1.

Our pro forma net tangible book value as of December 31, 2003 was approximately $39.2 million, or approximately $0.91 per share. Pro forma net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and divided by the total number of shares of common stock outstanding including the automatic conversion of all outstanding shares of our preferred stock. Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the pro forma net tangible book value per share of common stock immediately after the completion of this offering. After giving effect to the sale of the shares of common stock offered by us at an assumed initial public offering price of $ per share, and after deducting the underwriting discount and estimated offering expenses payable by us, our pro forma net tangible book value as of December 31, 2003 would have been approximately $ million, or $ per share of common stock. This represents an immediate increase in pro forma net tangible book value of $ per share to existing stockholders and an immediate dilution of $ per share to new investors of common stock. The following table illustrates this dilution on a per share basis:

The following table summarizes after giving effect to the offering, based on an assumed initial public offering price of $ per share, as of December 31, 2003, the differences between the existing stockholders and new investors with respect to the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid.

The foregoing discussion and tables are based upon the number of shares issued and outstanding on December 31, 2003, assumes the automatic conversion of all shares of our preferred stock and assumes no exercise of options outstanding as of December 31, 2003. As of that date, there were 832,000 shares of our common stock issuable upon exercise of options outstanding and restricted stock awards at a weighted average exercise price of $0.14 per share. Between December 31, 2003 and March 31, 2004, we also granted options to purchase 392,000 shares of common stock at a weighted average exercise price of $0.19 and issued 2,368,500 shares of common stock pursuant to restricted stock awards at a weighted average price per share of $0.19. In addition, as of December 31, 2003, we had warrants outstanding to purchase 839,335 shares of our redeemable convertible preferred stock at a weighted average exercise price of $0.17. To the extent these options or warrants are exercised, there will be further dilution to new investors.

The selected financial data set forth below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our financial statements and related notes, and the other information contained elsewhere in this prospectus. We have derived our selected statement of operations data for the period from July 12, 2001 (inception) to December 31, 2001, and the years ended December 31, 2002 and December 31, 2003 and the selected balance sheet data as of December 31, 2002 and 2003 from the audited financial statements included elsewhere in this prospectus. The selected balance sheet data as of December 31, 2001 were derived from the unaudited financial statements not included in this prospectus. Historical results are not necessarily indicative of results to be expected for future periods.


(2)	The unaudited pro forma basic and diluted net loss per share calculation assumes the conversion of all outstanding shares of redeemable convertible preferred stock into shares of common stock using the as-if-converted method as of the date of issuance.

The following information should be read together with the audited financial statements and the notes thereto and other information included elsewhere in this prospectus.

We develop nanotechnology-enabled products based on our unique expertise, infrastructure and intellectual property. We are utilizing our technology to develop potential products for multiple industries such as energy, defense, electronics, life sciences and information technology. Our technology and potential product applications are new and still in the early stages of development. To date, we have not successfully developed any commercially available products. We are currently in the investigation phase of all of our potential products. We do not anticipate that our first products will be commercially available for at least several years, if at all.

To date, our revenue has resulted from collaborations with partners and government agencies to explore the feasibility of developing nanotechnology-enabled products. We have been able to fund a portion of our development expenses from these commercial collaborations and government grants and contracts. Our strategy for developing products depends on entering into collaborations to leverage our partners’ financial, research and development, manufacturing, marketing and sales capabilities. If we are successful in completing an investigation phase agreement, our partner typically has the right to negotiate with us for a limited period of time to extend these agreements to the development or commercialization phases. In the near term, we will have a limited number of development or commercialization agreements, if any. We cannot predict how these agreements will be structured, how we will be able to recognize revenue under these agreements or the timing of any revenue recognition. As a result, our operating results could fluctuate significantly from period to period due to the timing of our revenue recognition.

In order to generate product sales, we will need to develop commercially viable products and the ability to manufacture those products in commercial quantities. The development and manufacture of nanotechnology-enabled products is complex and we will need to devote substantial capital resources to establish our development and manufacturing capabilities.

From our inception on July 12, 2001 through December 31, 2003, we incurred net losses of approximately $17.0 million. We expect these losses to continue for the foreseeable future. In the next few years, we expect to incur substantial additional operating losses as a result of increases in expenses for research and development, manufacturing and selling, general and administrative costs.

In order to prepare financial statements in accordance with accounting principles generally accepted in the United States, we make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We have identified the following critical accounting estimates that involve a higher degree of subjectivity and judgment, are susceptible to change, and materially impact our financial condition or operating performance.

We have granted stock options and restricted stock purchase awards to employees and others. Given the absence of an active market for our common stock, we are required to estimate the fair value of our common stock based on a variety of company- and industry-specific factors for the purpose of measuring the cost of the transaction and properly reflecting it in our financial statements. The significant factors considered in the estimation of the fair value of our common stock are the anticipated initial public offering price, the price paid by third parties in cash for our redeemable convertible preferred stock in April 2003, the rights and privileges of the redeemable convertible preferred stock in comparison to our common stock, the risks and uncertainties involved with ownership of our common stock and, more recently, the anticipated initial public offering price.

We had no employee stock compensation expense reflected in our reported net loss in any period prior to 2003, as all options granted had an exercise price equal to the fair value of the underlying common stock on the date of the grant. In connection with the preparation of the financial statements necessary for the filing of our initial public offering, we have reassessed the fair value of our common stock and determined that some of the stock options and restricted stock purchase awards granted during 2003 were granted at exercise prices that were below the deemed fair value of the common stock on the date of grant. Accordingly, we recorded deferred compensation of approximately $1.1 million during 2003. The deferred compensation will be amortized on a straight-line basis over the vesting period of the related awards, generally five years. In 2003, we recorded expense for the amortization of deferred compensation of approximately $74,000 and we recorded stock-based compensation expense for nonemployees of approximately $964,000. In the first quarter of 2004, additional stock options and restricted stock purchase awards were granted at exercise prices that were below the deemed fair value on the date of grant. In the first quarter of 2004, we expect to record additional deferred compensation of approximately $11.1 million. We cannot reasonably estimate our stock-based compensation expense for non-employees because it will depend on the market price of our common stock when those shares vest.

Our results of operations for future periods will include the amortization of deferred compensation and stock-based compensation expense for nonemployees. The amount of expense expected to be recorded in future periods related to the amortization of deferred stock-based compensation for employees is as follows (in millions):

Please note that the amount of expense recorded in future periods related to stock-based compensation expense for nonemployees will be dependent upon the valuation of our common stock at the date of vesting of the nonemployee award. As of December 31, 2003, we had approximately 1.2 million unvested shares related to awards of stock options or restricted stock to nonemployees, at exercise or issuance prices ranging from $0.001 to $0.19 per share, which remained subject to remeasurement at fair value and may result in future nonemployee stock-based compensation expense.

We recognize revenue ratably over the period during which we perform services under an agreement, provided that there is persuasive evidence of an arrangement, we are not subject to any uncertainties regarding customer acceptance, the sales price is fixed or determinable and collection of our fees is probable. If there are acceptance requirements or uncertainties exist regarding acceptance, we do not recognize revenue until acceptance has occurred or the uncertainties have been resolved. We account for customer payments received in advance of revenue recognition as deferred revenue.

In connection with a revenue arrangement with one customer, we issued a warrant for the purchase of redeemable convertible preferred stock. In accordance with EITF 01-9, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products), we are required to estimate the portion of the consideration received from our collaborative partner that relates to the issuance of the warrant and the portion that relates to revenue for the performance of research and development services. The warrant becomes exercisable by our collaborative partner as they make milestone payments to us. Until the warrant is fully exercisable, it is subject to remeasurement at fair value. In 2003, we received $1.0 million in cash from our collaborative partner and these proceeds were attributed entirely to the value of the warrant. Because the fair value of the warrant exceeded our estimated total cash proceeds, we did not recognize any revenue under the arrangement and therefore recorded $370,000 of stock-based compensation in research and development expense in 2003. Additional

Period from Inception (July 12, 2001) to December 31, 2001 and Years Ended December 31, 2002 and December 31, 2003

We recognize revenue from commercial research collaborations and government contracts. We did not have any revenue from inception to December 31, 2001. Our revenue for 2002 was $283,000 and revenue for 2003 was $3.0 million.

We recognized revenue from Matsushita Electric Works, a Japanese company, of $200,000, or 71% of revenue, in 2002, which represented all of our non-United States revenue in 2002. Revenue recognized in 2003 consisted primarily of $1.6 million, or 53% of revenue, from Matsushita Electric Works, which represented all of our non-United States revenue, $586,000, or 19% of revenue, from SAIC, and $340,000, or 11% of revenue, from Sciperio, Inc., for which we are a subcontractor under a United States government contract. The remainder of revenue in each year was derived from contracts with other corporate collaborators and United States government agencies.

Our revenue relates to collaborations with partners and United States government agencies to evaluate the technical and market feasibility of potential products in a specified field of interest. Upon completion of an investigation phase, we typically have a given period in which to negotiate a related development, supply and commercialization agreement with our partner in the defined field. Our ability to generate revenue in future periods will be dependent upon our ability to extend current collaborations or enter into new collaborations.

Our research and development expenses consist primarily of personnel salary costs, license and patent fees, facility costs, supplies and professional services.

Our research and development expenses increased from $237,000 in the period from inception to December 31, 2001 to $5.2 million in 2002. The research and development expenses in the period of inception to December 31, 2001 related to the establishment of our operations and initial licensing activities. In 2002, research and development expenses increased by $5.0 million to $5.2 million primarily due to a $1.3 million increase in laboratory and facility costs incurred to establish our scientific laboratories, $1.2 million of personnel-related costs, $830,000 in fees to outside service providers and $702,000 for the licensing and patenting of our technology.

Our research and development expenses increased from $5.2 million in 2002 to $9.9 million in 2003. This increase of $4.7 million in 2003 was due primarily to a $1.8 million increase in personnel related costs, $1.4 million of stock-based compensation expense, $613,000 in laboratory and facility related costs and $677,000 for the licensing and patenting of our technology.

Our research and development efforts span multiple industries and technology we develop for one industry can in many cases also be utilized in other industries. Our current development projects include consumable substrates for life sciences research, solar cells, flexible electronics and non-volatile memory. We have not tracked our historical research and development costs by project. Our technology and potential product applications are new and still in the early stage of development or under evaluation. We are unable to predict the costs to complete any of our individual research and development projects or the anticipated completion date of any of our individual research and development projects.

We expect that total expenses related to research and development will increase in future periods as we continue to expand our headcount and facilities. In addition, total research and development expenses are expected to increase in future periods as a result of the amortization of deferred compensation for employees and stock-based compensation expense related to awards to nonemployees.

Our selling, general and administrative expenses include personnel costs for finance, human resources, business development, legal and general management, as well as professional services, such as legal and accounting. Our selling, general and administrative expenses increased from $562,000 in the period from inception to December 31, 2001 to $2.3 million in 2002. Our selling, general and administrative expenses in the period of inception to December 31, 2001 related to the initial establishment of our operations. In 2002, selling, general and administrative expenses increased by $1.8 million to $2.3 million, primarily due to an $896,000 increase in personnel-related costs, a $224,000 increase in professional services, such as legal and accounting, and a $436,000 increase in facilities expenses.

Our selling, general and administrative expenses increased from $2.3 million in 2002 to $2.6 million in 2003. This increase of $228,000 in 2003 was primarily due to a $143,000 increase in personnel related costs. We expect our selling, general and administrative expenses to increase in future periods as we continue to expand our headcount and facilities. We expect to incur additional expenses related to regulatory compliance, investor relations and other costs associated with being a public company. In addition, total selling, general and administrative expenses are expected to increase in future periods as a result of the amortization of deferred compensation for employees and stock-based compensation expense related to awards to nonemployees.

Our interest income (expense) and other income, net, increased from $7,000 in the period from inception to December 31, 2001, to $126,000 in 2002. Our interest income (expense)and other income, net increased from $126,000 in 2002 to $294,000 in 2003. The increases were primarily due to interest income resulting from higher average investment balances as a result of receipt of proceeds from the sales of our redeemable convertible preferred stock that were partially offset by interest expense related to our equipment line of credit.

In the period from inception to December 31, 2001 and in 2002 and 2003, we did not have any income tax expense, as we had net operating losses.

At December 31, 2003, we had approximately $13.9 million of net operating loss carryforwards and approximately $295,000 in federal research and development tax credit carryforwards available to offset any future taxable income we may generate. These net operating losses and tax credit carryforwards will expire beginning in 2013. Our deferred tax assets have been offset by a full valuation allowance, as the realization of such assets is uncertain. The Internal Revenue Code of 1986, as amended, places certain limitations on the annual amount of net operating loss and tax credit carryforwards that can be utilized in any particular year if certain changes in our ownership occur.

From inception through December 31, 2003, we raised $54.2 million in private equity financings. Our capital resources have included our equity financings in addition to payments received from partners and government agencies, as well as the proceeds from an equipment line of credit. As of December 31, 2003, our cash, cash equivalents and available-for-sale investments totaled $38.9 million.

Net cash used in operating activities was $398,000 in the period from inception to December 31, 2001, $4.3 million in 2002 and $7.6 million in 2003. The use of cash in each period was primarily a result of expenses associated with our research and development activities and selling, general and administrative expenses. Cash used in operating activities was offset by payments received from our partners, government grants and government contracts. We expect that our cash used in operating activities will increase in future periods primarily to support anticipated increases in personnel and facilities costs. Furthermore, because of the short-term nature of our product development collaborations, our cash payments from our

Net cash used in investing activities was $117,000 from the period from inception to December 31, 2001, $2.5 million in 2002 and $35.7 million in 2003. From inception to December 31, 2002, investing activities were primarily for the purchase of equipment to support our expanding operations. In 2003, we also made an investment in marketable securities, net of maturities, of $33.2 million, in addition to the purchase of equipment and leasehold improvements. We expect to continue to make significant purchases of equipment to begin the development of our manufacturing capabilities and leasehold improvements to support our growing research and development activities. Because our technology is in the early stages of development, we are unable to accurately estimate the amount of capital required to establish these manufacturing capabilities.

Financing activities provided cash of $1.6 million for the period from inception to December 31, 2001, $16.6 million in 2002 and $38.1 million in 2003. These amounts are primarily the proceeds we received from the sale of convertible redeemable preferred stock, equipment line of credit and proceeds from the sale of common stock and exercise of stock options.

Our contractual obligations as of December 31, 2003 were as follows (in thousands):


*	Operating lease commitments exclude approximately $96,000 of rental income under a non-cancelable sublease that terminated in April 2004.

We have entered into several license agreements with educational institutions that provide us with the right to exploit technology developed by researchers at those institutions. In connection with those licenses, we will be obligated to pay specified royalties to our licensors from sales on applicable products if they are commercialized. If we do not have any sales from commercial products, we are obligated to pay minimum royalties under the agreements. The minimum royalty obligations are waived in certain license agreements through 2004 if our expenditures in selected areas of research and development exceed specified amounts. Assuming we are unable to obtain waivers of any minimum royalty obligations, the following table reflects our future minimum royalty obligations as of December 31, 2003 (in thousands):

We believe that the net proceeds from this offering, together with our current cash, cash equivalents and available-for-sale securities will be sufficient to meet our anticipated operating and capital

requirements for at least the next year. We have no current plans, nor are we currently negotiating, to obtain additional financing following the closing of this offering. Since we anticipate incurring substantial losses for the foreseeable future, we may need to raise additional capital in order to complete our development activities and to build our commercial scale manufacturing facilities. We may raise additional capital through a variety of sources, including the public equity market, private financings, collaborative arrangements and debt. If we raise additional capital through the issuance of equity or securities convertible into equity, our stockholders may experience dilution. Those securities may have rights, preferences or privileges senior to those of the holders of the common stock. Additional financing may not be available to us on favorable terms, if at all. If we are unable to obtain financing, or to obtain it on acceptable terms, we may be unable to successfully support our business requirements.

On March 31, 2004, the Financial Accounting Standards Board issued its Exposure Draft, Share-Based Payment, which is a proposed amendment to FASB Statement No. 123, Accounting for Stock-Based Compensation. Generally, the approach in the Exposure Draft is similar to the approach described in Statement 123. However, the Exposure Draft would require all share based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Financial Accounting Standards Board expects to issue a final standard late in 2004 that would be effective for 2005. The pro forma impact of the adoption of Statement 123 on our historical financial statements is included in the footnotes to the financial statements. We expect to continue to grant stock-based compensation to employees and the impact of the adoption of the new standard, when and if issued, may have a material impact on our future results of operations.

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. We do not hold or issue financial instruments for trading purposes or have any derivative financial instruments. To date, all of our agreements with partners and government agencies have payments denominated in United States dollars. Our exposure to market risk is limited to interest rate fluctuations due to changes in the general level of United States interest rates, particularly because the majority of our investments are in short-term debt securities. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive without significantly increasing risk. To minimize risk, we maintain our portfolio of available-for-sale investments in a variety of interest-bearing instruments, including United States government and agency securities, high-grade United States corporate bonds, auction-rate securities issued by states of the United States, commercial paper and money market funds. The investment portfolio is subject to interest rate fluctuations and will fall in value in the event market interest rates increase. As of December 31, 2003, a hypothetical 1% increase in interest rates would result in an adverse change of approximately $200,000 in the fair value of our available-for-sale investments. As of December 31, 2002, our cash reserves were maintained in money market investment accounts and were not exposed to material market risks.

We develop nanotechnology-enabled products based on our unique expertise, infrastructure and intellectual property. We plan to sell our nanotechnology-enabled products to our partners and directly to end user customers. We are developing products based on our core technology that incorporate proprietary, inorganic nanostructures with integrated functionality. We are utilizing our technology to develop potential products for multiple industries such as energy, defense, electronics, life sciences and information technology. We have established and intend to continue to establish collaborations with partners and government agencies that we believe could benefit significantly from the incorporation of our nanotechnology-enabled products into their end user products. Our current collaborators include DuPont, In-Q-Tel, Intel, Matsushita Electric Works, SAIC and various United States government agencies. Some of our nanotechnology-enabled product development efforts include consumables for life sciences research, solar cells, flexible electronics and non-volatile memory. We have assembled an experienced business and technical team, with development and commercialization expertise, which is supported by the members of our scientific advisory board who are recognized experts in the field of nanotechnology. We have over 200 patents and patent applications which we have licensed from educational institutions and research centers or developed internally. We believe our strong team will enable us to deliver nanotechnology-enabled products for use in multiple industries.

Nanotechnology is the ability to control or manipulate materials on the atomic scale to create structures that have novel properties and functions because of their size, shape or composition. These structures are typically less than 100 nanometers in size. A nanometer is one billionth of a meter, which is approximately 100,000 times smaller than the width of a human hair and is up to 100 times smaller than geometries typically used in commercial semiconductor manufacturing today. By organizing atoms into structures of different shapes and sizes on a nanoscale, important properties including electrical, optical and physical, can be controlled. At the nanoscale, these properties can be fundamentally different than the properties of the same materials at a larger, traditional scale. When nanostructures are engineered into end user products, these products benefit from the unique properties exhibited by the nanostructures. We believe that the application of nanotechnology to multiple industries will significantly improve the performance, cost and functionality of existing products and allow the development of products previously not possible. As an example, with certain traditional materials, color is varied by using different chemicals. At the nanoscale, variations in color can be achieved by varying the size of a nanostructure, rather than its chemical composition. This could improve performance and color flexibility in products, such as displays, solid state lighting and solar cells, while reducing their cost and manufacturing complexity.

Many of the unique properties of nanostructures arise at sizes for which traditional fabrication processes, such as those used in semiconductor manufacturing, are either impractical or not possible using today’s technologies. Scientists have therefore developed methods for forming these nanostructures from the bottom up, building them atom by atom with precise control. Innovative and novel technologies are required for the design and synthesis of nanostructures, their assembly into products and their interface into end user products.

Common materials used to create nanostructures can be organic, such as carbon, or inorganic, such as silicon. We believe that inorganic nanostructures can be created with consistent, desired characteristics in commercially required quantities in a cost effective manner. Inorganic materials are appealing for fabrication of nanostructures for several reasons:


	•	there is a broad range of inorganic materials, such as silicon, silicon germanium, gallium arsenide, gallium nitride, cadmium selenide and indium phosphide, from which to create nanostructures, enabling different product properties;


	•	inorganic materials can form structures in a consistent manner and allow the use of similar fabrication methods to create a wide variety of nanostructures with reproducible physical and functional characteristics;

	•	significant information and expertise exists in traditional industries regarding the techniques to manipulate and interface with inorganic materials; this provides a strong foundation on which to design and build products based on nanostructures formed from these same materials; and

	•	inorganic nanostructures can be synthesized atom by atom leveraging commercially available equipment, creating billions of precisely defined functional nanostructures per batch and potentially lowering the total cost of the end user product.

While the concept of nanotechnology started in the research community several decades ago, to date nanotechnology products have had limited applications in commercial products. Nanoscale materials, however, are being utilized in a variety of basic applications, such as sunscreens, water repellant fabrics, carbon fiber tennis rackets and antistatic mats. Recently, a number of factors have converged to act as catalysts for the development of more advanced and complex nanotechnology products. Analytical instruments, such as scanning probe and electron microscopes, have been significantly improved in recent years, allowing researchers to better understand electrical, chemical and physical properties at the nanoscale. At the same time, governments have made research and development of nanotechnology a priority. For example, in December 2003 the United States adopted the 21st Century Nanotechnology Research and Development Act, which allocated approximately $3.7 billion dollars to nanotechnology development over the next four years. Governments of other major industrialized countries have also committed to advance the progress of nanotechnology by providing substantial research and development funding. In addition, multiple industries are approaching the point at which their ability to economically manufacture products with increasing levels of performance and functionality is being constrained by traditional technologies. Nanotechnology provides the potential to address these challenges.

Many companies are seeking to incorporate the potential benefits of nanotechnology into their end user products on a timely and cost effective basis. We believe that these companies will be motivated to work with focused nanotechnology suppliers that have the expertise, infrastructure and intellectual property needed to allow them to incorporate nanotechnology cost effectively into their end user products. The development of nanotechnology-enabled products requires specialized expertise in chemistry, physics, engineering, materials science, quantum mechanics and advanced manufacturing, as well as access to intellectual property.

We are developing nanotechnology-enabled products for partners and customers in multiple industries based on our unique expertise, infrastructure and intellectual property. We believe our strong team of technical and business experts and related development and commercialization capabilities will enable us to provide our partners and customers with nanotechnology-enabled products. We are utilizing our technology to develop potential products for multiple industries such as energy, defense, electronics, life sciences and information technology. The key elements of our solution include:

Broadly applicable technology. We intend to apply our core technology to develop and manufacture nanotechnology-enabled products for direct sale or incorporation into end user products across multiple industries or applications. Technology we develop for one product can in many cases also be utilized for other applications or products. We believe this approach will enable our partners and customers to leverage the advantages of nanotechnology without requiring them to heavily invest in the resources necessary to develop in-house nanotechnology expertise and infrastructure.

Significant intellectual property position. We have a significant body of nanotechnology-related intellectual property, including patents and patent applications licensed to us on an exclusive basis, as well as our own patent applications and trade secrets. This intellectual property covers a variety of technologies applicable to nanostructure compositions and devices, as well as their design, manufacture and use. When combined with our technical expertise, we believe our intellectual property provides us with a strong competitive advantage in developing and commercializing nanotechnology-enabled products.

Our objective is to become an industry leading nanotechnology company developing and manufacturing products that incorporate proprietary, inorganic nanostructures with integrated functionality for multiple industries. To facilitate the commercial adoption of our products, we have established and intend to continue to establish collaborations with partners and government agencies that we believe will benefit significantly from the incorporation of nanotechnology-enabled products into their end user products. Key strategies that we intend to implement to fulfill our objective include:

Utilize collaborations to enter multiple markets. We plan to collaborate with partners to sell and, in many cases, co-develop products. We intend to sell to our partners nanotechnology-enabled products that they can integrate into their end user products. By leveraging our partners development, manufacturing, sales and market expertise and customer relationships, we believe the time to market of our products will be reduced. We intend to select partners who value nanotechnology solutions and have a development, manufacturing and sales and marketing capability to maximize the commercial potential of our nanotechnology-enabled products. Through this strategy, we can remain focused on our core expertise of developing and manufacturing products based on inorganic nanostructure technology.

Leverage our core technology across multiple industries and applications. We seek to employ our core technology across multiple industries and applications through collaborations in order to accelerate the development of our products. We believe that our core technology can simultaneously address short, medium and long-term opportunities and will reduce our dependence on any particular industry, partner or application. Each of our product development efforts is intended to leverage our technology, know how and manufacturing capabilities.

Support core technology development through commercial and government funding. We have been able to fund a significant amount of our technology development through agreements with commercial partners and government agencies. Through these collaborations, we have gained valuable knowledge about the markets for our potential products. We intend to continue to leverage commercial and government funding to support the development of our core technology and products of interest to our partners, the government and us.

Build common manufacturing capabilities to achieve economies of scale. We believe our core technology enables us to utilize a common set of manufacturing capabilities to supply our partners with a variety of nanotechnology-enabled products. By building proprietary manufacturing capabilities that can be applied to multiple products, we believe that we can benefit from manufacturing economies of scale to provide cost effective, high quality products to our partners and customers.

All of our product development efforts are in the early stage, or in what we term the investigation phase. We cannot predict when or if we will commercialize these products. In order to diversify our development risk, we seek to develop products that we believe will have commercial applicability in the short, medium and long-term. Some of our current product development efforts include:

Consumable Substrates for Life Sciences Research. We are developing nanostructure coatings that have a wide variety of potential applications in life sciences research. For example, we are developing a disposable plate, or substrate, coated with nanostructures for use in existing time of flight mass spectrometry instruments. Time of flight mass spectrometry is widely used in the pharmaceutical and biotechnology industries to analyze large molecules. Our substrates enable time of flight mass spectrometry to also potentially be used for the rapid and accurate analysis of small molecules for high throughput screening of potential drug candidates and synthetic chemistry. We plan to develop and manufacture this product and enter into a product marketing agreement with one or more distributors or mass spectrometry instrument manufacturers.

Solar Cells. We are developing low cost and efficient solar cells for use in building materials, aerospace applications and portable power generation. The flexible and light weight nature of our solar cells and our ability to customize their optical properties could enable their use in a variety of products, such as architectural glass, roofing tiles, aerospace and portable power supplies. To develop nanotechnology-enabled solar cells, we are collaborating with Matsushita Electric Works and United States government agencies. We anticipate that we would manufacture the products resulting from these development efforts and would sell them to our partners or other customers for integration into their end user products.

Flexible Electronics. We are developing high performance, flexible electronics to be used in a variety of application areas including large area and portable displays, low cost radio frequency identification tags and electronically steerable antenna arrays for wireless communications. Our thin film electronics technology may allow us to achieve the electronic performance of silicon wafers, over large areas on a light weight, flexible substrate. We expect this technology to be compatible with traditional thin film manufacturing equipment, as well as advanced printable electronics technologies. To develop our nanotechnology-enabled thin film electronics products, we are collaborating with DuPont and a United States government agency. We anticipate that we would manufacture the products resulting from these development efforts and would sell them to our partners or other customers for integration into their end user products.

Non-Volatile Memory. We are developing nanostructures for non-volatile memory products for anticipated use in applications such as digital cameras, MP3 players and mobile phones. To develop non-volatile memory products, we are collaborating with Intel. We anticipate that we would manufacture the products resulting from these development efforts and would sell them to our collaborators or other customers for integration into a non-volatile memory device.

We seek to partner with leading companies across various industries to develop, manufacture and commercialize products based on our proprietary nanotechnology platform. We intend to leverage the development, manufacturing, sales and marketing capabilities of our partners. Initially, we intend to enter into product development agreements with commercial entities to explore the technical and market feasibility of developing products in specific areas of interest while at the same time expanding the

To date we have entered into several product development collaborations to evaluate the technical and market feasibility of potential products in specified fields of interest. Under these investigation phase agreements, we are responsible for performing investigative research and development at specified levels. We typically receive research and development funding at specified periods and amounts per full time equivalent employee working on the project, payments on the achievement of specified milestones, or both. We typically retain the exclusive rights to specified categories of nanotechnology inventions made by either party as a result of the investigation phase. Upon completion of an investigation phase, we and our partner typically have a given period in which to negotiate a related development, commercialization or supply agreement in a defined field. We have not yet entered into any of these agreements and we cannot be certain that we will be able to enter into such agreements in the future. In addition to relying upon partners to fund a portion of our research and development expenses for certain of our potential products, we also plan to fund development of potential products internally and with government funding.

We intend to expand existing collaborations and enter into new collaborations. Following successful product development either pursuant to a product development collaboration or our internal research programs, we intend to enter into original equipment manufacturer or distribution partnerships. These partnerships may be in the form of original equipment manufacturer agreements for products manufactured by us for integration by our partner into their end user products. We may also enter into distribution agreements for our partner to distribute end user products manufactured by us, in order to access the marketing expertise, customer relationships, distribution capabilities and sales force of our partner. To date, we have not entered into any original equipment manufacturer or distribution partnerships and we cannot be certain that we will be able to enter into any in the future.

In November 2002, we entered into a development agreement with Matsushita Electric Works to investigate the commercial feasibility of incorporating nanotechnology-enabled solar cells into building materials pursuant to which Matsushita Electric Works paid us $2.0 million. In addition, Matsushita Electric Works agreed to spend at least $2.0 million internally on the project. In February 2004, we and Matsushita Electric Works amended the agreement to extend the development period until August 2004 and Matsushita Electric Works paid us an additional $500,000. Our agreement provides that during the development period, we and Matsushita Electric Works will exclusively work together on developing these products for sale in certain Asian countries. Matsushita Electric Works also has the exclusive right to negotiate with us for a certain period following completion of the collaboration to enter into an agreement to develop and commercialize solar cells containing inorganic nanostructures for use in building materials in those countries.

In December 2003, we entered into a cooperative development agreement with Intel to investigate the feasibility of using our nanostructures in non-volatile memory devices pursuant to which Intel is obligated to pay us at least $1.9 million in exchange for performing research services unless the agreement is terminated by Intel. We granted Intel the right to exclusively negotiate with us for a specified period to enter into a development and commercialization agreement for the development of non-volatile memory devices using certain of our nanostructures, during which period we have agreed not to enter into any discussions regarding that type of product with any third party. Upon the payment of additional amounts, Intel may extend its exclusive negotiation period for another fixed period. Intel may terminate the cooperative development agreement at any time within 10 days after the completion of our six month formal review meeting, which is scheduled to occur no later than July 2004.

In January 2004, we entered into a cooperative development agreement with DuPont to investigate the commercial feasibility of using nanostructures for thin film electronics applications pursuant to which DuPont paid us $325,000 in exchange for performing research services during the first three months of the agreement. The agreement will terminate on May 17, 2004 unless the parties agree to continue the collaboration.

We have also entered into arrangements with United States government agencies. Our strategy for pursuing government contracts and grants is to focus on opportunities that will enable us to further our core technology development. We intend to pursue government contracts and grants that enable us to develop dual use products and technologies that may be sold in both government and commercial markets.

In September 2003, we entered into a development agreement with In-Q-Tel to investigate the application of our nanostructures to flexible, high performance electronics pursuant to which In-Q-Tel is obligated to pay us up to $3.0 million in exchange for performing research services. The project with In-Q-Tel is divided into two phases: a six month feasibility phase followed by a 12 month technical development and optimization phase. In-Q-Tel paid us $1.0 million at the commencement of the first phase. In April 2004, we received a notice from In-Q-Tel to proceed to the second phase and an additional payment of $1.0 million based on the achievement of specific milestones. In-Q-Tel is committed to pay the remaining $1.0 million upon our achievement of certain other milestones. In connection with the agreement, we issued In-Q-Tel warrants for 723,085 shares of our series C preferred stock at a price of $0.001 per share. The warrants will expire if not exercised prior to the closing of this offering.

Master Marketing and Business Development Agreement with Science Applications International Corporation, or SAIC

In July 2003, we entered into a master marketing and business development agreement with SAIC to identify and jointly pursue United States government contract or grant opportunities relating to nanoscience and nanotechnology. Our obligations to each other under the agreement are generally nonexclusive, provided that in certain circumstances we and SAIC have a right of first offer to pursue certain government contract or grant opportunities along with the other party. Under the agreement, SAIC is obligated to pay us $1.6 million in exchange for performing research services. In addition, SAIC agreed to spend at least $600,000 internally on the project. SAIC is entitled to receive the first $2.2 million in profit, after reimbursement of our and SAIC’s costs, that we or SAIC receive under any United States government contract or grant arising out of work performed under our agreement.

Since August, 2002, we have been awarded an aggregate of more than $1.7 million in grants from or contracts with United States government agencies to fund research relating to the development of our core technology and applications in the areas of biological detection, solar power, thin-film electronics and light emitting structures. We received these grants from and entered into contracts with several government agencies, including the Defense Advanced Research Projects Agency, the National Institute of Health and the National Aeronautics and Space Administration. We retain the rights to commercialize nanotechnology-enabled products developed using the research funded under these grants or contracts.

We are developing our core technology, which is based on a proprietary class of inorganic nanostructures, to engineer and integrate the physical, functional and performance characteristics of nanostructures for the purpose of creating products. Unlike traditional materials which are used to

fabricate devices, each nanostructure can incorporate device functionality. These nanostructures, which can be made with features as small as a few nanometers, are synthesized atom by atom in a controlled chemical environment, creating precisely defined functional nanostructures. To design products for different application areas, our nanostructure fabrication process enables us to define and control many of the important chemical and physical parameters of our nanostructures, such as composition, shape, size and surface chemistry.


	•	Composition: Our core technology allows us to fabricate nanostructures from one or more inorganic materials, including silicon, silicon germanium, gallium arsenide, gallium nitride, cadmium selenide and indium phosphide. Different inorganic materials can manifest different properties or perform different functions. For example, traditional integrated circuits are made from silicon, while light emitting diodes, or LEDs, are often made from gallium nitride. We can also incorporate two or more materials into each individual nanostructure, forming functional interfaces between the different materials that can provide unique electrical, optical or physical properties. Whether we are developing a solar cell, an LED or a memory device, the composition of the nanostructures can be selected to suit the application.

	•	Size: Our core technology allows us to control the size of the nanostructures. While the composition of a nanostructure largely defines its overall function, we can adjust the desired functional properties by controlling the size of the nanostructure. This feature allows us to further change the performance characteristics of our products in a way that is not possible using traditional technology. For example, when using a nanostructure to form an LED, we can tailor the size of the nanostructure to select the precise color of the emitted light.

	•	Shape: We can form nanostructures in a variety of shapes, including spheres, rods and wires, as well as more complex shapes. By controlling the shape, we can create additional functionality in our individual nanostructures and increase their performance, as well as, we believe, reduce the manufacturing complexity and cost of the products in which they are used.

	•	Surface chemistry: While functionality results from the nanostructures’ composition, size and shape, processability arises from the material filling the space between individual nanostructures. The interface between the nanostructures and the filling materials is formed through a surface chemistry that acts as a physical and functional connection between the nanostructures and the other components in the end user product. By controlling the surface chemistry independent of the composition, size and shape of the nanostructures, we potentially can separately define and optimize functional and manufacturing characteristics.

We have several core competencies that act as fundamental building blocks for developing applications from concept to product. Our core competencies include: synthesis, assembly, nano to macro interfaces, application specific formats and computer modeling and simulation. Developing our nanotechnology-enabled products requires the consistent synthesis, characterization and control of the nanostructures, which we then assemble in a directed fashion to achieve a desired function. The nano to macro interface allows us to integrate our nanostructures and their functionality into the rest of the system. Finally, the nanostructures must be incorporated into an application specific format that is compatible with the end user product. To direct nanostructure and product development throughout this process, we use computer modeling and simulation for multiple levels of the design, from the individual nanostructures to the end user application. As we develop products, we expect the resulting advances will expand and enhance our core technology, which in turn, can provide us with more application and collaboration opportunities.

We are currently applying our core competencies to develop potential products for various applications in multiple industries. One potential product is a new type of solar cell that performs like a

traditional solar cell, but can be configured like a light weight, flexible plastic. In particular, this technology has the potential to provide low cost solar power through currently available, high volume and inexpensive manufacturing techniques based on roll to roll manufacturing. Roll to roll manufacturing is a well established technique used in the photographic film, plastics, printing and paper industries. Roll to roll manufacturing has been used for decades and it is a relatively inexpensive process as compared to traditional semiconductor manufacturing.

As an illustration of our development process, using the following steps, we have created a functioning solar cell:


	•	Synthesis: We developed nanostructures for this application that are capable of light absorption, charge generation and charge conduction when incorporated into a polymer and thus act as a solar cell. We selected the composition and size and then constructed the nanostructure to absorb the sun’s light in an optimal manner and to separate resulting electrical charges.

	•	Assembly: To enable high volume, inexpensive manufacturing, it is desirable to process the nanostructures while suspended in a liquid and then harden the liquid into a film. We selected a plastic matrix from which a film is made. We also designed the specific surface chemistry on the nanostructures to allow their uniform mixing into the plastic matrix. To achieve good solar efficiency, it is also desirable to have each nanostructure closely positioned to the top and bottom of the film where the electricity from each nanostructure sized solar cell will be collected. We selected the shape of the nanostructure to orient itself naturally to provide a high conductivity electrical path across the film.

	•	Nano to macro interface: Each individual nanostructure generates electrical charges when it absorbs the sun’s rays. We designed the nanostructure’s surface chemistry to facilitate the transfer of electrical charges out of the nanostructure. We apply traditional electrodes to the top and bottom of the film, which is composed of trillions of nanostructure sized solar cells, to transfer electrical charges out of the film into an electrical system, such as a storage battery or electrical device.

	•	Application specific format: For a solar cell, there are several application specific requirements: light must enter the device, the cell must be connected to a circuit to remove the electrical charges and the device must tolerate long-term environmental exposure. We plan to select electrodes and encapsulating films for our nanostructures to achieve the application specific requirements. For example, the layer on top of the film must be a clear conducting layer to allow light to enter the film while also conducting electricity away.

	•	Computer modeling and simulation: Throughout the development process, we use computer modeling and simulation. We calculate the necessary physical and functional properties of the individual nanostructures to guide synthesis. We model the solar spectrum to determine the optimum absorption characteristics of the nanostructures. We calculate the necessary physical and functional properties of the nanostructures so that they can act as solar cells. We model the surface chemistry to optimize electrical charge transfer from the nanostructure to the electrodes and model the electrodes for optimal electrical charge transport. By modeling and simulating throughout the process, we expect to minimize the number of design iterations, thereby accelerating the entire development cycle.

We use similar building blocks to develop and construct our other potential products as outlined above. In addition, we use similar methods to evaluate the applicability of our nanotechnology to prospective products.

Since our inception, we have devoted significant resources to the development of our products and technology. We conduct our research and development operations in Palo Alto, California. As of March 31, 2004, our research and development team consisted of 23 people.

We had research and development expenses of $237,000 in the period from inception to December 31, 2001, $5.2 million in 2002 and $9.9 million in 2003. Our partners funded none of our research and development expenses from inception to December 31, 2001, $283,000 of our research and development expenses in 2002 and $3.0 million of our research and development expenses in 2003. We pursue our product development objectives by developing potential nanotechnology-enabled products internally and with those development partners identified above, but may from time to time acquire products, technologies and businesses complementary to ours or form alliances with other companies.

Our strategy is to seek patents on new and improvement inventions relating to our technology that we consider important to the development of our business. As of March 31, 2004, we owned or had exclusive rights to 36 issued United States patents, five issued or granted foreign patents and 196 additional pending United States and foreign patent applications. Our owned or licensed issued or granted patents expire at various times between 2011 and 2020. Included in the patents and applications enumerated above are the 36 issued U.S. patents, the five issued or granted foreign patents and 129 pending patent applications that are licensed to us from:


	•	Columbia University;

	•	Ernest Orlando Lawrence Berkeley National Laboratory;

	•	Harvard University;

	•	Hebrew University of Jerusalem;

	•	The Massachusetts Institute of Technology;

	•	The Regents of the University of California; and

	•	University of California Los Angeles.

We acquired the exclusive rights to use specific patents of these educational institutions in fields that are relevant to our business. Our exclusive license with the University of California at Los Angeles is for the University’s interest in patents that are jointly owned by the University and the Hewlett-Packard Company. Some of the patent and patent applications under our license from the Massachusetts Institute of Technology are jointly owned by Lumileds Lighting, U.S. LLC. One family of patent applications under our licenses with Harvard is a co-exclusively licensed to Nantero and Nantero also has patent rights from certain other Harvard licenses as necessary to protect its rights under the co-exclusive license. Our agreements with these parties expire upon the expiration of the related patents.

Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our technology and products as well as successfully defending these patents against third party challenges. If we or our licensors are unable to obtain and maintain patent and trade secret protection of our technology and products, our business could be harmed. In addition, we will only be able to protect our technology from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover that use.

Patents and patent applications covering a substantial portion of our core technology are owned by our third party licensors. While we have certain rights to participate in prosecution, maintenance and enforcement of those patents and patent applications, in the majority of cases these licensors have retained the right to prosecute, maintain and enforce those patents and patent applications. We cannot be certain

Commercial application of nanotechnology is new and the scope and breadth of patent protection is uncertain. Consequently, the patent positions of nanotechnology companies can be highly uncertain and involve complex legal and factual questions for which important legal principles may remain unresolved. In addition, to date there has been relatively little litigation surrounding nanotechnology related patents, and, therefore, it is not clear whether such patents will be subject to interpretations or legal doctrines that differ from conventional patent law principles. Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third party patents.


	•	we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications or issued patents;

	•	we or our licensors might not have been the first to file patent applications for these inventions;

	•	it is possible that none of our pending patent applications or none of the pending patent applications of our licensors will result in issued patents;

	•	our issued patents and issued patents of our licensors may not provide a basis for commercially viable products, may not provide us with any competitive advantages or may be challenged and invalidated by third parties;

	•	our and our licensors’ patent applications or patents may be subject to interference, opposition or similar administrative proceedings, which could result in those patent applications failing to issue as patents or those patents being held invalid;

	•	we may not develop additional proprietary technologies that are patentable; or

	•	the patents of others may have an adverse effect on our business.

We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. Trade secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors, partners or other advisors may unintentionally or willfully disclose our information to competitors. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know how.

proceedings is uncertain and could significantly harm our business. The industries for which we are investigating products are characterized by the existence of a large number of patents and frequent litigation based upon allegations of patent infringement. As our potential products progress toward commercialization in these markets, the possibility of an infringement claim against us or our collaborators increases. While we attempt to ensure that our products and the methods we employ to develop and manufacture them do not infringe other parties’ patents and other proprietary rights, competitors or other parties may assert that we infringe their proprietary rights.

In recent years, several thousand patent applications have been filed with the United States Patent and Trademark office that refer to nanoscale materials or structures. Information contained in patent applications is generally not publicly available. Consequently, we are unable to evaluate the underlying intellectual property until these patent applications become issued or published. The process to issue patents is long and certain innovations that have not yet resulted in issued patents could have been developed prior to our intellectual property. These patents, when issued, may predate our patents and may have superior claims or superior rights or otherwise be in conflict with our technology or business processes.

If a patent infringement suit were brought against us or our partners, we or they could be forced to stop or delay research, development, manufacturing or sales of the end user product or potential product that is the subject of the suit. We or our partners therefore may choose to seek, or be required to seek, a license from the third party and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our partners were able to obtain a license, the rights may be nonexclusive, which would give our competitors access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or forced to cease some aspect of our business operations, as a result of patent infringement claims, which could have a material adverse impact on our business. Alternatively, we could encounter delays in product introductions while we attempt to design around the patents. Our redesigned products may be inferior to our original designs or we may be unable to continue product development in the particular field.

We compete in intensely competitive markets for end user products. The nanotechnology-enabled products we are currently developing will compete directly with products incorporating conventional materials and technologies, including traditional semiconductors manufactured on the nanoscale. We believe our nanotechnology-enabled products will face significant competition from existing manufacturers in our target markets including:


	•	manufacturers of substrates for time of flight mass spectrometry equipment, such as Waters;

	•	manufacturers of solar cells, such as Sharp and BP;

	•	manufacturers of thin film electronics, such as Samsung, NEC and Philips; and

	•	manufacturers of memory products, such as Advanced Micro Devices and Samsung.

In addition, we may also face competition from focused nanotechnology companies, such as Evident Technologies, Konarka, Nantero, NanoHorizons, Nanosolar, Quantum Dot, UltraDots, ZettaCore and other newly created nanotechnology companies.

We may also face significant competition from our current and future partners, such as DuPont, Intel and Matsushita Electric Works, which are assessing the feasibility of expanding their development and manufacturing capabilities and portfolio of intellectual property to incorporate nanotechnology-enabled components into their end user products. Nanotechnology-enabled products developed by our current and future partners are designed to utilize the qualities of the partner’s own manufacturing process and may benefit from certain capacity, informational, cost and technical advantages. If our current and future partners expand their product offerings to compete directly with our nanotechnology-enabled products or actively seek to participate as vendors in the nanotechnology-enabled product market, our revenue and operating results could be negatively affected.


	•	Size and resources. Our competitors, as well as our current and future partners, may have access to substantially greater financial, engineering, manufacturing and other resources than we do, which may enable them to react more effectively to new market opportunities.

	•	Name recognition. Many of our competitors and our current and future partners have greater name recognition and market presence than we do, which may allow them to market themselves more effectively to new customers or partners.

	•	Access to information. Our current and future partners may have better access to information regarding their own manufacturing processes, which may enable them to develop nanotechnology-enabled products that can be more easily incorporated into the customers’ or partners’ products.

	•	Limits of product offerings. Although we intend to offer a broad range of nanotechnology-enabled products, a current or future partner may require nanotechnology-enabled products or functionalities that we do not offer. As a result, our competitors may exploit the areas in which we do not develop product offerings.

	•	Reliance on internal manufacturing. We intend to manufacture our products internally rather than license the manufacturing of those products to our current and future partners. Our partners may conclude that we will be unable to supply the volume or quality of products they need. In addition, those partners may want to control key steps in their manufacturing process capabilities and will therefore want to manufacture the nanotechnology-enabled products themselves. In order to successfully integrate our proposed products with theirs, we may be required to rely on our partners for access to their manufacturing process and capabilities. If this access is restricted or denied, our nanotechnology-enabled products may not be competitive with products internally developed by our partners or others.

	•	Scalability of development. A significant challenge in commercializing our nanotechnology-enabled products across multiple industries and end user products will be our ability to leverage our core technology and development efforts. Most nanotechnology-enabled products require custom development to meet application specific product requirements. To minimize custom development efforts, we will need to develop nanotechnology-enabled products that utilize our common set of our core technology and can benefit from our previous development efforts. If we are unable to achieve this, our development capabilities will be less competitive.

If we do not compete successfully, our ability to develop and sell our products could be harmed and our business could suffer.

As of March 31, 2004, we had 34 employees, including 23 in research and development and 11 in selling, general and administrative functions. None of our employees are represented by a labor union or are the subject of a collective bargaining agreement. We have never experienced a work stoppage and believe that our employee relations are good. We believe our future success will depend in large part upon our ability to attract and retain highly skilled managerial, research and development, sales and marketing personnel.

Our principal offices are located in Palo Alto, California. Our facility is occupied under a lease that expires in 2005. At March 31, 2004, our leased space approximated 14,000 square feet. This figure excludes approximately 7,000 square feet leased to others, which was subject to a sublease that terminated in April 2004.

We believe that our facilities are adequate for our current needs and that suitable additional or substitute space will be available as needed to accommodate expansion of our operations.

We are not currently a party to any material legal proceedings. From time to time, we may become subject to legal proceedings, including those requiring us to defend the parties which have licensed intellectual property to us.

We recruited a number of leading researchers in nanoscience to serve as members of our scientific advisory board. These advisors have entered into agreements with us to serve for fixed terms ranging from one to five years. In general, they serve on an exclusive basis within a defined field of collaboration. These advisors have received option grants and restricted stock purchase awards to purchase our common stock. In addition, some may receive cash compensation in connection with services rendered, and they receive reimbursement for expenses.

The following persons served on our scientific advisory board and their primary affiliations were as follows as of March 31, 2004:

Our directors and executive officers and certain information about them as of March 31, 2004 are as follows:


(1)	Member of the Audit Committee.

(2)	Member of the Compensation Committee.

(3)	Member of the Grant Committee.

(4)	Member of the Nominating and Governance Committee.

Mr. Bock has served as executive chairman of our board of directors since October 2003. Mr. Bock acted as our chief executive officer, president and a director from July 2001 to October 2003. Mr. Bock also acted as our chief financial officer from July 2001 to September 2001. Mr. Bock was a managing general partner of CW Group, a life sciences venture capital fund from June 1998 to April 2004 and from June 1998 to present has served as a general partner. From 1988 to June 1998, Mr. Bock was general partner of Avalon Ventures, a seed stage venture capital firm. Mr. Bock was the founder and initial chief executive officer of Metro Biosystems, Inc., Neurocrine Biosciences, Inc., Pharmacopeia, Inc., Argonaut Technologies, Inc. and Caliper Technologies Corp. Mr. Bock was also a co-founder of ARIAD Pharmaceuticals, Inc., Athena Neurosciences, Inc., GenPharm International, Vertex Pharmaceuticals, Inc., Onyx Pharmaceuticals, Inc. and Illumina, Inc. Mr. Bock holds a B.A. in Liberal Arts from Bowdoin College and an M.B.A. from the Anderson School at the University of California, Los Angeles.

Mr. Chow has served as our chief executive officer since October 2003 and as a director since February 2002. From November 2001 to October 2003, Mr. Chow served as our chief operating officer and, from November 2001 to June 2002, he served as our acting vice president of development. From October 1995 to September 2001, Mr. Chow, co-founded Caliper and served in various capacities, including most recently as its chief operating officer. From October 1985 to September 1995, Mr. Chow was a co-founder of and last served as vice president of engineering and operations at Molecular Devices Corporation. Mr. Chow holds a B.S.E.E. from the Illinois Institute of Technology and an M.S. in Electrical Engineering from Stanford University.

Dr. Parce has served as our chief technical officer and vice president of research since June 2002. Dr. Parce served on our Scientific Advisory Board from January 2002 to June 2002. From September 1995 to December 2002, Dr. Parce was a co-founder of and served as vice president of research at Caliper. Prior to joining Caliper, Dr. Parce spent 12 years with Molecular Devices Corporation as a co-founder, consultant, director of research and vice president of research. Dr. Parce holds a B.A. in Chemistry from Western Maryland College and a Ph.D. in Biochemistry from Wake Forest University.

Mr. Murphy has served as our vice president of intellectual property since April 2002. From March 1997 to March 2002, Mr. Murphy served in various capacities at Caliper, the most recent of which was vice president of intellectual property. From August 1994 to March 1997, Mr. Murphy was an associate at the law firm of Townsend and Townsend and Crew LLP. Mr. Murphy holds a B.S. in Microbiology from the University of California, Davis and a Juris Doctorate from the University of San Francisco.

Ms. Vergura has served as our vice president of finance since December 2001. From September 2001 to December 2001, Mr. Vergura provided services to us as a consultant. From August 1998 to April 2001 she served as the corporate controller and from January 2001 to April 2001 as director of financial planning at Convergent Networks, Inc., a broadband infrastructure company. From July 1997 to August 1998, Ms. Vergura served as the corporate controller at New Oak Communications, an extranet switching company that was acquired by Bay Networks. Ms. Vergura holds a B.S. in Business Administration from the University of Vermont.

Mr. Bybee has served as a member of our board of directors since October 2001. Since December 1996, Mr. Bybee has served as a managing director of ARCH Venture Partners, a venture capital company, and as a general partner of its related funds. From January 1994 to November 1996, he served as a vice president of ARCH Venture Partners. Mr. Bybee holds a B.S. in Engineering from Texas A&M University and an M.B.A. from the University of Chicago.

Mr. McKenna has served as a member of our board of directors since April 2002. Mr. McKenna has served as a marketing consultant to technology companies since 1970. He is chairman of Regis McKenna, Inc., a private firm specializing in the development of marketing information and network-based business strategies. Mr. McKenna has served as a general partner of McKenna Ventures, L.P., an investment partnership specialized in investments in early stage companies, since November 1998. Mr. McKenna holds a B.A. in Liberal Arts from Duquesne University.

Dr. Roberts has served as a member of our board of directors since May 2003. He joined Venrock Associates, a venture capital firm, in October 1997 and is now a general partner. Dr. Roberts worked at the investment banking firm Kidder Peabody & Co., Inc. in corporate finance from 1989 to 1992. Dr. Roberts also serves as a member of the Board of Directors of Sirna Therapeutics, Inc. Dr. Roberts holds a B.A. from Dartmouth College and a Ph.D. in Chemistry and Chemical Biology from Harvard University.

Dr. Somekh has served as a member of our board of directors since December 2003. Dr. Somekh has served as the president of Novellus, a manufacturer of semiconductor fabrication equipment, since February 2004. Dr. Somekh served in various capacities at Applied Materials, Inc. from 1980 to February 2004, the most recent of which was executive vice president, to which he was appointed in December 2000 and chairman, global executive committee, which took the place of the office of the president, to which he was appointed in October 2002. Dr. Somekh also serves as a member of the board of directors of Synopsys, Inc., an electronic design automation company. Dr. Somekh holds a B.S. in Physics from Tel Aviv University, an M.S. in Electrical Engineering from the California Institute of Technology and a Ph.D. in Electrical Engineering from the California Institute of Technology.

Mr. Young has served as a member of our board of directors since March 2004. Mr. Young is retired. He served as president and chief executive officer of Hewlett-Packard Company from 1978 to 1992 and served in other capacities at Hewlett-Packard from 1958 to 1978. Mr. Young currently serves as the chairman of the board of Ciphergen Biosystems, Inc. He also serves on the boards of directors of Affymetrix Inc., Perlegen Sciences, Inc., Fluidigm Corporation and Lucent Technologies, Inc. Mr. Young holds a B.S.E.E. from Oregon State University and an M.B.A. from the Stanford Graduate School of Business.

Dr. Yurek has served as a member of our board of directors since February 2004. Since 1988, Dr. Yurek has served in various capacities at American Superconductor Corporation, an electricity solutions company that he founded in 1987, and currently serves as its chief executive officer and chairman of the board of directors. From 1976 to 1988, Dr. Yurek was professor of materials science and

Our board of directors currently consists of eight members. Prior to the closing of this offering, our board of directors will be divided into three classes, with each director serving a three year term and one class being elected at each year’s annual meeting of stockholders. Dr. Yurek, Mr. Bybee and Dr. Roberts will be in the class of directors whose initial term expires at the 2005 annual meeting of stockholders. Mr. McKenna, Dr. Somekh and Mr. Chow will be in the class of directors whose initial term expires at the 2006 annual meeting of the stockholders. Mr. Bock and Mr. Young will be in the class of directors whose initial term expires at the 2007 annual meeting of stockholders.

Our board of directors currently has an audit committee, a compensation committee, a nominating and governance committee and a grant committee. Dr. Yurek, Mr. Young and Dr. Roberts are currently members of the audit committee. The audit committee reviews our internal accounting procedures and consults with and reviews the services provided by our independent accountants. Mr. Bybee, Mr. McKenna and Dr. Somekh are currently members of the compensation committee. The compensation committee reviews and recommends to the board of directors the compensation and benefits for all of our officers and establishes and reviews general policies relating to compensation and benefits for our other employees. Mr. Bybee, Mr. McKenna and Dr. Yurek are currently members of the nominating and governance committee. The nominating and governance committee assists our board of directors in the areas of membership selection, evaluation of overall effectiveness of the board of directors and the review of developments in corporate governance practices. Mr. Chow is the sole member of the grant committee. The grant committee approves option grants and other equity awards to our non-officer employees pursuant to guidelines set forth by the board of directors.

We reimburse our directors for reasonable travel expenses in connection with attendance at board and committee meetings. Under our 2001 stock plan, nonemployee directors are eligible to receive stock option grants at the discretion of the board of directors. In addition, in 2004, we granted restricted stock purchase rights to purchase our common stock to two of our nonemployee directors. For a description of these options, see “Our Relationships and Arrangements with Our Stockholders, Our Officers and Our Directors.” After this offering is completed, nonemployee directors will receive stock options pursuant to the 2004 stock plan. Each nonemployee director appointed to the board after the completion of this offering will receive an initial option to purchase 45,000 shares upon such appointment. Beginning in 2005, nonemployee directors who have been directors for at least six months will receive a subsequent option to purchase 9,000 shares following each annual meeting of our stockholders. Also, beginning in 2005, nonemployee directors who are members of the audit committee or compensation committee who have been members of such committee for at least six months will receive a subsequent option to purchase 3,000 shares following each annual meeting of our stockholders for each such committee upon which they serve, provided that the chairman of the audit committee and the chairman of the compensation committee will instead receive a subsequent option to purchase 4,500 shares. All such options shall have an exercise price equal to fair market value on the date of grant. Each initial option becomes exercisable as to one-third of the shares on each anniversary of the date of the grant, provided the nonemployee director remains a service provider on such dates. Each subsequent option becomes exercisable as to all of the shares subject to the subsequent option on the one year anniversary of the date of grant, provided the nonemployee director remains a service provider on such date. In addition, upon the effective date of this offering, each nonemployee director will receive options for a number of shares equal to the number of shares granted to directors and audit and compensation committee members, with respect to the committees upon which the nonemployee director is then serving, at each annual meeting of stockholders, provided that the exercise price per share for each grant shall be equal to the price of our common stock in this offering. These options will also become exercisable as to all of the shares subject to the options on

Our board of directors established its compensation committee in October 2001. Prior to establishing the compensation committee, our board of directors as a whole performed the functions delegated to the compensation committee. No interlocking relationship exists between any member of our compensation committee and any member of any other company’s board of directors or compensation committee.

The following table sets forth all compensation awarded, earned or paid for services rendered in all capacities to us during 2003, to each person who acted as chief executive officer during 2003 and our next most highly compensated executive officers, to whom we refer to collectively as the named executive officers in this prospectus, each of whose compensation exceeded $100,000 in 2003.

The following table sets forth certain information concerning grants of stock options to each of our named executive officers during 2003.

The stock option granted to the named executive officer in 2003 vests as to 1/60 of the total number of shares subject to the option one month from the vesting commencement date and as to 1/60 of the total number of shares subject to the option each full month thereafter. Under the 2001 stock plan, our board retains discretion to modify the terms of outstanding options. The percentage of total options granted was based on an aggregate of options to purchase 175,000 shares of common stock granted to our employees and executive officers in 2003.

Options were granted at an exercise price equal to the fair market value of our common stock on the grant date, as determined by our board of directors. As there was no public market for our stock prior to this offering, the board of directors determined the fair market value of our common stock by considering a number of factors, including, but not limited to, our current financial performance and prospects for future growth and profitability, the status of product releases and product integration, the absence of a resale market for our common stock and comparisons of certain of our key valuation metrics with similar metrics for comparable publicly traded companies, including measures of market capitalization based on revenue multiples, price to earning ratios and operating margins.

The table sets forth the hypothetical gains or “option spreads” that would exist for the option at the end of their respective ten year terms based on assumed annualized rates of compound stock price appreciation of 5% and 10% from the dates the options were granted until the expiration of the ten year option term. The 5% and 10% assumed rates are promulgated by the Securities and Exchange Commission and do not represent our estimate or projection of future common stock prices or stock price growth.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

The following table sets forth certain information regarding the exercise of stock options in 2003 by the named executive officers and the value of options held by these individuals at December 31, 2003.


(1)	Based on the assumed public offering price of $ per share, minus the exercise price, multiplied by the number of shares issued or issuable upon the exercise of the options.

The value received is calculated as the market value of our common stock at the exercise date minus the exercise price. The value of unexercisable in the money options is deemed to be the market value of our common stock at fiscal year end minus the exercise price. The fair market value of our common stock on December 31, 2003, as determined by our board of directors, was $0.19 per share. However, we have used the estimated initial public offering price of $ per share for purposes of this computation.

Employment Contracts, Change of Control Arrangements and Separation Agreements

We do not have any employment contracts, change of control arrangements or separation agreements with our officers.

Our board of directors adopted and our stockholders initially approved the 2001 stock plan in September and October of 2001, respectively. Our board of directors has decided not to grant any additional awards under the plan following the effective date of this offering. However, the plan will continue to govern the terms and conditions of the outstanding options and stock purchase rights previously granted under the plan.

A total of 9,137,000 shares of our common stock are authorized for issuance under the 2001 stock plan. As of March 31, 2004, options to acquire a total of 969,593 shares of our common stock were issued and outstanding, and a total of 6,102,240 shares of our common stock had been issued upon the exercise of options or stock purchase rights granted under the plan.

The plan provides for the grant of nonstatutory stock options and stock purchase rights to our employees, directors and consultants, and for the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code to our employees. Our board of directors administers the 2001 stock plan. The administrator has the authority to determine the terms and conditions of the options and stock purchase rights granted under the plan.

The term of the options granted under the 2001 stock plan is set forth in the option agreement The exercise price for options granted under the 2001 stock plan is determined in the option agreement. However, in the case of options granted to an optionee who owns stock representing more than 10% of the voting power of all classes of voting stock of our company, parent or subsidiaries, the exercise price may be no less than 110% of the fair market value of a share of our common stock at the time of the grant. For all other optionees, the exercise price may not be less than fair market value of our common stock on the date of grant for an incentive stock option and may not be less than 85% of the fair market value on the date of grant for a non-incentive stock option. Generally, options granted under the 2001 stock plan to new service providers vest as to 20% of the shares subject to the option on the first anniversary of the vesting commencement date and as to 1/60 of the shares subject to the option per month thereafter.

To the extent incentive stock options granted to an optionee become exercisable in any calendar year for more than an aggregate fair market value in excess of $100,000 (determined on the date any such option was granted), such options will not be treated as incentive stock options for the amounts in excess of $100,000.

The administrator determines the exercise price of stock purchase rights granted under our 2001 stock plan. However, in the case of stock purchase rights granted to an optionee who owns stock representing more than 10% of the voting power of all classes of voting stock of our company, parent or subsidiaries, the purchase price may be no less than 100% of the fair market value of a share of our common stock at the time of the grant. For all other employees, the exercise price may not be less than 85% of the fair market value of our common stock on the date of grant. Unless the administrator determines otherwise, the restricted stock purchase agreement will grant us a repurchase option that we may exercise upon the voluntary or involuntary termination of the purchaser’s service with us for any reason (including death or disability). The purchase price for shares we repurchase will generally be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to us. The administrator determines the rate at which our repurchase option will lapse, provided that for stock purchase rights granted to service providers other than officers, directors and consultants, the repurchase right must lapse as to 20% of the shares subject to the award each year from the date of grant.

Our 2001 stock plan provides that in the event of our merger with or into another corporation or our change of control, the successor corporation will assume or substitute each outstanding award. If the outstanding awards are not assumed or substituted, the administrator will provide notice to the optionee that he or she has the right to exercise the award as to all of the shares subject to the award, including shares that would not otherwise be exercisable, for a period of 15 days from the date of notice. The award will terminate upon the expiration of the 15-day period.

Our board of directors adopted our 2004 stock plan in April 2004 and we expect our stockholders to approve it on or before the effective time of this offering. Our 2004 stock plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and our parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, stock purchase rights, restricted stock, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants.

As of April 15, 2004, a total of 3,000,000 shares of our common stock were reserved for issuance pursuant to the 2004 stock plan, of which no awards were issued and outstanding as of that date. The 2004 stock plan became effective on the date our board of directors adopted it. In addition, the shares reserved for issuance under our 2004 stock plan will be increased by the number of shares reserved but unissued under our 2001 stock plan as of the effective date of this offering, any shares returned to the 2001 stock plan as the result of termination of options or the repurchase of shares issued under such plan and annual increases in the number of shares available for issuance on the first day of each fiscal year beginning with January 1, 2005, equal to the lesser of:


	•	5% of the outstanding shares of common stock on the first day of our fiscal year,

	•	6,000,000 shares, or

	•	an amount our board may determine.

Our board of directors or a committee of our board administers our 2004 stock plan. In the case of options intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code, the committee will consist of two or more outside directors within the meaning of Section 162(m) of the Internal Revenue Code. The administrator has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards and the form of consideration, if any, payable upon exercise. The administrator also has the authority to institute an exchange program by which outstanding awards may be surrendered in exchange for awards with a lower exercise price.

The administrator determines the exercise price of options granted under our 2004 stock plan, but with respect to nonstatutory stock options intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code and all incentive stock options, the exercise price must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years, except that with respect to any participant who owns 10% of the voting power of all classes of our outstanding stock, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. The administrator determines the term of all other options.

No optionee may be granted an option to purchase more than 2,250,000 shares in any fiscal year. However, in connection with his or her initial service, an optionee may be granted an additional option to purchase up to 4,500,000 shares.

After termination of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in the option agreement. Generally, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, the option will generally remain exercisable for three months. However, an option generally may not be exercised later than the expiration of its term.

Stock purchase rights, which represent the right to purchase our common stock, may be issued under our 2004 stock plan. The administrator determines the purchase price of stock purchase rights. Unless the administrator determines otherwise, we will retain a repurchase option that we may exercise upon the termination of the purchaser’s service with us for any reason. The administrator determines the rate at which our repurchase option will lapse.

Stock appreciation rights may be granted under our 2004 stock plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant. The administrator determines the terms of stock appreciation rights, including when such rights become exercisable and whether to pay the increased appreciation in cash or with shares of our common stock, or a combination thereof.

Restricted stock may be granted under our 2004 stock plan. Restricted stock awards are shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to any employee. The administrator may impose whatever conditions to vesting it determines to be appropriate. For example, the administrator may set restrictions based on the achievement of specific performance goals. Shares of restricted stock that do not vest are subject to our right of repurchase or forfeiture.

Performance units and performance shares may be granted under our 2004 stock plan. Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator will establish organizational or individual performance goals in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance units and performance shares to be paid out to participants. Performance units shall have an initial dollar value established by the administrator prior to the grant date. Performance shares shall have an initial value equal to the fair market value of our common stock on the grant date.

Our 2004 stock plan also provides for the automatic grant of options to our non-employee directors. Each non-employee director appointed to the board after the completion of this offering will receive an initial option to purchase 45,000 shares upon such appointment. Beginning in 2005, non-employee directors who have been directors for at least six months will receive a subsequent option to purchase 9,000 shares following each annual meeting of our stockholders. Also, beginning in 2005, non-employee directors who are members of the audit committee or compensation committee who have been members of such committee for at least six months will receive a subsequent option to purchase 3,000 shares following each annual meeting of our stockholders for each such committee upon which they serve, provided that the chairman of the audit committee and the chairman of the compensation committee will instead receive a subsequent option to purchase 4,500 shares. All such options shall have an exercise price equal to fair market value on the date of grant. Each initial option becomes exercisable as to one-third of the shares on each anniversary of the date of the grant, provided the non-employee director remains a service provider on such dates. Each subsequent option becomes exercisable as to all of the shares subject to the subsequent option on the one-year anniversary of the date of grant, provided the non-employee director remains a service provider on such date. In addition, upon the effective date of this offering, each nonemployee director will receive options for a number of shares equal to the number of shares granted to directors and audit and compensation committee members, with respect to the committees upon which the nonemployee director is then serving, at each annual meeting of stockholders, provided that the exercise price per share for each grant shall be equal to the price of our common stock in this offering. These options will also become exercisable as to all of the shares subject to the options on the one year anniversary of the date of grant.

Our 2004 stock plan generally does not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.

Our 2004 stock plan provides that in the event of our change of control, the successor corporation will assume or substitute an equivalent award for each outstanding award. If there is no assumption or substitution of outstanding awards, the administrator will provide notice to the recipient that he or she has the right to exercise his or her awards as to all of the shares subject to the awards, including shares which would not otherwise be exercisable, for a period of time as the administrator may determine from the date of the notice. The awards will terminate upon the expiration of such period. In addition, all restrictions and rights of repurchase on restricted stock will lapse and, with respect to performance awards all performance goals will be deemed achieved at target levels, and all other terms and conditions met in the event of a change of control and these awards are not assumed. In the event an outside director is terminated on or

Our 2004 stock plan will automatically terminate in 2014, unless we terminate it sooner. In addition, our board of directors has the authority to amend, suspend or terminate the 2004 stock plan provided such action does not impair the rights of any participant.

In 2001, we adopted the Nanosys 401(k) plan, which covers all of our eligible employees who have attained the age of 21 and have completed one month of service with us. The 401(k) plan is intended to qualify under Sections 401(a), 401(m) and 401(k) of the Internal Revenue Code and the 401(k) plan trust is intended to qualify under Section 501(a) of the Internal Revenue Code. All contributions to the 401(k) plan by eligible employees, and the investment earnings thereon, are not taxable to these employees until withdrawn and are 100% vested immediately. Our eligible employees may elect to reduce their current compensation up to the maximum statutorily prescribed annual limit, and to have these salary reductions contributed on their behalf to the 401(k) plan. We have not made any matching contributions to our 401(k) plan.

We have adopted provisions in our certificate of incorporation that will limit the liability of our directors and executive officers for monetary damages for breach of their fiduciary duties to the maximum extent permitted by Delaware law. Under Delaware laws a certificate of incorporation may provide that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except liability for:


	•	any breach of their duty of loyalty to our company or our stockholders;

	•	acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

	•	unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

	•	any transaction from which the director derived an improper personal benefit.

The limits on a director or officer’s liability in our certificate of incorporation will not apply to liabilities arising under the federal securities laws and will not affect the availability of equitable remedies such as injunctive relief or rescission.

Our certificate of incorporation together with our bylaws will provide that we must indemnify our directors and executive officers and may indemnify our other officers and employees and other agents to the fullest extent permitted by law. We believe that indemnification under our bylaws covers at least negligence and gross negligence on the part of indemnified parties. Our bylaws will also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity, regardless of whether our bylaws would otherwise permit indemnification. We believe that the indemnification provisions of our certificate of incorporation and bylaws are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.

We have entered and expect to continue to enter into agreements to indemnify our directors, executive officers and other employees as determined by the board of directors. These agreements provide for indemnification for related expenses including attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these provisions and agreements are necessary to attract and retain qualified persons as our directors and executive officers.

At present we are not aware of any pending litigation or proceeding involving any director, officer, employee or agent of our company in such person’s capacity with our company where indemnification will be required or permitted. We are also not aware of any threatened litigation or proceedings that might result in a claim for indemnification.

The following table sets forth information known to us with respect to the beneficial ownership of our common stock as of March 31, 2004 and as adjusted to reflect the sale of shares of common stock by us in this offering, by the following:


	•	each stockholder known by us to own beneficially more than 5% of our common stock;

	•	each of our executive officers named in the compensation table above;

	•	each of our directors; and

	•	all directors and executive officers as a group.

Except as otherwise noted below, the address is c/o Nanosys, Inc., 2625 Hanover Street, Palo Alto, California 94304.

We have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. Except as otherwise indicated, we believe that the beneficial owners of the common stock listed below, based on the information furnished by these owners, have sole voting power and investment power with respect to these shares, subject to applicable community property laws. We have based our calculation of the percentage of beneficial ownership of 46,710,263 shares of common stock outstanding as of March 31, 2004, after giving effect to the conversion of our outstanding preferred stock, and shares of common stock outstanding upon completion of this offering.

In computing the number of shares of common stock beneficially owned by a person and the percent ownership of that person, we deemed outstanding shares of common stock subject to options held by that person that are currently exercisable within 60 days of March 31, 2004. We did not deem these shares outstanding for purposes of computing the percent ownership of any other person.


	(1)	Represents: (a) 6,302,435 shares held by ARCH Venture Fund V, L.P., (b) 535,619 shares held by Healthcare Focus Fund, L.P. and (c) 38,343 shares held by ARCH V Entrepreneurs Fund, L.P.

	(2)	Represents: (a) 4,720,826 shares held by CW Ventures III, L.P., (b) 825,030 shares held by CW Ventures III — A Co-Investment Fund, L.P. and (c) 794,922 shares held by JP Morgan/ CW Ventures III (Nanosys), L.P.

	(3)	Represents: (a) 6,086,798 shares held by Polaris Venture Partners III, L.P., (b) 158,043 shares held by Polaris Venture Partners Entrepreneurs Fund III, L.P., and (c) 95,937 shares held by Polaris Venture Partners Founders’ Fund III, L.P.

	(4)	Represents: (a) 5,072,623 shares held by Venrock Associates III, L.P., (b) 1,141,340 shares held by Venrock Associates and (c) 126,815 shares held by Venrock Entrepreneurs Fund III, L.P.

	(5)	Represents: (a) 950,000 shares held by The Bock Family Trust and in trust for the benefit of Mr. Bock’s children, of which 934,167 shares are subject to our right of repurchase upon Mr. Bock’s termination as our service provider, (b) 143,750 shares held by the Bock Family Trust, of which 74,271 of the shares remain subject to a repurchase right upon Mr. Bock and CW Group affiliates no longer remaining available to provide services to us, (c) 4,720,826 shares held by CW Ventures III, L.P., (d) 825,030 shares held by CW Ventures III — A Co-Investment Fund, L.P. and (e) 794,922 shares held by JP Morgan/ CW Ventures III (Nanosys), L.P. Mr. Bock disclaims beneficial ownership of the shares held by funds affiliated with CW Group except to the extent of his proportionate partnership interest.

	(6)	Represents 1,735,000 shares held by Mr. Chow, of which 1,130,000 shares are subject to our right of repurchase upon termination of Mr. Chow as a service provider.

	(7)	Represents: (a) 730,000 shares held by Dr. Parce, of which 481,474 shares are subject to our right of repurchase upon termination of Dr. Parce as a service provider and (b) the right to acquire 23,333 shares exercisable within 60 days of March 31, 2004.

	(8)	Represents: (a) 95,324 shares held by Mr. Murphy, of which 14,500 are subject to our right of repurchase upon termination of Mr. Murphy as a service provider, and (b) 20,676 shares underlying options held by Mr. Murphy that are exercisable within 60 days of March 31, 2004.

	(9)	Represents 287,500 shares held by Ms. Vergura, of which 143,500 shares are subject to our right of repurchase upon termination of Ms. Vergura as a service provider.


(10)	Represents: (a) 6,302,435 shares held by ARCH Venture Fund V, L.P., (b) 535,619 shares held by Healthcare Focus Fund, L.P. and (c) 38,343 shares held by ARCH V Entrepreneurs Fund, L.P. Mr. Bybee disclaims beneficial ownership of these shares except to the extent of his proportionate partnership interest.

(11)	Represents: (a) 125,000 shares held by Mr. McKenna, of which 100,000 shares are subject to our right of repurchase upon termination of Mr. McKenna as a service provider and (b) 137,099 shares held by McKenna Ventures L.P. Mr. McKenna disclaims beneficial ownership of the shares held by McKenna Ventures L.P. except to the extent of his proportionate interest.

(12)	Represents: (a) 5,072,623 shares held by Venrock Associates III, L.P., (b) 1,141,340 shares held by Venrock Associates and (c) 126,815 shares held by Venrock Entrepreneurs Fund III, L.P. Dr. Roberts disclaims beneficial ownership of these shares except to the extent of his proportionate partnership interest.

(13)	Represents: 100,000 shares held by Dr. Somekh, all of which are subject to our right of repurchase upon his termination as a service provider.

(14)	Represents: 100,000 shares held by Dr. Yurek, all of which are subject to our right of repurchase upon his termination as a service provider.

(15)	See notes 5 through 14.

In October 2001, we sold 5,499,998 shares of our series A preferred stock at $0.30 per share. In January and February 2002, we sold 12,500,003 shares of our series B preferred stock at $1.20 per share. In April and May 2003 and April 2004, we sold 20,081,927 shares of our series C preferred stock at $1.867 per share. Our series A, series B and series C preferred stock is convertible into shares of our common stock on a one for one basis.

Upon the closing of this offering, all shares of our outstanding preferred stock will be automatically converted into shares of common stock. We have entered into an agreement pursuant to which these and other preferred stockholders will have registration rights with respect to their shares of common stock following this offering. For a description of these registration rights, see “Description of Capital Stock.”

Since our inception, we have from time to time sold shares of our common stock pursuant to option exercises and restricted stock purchase rights at per share prices ranging from $0.001 per share to $1.00 to our directors, officers, founders and consultants, subject to repurchase rights in our favor that lapse over specified periods, usually five years. The repurchase right entitles us to repurchase unvested shares at their original purchase price on termination of a purchaser’s services with us.

Listed below are those persons who participated in the transactions described above who are our executive officers or directors or who beneficially own five percent or more of our securities.


(1)	Represents: (a) 1,242,887 shares of series A preferred stock, 2,589,349 shares of series B preferred stock and 2,470,199 shares of series C preferred stock held by ARCH Venture Fund V, L.P., (b) 535,619 shares of series C preferred stock held by Healthcare Focus Fund, L.P., and


	(c) 7,113 shares of series A preferred stock, 14,818 shares of series B preferred stock, and 16,412 shares of series C preferred stock held by ARCH V Entrepreneurs Fund, L.P.


(2)	Represents: (a) 926,250 shares of series A preferred stock, 1,929,687 shares of series B preferred stock and 1,864,889 shares of series C preferred stock held by CW Ventures III, L.P., (b) 161,875 shares of series A preferred stock, 337,240 shares of series B preferred stock and 325,915 shares of series C preferred stock held by CW Ventures III — A Co-Investment Fund, L.P. and (c) 161,875 shares of series A preferred stock, 337,240 shares of series B preferred stock and 295,807 shares of series C preferred stock held by JP Morgan/ CW Ventures III (Nanosys), L.P.

(3)	Represents: (a) 1,199,931 shares of series A preferred stock, 2,499,857 shares of series B preferred stock and 2,387,010 shares of series C preferred stock held by Polaris Venture Partners III, L.P., (b) 31,156 shares of series A preferred stock, 64,909 shares of series B preferred stock, and 61,978 shares of series C preferred stock held by Polaris Venture Partners Entrepreneurs’ Fund III, L.P. and (c) 18,913 shares of series A preferred stock, 39,401 shares of series B preferred stock, and 37,623 shares of series C preferred stock held by Polaris Venture Partners Founders’ Fund III, L.P.

(4)	Represents: (a) 1,000,000 shares of series A preferred stock, 2,083,334 shares of series B preferred stock and 1,989,289 shares of series C preferred stock held by Venrock Associates III, L.P., (b) 225,000 shares of series A preferred stock, 468,750 shares of series B preferred stock and 447,590 shares of series C preferred stock held by Venrock Associates, and (c) 25,000 shares of series A preferred stock, 52,083 shares of series B preferred stock and 49,732 shares of series C preferred stock held by Venrock Entrepreneurs Fund III, L.P.

(5)	Represents: (a) 893,750 shares of common stock held by the Bock Family Trust, (b) 200,000 shares of common stock held by trusts for the benefit of Mr. Bock’s children, (c) 926,250 shares of series A preferred stock, 1,929,687 shares of series B preferred stock, and 1,864,889 shares of series C preferred stock held by CW Ventures III, L.P., (d) 161,875 shares of series A preferred stock, 337,240 shares of series B preferred stock and 325,915 shares of series C preferred stock held by CW Ventures III — A Co-Investment Fund, L.P. and (e) 161,875 shares of series A preferred stock, 337,240 shares of series B preferred stock and 295,807 shares of series C preferred stock held by JP Morgan/ CW Ventures III (Nanosys), L.P. Mr. Bock disclaims beneficial ownership of the shares held by funds affiliated with CW Group except to the extent of his proportionate partnership interest.

(6)	Represents: (a) 1,735,000 shares of common stock held by Mr. Chow and (b) 265,833 shares of series B preferred stock held in trust for the benefit of Mr. Chow’s children. Mr. Chow disclaims beneficial ownership with respect to the shares held in trust for the benefit of his children.

(7)	Represents: (a) 1,242,887 shares of series A preferred stock, 2,589,349 shares of series B preferred stock and 2,470,199 shares of series C preferred stock held by ARCH Venture Fund V, L.P. (b) 535,619 shares of series C preferred stock held by Healthcare Focus Fund, L.P., and (c) 7,113 shares of series A preferred stock, 14,818 shares of series B preferred stock, and 16,412 shares of series C preferred stock held by ARCH V Entrepreneurs Fund, L.P. Mr. Bybee disclaims beneficial ownership of these shares except to the extent of his proportionate partnership interest.

(8)	Represents: (a) 125,000 shares of common stock held by Mr. McKenna and (b) 83,334 shares of series B preferred stock and 53,765 shares of series C preferred stock held by McKenna Ventures L.P. Mr. McKenna disclaims beneficial ownership of the shares held by McKenna Ventures except to the extent of his proportionate interest.

(9)	Represents: (a) 1,000,000 shares of series A preferred stock, 2,083,334 shares of series B preferred stock and 1,989,289 shares of series C preferred stock held by Venrock Associates III, L.P., (b) 225,000 shares of series A preferred stock, 468,750 shares of series B preferred stock and 447,590 shares of series C preferred stock held by Venrock Associates and (c) 25,000 shares of series A preferred stock, 52,083 shares of series B preferred stock and 49,732 shares of series C


	preferred stock held by Venrock Entrepreneurs Fund III, L.P. Dr. Roberts disclaims beneficial ownership of these shares except to the extent of his proportionate partnership interest.

Since our inception we have issued the following options and restricted stock purchase rights to our current officers and directors under our 2001 stock plan and they have exercised options and stock purchase rights to acquire our common stock as follows:


(1)	Represents a restricted stock purchase right. Such shares purchased by Mr. Bock are subject to our repurchase right upon the termination of Mr. Bock as a service provider that lapses monthly over a five year period beginning February 10, 2004. As of March 31, 2004, 934,167 shares remained subject to our repurchase right.

(2)	Represents the early exercise in full of a non-statutory option pursuant to a restricted stock purchase agreement. Such shares purchased by Mr. Chow are subject to our repurchase right upon the termination of Mr. Chow as a service provider that lapses monthly over a five year period beginning November 12, 2001. As of March 31, 2004, 266,667 shares remained subject to our repurchase right.

(3)	Represents the early exercise in full of a non-statutory option pursuant to a restricted stock purchase agreement. Shares purchased by Mr. Chow were subject to our repurchase right upon the termination of Mr. Chow as a service provider that lapsed according to the achievement by Mr. Chow of annual milestones determined in the discretion of our board of directors. As of March 31, 2004, none of such shares remained such to our repurchase right.

(4)	Represents a restricted stock purchase right. Such shares purchased by Mr. Chow are subject to our repurchase right upon the termination of Mr. Chow as a service provider that lapses monthly over a five year period beginning November 14, 2002. As of March 31, 2004, 370,333 shares remained subject to our repurchase right.


(5)	Represents a restricted stock purchase right. Such shares purchased by Mr. Chow are subject to our repurchase right upon the termination of Mr. Chow as a service provider that lapses monthly over a five year period beginning January 1, 2004. As of March 31, 2004, 493,000 shares remained subject to our repurchase right.

(6)	Represents the early exercise in full of a non-statutory option pursuant to a restricted stock purchase agreement. Such shares purchased by Dr. Parce are subject to our repurchase right upon the termination of Dr. Parce as a service provider that lapses monthly over a five year period beginning January 11, 2002. As of March 31, 2004, 17,000 shares remained subject to our repurchase right.

(7)	Represents a restricted stock purchase right. Such shares purchased by Dr. Parce are subject to our repurchase right upon the termination of Dr. Parce as a service provider that lapses monthly over a five year period beginning June 1, 2002. As of March 31, 2004, 464,474 shares remained subject to our repurchase right.

(8)	Represents incentive stock option. Such option vests as to 1/60th of the shares subject to such option each month over a five year period beginning January 1, 2004. As of March 31, 2004, 338,334 shares remained unvested.

(9)	Represents an incentive stock option that was partially exercised. Such option vested as to 20% of the shares subject to such option one year after April 29, 2002 and continued vesting as to 1/60th of the shares each month thereafter. As of March 31, 2004, 135,667 shares remained unvested.


(10)	Represents an incentive stock option that was partially exercised. Such option vests as to 1/60th of the shares subject to such option each month over a five year period beginning January 1, 2003. As of March 31, 2004, 26,833 shares remained unvested.

(11)	Represents a restricted stock purchase right. Such shares purchased by Mr. Murphy are subject to our repurchase right upon the termination of Mr. Murphy as a service provider that lapses monthly over a five year period beginning January 1, 2004. As of March 31, 2004, 14,500 shares remained subject to our repurchase right.

(12)	Represents the early exercise in full of a non-statutory option pursuant to a restricted stock purchase agreement. Such shares purchased by Ms. Vergura are subject to our repurchase right upon the termination of Ms. Vergura as a service provider that lapses monthly over a five year period beginning December 13, 2001. As of March 31, 2004, 110,000 shares remained subject to our repurchase right.

(13)	Represents a restricted stock purchase right. Such shares purchased by Ms. Vergura are subject to our repurchase right upon the termination of Ms. Vergura as a service provider that lapses monthly over a five year period beginning December 17, 2002. As of March 31, 2004, 26,250 shares remained subject to our repurchase right.

(14)	Represents a restricted stock purchase right. Such shares purchased by Ms. Vergura are subject to our repurchase right upon the termination of Ms. Vergura as a service provider that lapses monthly over a five year period beginning January 1, 2004. As of March 31, 2004, 7,250 shares remained subject to our repurchase right.

(15)	Represents the early exercise in full of a non-statutory option pursuant to a restricted stock purchase agreement. Such shares purchased by Mr. McKenna are subject to our repurchase right upon the termination of Mr. McKenna as a service provider that lapses as to 20% of such shares on each anniversary of April 2, 2002. As of March 31, 2004, 100,000 shares remained subject to our repurchase right.

(16)	Represents a restricted stock purchase right. Such shares purchased by Dr. Somekh are subject to our repurchase right upon the termination of Dr. Somekh as a service provider that lapses as to 20% of such shares on each anniversary of November 18, 2003. As of March 31, 2004, all such shares remained subject to our repurchase right.


(17)	Represents a restricted stock purchase right. Such shares purchased by Mr. Young are subject to our repurchase right upon the termination of Mr. Young as a service provider that lapses as to 20% of such shares on each anniversary of March 18, 2004. As of March 31, 2004, all such shares remained subject to our repurchase right.

(18)	Represents a restricted stock purchase right. Such shares purchased by Dr. Yurek are subject to our repurchase right upon the termination of Dr. Yurek as a service provider that lapses as to 20% of such shares on each anniversary of February 10, 2004. As of March 31, 2004, all such shares remained subject to our repurchase right.

(19)	Represents a restricted stock purchase right. Such shares purchased by Dr. Yurek are subject to our repurchase right upon the termination of Dr. Yurek as a service provider that lapses as to 20% of such shares on each anniversary of March 15, 2004. As of March 31, 2004, all such shares remained subject to our repurchase right.

In connection with the purchase by Dr. J. Wallace Parce of 700,000 shares of our common stock on August 12, 2002, we provided Dr. Parce with a loan, secured by such shares, under a full recourse promissory note dated August 12, 2002, in the amount of $84,000 and an interest rate of 6.0% per annum. Dr. Parce repaid us the principal and interest accrued to date under such promissory note in March 2004.

In connection with the purchase by Calvin Chow of 505,000 shares of our common stock on November 11, 2002, we provided Mr. Chow with a loan, secured by such shares, under a full recourse promissory note dated November 11, 2002, in the amount of $60,600 and an interest rate of 6.0% per annum. Mr. Chow repaid us the principal and interest accrued to date under such promissory note in March 2004.

In March 2004, we entered an agreement with CW Group, Inc., certain entity and individual affiliates of CW Group, Inc. and Mr. Bock. In accordance with the terms of this agreement, we issued 50,000 shares of common stock to each of Charles Hartman, Barry Weinberg and Walter Channing, affiliates of CW Group, Inc., and 950,000 shares of common stock to Mr. Bock. We also granted to CW Group, Inc. board observation rights that terminate upon an initial public offering of our common stock, agreed to discuss with a new entity that could be formed in connection with a potential spin-out transaction of some of our current technology the possibility of such new entity granting CW Group, Inc. the ability to invest in such new entity’s initial venture capital funding, stated our intention to offer Lawrence Bock an offer of employment with us and agreed to reimburse Mr. Bock for COBRA payments in connection with Mr. Bock’s maintenance of health insurance coverage with CW Group, Inc., Mr. Bock’s former employer, and the entity of which Mr. Bock remains a general partner. CW Group, Inc., in turn, agreed to terminate its rights to designate a member of our board of directors pursuant to a voting agreement, the terms of which will terminate upon an initial public offering of our common stock, fully vest Mr. Bock in his interests in CW Group, Inc. and that CW Group, Inc., and its entities, would not have any further rights to cash or equity amounts issued or granted by us to Mr. Bock or otherwise.

On August 17, 2001, Dr. Charles Lieber purchased 550,000 shares of our common stock at a price per share of $0.001. Such shares purchased by Mr. Lieber are subject to our repurchase right upon the termination of Mr. Lieber as a service provider that lapsed as to 5% of such shares on October 3, 2001, with the repurchase right lapsing as to the remaining shares monthly over a five year period beginning October 3, 2001. As of March 31, 2004, 269,964 shares remained subject to our repurchase right. Dr. Lieber is a member of our scientific advisory board, was a holder of more than 5% of our voting securities for a period of time after such purchase, and a member of our board of directors from September 2001 to June 2003.

On August 17, 2001, Dr. Hongkun Park purchased 450,000 shares of our common stock at a price per share of $0.001. Such shares purchased by Dr. Park are subject to our repurchase right upon the termination of Dr. Park as a service provider that lapsed as to 5% of such shares on October 3, 2001, with the repurchase right lapsing as to the remaining shares monthly over a five year period beginning October 3, 2001. As of March 31, 2004, 220,880 shares remained subject to our repurchase right. Dr. Park is a member of our scientific advisory board, and was a holder of more than 5% of our voting securities for a period of time after such purchase.

Dr. Park and Dr. Lieber are professors at Harvard University. As such, Dr. Park and Dr. Lieber may receive compensation from Harvard University in respect of inventions Dr. Park and Dr. Lieber may have assigned to such university, including certain patent rights that we licensed from Harvard University in October 2001 and January 2003. In connection with such licenses, Harvard acquired 160,000 shares of our common stock in October 2001, 20,000 shares of our common stock in February 2003 and 10,000 shares of our common stock in June 2003. In addition to the compensation Dr. Park and Dr. Lieber may receive as described above, Dr. Park and Dr. Lieber may be entitled to receive a portion of such shares of common stock or the proceeds that Harvard University may recognize upon the disposition of such shares.

On September 20, 2001, Dr. A. Paul Alivisatos purchased 385,000 shares of our common stock at a price per share of $0.001. Such shares purchased by Dr. Alivisatos are subject to our repurchase right upon the termination of Dr. Alivisatos as a service provider that lapses monthly over a five year period beginning September 4, 2001. As of March 31, 2004, 192,497 shares remained subject to our repurchase right. Dr. Alivisatos is a member of our scientific advisory board, and was a holder of more than 5% of our voting securities for a period of time after such purchase.

Dr. Alivisatos is head of the Molecular Design Institute and a Director of the Material Science Division at Lawrence Berkeley Laboratories. As such Dr. Alivisatos may receive compensation from Lawrence Berkeley Laboratories in respect of inventions Dr. Alivisatos may have assigned to such institution, including certain patent rights that we licensed from Lawrence Berkeley Laboratories in October 2002.

In March 2002, we entered into a sublease with Optobionics Corporation for certain real property located at our principal offices at 2625 Hanover Street, Palo Alto, California. Our rental payments from Optobionics under this sublease were approximately $24,000 per month. Alan Chow, M.D., is a founder and an executive officer of Optobionics, and is the brother of Calvin Y.H. Chow, our chief executive officer, and Calvin Chow is a member of the board of directors of Optobionics. The sublease terminated in April 2004.

We are authorized to issue 53,500,000 shares of common stock, $0.001 par value. Upon the closing of this offering, we will be authorized to issue 120,000,000 shares of common stock, $0.001 par value, and 10,000,000 shares of undesignated preferred stock, $0.001 par value.

As of March 31, 2004, we had 8,762,240 shares of common stock outstanding that were held of record by approximately 90 stockholders and 37,948,023 shares of preferred stock outstanding that were convertible to 37,948,023 shares of common stock and held of record by approximately 41 persons.

The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably any dividends that may be declared from time to time by the board of directors out of funds legally available for that purpose. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock then outstanding. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable, and the shares of common stock to be issued upon the closing of this offering will be fully paid and nonassessable.

Upon the closing of this offering, our board of directors will have the authority, without action by our stockholders, to designate and issue preferred stock in one or more series. The board of directors may also designate the rights, preferences and privileges of each series of preferred stock, any or all of which may be greater than the rights of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of the common stock until the board of directors determines the specific rights of the holders of the preferred stock. However, these effects might include:


	•	restricting dividends on the common stock;

	•	diluting the voting power of the common stock;

	•	impairing the liquidation rights of the common stock; and

	•	delaying or preventing a change in control of our company without further action by the stockholders.

As of March 31, 2004, we had the following warrants outstanding to purchase a total of 839,335 shares of our capital stock:


	•	75,000 shares of our series B preferred stock at an exercise price of $1.20 per share, terminating in March 2012.

	•	41,250 shares of our series B preferred stock at an exercise price of $1.20 per share, terminating in May 2012.

	•	723,085 shares of our series C preferred stock at an exercise price of $0.001 per share, terminating on the completion of this offering.

Holders of Registration Rights Can Require Us to Register Shares of Our Stock for Resale

The holders of 37,948,023 shares of common stock and 839,335 shares of common stock issuable upon the exercise of warrants or their permitted transferees are entitled to rights with respect to registration of these shares under the Securities Act of 1933, as amended. These rights are provided under the terms of our agreement with the holders of registrable securities. Under these registration rights, holders of the then outstanding registrable securities may require on two occasions that we register their shares for public resale. Each such registration requires the election of the holders of registrable securities holding at least 40% of the registrable securities to register at least 40% of the registrable securities held by such group of electing holders or a lesser percentage with an expected aggregate offering price to the public of at least $5,000,000. Holders of registrable securities may require that we register their shares for public resale on Form S-3 or similar short-form registration, if we are eligible to use Form S-3 or similar short-form registration, and the value of the securities to be registered is at least $1,000,000. In addition, if we elect to register any of our shares of common stock for any public offering, the holders of registrable securities are entitled to include shares of common stock in the registration. We may reduce the number of shares proposed to be registered in view of market conditions. We will pay all expenses in connection with any registration, other than underwriting discounts and commissions. None of the holders of registrable securities may require that we include shares in this offering.

Certain provisions of Delaware law and our certificate of incorporation and bylaws could make the acquisition of our company through a tender offer, a proxy contest or other means more difficult and could make the removal of incumbent officers and directors more difficult. We expect these provisions to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of our company to first negotiate with our board of directors. We believe that the benefits provided by our ability to negotiate with the proponent of an unfriendly or unsolicited proposal outweigh the disadvantages of discouraging these proposals. We believe the negotiation of an unfriendly or unsolicited proposal could result in an improvement of its terms.

We are subject to Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging under certain circumstances, in a “business combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless:


	•	prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

	•	upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are directors and also officers and (b) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

	•	on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.

Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting securities. We expect the

Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides for our board of directors to be divided into three classes serving staggered terms. Approximately one-third of the board of directors will be elected each year. The provision for a classified board could prevent a party who acquires control of a majority of the outstanding voting stock from obtaining control of the board of directors until the second annual stockholders meeting following the date the acquirer obtains the controlling stock interest. The classified board provision could discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company and could increase the likelihood that incumbent directors will retain their positions. Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides that directors may be removed with cause by the affirmative vote of the holders of the outstanding shares of common stock.

Our bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. At an annual meeting, stockholders may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors. Stockholders may also consider a proposal or nomination by a person who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given to our Secretary timely written notice, in proper form, of his or her intention to bring that business before the meeting. The bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting of the stockholders. However, our bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.

Under Delaware law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the certificate of incorporation or the bylaws. Only a majority of our board of directors, the chairman of the board, our chief executive officer or president (in the absence of a chief executive officer) are authorized under our bylaws to call a special meeting of stockholders. Because our stockholders do not have the right to call a special meeting, a stockholder could not force stockholder consideration of a proposal over the opposition of the board of directors by calling a special meeting of stockholders prior to the time as a majority of the board of directors believed or the chief executive officer believed the matter should be considered or until the next annual meeting provided that the requestor met the notice requirements. The restriction on the ability of stockholders to call a special meeting means that a proposal to replace the board could be delayed until the next annual meeting.

Delaware law provides that stockholders may execute an action by written consent in lieu of a stockholder meeting. However, Delaware law also allows us to eliminate stockholder actions by written consent. Elimination of written consents of stockholders may lengthen the amount of time required to take stockholder actions since actions by written consent are not subject to the minimum notice requirement of a stockholder’s meeting. However, we believe that the elimination of stockholders’ written consents may deter hostile takeover attempts. Without the availability of stockholder’s actions by written consent, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a stockholders meeting. The holder would have to obtain the consent of a majority of the board of directors, the chairman of the board or the chief executive officer to call a stockholders’ meeting and satisfy the notice periods determined by the board of directors. Our certificate of

We have applied to have our common stock listed on the Nasdaq National Market for quotation under the symbol “NNSY.”

The transfer agent and registrar for our common stock is EquiServe Trust Company, N.A. and its address is 150 Royall Street, Canton, Massachusetts 02021 and its telephone number is 816-843-4299.

Prior to this offering, there has been no public market for our stock. Future sales of substantial amounts of our common stock in the public market following this offering or the possibility of these sales occurring could adversely affect prevailing market prices for our common stock or could impair our ability to raise capital through an offering of equity securities.

After this offering, we will have outstanding shares of common stock, based upon 46,710,263 shares outstanding as of March 31, 2004, assuming no exercise of outstanding options or warrants after March 31, 2004. All of the shares sold in this offering will be freely tradable without restriction under the Securities Act except for any shares purchased by our affiliates as that term is defined in Rule 144 under the Securities Act. The remaining 46,710,263 shares of common stock held by existing stockholders are restricted shares as that term is defined in Rule 144 under the Securities Act. We issued and sold the restricted shares in private transactions in reliance upon exemptions from registration under the Securities Act. Restricted shares may be sold in the public market only if they are registered under the Securities Act or if they qualify for an exemption from registration, such as the exemptions provided under Rule 144 under the Securities Act, which is summarized below.

Our officers, directors, employees and stockholders, who collectively hold an aggregate of restricted shares, and the underwriters entered into lock-up agreements in connection with this offering. These lock-up agreements provide that, with certain limited exceptions, our officers, directors, certain of our employees, and certain other stockholders have agreed not to offer, sell, contract to sell, grant any option to purchase or otherwise dispose of any of our shares for a period of 180 days after the effective date of this offering. Merrill Lynch may, in its sole discretion and at any time upon prior notice, release all or any portion of the shares subject to these lock-up agreements. We have also entered into an agreement with Merrill Lynch that, with certain exceptions, we will not offer, sell or otherwise dispose of our common stock until 180 days after the date of this prospectus.

Taking into account the lock-up agreements, the number of shares that will be available for sale in the public market under the provisions of Rules 144 and 144(k) will be as follows:

Following the expiration of the initial 180 day lockup period, shares issued upon exercise of options granted by us prior to the completion of this offering will also be available for sale in the public market pursuant to Rule 701 under the Securities Act unless those shares are held by one of our affiliates, directors or officers.

Beginning 181 days after the date of this prospectus, approximately 247,410 additional shares subject to vested options will become available for sale in the public market in reliance on Rule 701 or pursuant to a registration statement on Form S-8.

Our stockholders who acquired the shares of our common stock they hold between July 2001 and April 2004 may resell the shares pursuant to Rule 144 under the Securities Act. Unless the shareholder who acquired shares from us upon exercise of stock options prior to the filing of our registration statement on Form S-8 is currently our officer, director or affiliate, that shareholder will be able to sell all of the shares they acquired as soon as their contractual lockup period expires.

We issued warrants to purchase an aggregate of 839,335 shares of our preferred stock, which will be available for resale in the public market 180 days after the offering, assuming those warrants are net exercised. Warrants exercised for cash will be available for resale in the public market one year from the date of issuance of the shares acquired upon exercise under Rule 144. Holders of these warrants have registration rights.

In addition, after the 180th day after this prospectus, our officers, directors and other affiliates will be eligible to sell shares of our common stock they hold under Rule 144. In general, under Rule 144 as currently in effect, a person, or persons whose shares are required to be aggregated, who has beneficially owned restricted shares for at least one year, including the holding period of any prior owner except an affiliate, would be entitled to sell within any three month period a number of shares that does not exceed the greater of:


	•	one percent of the number of shares of common stock then outstanding, which will equal approximately shares immediately after the offering, or

	•	the average weekly trading volume of our common stock during the four calendar weeks preceding the date on which notice of the sale is filed.

Sales under Rule 144 are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. Under Rule 144(k), a person who is not deemed to have been an affiliate of our company at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years including the holding period of any prior owner except an affiliate, is entitled to sell the shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

Any of our employees or consultants who purchased his or her shares pursuant to a written compensatory plan or contract is entitled to rely on the resale provisions of Rule 701, which permits nonaffiliates to sell their Rule 701 shares without having to comply with the public information, holding period, volume limitation or notice provisions of Rule 144 and permits affiliates to sell their Rule 701 shares without having to comply with the Rule 144 holding period restrictions, in each case commencing 90 days after the date of this prospectus.

We intend to file a registration statement on Form S-8 under the Securities Act to register shares of our common stock that are subject to outstanding options or reserved for issuance under our 2001 stock plan and our 2004 stock plan promptly after the date of this prospectus, thus permitting the resale of these shares by nonaffiliates in the public market without restriction under the Securities Act.

Additionally, subject to limitations in our stockholders agreement, we granted demand registration rights, rights to participate in offerings that we initiate and Form S-3 registration rights to the former holders of our preferred stock and warrants to acquire our preferred stock. See “Description of Capital Stock — Holders of Registration Rights Can Require Us to Register Shares of Our Stock for Resale.”

Merrill Lynch, Pierce, Fenner & Smith Incorporated, Lehman Brothers Inc., CIBC World Markets Corp. and Needham & Company, Inc. are acting as representatives of each of the underwriters named below. Subject to the terms and conditions set forth in a purchase agreement among us and the underwriters, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the number of shares of common stock set forth opposite its name below.

Subject to the terms and conditions set forth in the purchase agreement, the underwriters have agreed, severally and not jointly, to purchase all of the shares sold under the purchase agreement if any of these shares are purchased. If an underwriter defaults, the purchase agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreement may be terminated.

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the purchase agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

The representatives have advised us that they propose initially to offer the shares to the public at the initial public offering price set forth on the cover page of this prospectus and to dealers at that price less a concession not in excess of $ per share. The underwriters may allow, and the dealers may reallow, a discount not in excess of $ per share to other dealers. After the initial public offering, the public offering price, concession and discount may be changed.

The following table shows the initial public offering price, underwriting discount and proceeds before expenses to us. The information assumes either no exercise or full exercise by the underwriters of their overallotment option.

The total expenses of the offering, not including the underwriting discount, are estimated at $ million and are payable by us.

We have granted an option to the underwriters to purchase up to additional shares at the initial public offering price, less the underwriting discount. The underwriters may exercise this option for 30 days from the date of this prospectus solely to cover any overallotments. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the purchase agreement, to purchase a number of additional shares proportionate to that underwriter’s initial amount reflected in the above table.

We, our executive officers and directors and all of our existing security holders have agreed not to sell or transfer any common stock or securities convertible into, exchangeable for exercisable for, or repayable with common stock, for 180 days after the date of this prospectus without first obtaining the written consent of Merrill Lynch. Specifically, we and these other persons have agreed not to directly or indirectly:


	•	offer, pledge, sell or contract to sell any common stock;

	•	sell any option or contract to purchase any common stock;

	•	purchase any option or contract to sell any common stock;

	•	grant any option, right or warrant for the sale of any common stock;

	•	lend or otherwise dispose of or transfer any common stock; or

	•	enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any common stock whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise.

We have applied to have our common stock approved for quotation on the Nasdaq National Market under the symbol “NNSY.”

Before this offering, there has been no public market for our common stock. The initial public offering price was determined through negotiations among us and the representatives. In addition to prevailing market conditions, the factors considered in determining the initial public offering price were:


	•	the valuation multiples of publicly traded companies that the representatives believe to be comparable to us;

	•	our financial information;

	•	the history of, and the prospects for, our past and present operations, and the prospects for, and timing of, our future revenues;

	•	an assessment of our management, our past and present operations, and the prospects for, and timing of, our future revenues;

	•	the present state of our development; or

	•	the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours.

An active trading market for our shares of common stock may not develop. It is also possible that after the offering the shares will not trade in the public market at or above the initial public offering price. The underwriters do not expect to sell more than percent of the shares being offered in this offering to accounts over which they exercise discretionary authority.

Until the distribution of the shares is completed, Securities and Exchange Commission rules may limit the underwriters and selling group members from bidding for and purchasing our common stock. However, the representatives may engage in transactions that stabilize the price of our common stock, such as bids or purchases to peg, fix or maintain that price.

The underwriters may purchase and sell our common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares from the issuer in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. “Naked” short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of shares of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market.

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor any of the representatives make any representation that the representatives will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

In connection with this offering, underwriters and selling group members may engage in passive market making transactions in the common stock on the Nasdaq National Market in accordance with Rule 103 of Regulation M under the Securities Exchange Act of 1934 during a period beginning with the commencement of offers or sales of common stock and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker’s bid, that bid must then be lowered when specified purchase limits are exceeded.

At our request, the underwriters have reserved for sale, at the initial public offering price, up to shares of our common stock offered hereby to be sold to certain partners, employees, officers, directors and other persons associated with us. The number of shares of common stock available for sale to the general public in the offering will be reduced to the extent these persons purchase the reserved shares. Any reserved shares which are not orally confirmed for purchase within one day of the pricing of this offering will be offered by the underwriters to the general public on the same terms as the other shares.

Merrill Lynch will be facilitating internet distribution for this offering to certain of its Internet subscription customers. Merrill Lynch intends to allocate a limited number of shares for sale to its online brokerage customers. An electronic prospectus is available on the web site maintained by Merrill Lynch. Other than the prospectus in electronic format, the information on the Merrill Lynch web site is not part of this prospectus.

The validity of the common stock offered hereby will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation and for the underwriters by Latham & Watkins LLP. Investment partnerships comprised of members and persons associated with Wilson Sonsini Goodrich & Rosati and members of Wilson Sonsini Goodrich & Rosati own shares of our common stock representing less than 1% of our outstanding shares of common stock as of March 31, 2004.

Ernst & Young LLP, independent auditors, have audited our financial statements at December 31, 2002 and 2003, and for the period from inception (July 12, 2001) to December 31, 2001 and for each of the two years in the period ended December 31, 2003, as set forth in their report. We have included our financial statements in the prospectus and elsewhere in the registration statement in reliance on Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.

We have filed with the Securities and Exchange Commission, or SEC, a registration statement on Form S-1 under the Securities Act with respect to the common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules filed as part of the registration statement. For further information with respect to us and our common stock, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, we refer you to the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The reports and other information we file with the SEC can be read and copied at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington D.C. 20549. Copies of these materials can be obtained at prescribed rates from the Public Reference Section of the SEC at the principal offices of the SEC, 450 Fifth Street, N.W., Washington D.C. 20549. You may obtain information regarding the operation of the public reference room by calling 1(800) SEC-0330. The SEC also maintains a web site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Once we undertake this offering, we will become subject to the information and periodic reporting requirements of the Securities Exchange Act and, in accordance therewith, file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information are available for inspection and copying at the SEC’s public reference rooms and the web site of the SEC referred to above. Our Internet address is http://www.nanosysinc.com.

We intend to provide our stockholders with annual reports containing, among other information, financial statements audited by an independent public accounting firm and we intend to make available to our stockholders quarterly reports containing unaudited financial data for the first three quarters of each fiscal year. We also intend to furnish other reports as we may determine or as required by law.

We have audited the accompanying balance sheets of Nanosys, Inc. as of December 31, 2002 and 2003, and the related statements of operations, redeemable convertible preferred stock and stockholders’ deficit and cash flows for the period from inception (July 12, 2001) to December 31, 2001 and for each of the two years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nanosys, Inc. at December 31, 2002 and 2003, and the results of its operations and its cash flows for the period from inception (July 12, 2001) to December 31, 2001 and for each of the two years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States.

STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

Nanosys, Inc. (the “Company”) was incorporated in Delaware on July 12, 2001 and is engaged in the development and commercialization of unique nanotechnology-enabled systems. The Company is developing products based on its core technology that incorporate proprietary, high performance inorganic nanostructures with integrated functionality for multiple industries. The Company is utilizing its technology to develop products in multiple industries such as energy, defense, electronics, life sciences and information technology. In prior years, the Company was considered to be in the development stage for accounting purposes.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying. Actual results could differ from those estimates.

Financial instruments that potentially subject the Company to credit risk consist of investments and accounts receivable to the extent of the amounts recorded on the balance sheets. The Company’s investments are placed with high credit-quality financial institutions and issuers. The Company generally does not require collateral to support the financial instruments subject to credit risk.

The Company performs credit evaluations of its customers and generally does not require collateral. The Company has not recorded material losses due to customer nonpayment.

During 2002 approximately 71% and 29% of the Company’s revenue was derived from two companies. For 2003, the Company derived 53%, 19% and 11% of its revenue from three companies. The Company’s largest customer in 2002 and 2003 was located in Japan. All other customers were located in the United States.

The Company considers all highly liquid investments with a remaining maturity of 90 days or less at the date of purchase to be cash equivalents. Investments in debt securities and marketable equity securities are classified as “available-for-sale”. The Company views its available-for-sale portfolio as available for use in current operations. Accordingly, the Company has classified all investments as current assets, even though the stated maturity may be more than one year beyond the current balance sheet date. Available-for-sale investments are carried at fair value based on quoted market prices, with unrealized gains and losses reported in accumulated other comprehensive income, as a separate component of stockholders’ equity (deficit).

The cost basis of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. This amortization and accretion is included in interest income (expense) and other income, net. Realized gains and losses are also included in interest income (expense) and other income, net. The cost of all securities sold is based on the specific identification method.

Financial instruments consist principally of cash, available-for-sale investments and notes payable. The carrying value of notes payable approximates its fair value, as determined from information obtained from market sources and management estimates.

Revenue consists of revenue from research and development contracts and government grants. The Company recognizes revenue ratably over the research and development period provided that there is persuasive evidence of an arrangement, there are no uncertainties regarding customer acceptance, the sales price is fixed or determinable and collection of the related receivable is probable. Amounts collected or billed prior to satisfying the above revenue recognition criteria are reflected as deferred revenue.

In 2003, in connection with a revenue arrangement with a customer, the Company issued warrants for the purchase of Series C redeemable convertible preferred stock. In accordance with Emerging Issues Task Force (“EITF”) Issue No. 01-9, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products), management estimated the portion of the consideration received from the customer that related to the issuance of the warrants and the portion that related to revenue for the performance of research and development services. The warrants become exercisable by the customer as the customer makes milestone payments to the Company. Until the warrants are fully exercisable, they are subject to remeasurement at fair value. In 2003, the Company received $1.0 million in cash proceeds which were attributed entirely to the value of the warrants. Because the value of the warrant exceeded the estimated total cash proceeds under the arrangement, the Company did not recognize any revenue under the arrangement and therefore recorded $370,000 of stock-based compensation in research and development expense in 2003. Additional expense may be recorded in future periods if the estimated fair value of the warrants increases. The warrants expire if not exercised prior to the closing of the Company’s initial public offering.

Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization is provided using the straight-line method over the estimated useful lives of the related assets. Property and equipment are generally depreciated over a useful life of three years, except leasehold improvements, which are amortized over the term of the lease.

Research and development costs are expensed as incurred. Research and development costs consist of salaries, employee benefits, license fees, and payments to research organizations and professional service providers.

The Company accounts for employee stock options using the intrinsic-value method in accordance with Accounting Principles Board (“APB”) Opinion No. 25, and related interpretations, and has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation. The pro forma net loss disclosure has been determined as if the Company had accounted for its employee stock options under the fair value method of SFAS No. 123. The resulting effect on net loss pursuant to SFAS No. 123 is not likely to be representative of the effects on net loss pursuant to SFAS No. 123 in future years, since future years are likely to include additional grants and the impact of future years’ vesting.

The Company estimates the fair value of stock options using the Black-Scholes model. The following table illustrates the weighted average assumptions for the Black-Scholes model used in determining the fair value of options granted to employees:

The following table illustrates the effect on net loss had the Company applied the fair value provisions of SFAS No. 123 to employee stock compensation (in thousands, except per share amounts):

Comprehensive income (loss) is comprised of net loss and other comprehensive income. Other comprehensive income includes unrealized gains and losses on the Company’s available-for-sale securities.

The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 144, Accounting for Impairment or Disposal of Long Lived Assets. This statement requires that long-lived assets and certain identifiable intangible assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of December 31, 2003, the Company has not identified any impairment of its long-lived assets.

The Company utilizes the liability method of accounting for income taxes as required by SFAS No. 109, Accounting for Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax reporting bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. A valuation allowance is recorded when it is more likely than not that

the deferred tax asset will not be recovered. Currently, there is no provision for income taxes as the Company has incurred operating losses to date.

On March 31, 2004, the Financial Accounting Standards Board (the “FASB”) issued its Exposure Draft, Share-Based Payment, which is a proposed amendment to FASB Statement No. 123, Accounting for Stock-Based Compensation. Generally, the approach in the Exposure Draft is similar to the approach described in Statement 123. However, the Exposure Draft would require all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The FASB expects to issue a final standard late in 2004 that would be effective for our 2005 fiscal year. The pro forma impact of the adoption of Statement 123 on the Company’s historical financial statements is included in the footnotes to the financial statements. The Company expects to continue to grant stock-based compensation to employees and the impact of the adoption of the new standard, when and if issued, may have a material impact on its future results of operations.

As of December 31, 2002, the Company’s cash and cash equivalents of $10,828,000 included deposits in money market investment accounts. The table below outlines the Company’s available-for-sale investments as of December 31, 2003 (in thousands):

There were no material realized gains or losses on sales of available-for-sale investments in any of the periods presented. The amortized cost and estimated fair value of available-for-sale investments in debt securities at December 31, 2003, by contractual maturity, were as follows (in thousands):

In 2002, the Company entered into an equipment line of credit, which provided for up to a maximum of $2,500,000 to finance the purchases of equipment. Borrowings under the equipment line of credit convert to notes payable that are repayable ratably over 36 months, starting in the month following the borrowing. Borrowings outstanding bear interest at a rate of 5% per annum, and are secured by the financed property and equipment of the Company. At December 31, 2003, there was $1,543,000 outstanding under the equipment line of credit, which was secured by related property and equipment. There were no further borrowings available under the equipment line of credit as of December 31, 2003.

In connection with the equipment line of credit, the Company issued warrants to purchase 41,250 shares of Series B redeemable convertible preferred stock to the lender. The warrants are immediately exercisable at an exercise price of $1.20 per share at the option of the holder and expire in 2012. The Company ascribed a fair value of $40,000 to these warrants, as determined by the Black-Scholes option pricing model, using the following assumptions: a ten-year term, volatility of 0.75, no dividend yield and a 4% risk free rate. The Company recorded the fair value of the warrants, and amortized the value into interest expense on a straight-line basis over the commitment period of the equipment line of credit. During 2002 and 2003, the Company recorded $32,000 and $8,000, respectively, of interest expense related to the amortization of these warrants.

Future minimum annual principal payments due under the equipment line of credit are as follows at December 31, 2003 (in thousands):

The Company has several patent license agreements with various institutions for the right of the Company to use certain technology incorporated in the Company’s potential products. The Company can terminate these agreements at anytime, or the agreements expire upon the expiration or abandonment of the related licensed patents. The Company is also obligated to pay specified royalty fees on sales of licensed products, as defined. In the event that the Company does not obtain waivers of any minimum royalty obligation, the following table reflects the Company’s minimum royalties to the institutions (in thousands):

In connection with the execution of a patent license agreement, the Company is obligated to pay a license milestone payment in cash. The amount of the milestone payment will be 70,000 multiplied by the public offering price, which will be payable at various times over twenty-six months after the closing of an initial public offering. The Company is expected to expense this license milestone when and if the milestone is achieved.

The Company leases a facility under an operating lease that expires in December 2005. In connection with entering into the operating lease, the Company issued warrants to purchase 75,000 shares of Series B redeemable convertible preferred stock to the landlord. The warrants are immediately exercisable at an exercise price of $1.20 per share at the option of the holder and expire in 2012. The Company ascribed a fair value of $73,000 to these warrants, as determined by the Black-Scholes option pricing model using the following assumptions: a ten-year term, volatility of 0.75, no dividend yield and a 4% risk free interest rate. The Company recorded the fair value of the warrants and is amortizing the fair value of the warrants into rent expense on a straight-line basis over the term of the operating lease. During the years ended December 31, 2002 and 2003, the Company recorded $16,000 and $19,000 related to the amortization of these warrants.

The Company entered into a sublease agreement with a related party for a portion of its current rented space. The sublease expires in April 2004.

Rent expense for the period from inception to December 31, 2001, and for 2002 and 2003, was $0, $711,000 and $1,194,000, respectively. Total sublease income was $0, $86,000 and $282,000 for the period from inception to December 31, 2001, and for 2002 and 2003, respectively. At December 31, 2003, the minimum future rental payments and sublease income, under operating lease arrangements, were as follows (in thousands):


	The Company has consulting arrangements with members of its scientific advisory board guaranteeing minimum cash payments of $178,000 per year in 2004, 2005 and 2006.

As disclosed in Note 5, the Company has entered into a sublease arrangement that expires in April 2004 with a related party. The related party is a company for which the chief executive officer of Nanosys serves on the Board of Directors. The amount of sublease income recorded under this sublease arrangement was $86,000 and $282,000 in 2002 and 2003, respectively. As security for the sublease, the Company required a security deposit from the subtenant of approximately $23,000 in cash. The security deposit is classified in accrued expenses as a current liability on the balance sheet as of December 31, 2003.

At December 31, 2003, the Company held two full recourse stockholder notes receivable in the amount of $145,000 from two officers in consideration for the exercise of stock options for 1,205,000 shares of common stock. The shares issued are subject to a repurchase agreement under which the shares can be repurchased at the lower of the shares original issuance price or the fair market value of the shares at the date of repurchase. The notes accrue interest at a rate of 6% per annum and are reflected as a reduction of stockholders’ equity. The notes were repaid in full in cash in March 2004.

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, less outstanding shares subject to repurchase. Outstanding shares subject to repurchase are not included in the computation of basic net loss per share until the Company’s time-based repurchase rights have lapsed. The Company has excluded all common stock subject to repurchase by the Company, preferred stock and stock options from the calculation of historical diluted net loss per common share because all such securities are antidilutive for all periods presented. The following table sets forth the common stock equivalents outstanding as of December 31, 2003 that may be included in diluted earnings per share in future periods:

The unaudited pro forma basic and diluted net loss per share calculations assume the conversion of all outstanding shares of redeemable convertible preferred stock into shares of common stock using the as-if-converted method as of the date of issuance.

The redeemable convertible preferred stock is redeemable upon the liquidation or winding up of the Company, a greater than 50% change of control or sale of substantially all of the assets of the Company. As the redemption event is outside the control of the Company, all shares of redeemable convertible preferred stock have been presented outside of permanent equity. Further, the Company has not adjusted the carrying values of the Series A, B, or C redeemable convertible preferred stock to the redemption value of such shares, since it is uncertain whether or when a redemption event will occur. If it becomes certain that the redeemable convertible preferred stock will become redeemable, the amount reclassified from equity will be equal to the fair value of the instrument on the date that the contingent event becomes certain.

The Board of Directors is authorized to determine the rights, preferences and terms of each series of redeemable convertible preferred stock. Collectively, Series A, B and C are referred to as “redeemable convertible preferred stock” and have similar rights and preferences as outlined below (in thousands, except share amounts):

Each series of redeemable convertible preferred stock is convertible at the stockholders’ option at any time on a one-for-one basis, subject to adjustment for antidilution. Conversion is automatic upon the closing of an firm commitment underwritten public offering of common stock registered under the Securities Act of 1933, with aggregate offering proceeds exceeding $30,000,000 and an offering price of at least $5.60 per share (appropriately adjusted for any stock splits, stock dividends, recapitalization, or similar events) or upon agreement of the majority of holders of the outstanding shares.

Holders of the Series A, B and C redeemable convertible preferred stock, in preference to the holders of common stock, are entitled to receive, when and as declared by the Board of Directors, cash dividends at the rate of $0.024, $0.096, and $0.149, respectively, on each outstanding share of redeemable convertible preferred stock. Such dividends are noncumulative. Upon conversion to common stock, the holder is entitled to receive any declared and unpaid dividends on the shares of redeemable convertible preferred stock being converted. No dividends have been declared through December 31, 2003.

In the event of a liquidation or winding up of the Company, holders of the Series A, B and C redeemable convertible preferred stock have a liquidation preference of $0.30, $1.20, and $1.867 per share, respectively, together with any declared but unpaid dividends, over holders of common shares. If the assets of the Company available for distribution are insufficient to pay each holder of the redeemable convertible preferred stock the full amount of the preference payment, then the shareholders are entitled to share ratably in the distribution. After payment of the full liquidation preference of the redeemable convertible preferred stock, the remaining assets of the Company shall be distributed among the holders of the preferred and common stock pro rata based on the number of shares of stock held. The redeemable convertible preferred stockholders’ distribution is limited to 225% of their respective initial investment.

Each share of redeemable convertible preferred stock has voting rights equal to the number of common shares into which the preferred stock is convertible at the record date.

As of December 31, 2003 the Company had issued a total of 116,250 warrants to purchase Series B redeemable convertible preferred stock at $1.20 per share, in connection with an equipment line of credit and an operating lease.

The Company has also issued 723,085 warrants for the purchase of Series C redeemable convertible preferred stock at an exercise price of $0.001 per share in connection with a research and development agreement signed in September 2003. The warrants expire in 2008, or upon the closing of an initial public offering. The warrants become exercisable by the collaborative partner as the collaborative partner makes milestone payments to the Company. In accordance with EITF 01-9, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products), the Company has allocated the portion of the consideration received from the collaborative partner that relates to the issuance of the warrants and the portion that relates to the revenue for the performance of research and development services. Until the warrants are fully exercisable, they are subject to remeasurement at fair value. Because of the increase in the estimated fair value of the Company’s Series C redeemable convertible preferred stock subsequent to September 2003, the amount of consideration allocated to the equity component of this arrangement exceeds the cash consideration received. As a result of this condition, no revenue was recognized for research and development services performed under this collaborative arrangement and $370,000 of additional research and development expense was recorded in 2003. Additional expense may be recorded in future periods until the warrants are fully exercisable if the fair value of the Series C redeemable convertible preferred stock increases further.

Under the 2001 Stock Plan (“the Plan”), as amended, the Company may grant restricted stock, incentive and nonqualified stock options to employees, officers, directors, advisors, scientific advisory board members and consultants of the Company. All option grants are issued at an exercise price equal to 100% of the estimated fair value of common stock, as established by the Board of Directors on the date of grant; provided, however, that an individual who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company shall be granted options with a purchase price of at least 110% of the estimated fair value of the common stock on the date of grant.

Certain options granted under the Plan may be exercisable immediately and all options vest over periods determined by the Board of Directors, generally up to 5 years, and expire no more than 10 years after the date of grant. Stock which is purchased prior to the option vesting is subject to the Company’s

right of repurchase, which lapses over the vesting period. Stock option activity for the period from inception (July 12, 2001) through December 31, 2003 is as follows:

Options presented as exercised in the table above for the year ended December 31, 2003 include the vesting of restricted common stock associated with the early exercise of stock options in previous periods.

The following table summarizes information concerning options outstanding as of December 31, 2003:

The weighted-average fair value of options granted for the period from inception to December 31, 2001 and during 2002 and 2003 was $0.02, $0.06, and $1.87 per share, respectively.

No employee stock compensation expense was reflected in the Company’s reported net loss in any period prior to December 31, 2002, as all options granted had an exercise price equal to the fair value of the underlying common stock on the date of the grant. During 2003, stock options were granted with exercise prices that were at the fair value of the common stock at the date of grant as determined by the Board of Directors. Subsequent to the commencement of the initial public offering process, the Company reevaluated the fair value of its common stock and determined that certain of the stock options granted during 2003 were granted at exercise prices that were below the reassessed fair value of the common stock on the date of grant. Accordingly, deferred stock compensation of $1,107,000 was recorded during 2003 in accordance with APB Opinion No. 25. The deferred compensation will be amortized straight-line over the vesting period of the related awards, generally five years. For 2003 the Company recorded employee stock compensation expense of $74,000.

Stock-based compensation arrangements for nonemployees are accounted for in accordance with SFAS No. 123, as amended by SFAS No. 148, and EITF Issue No. 96-18, Accounting for Equity Instruments that Are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, using a fair value approach. Compensation expense associated with these arrangements is subject to periodic remeasurement over the vesting terms as earned.

During 2002 and 2003, the Company granted options and restricted stock purchase awards of 63,000 shares and 132,000 shares, respectively, to acquire shares of common stock to non-employees. Stock compensation expense of $41,000 and $964,000 was recorded for the years ended December 31, 2002, and 2003, respectively. The deferred compensation expense represented the difference between the fair market value and the exercise price of the common stock options for shares vesting during the period.

The following table illustrates the weighted average assumptions for the Black-Scholes model used in determining the fair value of options granted to nonemployees:

The Company has issued restricted common stock to employees, consultants, officers and directors of the Company. Shares issued pursuant to a restricted stock purchase agreement are subject to repurchase by the Company solely at its option. In the event of termination of services, the Company has the right to repurchase unvested shares at the original purchase price. The restrictions generally lapse over a five year vesting period.

In accordance with EITF Issue No. 00-23, Issues Related to the Accounting for Stock Compensation under APB Opinion No. 25 and FASB Interpretation No. 44, the shares issued pursuant to

the early exercise of stock options or restricted stock purchase awards are not deemed to be issued until those shares vest. Therefore, payments received by the Company for the exercise price of stock options or restricted stock purchase awards that were early-exercised after March 21, 2002 are recorded as a liability for early exercise of stock options and restricted stock purchase awards on the balance sheet, and will be transferred into common stock and additional paid-in capital as the shares vest. A summary of activity related to restricted common stock, excluding restricted shares issued after March 21, 2002, from inception to December 31, 2003 is set forth below:

At December 31, 2003, the Company held two full recourse notes receivable in the amount of $145,000 from two officers in consideration for the exercise of stock options for 1,205,000 shares of common stock. The shares issued are subject to a repurchase agreement under which the shares can be repurchased at the lower of the shares original issuance price or the fair market value of the shares at the date of repurchase. The notes accrue interest at a rate of 6% per annum and are reflected as a reduction of stockholders’ equity. The notes were repaid in full in cash in March 2004.

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock a number of shares sufficient to effect the conversion of all outstanding shares of redeemable convertible preferred stock, plus shares granted and available for grant under the Company’s stock option plans. The Company had reserved shares of common stock for future issuance as of December 31, 2003, as follows:

The Company sponsors an employee benefit plan under Section 401(k) of the Internal Revenue Code. The plan allows employees to make pretax contributions of up to the maximum allowable amount set by the Internal Revenue Service. In addition, the Company may make discretionary contributions to the plan. To date, the Company has not made any contributions to the plan.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands):

Realization of deferred tax assets is dependent upon future taxable income, if any, the amount and timing of which are uncertain. Accordingly, deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $0.3 million, $2.8 million and $3.4 million during the period from inception to December 31, 2001 and 2002 and 2003, respectively.

As of December 31, 2003, the Company had net operating loss carryforwards for federal income tax purposes of approximately $13.9 million which will expire beginning in 2021 and California net operating loss carryforwards of approximately $10.1 million which will expire beginning in 2013. The Company also has federal and California research and development tax credit carryforwards of approximately $295,000 and $279,000 respectively. The federal research tax credits will begin to expire in 2021, and the California research tax credits have no expiration date.

Utilization of the Company’s net operating loss and research tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. Such an annual limitation could result in the expiration of net operating losses and credits before utilization.

The Company has certain agreements with customers and collaborators that contain indemnification provisions. In such provisions, the Company typically agrees to indemnify the customer or collaborator against certain types of third-party claims. The Company would accrue for known indemnification issues if a loss were probable and could be reasonable estimated. The Company would also accrue for estimated incurred but unidentified issues based on historical activity. There was no accrual for or expense related to indemnification issues for any period presented.

In April 2004, the Company’s Board of Directors authorized the filing of a registration statement with the Securities and Exchange Commission in connection with the Company’s proposed initial public offering of its common stock. If the offering is completed upon the terms presently contemplated, all outstanding shares of redeemable convertible preferred stock outstanding as of December 31, 2003 will

automatically convert into 37,948,023 shares of common stock immediately prior to the closing of the proposed offering. Unaudited pro forma stockholders’ equity at December 31, 2003 reflects the automatic conversion of outstanding shares of redeemable convertible preferred stock that would occur upon completion of the offering as if that conversion had happened as of the balance sheet date.

In March 2004, the Board of Directors increased the number of shares of common stock available for future grant under the 2001 Stock Plan by 3,100,000 shares. From January 1 to March 31, 2004, the Company granted employees options and restricted stock purchase awards to acquire 2,520,500 of shares of common stock at a weighted average exercise price of $0.19 per share. As a result, the Company estimates that it will recognize $11.1 million in employee deferred stock compensation that will be amortized to expense over the five-year vesting period. In addition, the Company granted restricted stock purchase awards to purchase a total of 240,000 shares of common stock to nonemployees at a weighted average price of $0.19.

In April 2004, the Company issued 133,905 shares of Series C redeemable convertible preferred stock for $1.867 per share resulting in aggregate net cash proceeds of $250,000. In connection with the proposed initial public offering, the Company will record a deemed dividend, limited to the amount of proceeds of $250,000, based on the difference between the conversion price and the deemed fair value of the common stock on the transaction date.

In April 2004, the Board of Directors adopted the 2004 Stock Plan. The 2004 Stock Plan provides for the grant of incentive and nonstatutory stock options to employees, directors and consultants. As of April 15, 2004, a total of 3,000,000 shares of common stock were reserved for issuance pursuant to the 2004 Stock Plan. In addition, shares reserved under the 2004 Stock Plan will also include (a) shares reserved but unissued under the 2001 Stock Plan as of the effective date of the proposed initial public offering, (b) shares returned to the 2001 Stock Plan as the result of termination of options or the repurchase of shares issued under such plan, and (c) annual increases in the number of shares available for issuance on the first day of each fiscal year beginning on January 1, 2005, equal to the lesser of:


	•	5% of the outstanding shares of common stock on the first day of the Company’s fiscal year.

	•	6,000,000 shares, or

	•	an amount the Company’s board may determine.

Through and including , 2004 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

The following table sets forth the costs and expenses, other than the underwriting discounts, payable by the registrant in connection with the sale of the securities being registered. All amounts are estimates except the SEC registration fee, the NASD filing fee and the Nasdaq/ National Market listing fee.

As permitted by Section 145 of the Delaware General Corporation Law, the registrant’s amended and restated certificate of incorporation includes a provision that eliminates the personal liability of its directors for monetary damages for breach or alleged breach of their duty of care. In addition, as permitted by Section 145 of the Delaware General Corporation Law, the bylaws of the registrant provide that: (1) the registrant is required to indemnify its directors and executive officers and persons serving in these capacities in other business enterprises at the registrant’s request, to the fullest extent permitted by Delaware law, including in those circumstances in which indemnification would otherwise be discretionary; (2) the registrant may, in its discretion, indemnify employees and agents in those circumstances where indemnification is not required by law; (3) the registrant is required to advance expenses, as incurred, to its directors and executive officers in connection with defending a proceeding, except that it is not required to advance expenses to a person against whom the registrant brings a claim for breach of the duty of loyalty, failure to act in good faith, intentional misconduct, knowing violation of law or deriving an improper personal benefit; (4) the rights conferred in the bylaws are not exclusive, and the registrant is authorized to enter into indemnification agreements with its directors, executive officers and employees; and (5) the registrant may not retroactively amend the bylaw provisions in a way that it adverse to our directors, executive officers and employees in these matters.

The registrant’s policy is to enter into indemnification agreements with each of its directors and executive officers that provide the maximum indemnity allowed to directors and executive officers by Section 145 of the Delaware General Corporation Law and the bylaws, as well as certain additional procedural protections. In addition, the indemnification agreements provide that the registrant’s directors and executive officers will be indemnified to the fullest possible extent not prohibited by law against all expenses, including attorney’s fees, and settlement amounts paid or incurred by them in any action or proceeding, including any derivative action by or in the right of the registrant, on account of their services as directors or executive officers of the registrant or as directors or officers of any other company or enterprise when they are serving in these capacities at the request of the registrant. The registrant will not

be obligated pursuant to the indemnification agreements to indemnify or advance expenses to an indemnified party with respect to proceedings or claims initiated by the indemnified party and not by way of defense, except with respect to proceedings specifically authorized by the registrant’s board of directors or brought to enforce a right to indemnification under the indemnification agreement, the registrant’s bylaws or any statute or law. Under the agreements, the registrant is not obligated to indemnify the indemnified party (1) for any expenses incurred by the indemnified party with respect to any proceeding instituted by the indemnified party to enforce or interpret the agreement, if a court of competent jurisdiction determines that each of the material assertions made by the indemnified party in any proceeding was not made in good faith or was frivolous; (2) for any amounts paid in settlement of a proceeding unless the registrant consents to such settlement; (3) with respect to any proceeding brought by the registrant against the indemnified party for willful misconduct, unless a court determines that each of such claims was not made in good faith or was frivolous; (4) on account of any suit in which judgment is rendered against the indemnified party for an accounting of profits made from the purchase or sale by the indemnified party of securities of the registrant pursuant to the provisions of §16(b) of the Securities Exchange Act of 1934, and related laws; (5) on account of the indemnified party’s conduct which is finally adjudged to have been knowingly fraudulent or deliberately dishonest, or to constitute willful misconduct or a knowing violation of the law; (6) an account of any conduct from which the indemnified party derived an improper personal benefit; (7) on account of conduct the indemnified party believed to be contrary to the best interests of the registrant or its stockholders; (8) on account of conduct that constituted a breach of the indemnified party’s duty of loyalty to the registrant or its stockholders; or (9) if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful.

The indemnification provision in the bylaws and the indemnification agreements entered into between the registrant and its directors and executive officers may be sufficiently broad to permit indemnification of the registrant’s officers and directors for liabilities arising under the Securities Act of 1933.

Reference is made to the following documents filed as exhibits to this registration statement regarding relevant indemnification provisions described above and elsewhere herein:

(1) In October 2001, the Registrant sold an aggregate of 5,499,998 shares of its series A preferred stock to investors at a price of $0.30 per share for an aggregate purchase price of $1,649,999.

(2) In January and February 2002, the Registrant sold an aggregate of 12,500,003 shares of its series B preferred stock to investors at a price of $1.20 per share for an aggregate purchase price of $15,000,004.

(3) In April and May 2003 and April 2004, the Registrant sold an aggregate of 20,081,927 shares of its series C preferred stock to investors at a price of $1.867 per share for an aggregate purchase price of $37,492,958.

The sales of the above securities were deemed to be exempt from registration in reliance on Section 4(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving any public offering. All recipients were either accredited or sophisticated investors, as those terms are defined in the Securities Act and the regulations promulgated thereunder. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. All recipients either received adequate information about the Registrant or had access, through employment or other relationships, to such information.

Since inception in July 2001, the Registrant issued an aggregate of 6,102,240 shares of the Registrant’s common stock to employees, consultants and directors pursuant to the exercise of stock options and stock purchase rights under the Registrant’s 2001 Amended Stock Plan, for aggregate consideration of $831,226.

The sales of the above securities were deemed to be exempt from registration in reliance on Rule 701 promulgated under Section 3(b) under the Securities Act as transactions pursuant to a compensatory benefit plan or a written contract relating to compensation.

(1) In August and September 2001, the Registrant sold an aggregate of 2,290,000 shares of common stock at a price of $0.001 per share to certain founders, employees and members of the Registrant’s Scientific Advisory Board for an aggregate purchase price of $2,290.

(2) In October 2001, the Registrant sold an aggregate of 160,000 shares of common stock at a price of $0.001 per share to The President and Fellows of Harvard College in connection with the license of certain patent rights for an aggregate purchase price of $160.

(3) In October 2001, the Registrant issued an aggregate of 100,000 shares of common stock to an individual in connection with a settlement agreement and mutual release with an aggregate value of $100.

(4) In April 2002, the Registrant sold an aggregate of 10,000 shares of common stock at a price of $0.12 per share to Shellwater & Co. (as nominee of the Regents of the University of California) in connection with the license of certain patent rights for an aggregate purchase price of $1,200.

(5) In January 2003, the Registrant sold an aggregate of 20,000 shares of common stock at a price of $0.12 per share to The President and Fellows of Harvard College in connection with the license of certain patent rights for an aggregate purchase price of $2,400.

(6) In April 2003, the Registrant sold an aggregate of 10,000 shares of common stock at a price of $0.15 per share to an individual and WS Investment Company, LLC for an aggregate purchase price of $1,500.

(7) In April 2003, the Registrant sold an aggregate of 50,000 shares of common stock at a price of $0.12 per share to the Massachusetts Institute of Technology in connection with the license of certain patent rights for an aggregate purchase price of $6,000.

(8) In June 2003, the Registrant sold an aggregate of 10,000 shares of common stock at a price of $0.19 per share to The President and Fellows of Harvard College in connection with the license of certain patent rights for an aggregate purchase price of $1,900.

(9) In December 2003, the Registrant sold an aggregate of 10,000 shares of common stock at a price of $0.19 per share to the Trustees of Columbia University in the City of New York in connection with the license of certain patent rights for an aggregate purchase price of $1,900.

The sales of the above securities were deemed to be exempt from registration in reliance on Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering. All recipients were either accredited or sophisticated investors, as those terms are defined in the Securities Act and the regulations promulgated thereunder. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. All recipients either received adequate information about the Registrant or had access, through employment or other relationships, to such information.

a. Exhibits. The following exhibits are included herein or incorporated herein by reference:


†	Pursuant to a request for confidential treatment, portions of the Exhibit have been redacted from the publicly filed document and have been furnished separately to the SEC as required by Rule 406 under the Securities Act.

Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.


	(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

	(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, State of California on April 22, 2004.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints, jointly and severally, Calvin Y. H. Chow and Karen L. Vergura, and each of them, as his or her attorney-in-fact, with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this registration statement (including post-effective amendments), and any and all registration statements filed pursuant to Rule 462 under the Securities Act of 1933, as amended, in connection with or related to the offering contemplated by this registration statement and its amendments, if any, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by his or her said attorney to any and all amendments to said registration statement.

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:


†	Pursuant to a request for confidential treatment, portions of the Exhibit have been redacted from the publicly filed document and have been furnished separately to the SEC as required by Rule 406 under the Securities Act.

EX-3.1 3 f97636orexv3w1.txt EXHIBIT 3.1 EXHIBIT 3.1 CERTIFICATE OF AMENDMENT OF THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF NANOSYS, INC. Calvin Y.H. Chow and Gavin McCraley certify that: 1. They are the Chief Executive Officer and the Assistant Secretary, respectively, of Nanosys, Inc., a Delaware Corporation (the "Corporation"), originally incorporated on July 12, 2001. 2. Article FOUR, Section (C)(4)(a)(iii)(C) of the Third Amended and Restated Certificate of Incorporation, as amended, is hereby amended and restated in its entirety as follows: "(C) shares of the Corporation's capital stock (or related options) issued to employees, officers, directors, consultants, or other persons performing services for the Corporation (including, but not by way of limitation, distributors and sales representatives) (collectively, "Service Providers"), or (at the request of a Service Provider) issued to third parties on behalf of any such Service Provider, pursuant to any stock offering plan or arrangement approved by the Board of Directors;" 3. Article FOUR, Section (D)(2)(a) of the Third Amended and Restated Certificate of Incorporation, as amended, is hereby amended and restated in its entirety as follows: "a. Number of Directors. Except as reduced by Section D.2(c), there shall be eight (8) directors of the Corporation, provided that such number of directors may be increased with the affirmative vote or written consent of the holders of a majority of Common Stock and the holders of a majority of the Preferred Stock (voting on an as-converted basis), each voting as a separate class." IN WITNESS WHEREOF, this Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation, which amends certain provisions of the Third Amended and Restated Certificate of Incorporation, as amended, of the Corporation, having been duly adopted in accordance with the provisions of Sections 228 and 242 of the Delaware General Corporation Law, has been duly executed by its Chief Executive Officer and Assistant Secretary this 17th day of March, 2004. /s/ Calvin Y.H. Chow ----------------------------------------- Calvin Y.H. Chow, Chief Executive Officer /s/ Gavin McCraley ----------------------------------------- Gavin McCraley, Assistant Secretary -2- CERTIFICATE OF AMENDMENT OF THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF NANOSYS, INC. Lawrence A. Bock and Michael J. O'Donnell certify that: 1. They are the President and the Secretary, respectively, of Nanosys, Inc., a Delaware Corporation (the "Corporation") originally incorporated on July 12, 2001. 2. The first paragraph of Article FOUR of the Third Amended and Restated Certificate of Incorporation is hereby amended and restated in its entirety as follows: "FOUR. This Corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares which the Corporation is authorized to issue is Ninety-Three Million Seven Hundred Fifty Thousand (93,750,000), Fifty-Three Million Five Hundred Thousand (53,500,000) of which are designated Common Stock (the "Common Stock") and Forty Million Two Hundred Fifty Thousand (40,250,000) shares of which are designated Preferred Stock (the "Preferred Stock"). Of the Preferred Stock, Five Million Five Hundred Thousand (5,500,000) shares are designated Series A Preferred Stock (the "Series A Preferred"), Thirteen Million (13,000,000) shares are designated Series B Preferred Stock (the "Series B Preferred") and Twenty-One Million Seven Hundred Fifty Thousand (21,750,000) shares are designated Series C Preferred Stock (the "Series C Preferred"). The Preferred Stock shall have a par value of one tenth of one cent ($0.001) per share and the Common Stock shall have a par value of one tenth of one cent ($0.001) per share." IN WITNESS WHEREOF, this Certificate of Amendment of the Third Amended and Restated Certificate of Incorporation, which amends certain provisions of the Third Amended and Restated Certificate of Incorporation of the Corporation, having been duly adopted in accordance with the provisions of Sections 228 and 242 of the Delaware General Corporation Law, has been duly executed by its President and Secretary this 4th day of June, 2003. /s/ Lawrence A. Bock ----------------------------------------- Lawrence A. Bock, President /s/ Michael J. O'Donnell ----------------------------------------- Michael J. O'Donnell, Secretary -2- THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF NANOSYS, INC. Nanosys, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: A. The name of the corporation is Nanosys, Inc. The corporation was originally incorporated under the same name and the date of filing the original Certificate of Incorporation of this corporation with the Secretary of State of the State of Delaware is July 12, 2001. B. Pursuant to sections 242 and 245 of the General Corporation Law of the State of Delaware, this Amended and Restated Certificate of Incorporation amends and restates the provisions of the Certificate of Incorporation of this corporation. C. The Certificate of Incorporation of this corporation is hereby amended and restated to read as follows: ONE. The name of the corporation is Nanosys, Inc. (the "Corporation" or the "Company"). TWO. The address of the registered office of the Corporation in the State of Delaware is the Corporation Trust Company, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801 and the name of the registered agent at that address is The Corporation Trust Company. THREE. The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware. FOUR. This Corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares which the Corporation is authorized to issue is Ninety Million Seven Hundred Fifty Thousand (90,750,000), Fifty-Two Million (52,000,000) shares of which are designated Common Stock (the "Common Stock") and Thirty-Eight Million Seven Hundred and Fifty Thousand (38,750,000) shares of which are designated Preferred Stock (the "Preferred Stock"). Of the Preferred Stock, Five Million Five Hundred Thousand (5,500,000) shares are designated Series A Preferred Stock (the "Series A Preferred"), Thirteen Million (13,000,000) shares are designated Series B Preferred Stock (the "Series B Preferred") and Twenty Million Two Hundred Fifty Thousand (20,250,000) shares are designated Series C Preferred Stock (the "Series C Preferred"). The Preferred Stock shall have a par value of one tenth of one cent ($0.001) per share, and the Common Stock shall have a par value of one tenth of one cent ($0.001) per share. The rights, preferences, privileges and restrictions granted to or imposed upon the Common Stock and the Preferred Stock are as follows: A. Dividends. The holders of the Preferred Stock shall be entitled to receive dividends out of funds legally available therefor, at the annual rates of $0.024, $0.096 and $0.149 per share of Series A Preferred, Series B Preferred or Series C Preferred, respectively, held by them, as adjusted for stock splits, stock dividends, recapitalizations, and similar events, prior and in preference to the declaration or payment of any dividend or other distribution (payable other than in Common Stock) with respect to the Common Stock, when, as and if declared by the Board of Directors. Such dividends shall not be cumulative and no right to such dividends shall accrue to holders of Preferred Stock unless declared by the Board of Directors. No dividends or other distributions shall be made with respect to the Common Stock, other than dividends payable solely in Common Stock, unless (i) dividends shall have been paid or declared and set apart for payment, on account of all shares of Preferred Stock then issued and outstanding, at the aforesaid rates for such calendar year, and (ii) the Corporation shall declare and pay at the same time to each holder of Preferred Stock a dividend equal to the dividend that would have been payable to such holder if the shares of Preferred Stock held by such holder had been converted into Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend. B. Liquidation Preference. 1. Preferred Stock Preference. In the event of any liquidation, dissolution or winding up of the corporation, either voluntary or involuntary (each a "Liquidation Event"), the holders of Series A Preferred, Series B Preferred and Series C Preferred shall be entitled to receive on a pari passu basis and prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of Common Stock by reason of their ownership thereof, the amount of $0.30 (the "Original Series A Issue Price"), $1.20 (the "Original Series B Issue Price") or $1.867 (the "Original Series C Issue Price") per share (each as adjusted for Preferred Stock splits, Preferred Stock dividends, recapitalizations, and similar events relating to the Preferred Stock) for each share of Series A Preferred, Series B Preferred or Series C Preferred then held and, in addition, an amount equal to all declared but unpaid dividends on the Series A Preferred, Series B Preferred or Series C Preferred, as applicable. If the assets and funds thus distributed among the holders of the Series A Preferred, Series B Preferred and Series C Preferred are insufficient to permit the payment to such holders of their full preferential amounts, then the entire assets and funds of the Corporation legally available for distribution shall be distributed among the holders of Series A Preferred, Series B Preferred and Series C Preferred in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Section B(1). No payment shall be made with respect to the Common Stock unless and until full payment has been made to the holders of the Series A Preferred, Series B Preferred and Series C Preferred of the amounts they are entitled to receive under this Section B(1). -2- 2. Remaining Assets. After payment to the holders of the Preferred Stock of the amounts set forth in Section B(1) above, the remaining assets and funds of the Corporation legally available for distribution, if any, to stockholders shall be distributed among the holders of Preferred Stock and Common Stock pro rata and based on the number of shares of Common Stock held by each (assuming conversion of all such Preferred Stock), provided that the maximum distribution that a holder of Preferred Stock may receive pursuant to Sections B(1) and (2) is 225% of the sum of (i) Original Series A Issue Price multiplied by the number of shares of Series A Preferred then held by such holder, (ii) Original Series B Issue Price multiplied by the number of shares of Series B Preferred then held by such holder, and (iii) Original Series C Issue Price multiplied by the number of shares of Series C Preferred then held by such holder. All remaining assets and funds after the maximum distribution to the holders of Series A Preferred, Series B Preferred and Series C Preferred shall be distributed to the holders of Common Stock. 3. Reorganization or Merger. A reorganization, merger or consolidation of the Corporation with or into any other corporation or entity or a sale, conveyance or encumbrance of all or substantially all of the assets of the Corporation, in which transaction or series of related transactions the Corporation's stockholders immediately prior to such transaction own immediately after such transaction less than 50% of the equity securities of the surviving corporation or its parent, shall be deemed to be a Liquidation Event within the meaning of this Section B, unless the holders of two-thirds in voting power of the then outstanding shares of Preferred Stock (voting on an as-converted basis) elect to the contrary; such election to be made by giving written notice thereof to the Corporation at least three days before the effective date of such event. If such notice is given with respect to the Preferred Stock, the provisions of Section C.6(d) shall apply. Unless such election is made with respect to the Preferred Stock, any amounts received by the holders of such Preferred Stock as a result of such merger or consolidation shall be deemed to be applied toward, and all consideration received by the Corporation in such asset sale together with all other available assets of the Corporation shall be distributed toward, the preferred liquidation distributions of the holders of Preferred Stock. 4. Non-Cash Consideration. If any assets of the Corporation distributed to stockholders in connection with any Liquidation Event are other than cash, then the value of such assets shall be their fair market value as determined in good faith by the Board of Directors, except that any securities to be distributed to stockholders in a Liquidation Event shall be valued as follows: a. The method of valuation of securities not subject to investment letter or other similar restrictions on free marketability shall be as follows: (i) if the securities are then traded on a national securities exchange or the Nasdaq National Market (or a similar quotation system), then the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the 30-day period ending three (3) days prior to the distribution; and (ii) if actively traded over-the-counter, then the value shall be deemed to be the average of the closing bid prices over the 30-day period ending three (3) days prior to the distribution; and -3- (iii) if there is no active public market, then the value shall be the fair market value thereof, as determined in good faith by the Board of Directors of the Corporation. b. The method of valuation of securities subject to investment letter or other restrictions on free marketability shall be to make an appropriate discount from the market value determined as above in subsections (a)(i), (ii) or (iii) of this Section B.4 to reflect the approximate fair market value thereof, as determined in good faith by the Board of Directors. 5. Notice and Opportunity to Exercise Conversion Rights. Notwithstanding anything to the contrary that may be inferred from the provisions of this Section B, each holder of Preferred Stock shall be entitled to receive notice from the Corporation of any proposed liquidation, dissolution or winding-up of the Corporation at least ten (10) days prior to the date on which any such liquidation, dissolution or winding-up of the Corporation is scheduled to occur and, at any time prior to any such liquidation, dissolution or winding-up of the Corporation, to convert any or all of such holder's shares of Series A Preferred, Series B Preferred or Series C Preferred into shares of Common Stock pursuant to Section C hereof. C. Conversion. The holders of Preferred Stock shall have conversion rights as follows (the "Conversion Rights"): 1. Right to Convert. Each share of Preferred Stock shall be convertible, at the option of and without the payment of any additional consideration by the holder thereof, at any time into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Issuance Price (as defined below) by the Conversion Price (as defined below) in effect at the time of conversion. The Issuance Prices for the Series A Preferred, Series B Preferred and Series C Preferred shall be $0.30, $1.20 and $1.867, respectively. The Conversion Prices for the Series A Preferred, Series B Preferred and Series C Preferred, shall initially be $0.30, $1.20 and $1.867, respectively, subject to adjustment as provided below. The number of shares of Common Stock into which a share of Series A Preferred, Series B Preferred or Series C Preferred is convertible is hereinafter referred to as the "Conversion Rate" of such series of Preferred Stock, as appropriate. 2. Automatic Conversion. Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the then effective Conversion Rate (i) immediately prior to the closing of a firm commitment underwritten public offering pursuant to an effective registration statement on Form S-1 under the Securities Act of 1933 (the "Act") covering the offer and sale of Common Stock for the account of the Corporation to the public with gross proceeds to the Corporation of more than $30,000,000 and with (a) a price per share of at least $5.60 (as adjusted for stock splits, stock dividends, recapitalizations and similar events), or (b) the election of the holders of at least a majority of the shares of Preferred Stock then outstanding voting on an as-converted basis; or (ii) upon the consent of holders of at least Sixty-Six and Two-Thirds percent (662/3%) of the Preferred Stock then outstanding voting on an as-converted basis. 3. Mechanics of Conversion. Before any holder of Preferred Stock shall be entitled to convert the same into full shares of Common Stock and to receive certificates therefor, -4- such holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Series A Preferred, Series B Preferred or Series C Preferred, and shall give written notice to the Corporation at such office that such holder elects to convert the same; provided, however, that in the event of an automatic conversion pursuant to Section C.2 above, the outstanding shares of Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, and provided further that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Preferred Stock are either delivered to the Corporation or its transfer agent as provided above, or the holder notifies the Corporation or the Corporation's transfer agent that such certificates have been lost, stolen or destroyed and executes an affidavit to such effect, in a form reasonably satisfactory to the Corporation. The Corporation shall, as soon as practicable after such delivery, or such affidavit in the case of a lost certificate, issue and deliver at such office to such holder of Series A Preferred, Series B Preferred or Series C Preferred, a certificate or certificates for the number of shares of Common Stock to which the holder shall be entitled and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Common Stock. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series A Preferred, Series B Preferred or Series C Preferred to be converted, or in the case of automatic conversion in connection with an underwritten public offering, immediately prior to the closing of the offering, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. 4. Adjustments to Conversion Price of Preferred Stock for Dilutive Issues: a. Special Definitions. For purposes of this Section C.4, the following definitions shall apply: (i) "Options" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities. (ii) "Convertible Securities" shall mean any evidences of indebtedness, shares of capital stock (other than the Common Stock) or other securities convertible into or exchangeable for Common Stock. (iii) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section C.4(b), deemed to be issued) by the Corporation, other than: (A) shares of the Corporation's Common Stock issued upon conversion of the Preferred Stock; (B) shares of the Corporation's capital stock issued pursuant to bone fide, arms-length acquisitions, mergers, technology licenses or purchases, -5- corporate partnering agreements or other similar transactions approved by the Board of Directors; (C) shares of the Corporation's capital stock (or related options) issued to employees, officers, directors, consultants, or other persons performing services for the Corporation (including, but not by way of limitation, distributors and sales representatives) pursuant to any stock offering plan or arrangement approved by the Board of Directors; (D) shares of the Corporation's capital stock issued to financial institutions in connection with the extension of credit to the Corporation, or to lessors in connection with the lease of equipment or real property, which issuances are approved by the Board of Directors; (E) shares of the Corporation's Common Stock issued in connection with any stock split, stock dividend, or combination thereof by the Corporation; (F) all shares of Common Stock issued or issuable upon conversion of Convertible Securities issued and outstanding on the date this document is filed with the Delaware Secretary of State; or (G) shares issued in a public offering in which all of the Preferred Stock will be converted. b. Deemed Issue of Additional Shares of Common Stock. (i) Options and Convertible Securities. In the event the Corporation at any time or from time to time after the original issuance date for the Series C Preferred shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto assuming the satisfaction of any conditions to exercisability, including, without limitation, the passage of time and without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section C.4(d) hereof) of such Additional Shares of Common Stock would be less than the Conversion Price for the Series A Preferred, Series B Preferred or Series C Preferred, as applicable, in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and, provided further, that in any such case in which Additional Shares of Common Stock are deemed to be issued: (A) no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities; -6- (B) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Corporation, or in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; (C) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if; (i) in the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were the shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange, and (ii) in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation upon the issue of the Convertible Securities with respect to which such Options were actually exercised; (D) no readjustment pursuant to clause (B) or (C) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (i) the Conversion Price on the original adjustment date, or (ii) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date; and (E) in the case of any Options which expire by their terms not more than 90 days after the date of issue thereof, no adjustment of the Conversion Price shall be made until the expiration or exercise of all such Options. c. Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event this Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section C.4(b)(i)) after the original issuance date for the Series C Preferred without consideration -7- or for consideration per share less than the Conversion Price for the Series A Preferred, Series B Preferred or Series C Preferred, as applicable, in effect on the date of and immediately prior to such issue (a "Dilutive Issuance"), then and in such event, the Conversion Price for the Series A Preferred, Series B Preferred or Series C Preferred, as applicable, shall be reduced, concurrently with such issue, to a price determined by multiplying such Series A Preferred Conversion Price, Series B Preferred Conversion Price or Series C Preferred Conversion Price by a fraction, as applicable, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue (including shares issuable upon conversion of the outstanding Preferred Stock and shares issuable upon exercise, conversion or exchange of Options, convertible securities or warrants for Preferred Stock) plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at such Series A Preferred Conversion Price, Series B Preferred Conversion Price or Series C Preferred Conversion Price, as applicable; and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue (including shares issuable upon conversion of the outstanding Preferred Stock and shares issuable upon exercise, conversion or exchange of Options, convertible securities or warrants for Preferred Stock) plus the number of such Additional Shares of Common Stock so issued. d. Determination of Consideration. For purposes of this Section C.4, the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows: (i) Cash and Property: Such consideration shall: (A) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation. (B) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board of Directors irrespective of any accounting treatment; and (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors. (ii) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section C.4(b), relating to Options and Convertible Securities, shall be determined by dividing: (A) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or -8- exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities by (B) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. 5. Fractional Shares. In lieu of any fractional shares to which the holder of Preferred Stock would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of one share of Series A Preferred, Series B Preferred or Series C Preferred, as applicable, as determined by the Board of Directors of the Corporation. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock of each holder at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion. 6. Adjustment of Conversion Price; Cash Dividends; Merger Consideration. a. The Conversion Price of each share of Series A Preferred, Series B Preferred and Series C Preferred shall be subject to adjustment from time to time as follows: (i) if the number of shares of Common Stock outstanding at any time after the date hereof is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, on the date such payment is made or such change is effective, the Conversion Prices of the Series A Preferred, Series B Preferred and Series C Preferred shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of any shares of Series A Preferred, Series B Preferred and Series C Preferred shall be increased in proportion to such increase of outstanding shares; or (ii) if the number of shares of Common Stock outstanding at any time after the date hereof is decreased by a combination of the outstanding shares of Common Stock, then, on the effective date of such combination, the Conversion Prices of the Series A Preferred, Series B Preferred and Series C Preferred shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of any shares of Series A Preferred, Series B Preferred and Series C Preferred shall be decreased in proportion to such decrease in outstanding shares. b. In case the Corporation shall declare a cash dividend upon its Common Stock payable otherwise than out of retained earnings or shall distribute to holders of its Common Stock shares of its capital stock (other than Common Stock), stock or other securities of other persons, evidences of indebtedness issued by the Corporation or other persons, assets (excluding cash dividends) or options or rights (excluding options to purchase and rights to subscribe for Common Stock or other securities of the Corporation convertible into or exchangeable for Common Stock), then, in each such case, the holders of the Series A Preferred, Series B Preferred and Series C Preferred shall, concurrent with the distribution to holders of Common Stock, receive a like distribution based upon the number of shares of Common Stock into which such Series A Preferred, Series B Preferred and Series C Preferred is then convertible. -9- c. In the event that the Common Stock issuable upon the conversion of the Series A Preferred, Series B Preferred and Series C Preferred shall be changed into the same or a different number of shares of any class or series of stock or other securities or property, whether by capital reorganization, reclassification, recapitalization or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a merger, consolidation, or sale of assets provided for below), then and in each such event the holder of any shares of Preferred Stock shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, recapitalization or other change by the holder of a number of shares of Common Stock equal to the number of shares of Common Stock into which such shares of Preferred Stock might have been converted immediately prior to such reorganization, reclassification, recapitalization or change, all subject to further adjustment as provided herein. d. In the event that the Corporation shall merge or consolidate with or into another entity or sell all or substantially all of its assets, and such consolidation, merger or sale is not treated as a liquidation under Section B.3, each share of Series A Preferred, Series B Preferred and Series C Preferred shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such Series A Preferred, Series B Preferred or Series C Preferred would have been entitled to receive upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section C with respect to the rights and interest thereafter of the holders of shares of such Preferred Stock, to the end that the provisions set forth in this Section C (including provisions with respect to changes in and other adjustments of the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the conversion of such Preferred Stock. The provisions of this Section C.6(d) shall similarly apply to successive reorganizations, reclassification, consolidations, mergers, sales or other dispositions. e. All calculations under Section C.4 and this Section C.6 shall be made to the nearest one hundredth (1/100) of one cent or to the nearest one hundredth (1/100) of a share, as the case may be. 7. Minimal Adjustments. No adjustment in the Conversion Price for the Series A Preferred, Series B Preferred or Series C Preferred need be made if such adjustment would result in a change in the Conversion Price of less than $0.001. Any adjustment of less than $0.001 which is not made shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, on a cumulative basis, amounts to an adjustment of $0.001 or more in the Conversion Price. 8. No Impairment. The Corporation shall not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section C and in the taking of all such action as may be necessary or -10- appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment. This provision shall not restrict the Corporation's right to amend its Certificate of Incorporation with the requisite stockholder consent. 9. Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of any Conversion Rate pursuant to Section C, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series A Preferred, Series B Preferred or Series C Preferred, as applicable, a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon written request at any time from any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) all such adjustments and readjustments, (ii) the applicable Conversion Rates at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such holder's shares of Preferred Stock. 10. Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property or to receive any other right, the Corporation shall mail to each holder of Preferred Stock at least twenty (20) days prior to such record date, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution or right, and the amount and character of such dividend, distribution or right. 11. Notices. Any notice required by the provisions of this Section C.4 to be given to any holder of Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at such holder's address appearing on the Corporation's books. 12. Common Stock Reserved. The Corporation shall reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of the Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the then outstanding shares of Preferred Stock, the Corporation shall promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. 13. Certain Taxes. The Corporation shall pay any issue or transfer taxes payable in connection with the conversion of Preferred Stock, provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer to a name other than that of the holder of the Preferred Stock. 14. Closing of Books. The Corporation shall at no time close its transfer books against the transfer of any Preferred Stock or of any shares of Common Stock issued or -11- issuable upon the conversion of any shares of Preferred Stock in any manner which interferes with the otherwise permissible timely conversion or transfer of such Preferred Stock or Common Stock. 15. Validity of Shares. The Corporation agrees that it will from time to time take all such actions as may be required to assure that all shares of Common Stock which may be issued upon conversion of any Preferred Stock will, upon issuance, be legally and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof. D. Voting Rights. 1. Generally. The holder of each share of Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which each share of such Preferred Stock could be converted on the record date for the vote or written consent of stockholders and, except as otherwise required by law, shall have voting rights and powers equal to the voting rights and powers of the Common Stock. The holder of each share of Preferred Stock shall be entitled to notice of any stockholders' meeting in accordance with the bylaws of the Corporation and shall vote with holders of the Common Stock upon all matters submitted to a vote of stockholders, except with respect to those matters required pursuant to Section E or by law to be submitted to a class or series vote. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares of Common Stock into which shares of Preferred Stock held by each holder could be converted) shall be disregarded. The holder of each share of Common Stock shall have the right to one vote, and shall be entitled to notice of any stockholders' meeting in accordance with the bylaws of the Corporation, and shall be entitled to vote upon such matters and in such manner as may be provided by law. 2. Directors. a. Number of Directors. Except as reduced by Section D.2(c), there shall be seven (7) directors of the Corporation, provided that such number of directors may be increased with the affirmative vote or written consent of the holders of a majority of Common Stock and the holders of a majority of the Preferred Stock (voting on an as-converted basis), each voting as a separate class. b. Election by Class. The directors shall be elected as follows: (i) One director (the "Series B Director") shall be elected by the holders of a majority of the outstanding shares of Series B Preferred voting together as a single class; (ii) Two directors (the "Series A Directors") shall be elected by the holders of a majority of the outstanding shares of Series A Preferred voting together as a single class; -12- (iii) Two directors (the "Common Directors") shall be elected by the holders of a majority of the outstanding shares of Common Stock voting together as a single class; (iv) Any remaining directors (the "Joint Directors") shall be elected by the holders of a majority of the outstanding Common Stock and Preferred Stock voting together as a single class, on an as-converted-to-Common Stock basis. c. Removal of Directors, Reduction of Number of Directors. (i) If at any time there are fewer than 300,000 shares (appropriately adjusted for stock splits, stock dividends, recapitalizations and similar events) of Series B Preferred outstanding (i) the right of the holders of the shares of Series B Preferred to elect the Series B Preferred Director will terminate, (ii) a voting shift shall be effected and the term of office of the Series B Director will automatically terminate, and (iii) the authorized number of directors shall be reduced by one. In addition, the Series B Director may be removed by vote or written consent of a majority of the shares of Series B Preferred then outstanding, voting as a single class. (ii) If at any time there are fewer than 100,000 shares (appropriately adjusted for stock splits, stock dividends, recapitalizations and similar events) of Series A Preferred outstanding (i) the right of the holders of the shares of Series A Preferred to elect Series A Preferred Directors will terminate, (ii) a voting shift shall be effected and the term of office of the Series A Directors will automatically terminate, and (iii) the authorized number of directors shall be reduced by two. In addition, the Series A Directors may be removed by vote or written consent of a majority of the shares of Series A Preferred then outstanding, voting as a single class. (iii) The Common Directors may be removed by vote or written consent of a majority of the shares of Common Stock then outstanding, voting as a single class. (iv) The Joint Directors may be removed by vote or written consent of a majority of the shares of Common Stock and Preferred Stock then outstanding, voting together as a single class on an as-converted-to-Common Stock basis. d. Vacancies. (i) In the event of a vacancy on the Board of Directors created by the resignation, death, or removal of a Series B Director, such vacancy shall be filled: (i) by the Corporation's Board of Directors upon receipt by the Board of Directors of, and in accordance with, written consents specifying the new director to fill such vacancy and signed by the holders of a majority of the shares of the Series B Preferred then outstanding, or (ii) by vote or written consent of the holders of a majority of the Series B Preferred then outstanding. (ii) In the event of a vacancy on the Board of Directors created by the resignation, death, or removal of a Series A Director, such vacancy shall be filled: (i) by the Corporation's Board of Directors upon receipt by the Board of Directors of, and in accordance with, written consents specifying the new director to fill such vacancy and signed by -13- the holders of a majority of the shares of the Series A Preferred then outstanding, or (ii) by vote or written consent of the holders of a majority of the Series A Preferred then outstanding (iii) In the event of a vacancy on the Board of Directors created by the resignation, death, or removal of a Common Director, such vacancy shall be filled: (i) by the Corporation's Board of Directors upon receipt by the Board of Directors of, and in accordance with, a written consent specifying the new director to fill such vacancy and signed by the holders of a majority of the shares of Common Stock then outstanding, or (ii) by vote or written consent of the holders of a majority of the Common Stock then outstanding. (iv) In the event of a vacancy on the Board of Directors created by the resignation, death, or removal of a Joint Director, such vacancy shall be filled: (i) by the Corporation's Board of Directors upon receipt by the Board of Directors of, and in accordance with, a written consent specifying the new director to fill such vacancy and signed by the holders of a majority of the shares of Common Stock and Preferred Stock then outstanding, voting as a single class on an as-converted-to-Common Stock basis, or (ii) by vote or written consent of the holders of a majority of the Common Stock and Preferred Stock then outstanding, voting together as a single class on an as-converted-to-Common Stock basis. e. Committees of Board of Directors. No audit committee or compensation committee of the Board of Directors may include any director who is an officer, employee or consultant of the Corporation; provided, however, that Larry Bock may continue to serve on the compensation committee of the Board of Directors until his successor is duly elected and qualified or until his earlier resignation or removal. f. Right to Call Meetings. In addition to any rights which may be available under the Corporation's Bylaws or otherwise under law, the holders of not less than twenty percent (20%) in voting power of the outstanding Preferred Stock shall be entitled to call meetings of the stockholders of the Corporation. Within five (5) business days after written application by the holders of not less than twenty percent (20%) in voting power of the outstanding Preferred Stock, the President or Secretary, or such other officer of the Corporation as may be authorized in the Bylaws of the Corporation to give notice of meetings of stockholders of the Corporation, shall notify each stockholder of the Corporation entitled to such notice of the date, time, place and purpose of such meeting. No meeting of stockholders called pursuant to this Section D(2) shall take place more than ten (10) days after the date notice of such meeting is given. E. Protective Provisions. In addition to any other rights provided by law, so long as 300,000 shares of Preferred Stock shall be outstanding, this Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of at least Sixty-Six and Two-Thirds percent (66 2/3%) of the then outstanding shares of Preferred Stock voting together as a single class: 1. materially and adversely alter or change the express rights, preferences, privileges or restrictions on the Preferred Stock; -14- 2. increase or decrease the aggregate number of authorized shares of Preferred Stock; 3. authorize or create any series or class of capital stock having rights, preferences or privileges senior to, or pari passu with, the Series A Preferred, Series B Preferred or Series C Preferred; 4. authorize (i) a merger or consolidation after which the stockholders of the Corporation shall own less than a majority of the outstanding voting stock of the surviving corporation or (ii) a sale of all or substantially all of the assets of the Corporation; 5. authorize a liquidation or dissolution of the Corporation; and 6. declare or pay any cash dividend or redeem or repurchase any shares of capital stock of the Corporation (other than redemption or repurchase from terminated employees or service providers pursuant to contractual rights of repurchase or redemption). F. Status of Converted Stock. No shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be cancelled, retired and eliminated from the shares which the Corporation shall be authorized to issue. G. Residual Rights. All rights accruing to the outstanding shares of capital stock not expressly provided for to the contrary herein shall be vested in the Common Stock. FIVE. The Corporation is to have perpetual existence. SIX. In furtherance and not in limitation of the powers conferred by statute, the Bylaws of the Corporation may be altered, amended or repealed by the Board of Directors of the Corporation, with, and only with, the approval of a majority of the directors then in office. SEVEN. The election of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. EIGHT. Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provisions contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation. NINE. The Corporation shall indemnify each person who at any time is, or shall have been, a director or officer of the Corporation and was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement incurred in connection with any such action, suit or proceeding, to the maximum -15- extent permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended. In furtherance of and not in limitation of the foregoing, the Corporation shall advance expenses, including attorneys' fees, incurred by an officer or director of the Corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such advances if it shall be ultimately determined that he is not entitled to be indemnified by the Corporation. The foregoing right of indemnification shall in no way be exclusive of any other rights of indemnification to which any such director or officer may be entitled, under any Bylaw, agreement, vote of directors or stockholders or otherwise. No amendment to or repeal of the provisions of this Article NINE shall deprive a director or officer of the benefit hereof with respect to any act or failure to act occurring prior to such amendment or repeal. TEN. No director of the Corporation shall be personally liable to the Corporation or to any of its stockholders for monetary damages arising out of such director's breach of his fiduciary duty as a director of the Corporation, except to the extent that the elimination or limitation of such liability is not permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended. No amendment to or repeal of the provisions of this Article TEN shall deprive any director of the Corporation of the benefit hereof with respect to any act or failure to act of such director occurring prior to such amendment or repeal. ELEVEN. Advance notice of new business and stockholder nomination for the election of directors shall be given in the manner and to the extent provided in the Bylaws of the Corporation. TWELVE. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Third Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. A. This Third Amended and Restated Certificate of Incorporation has been duly approved by the Board of Directors of this Corporation. B. This Third Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware. -16- IN WITNESS WHEREOF, Nanosys, Inc. has caused this Third Amended and Restated Certificate of Incorporation to be signed by the President on April 10, 2003. Nanosys, Inc. By: /s/ Lawrence A. Bock ------------------------------- Lawrence A. Bock, President ATTEST: By: /s/ Michael J. O'Donnell -------------------------------- Michael J. O'Donnell, Secretary (Signature Page to Third Amended and Restated Certificate of Incorporation) EX-3.1.1 4 f97636orexv3w1w1.txt EXHIBIT 3.1.1 EXHIBIT 3.1.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION NANOSYS, INC. Nanosys, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: A. The original Certificate of Incorporation of the corporation was filed with the Secretary of State of the State of Delaware on July 12, 2001. B. Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware (the "DGCL"), this Amended and Restated Certificate of Incorporation restates and amends the provisions of the Amended and Restated Certificate of Incorporation of the corporation. C. This Amended and Restated Certificate of Incorporation has been duly approved by the Board of Directors of the corporation in accordance with Sections 242 and 245 of the DGCL. D. This Amended and Restated Certificate of Incorporation has been duly approved by the written consent of the stockholders of the corporation in accordance with Sections 228, 242 and 245 of the DGCL. E. The Certificate of Incorporation of the corporation is hereby amended and restated in its entirety to read as follows: ARTICLE I The name of the corporation is Nanosys, Inc. ARTICLE II The address of the corporation's registered office in the State of Delaware is 30 Old Rudnick Lane, City of Dover, County of Kent 19901. The name of its registered agent at such address is CorpAmerica, Inc. ARTICLE III The purpose of the corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL. ARTICLE IV The corporation shall have authority to issue shares as follows: 120,000,000 shares of Common Stock, par value $0.001 per share. Each share of Common Stock shall entitle the holder thereof to one (1) vote on each matter submitted to a vote at a meeting of stockholders. 10,000,000 shares of Preferred Stock, par value $0.001 per share, which may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors (authority to do so being hereby expressly vested in the Board of Directors). The Board of Directors is further authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of any wholly unissued series of Preferred Stock, including without limitation authority to fix by resolution or resolutions the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any such series, and the number of shares constituting any such series and the designation thereof, or any of the foregoing. The Board of Directors is further authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issuance of shares of such series then outstanding, subject to the powers, preferences and rights, and the qualifications, limitations and restrictions thereof stated in the Certificate of Incorporation or the resolution of the Board of Directors originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series. ARTICLE V The number of directors that constitutes the entire Board of Directors of the corporation shall be determined in the manner set forth in the Bylaws of the corporation. At each annual meeting of stockholders, directors of the corporation shall be elected to hold office until the expiration of the term for which they are elected and until their successors have been duly elected and qualified; except that if any such election shall not be so held, such election shall take place at a stockholders' meeting called and held in accordance with the DGCL. The directors of the corporation shall be divided into three classes as nearly equal in size as is practicable, hereby designated Class I, Class II and Class III. The term of office of the initial Class I directors shall expire at the first regularly-scheduled annual meeting of the stockholders following the effective date of this corporation's initial public offering (the "EFFECTIVE DATE"), the term of office of the initial Class II directors shall expire at the second annual meeting of the stockholders following the Effective Date and the term of office of the initial Class III directors shall expire at the third annual meeting of the stockholders following the Effective Date. At each annual meeting of stockholders, commencing with the first regularly-scheduled annual meeting of stockholders following the Effective Date, each of the successors elected to replace the directors of a Class whose term shall have expired at such annual meeting shall be elected to hold office until the third annual meeting next succeeding his or her election and until his or her respective successor shall have been duly elected and qualified. -2- Notwithstanding the foregoing provisions of this Article, each director shall serve until his or her successor is duly elected and qualified or until his or her death, resignation, or removal. If the number of directors is hereafter changed, any newly created directorships or decrease in directorships shall be so apportioned among the classes as to make all classes as nearly equal in number as is practicable, provided that no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Any director may be removed from office by the stockholders of the corporation only for cause. Vacancies occurring on the Board of Directors for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled only by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy or newly created directorship shall hold office until the next election of the Class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified. ARTICLE VI In furtherance and not in limitation of the powers conferred by statute, the Board of Directors of the corporation is expressly authorized to adopt, amend or repeal the Bylaws of the corporation. ARTICLE VII The election of directors need not be by written ballot unless the Bylaws of the corporation shall so provide. ARTICLE VIII No action shall be taken by the stockholders of the corporation except at an annual or special meeting of the stockholders called in accordance with the Bylaws, and no action shall be taken by the stockholders by written consent. The affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the then outstanding voting securities of the corporation, voting together as a single class, shall be required for the amendment, repeal or modification of the provisions of Article V, Article VI or Article VIII of this Certificate of Incorporation or Sections 2.1 (Place of Meetings), 2.2 (Annual Meeting), 2.3 (Special Meeting), 2.4 (Advance Notice Procedures; Notice of Stockholders' Meetings), 2.9 (Voting), or 3.2 (Number of Directors) of the corporation's Bylaws. ARTICLE IX The corporation shall indemnify and hold harmless, to the fullest extent permitted by the DGCL as it presently exists or may hereafter be amended, any director or officer of the corporation who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "PROCEEDING") by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, -3- enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding. The corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized by the Board. The corporation shall have the power to indemnify and hold harmless, to the extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the corporation who was or is made or is threatened to be made a party or is otherwise involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding. Neither any amendment nor repeal of this Article IX, nor the adoption of any provision of this corporation's Certificate of Incorporation inconsistent with this Article IX, shall eliminate or reduce the effect of this Article IX in respect of any matter occurring, or any cause of action, suit or claim accruing or arising or that, but for this Article IX, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. ARTICLE X Except as provided in Article IX above, the corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. -4- IN WITNESS WHEREOF, Nanosys, Inc. has caused this Amended and Restated Certificate of Incorporation to be signed by the President and Chief Executive Officer of the corporation on this ____ day of _________ 2004. By: ----------------------------- Calvin Y.H. Chow Chief Executive Officer -5- EX-3.2 5 f97636orexv3w2.txt EXHIBIT 3.2 EXHIBIT 3.2 BYLAWS OF NANOSYS, INC. (A DELAWARE CORPORATION) TABLE OF CONTENT

-i- TABLE OF CONTENT (CONTINUED)

-ii- TABLE OF CONTENT (CONTINUED)

-iii- BYLAWS OF NANOSYS, INC. ARTICLE I CORPORATE OFFICES 1.1 REGISTERED OFFICE The registered office of Nanosys, Inc. (the "Corporation") shall be at Corporation Trust Center, 1209 Orange Street, the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the Corporation at such location is The Corporation Trust Company. 1.2 OTHER OFFICES The Board of Directors may at any time establish other offices at any place or places where the Corporation is qualified to do business. ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 PLACE OF MEETINGS Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the Board of Directors. In the absence of any such designation, stockholders' meetings shall be held at the registered office of the Corporation. 2.2 ANNUAL MEETING The annual meeting of stockholders shall be held each year on a date and at a time designated by the Board of Directors. At the meeting, Directors shall be elected and any other proper business may be transacted. 2.3 SPECIAL MEETING A special meeting of the stockholders may be called, at any time for any purpose or purposes, by the Board of Directors or by such person as may be authorized by the Certificate of Incorporation or the Bylaws. 2.4 NOTICE OF STOCKHOLDERS' MEETINGS All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.5 of these Bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, date, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. 2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. An affidavit of the Secretary or an Assistant Secretary or of the Transfer Agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. 2.6 QUORUM The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed. The affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders; and where a separate vote by class is required, the affirmative vote of the majority of shares of such class present in person or represented by proxy at the meeting shall be the act of such class. 2.7 ADJOURNED MEETING; NOTICE When a meeting is adjourned to another time or place, unless these Bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned -2- meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.8 VOTING The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these Bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements). Except as provided in the last paragraph of this Section 2.8, or as may be otherwise provided in the Certificate of Incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. At a stockholders' meeting at which Directors are to be elected, or at elections held under special circumstances, a stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a number of votes greater than the number of votes which such stockholder normally is entitled to cast). Each holder of stock, or of any class or classes or of a series or series thereof, who elects to cumulate votes shall be entitled to as many votes as equals the number of votes which (absent this provision as to cumulative voting) he would be entitled to cast for the election of Directors with respect to his shares of stock multiplied by the number of Directors to be elected by him, and he may cast all of such votes for a single Director or may distribute them among the number to be voted for, or for any two or more of them, as he may see fit. 2.9 WAIVER OF NOTICE Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the Certificate of Incorporation or these Bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or these Bylaws. 2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING Unless otherwise provided in the Certificate of Incorporation, any action required by this chapter to be taken at any annual or special meeting of stockholders of a corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. -3- Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. If the action which is consented to is such as would have required the filing of a certificate under any section of the General Corporation Law of Delaware if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the General Corporation Law of Delaware. 2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. If the Board of Directors does not so fix a record date: (i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (ii) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed. (iii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. 2.12 PROXIES Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by a written proxy, signed by the stockholder and filed with the Secretary of the Corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder's name is placed on -4- the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder's attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(e) of the General Corporation Law of Delaware. 2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE The Officer who has charge of the stock ledger of a corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. ARTICLE III DIRECTORS 3.1 POWERS Subject to the provisions of the General Corporation Law of Delaware and any limitations in the Certificate of Incorporation or these Bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. 3.2 NUMBER OF DIRECTORS The Board of Directors shall consist of one or more members, the number thereof to be determined from time to time by resolution of the Board of Directors. Directors need not be stockholders. No reduction of the authorized number of Directors shall have the effect of removing any Director before that Director's term of office expires. 3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS Except as provided in Section 3.4 of these Bylaws, Directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Directors need not be stockholders unless so required by the Certificate of Incorporation or these Bylaws, wherein other qualifications for Directors may be prescribed. Each Director, including a Director elected to fill a -5- vacancy, shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Elections of Directors need not be by written ballot. 3.4 RESIGNATION AND VACANCIES Any Director may resign at any time upon written notice to the Corporation. When one or more Directors so resigns and the resignation is effective at a future date, a majority of the Directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each Director so chosen shall hold office as provided in this section in the filling of other vacancies. Unless otherwise provided in the Certificate of Incorporation or these Bylaws: (i) Vacancies and newly created Directorships resulting from any increase in the authorized number of Directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the Directors then in office, although less than a quorum, or by a sole remaining Director. (ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more Directors by the provisions of the Certificate of Incorporation, vacancies and newly created Directorships of such class or classes or series may be filled by a majority of the Directors elected by such class or classes or series thereof then in office, or by a sole remaining Director so elected. If at any time, by reason of death or resignation or other cause, the Corporation should have no Directors in office, then any Officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the Certificate of Incorporation or these Bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware. If, at the time of filling any vacancy or any newly created Directorship, the Directors then in office constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10) percent of the total number of the shares at the time outstanding having the right to vote for such Directors, summarily order an election to be held to fill any such vacancies or newly created Directorships, or to replace the Directors chosen by the Directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable. -6- 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE The Board of Directors of the Corporation may hold meetings, both regular and special, either within or outside the State of Delaware. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. 3.6 FIRST MEETINGS The first meeting of each newly elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected Board of Directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the Directors. 3.7 REGULAR MEETINGS Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board. 3.8 SPECIAL MEETINGS; NOTICE Special meetings of the Board may be called by the President on three (3) days' notice to each Director, either personally or by mail, telegram, telex, or telephone; special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of two (2) Directors unless the Board consists of only one (1) Director, in which case special meetings shall be called by the President or Secretary in like manner and on like notice on the written request of the sole Director. 3.9 QUORUM At all meetings of the Board of Directors, a majority of the authorized number of Directors shall constitute a quorum for the transaction of business and the act of a majority of the Directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation. If a quorum is not present at any meeting of the Board of Directors, then the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. -7- 3.10 WAIVER OF NOTICE Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the Certificate of Incorporation or these Bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Directors, or members of a committee of Directors, need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or these Bylaws. 3.11 ADJOURNED MEETING; NOTICE If a quorum is not present at any meeting of the Board of Directors, then the Directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. 3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board or committee. 3.13 FEES AND COMPENSATION OF DIRECTORS Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the compensation of Directors. 3.14 APPROVAL OF LOANS TO OFFICERS The Corporation may lend money to, or guarantee any obligation of, or otherwise assist any Officer or other employee of the Corporation or of its subsidiary, including any Officer or employee who is a Director of the Corporation or its subsidiary, whenever, in the judgment of the Directors, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the Corporation. Nothing in this section contained shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any statute. -8- 3.15 REMOVAL OF DIRECTORS Unless otherwise restricted by statute, by the Certificate of Incorporation or by these Bylaws, any Director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of Directors. No reduction of the authorized number of Directors shall have the effect of removing any Director prior to the expiration of such Director's term of office. ARTICLE IV COMMITTEES 4.1 COMMITTEES OF DIRECTORS The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, with each committee to consist of one or more of the Directors of the Corporation. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors or in the Bylaws of the Corporation, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) amend the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, (iv) recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or (v) amend the Bylaws of the Corporation; and, unless the Board resolution establishing the committee, the Bylaws or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware. -9- 4.2 COMMITTEE MINUTES Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. 4.3 MEETINGS AND ACTION OF COMMITTEES Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these Bylaws, Section 3.5 (place of meetings and meetings by telephone), Section 3.7 (regular meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of adjournment), and Section 3.12 (action without a meeting), with such changes in the context of those Bylaws as are necessary to substitute the committee and its members for the Board of Directors and its members; provided, however, that the time of regular meetings of committees may also be called by resolution of the Board of Directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board of Directors may adopt rules for the government of any committee not inconsistent with the provisions of these Bylaws. ARTICLE V OFFICERS 5.1 OFFICERS The Officers of the Corporation shall be a President, one or more Vice Presidents, a Secretary, and a Treasurer. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, one or more Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers, and any such other Officers as may be appointed in accordance with the provisions of Section 5.3 of these Bylaws. Any number of offices may be held by the same person. 5.2 ELECTION OF OFFICERS The Officers of the Corporation, except such Officers as may be appointed in accordance with the provisions of Sections 5.3 or 5.5 of these Bylaws, shall be chosen by the Board of Directors, subject to the rights, if any, of an Officer under any contract of employment. 5.3 SUBORDINATE OFFICERS The Board of Directors may appoint, or empower the President to appoint, such other Officers and agents as the business of the Corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these Bylaws or as the Board of Directors may from time to time determine. -10- 5.4 REMOVAL AND RESIGNATION OF OFFICERS Subject to the rights, if any, of an Officer under any contract of employment, any Officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board of Directors at any regular or special meeting of the Board or, except in the case of an Officer chosen by the Board of Directors, by any Officer upon whom such power of removal may be conferred by the Board of Directors. Any Officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the Officer is a party. 5.5 VACANCIES IN OFFICES Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. 5.6 CHAIRMAN OF THE BOARD The Chairman of the Board, if such an Officer be elected, shall, if present, preside at meetings of the Board of Directors and exercise and perform such other powers and duties as may from time to time be assigned to him by the Board of Directors or as may be prescribed by these Bylaws. If there is no President, then the Chairman of the Board shall also be the Chief Executive Officer of the Corporation and shall have the powers and duties prescribed in Section 5.7 of these Bylaws. 5.7 PRESIDENT Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an Officer, the President shall be the Chief Executive Officer of the Corporation and shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and the Officers of the Corporation. He shall preside at all meetings of the stockholders and, in the absence or nonexistence of a Chairman of the Board, at all meetings of the Board of Directors. He shall have the general powers and duties of management usually vested in the office of President of a corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or these Bylaws. 5.8 VICE PRESIDENT In the absence or disability of the President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors or, if not ranked, a Vice President designated by the Board of Directors, shall perform all the duties of the President and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such -11- other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors, these Bylaws, the President or the Chairman of the Board. 5.9 SECRETARY The Secretary shall keep or cause to be kept, at the principal executive office of the Corporation or such other place as the Board of Directors may direct, a book of minutes of all meetings and actions of Directors, committees of Directors, and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at Directors' meetings or committee meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation's Transfer Agent or Registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required to be given by law or by these Bylaws. He shall keep the seal of the Corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by these Bylaws. 5.10 TREASURER The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any Director. The Treasurer shall deposit all money and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the President and Directors, whenever they request it, an account of all of his transactions as Treasurer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these Bylaws. 5.11 ASSISTANT SECRETARY The Assistant Secretary, or, if there is more than one, the Assistant Secretaries in the order determined by the stockholders or Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the Secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such -12- other duties and have such other powers as the Board of Directors or the stockholders may from time to time prescribe. 5.12 ASSISTANT TREASURER The Assistant Treasurer, or, if there is more than one, the Assistant Treasurers, in the order determined by the stockholders or Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors or the stockholders may from time to time prescribe. 5.13 AUTHORITY AND DUTIES OF OFFICERS In addition to the foregoing authority and duties, all Officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated from time to time by the Board of Directors or the stockholders. ARTICLE VI INDEMNITY 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS The Corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its Directors and Officers against expenses (including attorneys' fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the Corporation. For purposes of this Section 6.1, a "Director" or "Officer" of the Corporation includes any person (i) who is or was a Director or Officer of the Corporation, (ii) who is or was serving at the request of the Corporation as a Director or Officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a Director or Officer of a corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation. 6.2 INDEMNIFICATION OF OTHERS The Corporation shall have the power, to the extent and in the manner permitted by the General Corporation Law of Delaware, to indemnify each of its employees and agents (other than Directors and Officers) against expenses (including attorneys' fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the Corporation. For purposes of this Section 6.2, an "employee" or "agent" of the Corporation (other than a Director or Officer) includes any person (i) who is or was an employee or agent of the Corporation, (ii) who is or was serving at the request of the Corporation as an employee or agent of another corporation, partnership, joint -13- venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation. 6.3 INSURANCE The Corporation may purchase and maintain insurance on behalf of any person who is or was a Director, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of the General Corporation Law of Delaware. ARTICLE VII RECORDS AND REPORTS 7.1 MAINTENANCE AND INSPECTION OF RECORDS The Corporation shall, either at its principal executive office or at such place or places as designated by the Board of Directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these Bylaws as amended to date, accounting books, and other records. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation's stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal place of business. The Officer who has charge of the stock ledger of a corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. -14- 7.2 INSPECTION BY DIRECTORS Any Director shall have the right to examine the Corporation's stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his position as a Director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a Director is entitled to the inspection sought. The Court may summarily order the Corporation to permit the Director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper. 7.3 ANNUAL STATEMENT TO STOCKHOLDERS The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the Corporation. 7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS The Chairman of the Board, the President, any Vice President, the Treasurer, the Secretary or Assistant Secretary of this corporation, or any other person authorized by the Board of Directors or the President or a Vice President, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority. ARTICLE VIII GENERAL MATTERS 8.1 CHECKS From time to time, the Board of Directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the Corporation, and only the persons so authorized shall sign or endorse those instruments. 8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS The Board of Directors, except as otherwise provided in these Bylaws, may authorize any Officer or Officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or within the agency power of an Officer, no Officer, agent or employee shall have any power or authority to bind the Corporation -15- by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. 8.3 STOCK CERTIFICATES; PARTLY PAID SHARES The shares of a corporation shall be represented by certificates, provided that the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation by the Chairman or Vice-Chairman of the Board of Directors, or the President or Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any Officer, Transfer Agent or Registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such Officer, Transfer Agent or Registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such Officer, Transfer Agent or Registrar at the date of issue. The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. 8.4 SPECIAL DESIGNATION ON CERTIFICATES If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. -16- 8.5 LOST CERTIFICATES Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. 8.6 CONSTRUCTION; DEFINITIONS Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Delaware General Corporation Law shall govern the construction of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person. 8.7 DIVIDENDS The Directors of the Corporation, subject to any restrictions contained in the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock pursuant to the General Corporation Law of Delaware. Dividends may be paid in cash, in property, or in shares of the Corporation's capital stock. The Directors of the Corporation may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies. 8.8 FISCAL YEAR The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors and may be changed by the Board of Directors. 8.9 SEAL If and when a seal is adopted by the Board of Directors, such seal may be engraved, lithographed, printed, stamped, impressed upon, or affixed to any contract, conveyance, certificate for shares, or other instrument executed by the Corporation. -17- 8.10 TRANSFER OF STOCK Upon surrender to the Corporation or the Transfer Agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books. 8.11 STOCK TRANSFER AGREEMENTS The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of Delaware. 8.12 REGISTERED STOCKHOLDERS The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE IX AMENDMENTS The original or other Bylaws of the Corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the Corporation may, in its Certificate of Incorporation, confer the power to adopt, amend or repeal Bylaws upon the Directors. The fact that such power has been so conferred upon the Directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal Bylaws. ARTICLE X DISSOLUTION If it should be deemed advisable in the judgment of the Board of Directors of the Corporation that the Corporation should be dissolved, the Board, after the adoption of a resolution to that effect by a majority of the whole Board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution. At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the outstanding stock of the Corporation entitled to vote thereon votes for the proposed dissolution, -18- then a certificate stating that the dissolution has been authorized in accordance with the provisions of Section 275 of the General Corporation Law of Delaware and setting forth the names and residences of the Directors and Officers shall be executed, acknowledged, and filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such certificate's becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the Corporation shall be dissolved. Whenever all the stockholders entitled to vote on a dissolution consent in writing, either in person or by duly authorized attorney, to a dissolution, no meeting of Directors or stockholders shall be necessary. The consent shall be filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such consent's becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the Corporation shall be dissolved. If the consent is signed by an attorney, then the original power of attorney or a photocopy thereof shall be attached to and filed with the consent. The consent filed with the Secretary of State shall have attached to it the affidavit of the Secretary or some other Officer of the Corporation stating that the consent has been signed by or on behalf of all the stockholders entitled to vote on a dissolution; in addition, there shall be attached to the consent a certification by the Secretary or some other Officer of the Corporation setting forth the names and residences of the Directors and Officers of the Corporation. ARTICLE XI CUSTODIAN 11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the Corporation is insolvent, to be receivers, of and for the Corporation when: (i) at any meeting held for the election of Directors the stockholders are so divided that they have failed to elect successors to Directors whose terms have expired or would have expired upon qualification of their successors; or (ii) the business of the Corporation is suffering or is threatened with irreparable injury because the Directors are so divided respecting the management of the affairs of the Corporation that the required vote for action by the Board of Directors cannot be obtained and the stockholders are unable to terminate this division; or (iii) the Corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets. -19- 11.2 DUTIES OF CUSTODIAN The custodian shall have all the powers and title of a receiver appointed under Section 291 of the General Corporation Law of Delaware, but the authority of the custodian shall be to continue the business of the Corporation and not to liquidate its affairs and distribute its assets, except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware. -20- CERTIFICATE OF ADOPTION OF BYLAWS OF NANOSYS, INC. Adoption by Incorporator The undersigned person appointed in the Certificate of Incorporation to act as the Incorporator of Nanosys, Inc. hereby adopts the foregoing Bylaws, comprising twenty pages, as the Bylaws of the Corporation. Executed this 12th day of July 2001. /s/ Gavin T. McCraley ------------------------------- Gavin T. McCraley, Incorporator Certificate by Secretary of Adoption by Incorporator The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of Nanosys, Inc. and that the foregoing Bylaws, comprising twenty pages, were adopted as the Bylaws of the Corporation on July 12, 2001, by the person appointed in the Certificate of Incorporation to act as the Incorporator of the Corporation. IN WITNESS WHEREOF, the undersigned has hereunto set her hand and affixed the corporate seal this 12th day of July 2001. /s/ Michael J. O'Donnell ------------------------------- Michael J. O'Donnell, Secretary -21- EX-3.2.1 6 f97636orexv3w2w1.txt EXHIBIT 3.2.1 EXHIBIT 3.2.1 AMENDED AND RESTATED BYLAWS OF NANOSYS, INC. (as amended on [______, 2004] effective as of the closing of the corporation's initial public offering) TABLE OF CONTENTS

-i- TABLE OF CONTENTS (CONTINUED)

-ii- AMENDED AND RESTATED BYLAWS OF NANOSYS, INC. ARTICLE I - CORPORATE OFFICES 1.1 REGISTERED OFFICE. The registered office of Nanosys, Inc. shall be fixed in the corporation's certificate of incorporation, as the same may be amended from time to time. 1.2 OTHER OFFICES. The corporation's Board of directors (the "Board") may at any time establish other offices at any place or places where the corporation is qualified to do business. ARTICLE II - MEETINGS OF STOCKHOLDERS 2.1 PLACE OF MEETINGS. Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the "DGCL"). In the absence of any such designation or determination, stockholders' meetings shall be held at the corporation's principal executive office. 2.2 ANNUAL MEETING. The annual meeting of stockholders shall be held each year. The Board shall designate the date and time of the annual meeting. In the absence of such designation the annual meeting of stockholders shall be held on the second Tuesday of May of each year at 10:00 a.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding business day. At the annual meeting, directors shall be elected and any other proper business may be transacted. 2.3 SPECIAL MEETING. A special meeting of the stockholders may be called at any time by the Board, chairperson of the Board, chief executive officer or president (in the absence of a chief executive officer), but such special meetings may not be called by any other person or persons. No business may be transacted at such special meeting other than the business specified in such notice to stockholders. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held. 2.4 ADVANCE NOTICE PROCEDURES; NOTICE OF STOCKHOLDERS' MEETINGS. (i) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (B) otherwise properly brought before the meeting by or at the direction of the board of directors, or (C) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than one hundred twenty (120) calendar days before the one year anniversary of the date on which the corporation first mailed its proxy statement to stockholders in connection with the previous year's annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date of the prior year's meeting, notice by the stockholder to be timely must be so received not later than the close of business on the later of one hundred twenty (120) calendar days in advance of such annual meeting and ten (10) calendar days following the date on which public announcement of the date of the meeting is first made. A stockholder's notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the corporation that are beneficially owned by the stockholder, (d) any material interest of the stockholder in such business, and (e) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as a proponent to a stockholder proposal. Notwithstanding the foregoing, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholder's meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (i). The chairman of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this paragraph (i), and, if he should so determine, he shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted. (ii) Only persons who are nominated in accordance with the procedures set forth in this paragraph (ii) shall be eligible for election as directors. Nominations of persons for election to the board of directors of the corporation may be made at a meeting of stockholders by or at the direction of the board of directors or by any stockholder of the corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this paragraph (ii). Such nominations, other than those made by or at the direction of the board of directors, shall be made pursuant to timely notice in writing to the secretary of the corporation in accordance with the provisions of paragraph (i) of this Section 2.4. Such stockholder's notice shall set forth (a) as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the corporation that are beneficially owned by such person, (D) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for elections of directors, or is otherwise required, in each case pursuant to Regulation 14A -2- under the 1934 Act (including without limitation such person's written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (b) as to such stockholder giving notice, the information required to be provided pursuant to paragraph (i) of this Section 2.4. At the request of the board of directors, any person nominated by a stockholder for election as a director shall furnish to the secretary of the corporation that information required to be set forth in the stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this paragraph (ii). The chairman of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by these bylaws, and if he should so determine, he shall so declare at the meeting, and the defective nomination shall be disregarded. These provisions shall not prevent the consideration and approval or disapproval at an annual meeting of reports of officers, directors and committees of the board of directors, but in connection therewith no new business shall be acted upon at any such meeting unless stated, filed and received as herein provided. Notwithstanding anything in these bylaws to the contrary, no business brought before a meeting by a stockholder shall be conducted at an annual meeting except in accordance with procedures set forth in this Section 2.4. All notices of meetings of stockholders shall be sent or otherwise given in accordance with either Section 2.5 or Section 8.1 of these bylaws not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. 2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of any meeting of stockholders shall be given: (i) if mailed, when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the corporation's records; or (ii) if electronically transmitted as provided in Section 8.1 of these bylaws. An affidavit of the secretary or an assistant secretary of the corporation or of the transfer agent or any other agent of the corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein. 2.6 QUORUM. The holders of a majority of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed. -3- 2.7 ADJOURNED MEETING; NOTICE. When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place if any thereof, and the means of remote communications if any by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.8 CONDUCT OF BUSINESS. The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business. 2.9 VOTING. The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL. Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. 2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Subject to the rights of the holders of the shares of any series of Preferred Stock or any other class of stock or series thereof having a preference over the Common Stock as dividend or upon liquidation, any action required or permitted to be taken by the stockholders of the corporation must be effected at a duly called annual or special meeting of stockholders of the corporation and may not be effected by any consent in writing by such stockholders. 2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other such action. -4- If the Board does not so fix a record date: (i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (ii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. 2.12 PROXIES. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. 2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the corporation's principal executive office. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. 2.14 INSPECTORS OF ELECTION A written proxy may be in the form of a telegram, cablegram, or other means of electronic transmission which sets forth or is submitted with information from which it can be determined that the telegram, cablegram, or other means of electronic transmission was authorized by the person. -5- Before any meeting of stockholders, the board of directors shall appoint an inspector or inspectors of election to act at the meeting or its adjournment. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the meeting may, and upon the request of any stockholder or a stockholder's proxy shall, appoint a person to fill that vacancy. Such inspectors shall: (i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies; (ii) receive votes, ballots or consents; (iii) hear and determine all challenges and questions in any way arising in connection with the right to vote; (iv) count and tabulate all votes or consents; (v) determine when the polls shall close; (vi) determine the result; and (vii) do any other acts that may be proper to conduct the election or vote with fairness to all stockholders. The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. ARTICLE III - DIRECTORS 3.1 POWERS. Subject to the provisions of the DGCL and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board. 3.2 NUMBER OF DIRECTORS. The authorized number of directors shall be determined from time to time by resolution of the Board, provided the Board shall consist of at least one member. No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires. -6- 3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS. Except as provided in Section 3.4 of these bylaws, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until such director's successor is elected and qualified or until such director's earlier death, resignation or removal. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors. If so provided in the certificate of incorporation, the directors of the corporation shall be divided into three classes. 3.4 RESIGNATION AND VACANCIES. Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies. Unless otherwise provided in the certificate of incorporation or these bylaws, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. If the directors are divided into classes, a person so elected by the directors then in office to fill a vacancy or newly created directorship shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified. If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL. If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable. 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE. The Board may hold meetings, both regular and special, either within or outside the State of Delaware. -7- Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. 3.6 REGULAR MEETINGS. Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board. 3.7 SPECIAL MEETINGS; NOTICE. Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board, the chief executive officer, the president, the secretary or a majority of the authorized number of directors. Notice of the time and place of special meetings shall be: (i) delivered personally by hand, by courier or by telephone; (ii) sent by United States first-class mail, postage prepaid; (iii) sent by facsimile; or (iv) sent by electronic mail, directed to each director at that director's address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the corporation's records. If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least 24 hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the corporation's principal executive office) nor the purpose of the meeting. 3.8 QUORUM. At all meetings of the Board, a majority of the authorized number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. -8- A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting. 3.9 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. 3.10 FEES AND COMPENSATION OF DIRECTORS. Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors. 3.11 APPROVAL OF LOANS TO OFFICERS. The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the Board, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board shall approve, including, without limitation, a pledge of shares of stock of the corporation. 3.12 REMOVAL OF DIRECTORS. Any director may be removed from office by the stockholders of the corporation only for cause. No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office. ARTICLE IV - COMMITTEES 4.1 COMMITTEES OF DIRECTORS. The Board may, by resolution passed by a majority of the authorized number of directors, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and -9- authority of the Board in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the corporation, 4.2 COMMITTEE MINUTES. Each committee shall keep regular minutes of its meetings and report the same to the Board when required. 4.3 MEETINGS AND ACTION OF COMMITTEES. Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of: (i) Section 3.5 (place of meetings and meetings by telephone); (ii) Section 3.6 (regular meetings); (iii) Section 3.7 (special meetings and notice); (iv) Section 3.8 (quorum); (v) Section 7.12 (waiver of notice); and (vi) Section 3.9 (action without a meeting) with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However: (i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee; (ii) special meetings of committees may also be called by resolution of the Board; and (iii) notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws. ARTICLE V - OFFICERS 5.1 OFFICERS. The officers of the corporation shall be a president and a secretary. The corporation may also have, at the discretion of the Board, a chairperson of the Board, a vice chairperson of the Board, a chief executive officer, a chief financial officer or treasurer, one or more vice presidents, one or more assistant vice presidents, one or more -10- assistant treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person. 5.2 APPOINTMENT OF OFFICERS. The Board shall appoint the officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 and 5.5 of these bylaws, subject to the rights, if any, of an officer under any contract of employment. 5.3 SUBORDINATE OFFICERS. The Board may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine. 5.4 REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board. Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. 5.5 VACANCIES IN OFFICES. Any vacancy occurring in any office of the corporation shall be filled by the Board or as provided in Section 5.2. 5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairperson of the Board, the president, any vice president, the treasurer, the secretary or assistant secretary of this corporation, or any other person authorized by the Board or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority. 5.7 AUTHORITY AND DUTIES OF OFFICERS. All officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the Board or the -11- stockholders and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board. ARTICLE VI - RECORDS AND REPORTS 6.1 MAINTENANCE AND INSPECTION OF RECORDS. The corporation shall, either at its principal executive office or at such place or places as designated by the Board, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation's stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent so to act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal executive office. 6.2 INSPECTION BY DIRECTORS. Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper. ARTICLE VII - GENERAL MATTERS 7.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS. The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. 7.2 STOCK CERTIFICATES; PARTLY PAID SHARES. The shares of the corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. -12- Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the Board, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by the chairperson or vice-chairperson of the Board, or the president or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. 7.3 SPECIAL DESIGNATION ON CERTIFICATES. If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 7.4 LOST CERTIFICATES. Except as provided in this Section 7.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or such owner's legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. 7.5 CONSTRUCTION; DEFINITIONS. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the -13- singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person. 7.6 DIVIDENDS. The Board, subject to any restrictions contained in either (i) the DGCL, or (ii) the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the corporation's capital stock. The Board may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies. 7.7 FISCAL YEAR. The fiscal year of the corporation shall be fixed by resolution of the Board and may be changed by the Board. 7.8 SEAL. The corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. 7.9 TRANSFER OF STOCK. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books. 7.10 STOCK TRANSFER AGREEMENTS. The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL. 7.11 REGISTERED STOCKHOLDERS. The corporation: (i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner; (ii) shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and -14- (iii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 7.12 WAIVER OF NOTICE. Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws. ARTICLE VIII - NOTICE BY ELECTRONIC TRANSMISSION 8.1 NOTICE BY ELECTRONIC TRANSMISSION. Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any such consent shall be deemed revoked if: (i) the corporation is unable to deliver by electronic transmission two consecutive notices given by the corporation in accordance with such consent; and (ii) such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice. However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Any notice given pursuant to the preceding paragraph shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; -15- (iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder. An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein. 8.2 DEFINITION OF ELECTRONIC TRANSMISSION. An "electronic transmission" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process. 8.3 INAPPLICABILITY. Notice by a form of electronic transmission shall not apply to Sections 164, 296, 311, 312 or 324 of the DGCL. ARTICLE IX - INDEMNIFICATION 9.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS The corporation shall indemnify and hold harmless, to the fullest extent permitted by the DGCL as it presently exists or may hereafter be amended, any director or officer of the corporation who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "PROCEEDING") by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding. The corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized by the Board. 9.2 INDEMNIFICATION OF OTHERS The corporation shall have the power to indemnify and hold harmless, to the extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the corporation who was or is made or is threatened to be made a party or is otherwise involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding. -16- 9.3 PREPAYMENT OF EXPENSES The corporation shall pay the expenses incurred by any officer or director of the corporation, and may pay the expenses incurred by any employee or agent of the corporation, in defending any Proceeding in advance of its final disposition; provided, however, that the payment of expenses incurred by a person in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article IX or otherwise. 9.4 DETERMINATION; CLAIM If a claim for indemnification or payment of expenses under this Article IX is not paid in full within sixty days after a written claim therefor has been received by the corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law. 9.5 NON-EXCLUSIVITY OF RIGHTS The rights conferred on any person by this Article IX shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the certificate of incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise. 9.6 INSURANCE The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the DGCL. 9.7 OTHER INDEMNIFICATION The corporation's obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise. 9.8 AMENDMENT OR REPEAL Any repeal or modification of the foregoing provisions of this Article IX shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification." -17- ARTICLE X - AMENDMENTS These bylaws may be adopted, amended or repealed by the stockholders entitled to vote. However, the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws. -18- NANOSYS, INC. CERTIFICATE OF AMENDMENT OF BYLAWS The undersigned hereby certifies that he or she is the duly elected, qualified, and acting Secretary or Assistant Secretary of Nanosys, Inc., a Delaware corporation and that the foregoing bylaws, comprising [18] pages, were amended and restated, contingent upon the closing of the corporation's initial public offering, on [______ __, 2004] by the corporation's board of directors. IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this ___ day of __________, 2004. ____________________________ [________] Secretary EX-4.2 7 f97636orexv4w2.txt EXHIBIT 4.2 EXHIBIT 4.2 NANOSYS, INC. SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT APRIL 10, 2003 TABLE OF CONTENTS

-i- TABLE OF CONTENTS (CONTINUED)

-ii- NANOSYS, INC. SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT This Second Amended and Restated Investors' Rights Agreement (this "Agreement") is made as of April 10, 2003, among (i) Nanosys, Inc., a Delaware corporation (the "Company"), and (ii) the persons and entities listed on Exhibit A (collectively, the "Investors", and each individually an "Investor"). WHEREAS, certain Investors (the "Prior Investors") own (i) outstanding shares of the Company's Series A Preferred Stock, $0.001 par value per share ("Series A Preferred Stock"); and/or (ii) outstanding shares of the Company's Series B Preferred Stock, $0.001 per value per share ("Series B Preferred Stock," along with the Series A Preferred Stock, collectively, the "Prior Preferred"); WHEREAS, the Company and the Prior Investors are parties to an Amended and Restated Investors' Rights Agreement, dated as of January 18, 2002 (the "Original Agreement"); WHEREAS, certain Investors desire to purchase shares of the Company's Series C Preferred Stock, $0.001 par value per share ("Series C Preferred Stock"; and together with the Prior Preferred, the "Preferred Stock") pursuant to a Series C Preferred Stock Purchase Agreement of even date herewith (the "Series C Purchase Agreement"); WHEREAS, it is a condition to the closing of the sale of Series C Preferred Stock that, pursuant to the requirements of Section 4.2 of the Original Agreement, the requisite parties to the Original Agreement amend and restate the Original Agreement by entering into this Agreement or by executing a written consent to amend and restate the Original Agreement (a "Consent"); WHEREAS, the undersigned Prior Investors, and any Prior Investors executing any Consent, desire to amend and restate in its entirety the Original Agreement and to accept the rights and obligations created pursuant hereto in lieu of their rights and obligations under the Original Agreement; and WHEREAS, this amendment and restatement of the Original Agreement shall become effective, pursuant to the requirements of Section 4.2 of the Original Agreement, upon the execution of this Agreement and/or a Consent by the Company and the Prior Investors holding at least a majority of the Registrable Securities, as defined in the Original Agreement. NOW, THEREFORE, in consideration of these mutual promises and covenants set forth herein, the parties hereto agree to the terms and conditions set forth below: 1. Information and Other Rights. 1.1 Financial Statements. So long as an Investor and its affiliates hold at least 250,000 shares of Preferred Stock (or Common Stock issued or issuable upon conversion of the Preferred Stock, or a combination thereof), the Company shall provide to each Investor: (a) as soon as practicable after the end of each fiscal year, and in any event within 90 days thereafter, an audited consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of such fiscal year, and audited consolidated statements of income, stockholders' equity and cash flows of the Company and its subsidiaries, if any, for such year, prepared in accordance with generally accepted accounting principles ("GAAP") and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and all certified by a nationally recognized public accounting firm. (b) as soon as practicable after the end of each quarter and in any event within 30 days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such quarter, and consolidated statements of income, stockholders' equity and cash flows of the Company and its subsidiaries for such period and for the then current fiscal year to date, and setting forth in each case in comparative form the figures for corresponding periods in the previous fiscal year, and setting forth in comparative form the budgeted figures for such period and for the then current fiscal year then reported, prepared in accordance with GAAP consistently applied with prior practice for earlier periods (with the exception of footnotes that may be required by GAAP and provided that the foregoing shall not restrict the right of the Company to change its accounting principles consistent with GAAP, if the Board of Directors of the Company (the "Board of Directors") determines that it is in the best interest of the Company to do so), subject to changes resulting from year-end audit adjustments, all in reasonable detail and signed by the principal financial or accounting officer of the Company. (c) within thirty (30) days of the end of each month, an unaudited consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of such month and consolidated statements of income and cash flows for the end of such month, in reasonable detail, and setting forth in each case in comparative form the figures for corresponding periods in the previous fiscal year, and setting forth in comparative form the budgeted figures for such period and for the then current fiscal year then reported, prepared in accordance with GAAP consistently applied with prior practice for earlier periods (with the exception of footnotes that may be required by GAAP and, provided that, the foregoing shall not restrict the right of the Company to change its accounting principles consistent with GAAP, if the Board of Directors determines that it is in the best interest of the Company to do so), subject to changes resulting from year-end audit adjustments, all in reasonable detail and signed by the principal financial or accounting officer of the Company. (d) as soon as practicable, but in any event not less than thirty (30) days prior to the end of each fiscal year, a budget for the next fiscal year, prepared on a monthly basis, including balance sheets and sources and applications of funds statements for such months, and with reasonable promptness after preparation, any other budgets or revised budgets prepared by the Company; and (e) with reasonable promptness, such other information and data as such Investor may from time to time reasonably request. 1.2 Material Changes and Litigation. The Company shall promptly notify the Investors of any material adverse change in the business, prospects, assets or condition, financial -2- or otherwise, of the Company and of any litigation or governmental proceeding or investigation brought or, to the Company's knowledge, threatened against the Company or an officer, director, key employee or principal stockholder of the Company which, if adversely determined, would have a material adverse effect on the Company. 1.3 Access. The Company agrees to afford to the Investors and their respective employees, counsel and other authorized representatives, as well as to the directors elected solely by the holders of Preferred Stock (the "Preferred Stock Directors"), upon reasonable prior request, free and full access, during normal business hours, to all books, records and properties of the Company and to all officers of the Company and those other employees of the Company having responsibility for financial or accounting matters generally, for any reasonable purpose whatsoever; provided, however, that such Investors and Preferred Stock Directors shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and, provided further, that the Company reserves the right to withhold any information if access to such information could adversely affect the attorney-client privilege between the Company and its counsel or if the Board of Directors makes a good faith determination that the requesting Investor is a competitor of the Company or is acting on behalf of a competitor of the Company. Notwithstanding the foregoing, an Investor may use information provided by the Company in connection with the enforcement of its rights hereunder and its rights under any other agreement between the Company and such Investor. 1.4 Proprietary Information Agreements. The Company agrees to require each present or future employee or consultant of the Company who is an executive officer of the Company or has duties in the areas of technology, sales or marketing to enter into a Nondisclosure, Noncompetition and Assignment of Inventions Agreement substantially in the form of Exhibit G to the Series C Purchase Agreement unless otherwise approved by the Board of Directors. 1.5 Stock Vesting. Unless otherwise approved by the Board of Directors, the Company shall not issue or grant any securities of the Company to any officer, director, employee or consultant of the Company unless (i) such securities are subject to vesting in equal installments over a five year period commencing on the issuance or grant date (ii) such securities are subject to a right of first refusal in favor of the Company and (iii) with respect to an issuance or grant of securities of the Company that is equal to or greater than 1% of the capital stock of the Company on a fully-diluted basis, the recipient enters into the Co-Sale Agreement as a "Founder" (as defined in the Co-Sale Agreement). For purposes of this Agreement, "Co-Sale Agreement" means that certain Second Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of April 10, 2003, among the Company, the Investors and certain other stockholders of the Company, as the same may be amended from time to time. 1.6 Reserved Shares. The Company shall reserve and maintain a sufficient number of shares of Common Stock for issuance upon conversion of the outstanding shares of Preferred Stock. 1.7 Board Meetings. The Company agrees to use its best efforts to cause a meeting of its Board of Directors to be held at least once every calendar quarter. -3- 1.8 Qualified Small Business Stock. The Company covenants that it will (i) comply with any applicable filing or reporting requirements imposed by the Internal Revenue Code of 1986, as amended (the "Code"), any regulations promulgated thereunder, on issuers of Qualified Small Business Stock, as such term is defined in Section 1202(c) of the Code, and (ii) provide to each Investor in writing any information or documentation reasonably requested by such Investor so that such Investor may determine whether the shares of Preferred Stock held by them constitute "Qualified Small Business Stock" as defined in Section 1202(c) of the Code. 1.9 Termination of Covenants. The rights set forth in this Article 1 shall terminate and be of no further force or effect upon the closing of a Qualified IPO. For purposes of this Agreement, the term "Qualified IPO" shall mean a firm commitment underwritten public offering of the Company's securities pursuant to an effective registration statement filed by the Company under the Securities Act of 1933, as amended, in which: (i) the aggregate gross proceeds to the Company from such offering are not less than $30,000,000; and (ii)(A) the public offering price per share (prior to underwriters' commissions and discounts) is not less than $5.60 (appropriately adjusted to take account of any stock split, stock dividend, combination of shares, or the like), or (B) the holders of at least a majority of the shares of Preferred Stock then outstanding voting on an as-converted basis elect to convert all shares of Preferred Stock of the Company into shares of Common Stock of the Company. 2. Registration Rights. 2.1 Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: (a) "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. (b) "Holder" shall mean an Investor holding Registrable Securities or securities convertible or exercisable into Registrable Securities and any person holding such securities to whom the rights under this Article 2 have been transferred in accordance with Section 4.1 hereof. (c) "Initiating Holders" shall mean any Holder or Holders who in the aggregate hold at least 40% of the Registrable Securities. (d) "Participating Holders" shall mean any Holder or Holders who propose to distribute their securities through a registration pursuant to this Article 2. (e) "Registrable Securities" means (i) the Common Stock issued or issuable upon conversion of Preferred Stock, (ii) any shares of Common Stock, and any shares of Common Stock issued or issuable upon the conversion or exercise of any other securities, acquired by the Investors pursuant to Section 3 or pursuant to the Co-Sale Agreement, and (iii) any other shares of Common Stock issued in respect of such shares (because of any stock split, stock dividend, recapitalization, or similar event); provided, however, that shares of Common Stock or other securities shall only be treated as Registrable Securities for purposes of Section 2.3 hereof (A) if and so long as they have not been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (B) prior to the date -4- such securities have been sold or are all available for immediate sale pursuant to Rule 144(k) under the Securities Act. (f) The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. (g) "Registration Expenses" shall mean all expenses incurred by the Company in complying with Sections 2.2, 2.3 and 2.4 hereof (but excluding underwriting discounts and commissions) including, without limitation, any additional registration and qualification fees and any additional fees and disbursements of counsel to the Company that result from the inclusion of securities held by the selling Holders in such registration. (h) "Restricted Securities" shall mean the securities of the Company required to bear a legend indicating that transfer is restricted in the absence of registration. (i) "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. (j) "Selling Expenses" shall mean all underwriting discounts, selling commissions and stock transfer taxes, if any, applicable to the securities registered by the Holders. 2.2 Demand Registration. (a) Request for Registration. In case the Company shall receive from Initiating Holders a written request that the Company effect any registration, qualification or compliance with respect to at least 40% of the shares of Registrable Securities held by them, or a lesser percentage with an expected aggregate offering price to the public of at least $5,000,000, the Company will (1) within ten days of the receipt by the Company of such notice, give written notice of the proposed registration, qualification or compliance to all other Holders and (2) as soon as practicable (but within 100 days after receipt of the request of the Initiating Holders), use its best efforts to effect such registration, qualification or compliance (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within 20 days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2.2(a): (i) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; -5- (ii) Prior to the earlier of: (i) December 31, 2005, or (ii) six (6) months after the effective date of the Company's initial underwritten public offering; (iii) During the period starting with the date sixty (60) days prior to the Company's good faith estimate of the date of filing of, and ending on the date six (6) months immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction, with respect to an employee benefit plan or with respect to the Company's first registered public offering of its stock), provided that, the Company is actively employing in good faith its best efforts to cause such registration statement to become effective; (iv) After the Company has effected two registrations pursuant to this Section 2.2(a), which registrations have been declared or ordered effective; (v) If the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed in the near future, then the Company's obligation to use its best efforts to register, qualify or comply under this Section 2.2 shall be deferred for a period not to exceed 90 days from the date of receipt of written request from the Initiating Holders; provided, however, that the Company shall not exercise such right more than once in any twelve-month period. (b) Underwriting. In the event that a registration pursuant to this Section 2.2 is for a registered public offering involving an underwriting, the Company shall so advise the Holders as part of the notice given pursuant to Section 2.2(a). In such event, the right of any Holder to registration pursuant to this Section 2.2 shall be conditioned upon such Holder's participation in the underwriting arrangements required by this Section 2.2, and the inclusion of such Holder's Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided herein. The Company shall, together with all Participating Holders, enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by a majority of the Participating Holders and reasonably acceptable to the Company. Notwithstanding any other provision of this Section 2.2, if the managing underwriter advises the Company in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all Holders of Registrable Securities and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement or in such other manner as shall be agreed to by the Company and Holders of a majority of the Registrable Securities proposed to be included in such registration; provided, however, that the number of shares of Registrable Securities to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares. -6- If any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration, and such Registrable Securities shall not be transferred in a public distribution prior to 180 days after the effective date of such registration, or such other period of time as the underwriters may require. If shares are withdrawn from registration, the Company shall offer to all persons retaining the right to include securities in the registration the right to include additional securities in the registration, with such shares being allocated among all such Participating Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Participating Holders at the time of filing the registration statement. 2.3 Piggyback Registration. (a) Notice of Registration. If at any time or from time to time the Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders, other than a registration relating solely to employee benefit plans, a registration relating solely to a Commission Rule 145 transaction, or a registration pursuant to Section 2.2 hereof, the Company will (i) promptly give to each Holder written notice thereof, and (ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 20 days after receipt of such written notice from the Company, by any Holder. (b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to 2.3(a). In such event the right of any Holder to registration pursuant to 2.3 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 2.3, if the managing underwriter or Company determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit or completely exclude the Registrable Securities and other securities to be distributed through such underwriting, provided that, subsequent to the Company's initial underwritten public offering, the Registrable Securities to be included in such registration may not be limited to less than twenty-five percent (25%) of the total number of securities to be included in such registration. The Company shall so advise all Holders distributing their securities through such underwriting of such limitation (or exclusion, if applicable) and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated (if applicable) among all such Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement. To facilitate the allocation of shares in accordance with the above provisions, the Company may round the number of shares allocated to any Holder or other stockholder to the nearest 100 shares. -7- If any Participating Holder disapproves of the terms of any such underwriting, such Participating Holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration, and shall not be transferred in a public distribution prior to 180 days after the effective date of the registration statement relating thereto, or such other period of time as the underwriters may require. If shares are withdrawn from registration, the Company shall offer to all persons retaining the right to include securities in the registration the right to include additional securities in the registration, with such shares being allocated among all such Participating Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Participating Holders at the time of filing the registration statement. (c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 2.5 hereof. 2.4 Registration on Form S-3. Following the Company's initial public offering, the Company shall use commercially reasonable efforts to become eligible to register offerings of securities on SEC Form S-3 or its successor form ("Form S-3"). After the Company has qualified for the use of Form S-3, Holders of the Registrable Securities then outstanding shall have the right to request registration on Form S-3 (which request shall be in writing and shall state the number of shares of Registrable Securities to be registered and the intended method of disposition of shares by such Holders). If the Company receives such a request then it shall use its best efforts to cause such shares to be registered on Form S-3; provided that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2.4(a): (a) unless the Holders requesting registration propose to dispose of Registrable Securities having an anticipated aggregate price (after deduction of underwriting discounts and expenses of sale) of at least $1,000,000; (b) during the period starting with the date sixty (60) days prior to the Company's estimated date of filing of, and ending on the date six (6) months immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith its best efforts to cause such registration statement to become effective; (c) more than twice in any twelve month period; or (d) if the Company shall furnish to such Holder a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its stockholders for registration statements to be filed in the near future, then the Company's obligation to use its best efforts to register, qualify or comply under this Section 2.4 shall be deferred for a period not to exceed 60 days from the -8- receipt of the request to file such registration by such Holder or Holders; provided, however, that the Company shall not exercise such right more than once in any twelve-month period. 2.5 Expenses of Registration. All Registration Expenses incurred in connection with registrations pursuant to Section 2.3, the first two registrations pursuant to Section 2.2 and the first four registrations pursuant to Section 2.4 shall be borne by the Company. All Registration Expenses incurred in connection with registrations pursuant to Section 2.4, after the first four registrations initiated pursuant to such Section 2.4, shall be borne by the holders of securities included in such registration pro rata among each other on the basis of the number of shares so registered. All Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the holders of securities included in such registration pro rata among each other on the basis of the number of shares so registered. 2.6 Registration Procedures. In the case of each registration, qualification or compliance effected by the Company pursuant to this Article 2, the Company will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. At its expense the Company will: (a) Prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective until the distribution described in the Registration Statement has been completed; (b) Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement. (c) Furnish to the Participating Holders and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such Participating Holders and underwriters may reasonably request in order to facilitate the public offering of such securities. (d) Use commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Participating Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act. (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder shall also enter into and perform its obligations under such an agreement. -9- (f) Notify each Participating Holder at any time when a prospectus relating thereto is required to be delivered under the Securities Act or upon the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (g) Cause all securities covered by such registration statement to be listed on each securities exchange or authorized for quotation on each automated quotation system on which similar securities issued by the Company are then listed or authorized for quotation. (h) Provide a transfer agent and registrar for all securities covered by such registration statement and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. (i) Furnish, at the request of any Participating Holder, on the date that the securities are delivered to the underwriters for sale in connection with a registration being sold through underwriters, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Participating Holders and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities. (j) Make available for inspection by any Participating Holder, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such Participating Holder or any such underwriter, all pertinent financial and other records and pertinent corporate documents and properties of the Company, and cause all of the Company's officers, directors and employees to supply all information reasonably requested by any such Participating Holder, underwriter, attorney, accountant or agent in connection with such registration statement. (k) Use every reasonable effort to prevent the issuance of any stop order suspending the effectiveness of such registration statement or of any order preventing or suspending the use of any preliminary prospectus and, if any such order is issued, to obtain the lifting thereof at the earliest reasonable time. 2.7 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Article 2. 2.8 Indemnification. In the event any Registrable Securities are included in a registration statement under this Article 2: (a) To the extent permitted by law, the Company will indemnify and hold harmless each Participating Holder, each of its officers, directors, partners and legal -10- counsel, and each person controlling such Participating Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this Article 2, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated under the Securities Act applicable to the Company in connection with any such registration, qualification or compliance, and the Company will pay to each such Participating Holder, each of its officers, directors, partners, and legal counsel and each person controlling such Participating Holder, each such underwriter and each person who controls any such underwriter, as incurred, any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Participating Holder, controlling person or underwriter and stated to be specifically for use therein. (b) To the extent permitted by law, each Participating Holder will, if Registrable Securities held by such Participating Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify and hold harmless the Company, each of its directors, officers, and legal counsel, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other Participating Holder, each of its officers, directors, partners and legal counsel and each person controlling such Participating Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages or liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made not misleading, and will pay the Company, such Participating Holders, such directors, officers, persons, underwriters or control persons, as incurred, any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein. Notwithstanding the foregoing, the liability of each Holder under this subsection (b) shall be limited in an amount equal to the proceeds to each such Holder of Registrable Securities sold as contemplated herein, unless such liability resulted from willful -11- misconduct by such Holder. A Holder will not be required to enter into any agreement or undertaking in connection with any registration under this Article 2 providing for any indemnification or contribution on the part of such Holder greater than the Holder's obligations under this Section 2.8(b). (c) Each party entitled to indemnification under this Section 2.8 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party's expense, and, provided further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Article 2 unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or separate and different defenses but shall bear the expense of such defense nevertheless. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. (d) If the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations; provided that, in no event shall any contribution by a Holder under this Subsection (d) exceed the net proceeds from the offering received by such Holder, except in the case of willful misconduct by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. 2.9 Information by Holder. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Article 2 with respect to the Registrable Securities of any selling Holder that such holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. -12- 2.10 Rule 144 Reporting. With a view to making available to the Holders the benefits of Rule 144 and certain other rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use its best efforts to: (a) Make and keep public information available, as those terms are defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and (b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements). So long as an Investor owns any Restricted Securities, upon such Investor's written request, the Company shall forthwith furnish (i) a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company and (iii) such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as an Investor may reasonably request in availing itself of any rule or regulation of the Commission allowing an Investor to sell any such securities without registration. 2.11 Standoff Agreement. Each Holder agrees in connection with the Company's initial underwritten public offering of the Company's securities, upon request of the Company and the underwriters managing any underwritten offering of the Company's securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration (the "Standoff Period")as may be requested by the underwriters, provided that each officer, director and holder of more than 1% of the outstanding capital stock of the Company shall be bound by a similar agreement. In order to enforce the covenants set forth in this Section 2.11, and until the expiration of Standoff Period: (a) Each certificate held by a Holder representing Registrable Securities shall bear the following legend: "UPON THE REQUEST OF THE COMPANY OR THE UNDERWRITERS, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, SHORT SOLD, LOANED, MADE SUBJECT TO AN OPTION TO PURCHASE SUCH SECURITIES OR OTHERWISE DISPOSED OF FOR A PERIOD NOT TO EXCEED 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT FILED BY THE COMPANY -13- FOR ITS INITIAL PUBLIC OFFERING, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY OR THE UNDERWRITERS." (b) The Company may impose stop-transfer instructions with respect to Registrable Securities of each Holder (and the shares or securities of every other person subject to the restrictions set forth in this Section 2.11). 2.12 Limitation on Subsequent Registration Rights. After the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights senior to those granted to the Holders hereunder. 2.13 Mergers, etc. The Company shall not, directly or indirectly, enter into any merger, consolidation or reorganization in which the Company shall not be the surviving corporation unless the proposed surviving corporation shall, prior to such merger, consolidation or reorganization, agree in writing to assume the obligations of the Company under this Agreement, and for that purpose references hereunder to "Registrable Securities" shall be deemed to be references to the securities which the Holders would be entitled to receive in exchange for Registrable Securities under any such merger, consolidation or reorganization; provided, however, that the provisions of this Agreement shall not apply in the event of any merger, consolidation or reorganization in which the Corporation is not the surviving corporation if the holders of Registrable Securities are entitled to receive in exchange therefor (i) cash, or (ii) securities of the acquiring corporation which may be immediately sold to the public without registration under the Securities Act. 2.14 Termination of Registration Rights. The rights granted under this Article 2 shall terminate on the first to occur of (i) the fifth anniversary of the consummation of the initial underwritten public offering of the Company's securities pursuant to an effective registration statement filed under the Securities Act, or (ii) as to any Holder, at such time as such Holder is able to offer for sale all of its Registrable Securities within a given three-month period pursuant to Rule 144 of the Securities Act. 3. Preemptive Rights. 3.1 General. Except for (i) Preferred Stock sold pursuant to the Series Stock Purchase Agreement, (ii) securities issued in a public offering pursuant to an effective registration statement under the Securities Act in which all of the Preferred Stock is converted, (iii) securities issued upon conversion of the Preferred Stock or other warrants or other convertible or exercisable securities outstanding as of the date hereof, (iv) securities issued in connection with any stock split or stock dividend of the Company, recapitalizations or the like, (v) shares of Common Stock issued to employees, officers, or directors of, or contractors, consultants or advisors to, the Company pursuant to stock purchase or stock option plans, stock bonuses or awards, contracts or other arrangements approved by the Company's Board of Directors, (vi) shares of capital stock issued to a financial institution which has loaned funds to the Company, the terms of which are approved by the Board of Directors, (vii) shares of capital stock issued to equipment or real property lessors, the terms of which are approved by the Board -14- of Directors, (viii) shares of capital stock issued in connection with the acquisition of technology or licenses, the terms of which are approved by the Board of Directors, or (ix) securities issued to non-financial corporations in connection with a license, distribution, development, foundry or similar "corporate partner" agreement, the terms of which are approved by the Board of Directors, the Company will not, nor will it permit any subsidiary to, authorize or issue any securities of the Company of any class or kind and will not authorize, issue or grant any options, warrants, conversion rights or other rights to purchase or acquire any shares of stock of the Company of any class without offering the Investors the right of first refusal described below. 3.2 Right of First Offer. Each Investor that, along with its affiliates, holds at least 250,000 shares of Preferred Stock (or Common Stock issued or issuable upon conversion of the Preferred Stock, or a combination thereof) shall have a right of first offer to purchase an amount of securities of the Company of any class or kind which the Company proposes to sell in a nonregistered private placement (other than the issuance of shares contemplated by Section 3.1 above) ("Preemptive Securities") sufficient to maintain such Investor's proportionate beneficial ownership interest in the Company as set forth below. If the Company wishes to make any such sale of Preemptive Securities, it shall give the Investors prior written notice of the proposed sale. The notice shall set forth (i) the Company's bona fide intention to offer Preemptive Securities and (ii) the material terms and conditions of the proposed sale (including the number of shares to be offered and the price, if any, for which the Company proposes to offer such shares), and shall constitute an offer to sell Preemptive Securities to the Investors on such terms and conditions. Any Investor may accept such offer by delivering a written notice of acceptance (an "Acceptance Notice") to the Company within fifteen (15) days after receipt of the Company's notice of the proposed sale. Investors exercising their rights of first offer shall be entitled at their option to participate in the purchase of Preemptive Securities on a pro rata basis to the extent necessary to maintain such Investor's proportionate beneficial ownership interest in the Company (such Investor's "Pro Rata Portion") (for purposes of determining such Investor's Pro Rata Portion with respect to any issuance of Preemptive Securities, any Investor or other security holder shall be treated as owning that number of shares of Common Stock into which any outstanding Preferred Stock may be converted, while the total Company interest will be calculated on an as-converted to Common Stock basis, assuming full conversion and exercise of all outstanding convertible or exercisable securities). The Company shall, in writing, inform each Investor which elects to purchase its Pro Rata Portion of Preemptive Securities of any other Investor's failure to do so, in which case the Investors electing to purchase such shares of Preemptive Securities shall have the right to purchase all of such shares on a pro rata basis. If any Investor who elects to exercise its right of first offer does not complete the purchase of such Preemptive Securities within fifteen (15) days after delivery of its Acceptance Notice to the Company, the Company may complete the sale of Preemptive Securities on the terms and conditions specified in the Company's notice within the one hundred and twenty (120) day period following the expiration of such fifteen (15) day period. If the Company does not enter into an agreement for the sale of Preemptive Securities to the Investor pursuant to a delivered Acceptance Notice within such fifteen (15) day period, or if the Company does not otherwise consummate an agreement for the sale of Preemptive Securities within such one hundred and twenty (120) day period, the right provided hereunder shall be deemed to be revived and all future shares of Preemptive Securities shall not be offered unless first reoffered to the Investors in accordance with this Article 3. An Investor shall be entitled to apportion the right of first offer hereby granted among itself and its partners and affiliates in such proportions it deems appropriate. -15- 3.3 Expiration of Right of First Offer. The right of first offer granted under this Agreement shall terminate upon (i) the closing of a Qualified IPO or (ii) as to any individual Investor, after such Investor fails to purchase its full Pro Rata Portion of an issuance of Preemptive Securities. 4. Miscellaneous. 4.1 Transfer of Rights. This Agreement, and the rights and obligations of each Investor hereunder, may be assigned by such Investor (i) to any current or former partner, stockholder or other affiliate of such Investor, (ii) to any person or entity to which at least 250,000 shares of Registrable Securities are transferred by such Holder, or (iii) to any person or entity to which all shares of Registrable Securities held by such Holder are transferred, provided that, the transferee is not a competitor of the Company as determined in good faith by the Board of Directors, the transferee or assignee agrees in writing to all provisions contained in this Agreement and that such transfer otherwise be effected in accordance with applicable securities laws. 4.2 Waivers and Amendments. With the written consent of the holders of a majority of the Registrable Securities, the rights and obligations of the Company and the holders of Registrable Securities under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), and with the same consent, the Company, when authorized by resolution of its Board of Directors, may enter into a supplementary agreement for the purpose of adding additional parties and provisions to or changing in any manner or eliminating any of the provisions of this Agreement. This Agreement or any provision hereof may be changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in this Section 4.2; provided, however, and notwithstanding anything herein to the contrary, that any Investor who purchases Shares at an Additional Closing, as such terms are defined in the Series B Purchase Agreement, in accordance with Section 2.2(b) of the Series B Purchase Agreement may become a party to this Agreement without any amendment of this Agreement pursuant to this Section 4.2 or any consent or approval of any other Investor. 4.3 Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or otherwise delivered by hand or by courier addressed: (a) If to an Investor, at the Investor's address or facsimile number as shown on Exhibit A or at such other address as may have been furnished to the Company in writing by the Investors; (b) If to any other Holder, at such address or facsimile number as shown in the Company's records, or, until any such Holder so furnishes an address or facsimile number to the Company, then to and at the address of the last holder of such Registrable Securities for which the Company has contact information in its records; or -16- (c) If to the Company, one copy should be sent to its address or facsimile number set forth on the Company's signature page of this Agreement and addressed to the attention of the President, or at such other address or facsimile number as the Company shall have furnished to the Investors, with a copy to Michael J. O'Donnell, Esq., Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304. Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered by hand or by courier, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid or, if sent by facsimile, upon confirmation of facsimile transfer. 4.4 Descriptive Headings. The descriptive headings herein have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provisions hereof. 4.5 Governing Law. This Agreement shall be governed by and interpreted under the laws of the State of California as applied to agreements among California residents, made and to be performed entirely within the State of California. 4.6 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument, but only one of which need be produced. 4.7 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 4.8 Successors and Assigns. Except as otherwise expressly provided in this Agreement, this Agreement shall benefit and bind the successors, assigns, heirs, executors and administrators of the parties to this Agreement. 4.9 Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter of this Agreement. 4.10 Separability; Severability. Unless expressly provided in this Agreement, the rights of each Investor under this Agreement are several rights, not rights jointly held with any other Investors. Any invalidity, illegality or limitation on the enforceability of this Agreement with respect to any Investor shall not affect the validity, legality or enforceability of this Agreement with respect to the other Investors. If any provision of this Agreement is judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired. 4.11 Stock Splits. All references to numbers of shares in this Agreement shall be appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization of shares by the Company occurring after the date of this Agreement. -17- 4.12 Aggregation of Stock. All shares of Preferred Stock held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. -18- IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors Rights' Agreement on the day and year first set forth above. THE COMPANY: NANOSYS, INC. By: /s/ Lawrence A. Bock -------------------------------------- Lawrence A. Bock, President Address: 200 Boston Avenue, Suite 4700 Medford, MA 02156 (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" ARCH VENTURE FUND V, L.P. By: ARCH Venture Partners V, L.P. Its: General Partner By: ARCH Venture Partners V, L.L.C. Its: General Partner By: /s/ Clint Bybee ---------------------------------------- Managing Director ARCH V ENTREPRENEURS FUND, L.P. By: ARCH Venture Partners V, L.P. Its: General Partner By: ARCH Venture Partners V, L.L.C. Its: General Partner By: /s/ Clint Bybee ---------------------------------------- Managing Director (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" POLARIS VENTURE PARTNERS III, L.P. By: Polaris Venture Management Co. III, L.L.C. Its: General Partner By: /s/ William E. Bilodeau ------------------------------------------ William E. Bilodeau Attorney-in-fact POLARIS VENTURE PARTNERS ENTREPRENEURS' FUND III, L.P. By: Polaris Venture Management Co. III, L.L.C. Its: General Partner By: /s/ William E. Bilodeau ------------------------------------------ William E. Bilodeau Attorney-in-fact POLARIS VENTURE PARTNERS FOUNDERS' FUND III, L.P. By: Polaris Venture Management Co. III, L.L.C. Its: General Partner By: /s/ William E. Bilodeau ------------------------------------------ William E. Bilodeau Attorney-in-fact (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" VENROCK ASSOCIATES By: /s/ Bryan E. Roberts ---------------------------------------------- Name: Bryan E. Roberts Title: General Partner VENROCK ASSOCIATES III, L.P. By: Venrock Management III LLC Its: General Partner By: /s/ Bryan E. Roberts ----------------------------------------- Name: Bryan E. Roberts Title: Member VENROCK ENTREPRENEURS FUND III, L.P. By: VEF Management III LLC Its: General Partner By: /s/ Bryan E. Roberts ----------------------------------------- Name: Bryan E. Roberts Title: Member (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" CW VENTURES III, L.P. By: /s/ Charles Hartman ------------------------------------------- CW Partners IV, L.L.C. General Partner CW VENTURES III - A CO-INVESTMENT FUND, L.P. By: /s/ Charles Hartman -------------------------------------------- CW Partners IV, L.L.C. General Partner J.P. MORGAN/CW VENTURES III (NANOSYS), L.P. By: /s/ Charles Hartman -------------------------------------------- CW Partners IV, L.L.C. General Partner (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" PROSPECT VENTURE PARTNERS II, L.P. By: Prospect Management Co. II, LLC Its: General Partner By: /s/ James Tannanbaum --------------------------------------- Name: James Tananbaum Title: Managing Member PROSPECT ASSOCIATES II, L.P. By: Prospect Management Co. II, LLC Its: General Partner By: /s/ James Tannanbaum --------------------------------------- Name: James Tananbaum Title: Managing Member (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" ALEXANDRIA EQUITIES, LLC, a Delaware limited liability company By: ALEXANDRIA REAL ESTATE EQUITIES, INC., a Maryland corporation, managing member By: /s/ Joel S. Marcus ---------------------------------------- Joel S. Marcus, Chief Executive Officer (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" MCKENNA VENTURES, LP By: /s/ Regis McKenna ------------------------------------------- Title: General Partner (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" WS INVESTMENT COMPANY, LLC (2003A) By: /s/ Michael J. O'Donnell -------------------------------------------- Title: Partner WS INVESTMENT COMPANY, LLC (2003C) By: /s/ Michael J. O'Donnell -------------------------------------------- Title: Partner /s/ Michael J. O'Donnell ------------------------------------------------ Michael J. O'Donnell (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" /s/ R. Randolph Scott ------------------------------------------------ R. Randolph Scott (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" CDIB BIOSCIENCE VENTURES I, INC. By: /s/ Benny T. Hu -------------------------------------------- Name: Benny T. Hu Title: Chairman (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" CHINA DEVELOPMENT INDUSTRIAL BANK INC. By: /s/ Dr. Tze-Kaing Yang -------------------------------------------- Name: Dr. Tze-Kaing Yang Title: President (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" QUANTA COMPUTER INC. By: /s/ Barry Lam -------------------------------------------- Title: Chairman, Chief Executive Officer (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" CHIAO TUNG BANK CO., LTD By: /s/ Maria D. H. Lu -------------------------------------------- Name: Maria D. H. Lu Title: Sr. Vice President & General Manager (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" HARRIS & HARRIS GROUP, INC. By: /s/ Mel Melsheimer -------------------------------------------- Name: Mel Melsheimer Title: President (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" SAIC VENTURE CAPITAL CORPORATION By: /s/ Kevin A. Werner --------------------------------------------- Name: -------------------------------------------- Title:President, Managing Director (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" LUX VENTURES I LLC By: LUX CAPITAL GROUP, LLC, Its Managing Member By: /s/ Josh Wolfe --------------------------------------- Name: Josh Wolfe Title: Managing Partner (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" INTEL CAPITAL CORPORATION By: /s/ Mike Burns -------------------------------------------- Print Name: ------------------------------------- Title:Assistant Treasurer HEALTHCARE FOCUS FUND, L.P. By: ARCH Venture Partners V, L.P. Its: General Partner By: ARCH Venture Partners V, L.L.C. Its: General Partner By: /s/ Keith Rowe -------------------------------------------- Managing Director (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" H.B. FULLER COMPANY By: /s/ Raymond A. Tucker -------------------------------------------- Raymond A. Tucker, Senior Vice President, Chief Financial Officer (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" EASTMAN KODAK COMPANY By: /s/ James C. Stoffel -------------------------------------------- Name: ------------------------------------------- Title: Chief Technology Officer (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" UOB HERMES ASIA TECHNOLOGY FUND By: /s/ Seah Kian Wee -------------------------------------------- Name: ------------------------------------------- Title: Deputy Managing Director of UOB Venture Management Pte Ltd UOB VENTURE TECHNOLOGY INVESTMENTS LTD. By: /s/ Seah Kian Wee ------------------------------------------- Name: ------------------------------------------- Title: Deputy Managing Director of UOB Venture Management Pte Ltd (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) "INVESTORS" THE TRUST AGREEMENT DATED 4/27/98, AMENDED AND RESTATED IN ITS ENTIRETY ON 1/15/99 AND FURTHER AMENDED ON 2/16/01, BY AND BETWEEN SASSON R. SOMEKH AND ETA SOMEKH AS TRUSTORS AND SASSON R. SOMEKH AND ETA SOMEKH AS CO-TRUSTEES (THE "TRUST") IS HEREBY AMENDED AND RESTATED IN ITS ENTIRETY BY THE TRUSTORS By: /s/ Sasson R. Somekh ---------------------------------------- Name: -------------------------------------- Title: Trustor, Co-Trustee (SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT) EXHIBIT A SCHEDULE OF INVESTORS ARCH Venture Fund V. L.P. ARCH V Entrepreneurs Fund, L.P. CW Ventures III, L.P. CW Ventures III - A Co-Investment Fund. L.P. J.P. Morgan/CW Ventures III (Nanosys), L.P. Venrock Associates Venrock Associates III, L.P. Venrock Entrepreneurs Fund III, L.P. Polaris Venture Partners III, L.P. Polaris Venture Partners Entrepreneurs' Fund III, L.P. Polaris Venture Partners Founders' Fund III, L.P. Prospect Venture Partners II, L.P. Prospect Associates II, L.P. Dr. Charles Lieber Dr. Hongkun Park Robert M. Metcalfe Alan Chow C/F Tiffany Chow UGMA CA Alan Chow C/F Harrison Chow UGMA CA Alan Chow C/F Stephanie Chow UGMA CA McKenna Ventures, LP Michael O'Donnell R. Randolph Scott Karen L. Vergura WS Investment Company, LLC (2002A) WS Investment Company, LLC (2003A) WS Investment Company, LLC (2003C) Alexandria Equities, LLC China Development Industrial Bank Inc. Quanta Computer Inc. Chiao Tung Bank Co., Ltd. CDIB Bioscience Ventures I, Inc. Harris & Harris Group, Inc. SAIC Venture Capital Corporation Lux Ventures I LLC Healthcare Focus Fund, L.P. Intel Capital Corporation H.B. Fuller Company Eastman Kodak Company UOB Hermes Asia Technology Fund UOB Venture Technology Investments Ltd. The Trust Agreement dtd 4/27/88, amended & restated in its entirety on 1/15/99, and further amended on 2/16/01, by and between Sasson R. Somekh & Eta Somekh as Trustors & Sasson R. Somekh & Eta Somekh as Co-Trustees EX-4.2.1 8 f97636orexv4w2w1.txt EXHIBIT 4.2.1 EXHIBIT 4.2.1 WAIVER OF RIGHT OF FIRST OFFER AND AMENDMENT NO.1 TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT WHEREAS, the undersigned In-Q-Tel, Inc., a Delaware corporation ("IQT") and Nanosys, Inc., a Delaware corporation (the "Company"), have entered into a certain Development Agreement(the "DA"), dated as of September 4, 2003, in connection with which, among other things, the Company will issue to IQT and In-Q-Tel Employee Fund (an affiliated entity of IQT and also undersigned hereto, collectively the "Joining Parties") Warrants (the "Warrants") to purchase an aggregate of up to 723,085 shares of the Company's Series C Preferred Stock, $0.001 par value per share (the "Shares"); WHEREAS, the parties hereto desire the Joining Parties to have certain registration rights, rights of first offer and information rights pursuant to that certain Second Amended and Restated Investors' Rights Agreement, dated as of April 10, 2003, by and among the Company and the other parties named therein, as the same may be amended and/or restated from time to time (the "Rights Agreement"), and that the Joining Parties be added to the Rights Agreement as parties thereto for the purpose of granting such registration rights, rights of first offer and information rights; and WHEREAS, the parties hereto desire to waive any rights of first offer under Section 3 of the Rights Agreement that such parties may have in connection with the issuance of the Warrant; and WHEREAS, Section 4.2 of the Rights Agreement allows the amendment or waiver of such Rights Agreement or any provision therein with the written consent of the Company and the holders of at least a majority of the Registrable Securities, as defined therein, outstanding (the "Majority Holders"). NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby mutually acknowledged by the parties hereto, the parties hereby agree as follows: 1. The Company and the requisite Majority Holders hereby: (i) consent to the sale and issuance of the Warrants and the Shares (and all shares issuable directly or indirectly upon conversion or exercise thereof); and (ii) hereby waive their rights of first offer to purchase their pro-rata portion of the Warrants and the Shares (and all shares issuable directly or indirectly upon conversion or exercise thereof) pursuant to Section 3 of the Rights Agreement. 2. The Company and the requisite Majority Holders hereby waive any prior notice periods contained in the Rights Agreement that may pertain to this Agreement. 3. The Company and the requisite Majority Holders hereby consent to the amendment of the Rights Agreement, and hereby amend the Rights Agreement, to add the Joining Parties as Investors under the Rights Agreement with all the rights and obligations (except as otherwise set forth in this Agreement) of Investors, and that the shares of Common Stock issuable upon conversion of the Shares underlying the Warrant shall be deemed to be Registrable Securities as defined in the Rights Agreement. 4. Notwithstanding anything to the contrary in this Agreement, each of the Joining Parties shall not: (i) be entitled to initiate or participate under Section 2 of the Rights Agreement in any registration of the Company's securities until after the conversion or exercise of such Joining Party's Warrant; (ii) have or be deemed to have any rights of first offer pursuant to Section 3 of the Rights Agreement until after the exercise or conversion of such Joining Party's Warrant; (iii) have or be deemed to have any rights to materials or information of the Company, rights to access to the Company's books, records or properties or any other rights pursuant to Sections 1.1(e) or 1.3 of the Rights Agreement; or (iv) have or be deemed to have the right to take part in the initiation of a demand registration pursuant to Section 2.2 of the Rights Agreement as "Initiating Holders" but shall be entitled after the conversion or exercise of such Joining Party's Warrant to otherwise participate as a "Holder" in a demand registration initiated under Section 2.2 by Investors other than the Joining Parties. Prior to the date of any exercise or conversion of a Joining Party's Warrant, and notwithstanding anything to the contrary herein or in the Rights Agreement, such Joining Party shall for purposes of Sections 1.1(a), (b), (c) and (d) of the Rights Agreement be deemed to hold the number of shares of Series C Preferred Stock for which such Warrant is exercisable or may become exercisable, provided that such Joining Party shall not be deemed to have any of the other rights set forth in the Rights Agreement outside of Sections 1.1(a), (b), (c) and (d) except as set forth in this Agreement. 5. Notwithstanding anything to the contrary in this Agreement, this Agreement shall terminate, and the Joining Parties, along with any transferees of the Warrants, the Shares or the Common Stock underlying the Shares, shall no longer be or be deemed to be Investors or holders of Registrable Securities under the Rights Agreement if any of the following events occur: (i) the Warrant terminates, or (ii) the Company does not receive an aggregate of at least $2,000,000 from IQT pursuant to the DA by the 300th day following the date of this Agreement. 6. The Joining Parties hereby agree to be bound by the terms and conditions of the Rights Agreement as set forth in this Agreement, provided that, if a Joining Party transfers their Warrant, the Shares or the shares of Common Stock issuable upon conversion of the Shares, such Joining Party shall not be deemed to transfer (pursuant to Section 4.1 of the Rights Agreement or otherwise) or possess any rights set forth in the Rights Agreement other than the rights such Joining Party possesses pursuant to this Agreement, and no transferee shall possess or be deemed to possess any rights under the Rights Agreement other than the rights of such Joining Party hereunder. In addition to the requirements for transfer set forth in Section 4.1 of the Rights Agreement, no transfer of any Warrant, the Shares or the Common Stock underlying the Shares to any transferee shall become effective until such transferee agrees in writing to be bound by the terms and conditions of this Agreement as if such transferee were a Joining Party hereunder by executing and delivering to the Company an Agreement to be Bound, substantially in the form attached hereto as Attachment A. 7. Except as set forth herein, this Agreement shall be governed by the provisions of Section 4 of the Rights Agreement, and shall be deemed to be a part of the Rights Agreement. 8. This Agreement may be executed in any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. -2- IN WITNESS WHEREOF, the parties have duly executed this Agreement as of September 4, 2003. JOINING PARTIES: IN-Q-TEL, INC. By: /s/ Michael D. Griffin ------------------------------------------- Name: ----------------------------------------- Title: President, Chief Operating Officer IN-Q-TEL EMPLOYEE FUND By: /s/ Michael D. Griffin ------------------------------------------- Name: Title: President, Chief Operating Officer COMPANY: NANOSYS, INC. By: /s/ Lawrence A. Bock ------------------------------------------- Name: ----------------------------------------- Title: President, Chief Executive Officer [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: /s/ Alan Chow ------------------------------------- Alan Chow C/F Harrison Chow UGMA CA /s/ Alan Chow ------------------------------------- Alan Chow C/F Stephanie Chow UGMA CA /s/ Alan Chow ------------------------------------- Alan Chow C/F Tiffany Chow UGMA CA [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: ARCH VENTURE FUND V, L.P. By: ARCH Venture Partners V, L.P. Its: General Partner By: ARCH Venture Partners V, L.L.C. Its: General Partner By: /s/ Clint Bybee ---------------------------------------- Managing Director ARCH V ENTREPRENEURS FUND, L.P. By: ARCH Venture Partners V, L.P. Its: General Partner By: ARCH Venture Partners V, L.L.C. Its: General Partner By: /s/ Clint Bybee ---------------------------------------- Managing Director [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: ALEXANDRIA EQUITIES, LLC, a Delaware limited Liability company By: Alexandria Real Estate Equities, Inc., a Maryland corporation, managing member By: /s/ Joel S. Marcus --------------------------------- Joel S. Marcus, Chief Executive Officer [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: /s/ Jennifer K. Lieber ------------------------------------------------------- Jennifer K. Lieber as Trustee of the Lieber Family Trust u/d/dtd December 13, 2001 [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: MCKENNA VENTURES, L.P. BY: /s/ Regis McKenna --------------------------------------------------- TITLE: General Partner [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: CW VENTURES III, L.P. By: /s/ Charles Hartman -------------------------------------------- CW Partners IV, L.L.C. General Partner CW VENTURES III - A CO-INVESTMENT FUND, L.P. By: /s/ Charles Hartman -------------------------------------------- CW Partners IV, L.L.C. General Partner J.P. MORGAN/CW VENTURES III (NANOSYS), L.P. By: /s/ Charles Hartman -------------------------------------------- CW Partners IV, L.L.C. General Partner [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: /s/ Robert M. Metcalfe ------------------------------------------ Robert M. Metcalfe [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: /s/ Charles Lieber ------------------------------------------ Dr. Charles Lieber [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: __________________________________________ Jennifer C. Snyder & Carolyn K. Hwang, as Trustees of the Park Family Trust u/d/dtd November 21, 2001 [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: __________________________________________ R. Randolph Scott [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: POLARIS VENTURE PARTNERS III, L.P. By: Polaris Venture Management Co. III, L.L.C. Its: General Partner By: /s/ William E. Bilodeau ------------------------------------------- William E. Bilodeau Attorney-in-fact POLARIS VENTURE PARTNERS ENTREPRENEURS' FUND III, L.P. By: Polaris Venture Management Co. III, L.L.C. Its: General Partner By: /s/ William E. Bilodeau ------------------------------------------- William E. Bilodeau Attorney-in-fact POLARIS VENTURE PARTNERS FOUNDERS' FUND III, L.P. By: Polaris Venture Management Co. III, L.L.C. Its: General Partner By: /s/ William E. Bilodeau ------------------------------------------- William E. Bilodeau Attorney-in-fact [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: PROSPECT VENTURE PARTNERS II, L.P. By: Prospect Management Co. II, LLC Its: General Partner By: /s/ James Tananbaum -------------------------------------- Name: James Tananbaum Title: Managing Member PROSPECT ASSOCIATES II, L.P. By: Prospect Management Co. II, LLC Its: General Partner By: /s/ James Tanabaum -------------------------------------- Name: James Tananbaum Title: Managing Member [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: VENROCK ASSOCIATES By: /s/ Bryan E. Roberts -------------------------------------------- Name: Bryan E. Roberts Title: General Partner VENROCK ASSOCIATES III, L.P. By: Venrock Management III LLC Its: General Partner By: /s/ Bryan E. Roberts --------------------------------------------- Name: Bryan E. Roberts Title: Member VENROCK ENTREPRENEURS FUND III, L.P. By: VEF Management III LLC Its: General Partner By: /s/ Bryan E. Roberts -------------------------------------------- Name: Bryan E. Roberts Title: Member [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: ___________________________________________ Karen L. Vergura [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: WS INVESTMENT COMPANY, LLC (2002A) By: /s/ James Terranova --------------------------------------- Title: Manager WS INVESTMENT COMPANY, LLC (2003A) By: /s/ James Terranova -------------------------------------- Title: Manager WS INVESTMENT COMPANY, LLC (2003C) By: /s/ James Terranova --------------------------------------- Title: Manager /s/ Michael J. O'Donnell ------------------------------------------- Michael J. O'Donnell [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: CDIB BIOSCIENCE VENTURES I, INC. By: /s/ Benny T. Hu --------------------------------------- Name: Benny T. Hu Title: Chairman [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: CHINA DEVELOPMENT INDUSTRIAL BANK INC. By: _______________________________________ Name: Dr. Tze-Kaing Yang Title: President [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: QUANTA COMPUTER INC. By: _______________________________________ Title: ____________________________________ [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: CHIAO TUNG BANK CO., LTD By: _______________________________________ Name: Maria D.H. Lu Title: Sr. Vice President & General Manager [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: HARRIS & HARRIS GROUP, INC. By: /s/ Mel Melsheimer --------------------------------------- Name: Mel Melsheimer Title: President [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: SAIC VENTURE CAPITAL CORPORATION By:/s/ Gian Brown ----------------------------------------- Name: --------------------------------------- Title: General Counsel [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: LUX VENTURES I LLC By: LUX CAPITAL GROUP, LLC, Its Managing Member By: /s/ Josh Wolfe ----------------------------------- Name: Josh Wolfe Title: Managing Partner [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: INTEL CAPITAL CORPORATION By: ---------------------------------------- Print Name: -------------------------------- Title: ------------------------------------ HEALTHCARE FOCUS FUND, L.P. By: ARCH Venture Partners V, L.P. Its: General Partner By: ARCH Venture Partners V, LLC Its: General Partner /s/ Clint Bybee ------------------------------------------- Managing Director [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: H.B. FULLER COMPANY By: /s/ John A. Feenan --------------------------------------- John A. Feenan, Sr. Vice President, Chief Financial Officer [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: EASTMAN KODAK COMPANY By: /s/ Gary P. Van Graafeiland --------------------------------------- Name: -------------------------------------- Title:Senior Vice President [Signature Page to Waiver and Amendment to Investors' Rights Agreement] MAJORITY HOLDERS: UOB HERMES ASIA TECHNOLOGY FUND By: /s/ Seah Kian Wee --------------------------------------- Name: -------------------------------------- Title: Deputy Managing Director UOB Venture Management Pte Ltd UOB VENTURE TECHNOLOGY INVESTMENTS LTD. By: /s/ Seah Kian Wee --------------------------------------- Name: -------------------------------------- Title: Deputy Managing Director UOB Venture Management Pte Ltd [Signature Page to Waiver and Amendment to Investors' Rights Agreement] ATTACHMENT A AGREEMENT TO BE BOUND In connection with the transfer of the Warrant to purchase _________ shares of Series C Preferred Stock (the "Warrant") of Nanosys, Inc., a Delaware corporation (the "Company"), __________ shares of Series C Preferred Stock of the Company ("Preferred Shares"), and __________ shares of Common Stock of the Company ("Common Shares") to the undersigned from ___________________ (the "Transferor"), which Warrant, Preferred Shares and Common Shares are currently subject to certain voting restrictions pursuant to the Waiver of Right of First Offer and Amendment No.1 to Second Amended and Investors' Rights Agreement, dated as of August __, 2003 (the "Amendment"), by and among the Company and the Joining Parties, as defined in the Amendment attached hereto as Exhibit A, in consideration of the Company permitting such transfer of the Warrant, Preferred Shares and Common Shares to the undersigned, the undersigned hereby agrees by executing this Agreement To Be Bound to be bound by and comply with all of the provisions and obligations applicable to the Transferor contained in the Amendment as if the undersigned were the Joining Party thereunder. Date: _____________________, 20__ By: __________________________ Name: ________________________ Title: _________________________ EX-4.2.2 9 f97636orexv4w2w2.txt EXHIBIT 4.2.2 Exhibit 4.2.2 JOINDER AGREEMENT WHEREAS, the undersigned Silicon Valley Bank (the "Joining Party") and Nanosys, Inc., a Delaware corporation (the "Company"), have entered into a certain Loan and Security Agreement, dated as of May 17, 2002, and certain other related agreements contemplated thereby, pursuant to which, among other things, the Company will issue to the Joining Party a Warrant (the "Warrant") to purchase up to 41,250 shares of the Company's Series B Preferred Stock, $.001 par value per share (the "Shares"); WHEREAS, the parties hereto desire the Joining Party to have certain "piggyback" registration rights with respect to the shares of the Company's common stock, $.001 par value per share ("Common Stock"), issuable upon conversion of the Shares (and with respect to the Shares, at all times when the Class (as defined in the Warrant) is Common Stock) pursuant to Section 2.3 of that certain Amended and Restated Investors' Rights Agreement, dated as of January 18, 2002, among the Company and the other parties named therein, as amended (the "Rights Agreement"), and that the Joining Party be added to the Rights Agreement as a party thereto for the purpose of granting such "piggyback" registration rights; and WHEREAS, Section 4.2 of the Rights Agreement allows the Company and the holders of a majority (the "Majority Holders") of the Registrable Securities, as such term is defined in the Rights Agreement, to add parties to the Right Agreement by written consent. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby mutually acknowledged by the parties hereto, the parties hereby covenant and agree as follows: 1. The shares of Common Stock issuable upon conversion of the Shares, and the Shares at all times when the Class is Common Stock shall constitute "Registrable Securities," as such term is defined in Section 2.1(e) of the Rights Agreement, for all intents and purposes of the registration rights and related provisions and obligations set forth in Sections 2.1 and 2.3, Sections 2.5 through 2.14 inclusive and Section 4 of the Rights Agreement. 2. The Joining Party shall be treated for all purposes under Section 2.1 and 2.3, Sections 2.5 through 2.14 inclusive, and Section 4 of the Rights Agreement as a "Holder," as such term is defined in Section 2.1(b) of the Rights Agreement. 3. The Joining Party agrees to be bound by the terms and conditions of Sections 2.1 and 2.3, Sections 2.5 through 2.14 inclusive and Section 4 of the Rights Agreement and shall succeed to and assume all of the rights and obligations of a Holder of Registrable Securities for all intents and purposes of such Sections, provided that, in the case of Section 4.1 of the Rights Agreement, the Joining Party agrees to be bound as an "Investor" in the event the Joining Party proposes to transfer the Shares or the Warrant to a transferee and, provided further, that the Joining Party shall not, and shall not be deemed to, possess or be able to transfer any rights set forth in the Rights Agreement (including, without limitation, any Preemptive Rights set forth in Section 3 of the Rights Agreement) other than the "piggyback" registration rights the Joining Party possesses pursuant to this Joinder Agreement. 4. Notwithstanding the provisions of Section 2.3(a) of the Rights Agreement, the Company shall give notice of any registration initiated pursuant to Section 2.2 of the Rights Agreement to the Joining Party in accordance with the notice provisions of said Section 2.3(a) and shall (upon receipt by the Company of a written request from the Joining Party within 20 days after Joining Party's receipt of such notice) include the Joining Party's Registrable Securities in such registration, subject to the terms, conditions and limitations of the portions of the Rights Agreement to which the Joining Party is made a party hereby; provided, that in the case of a registration initiated pursuant to Section 2.2 of the Rights Agreement, the Joining Party shall be subject to the terms, conditions and limitations set forth in Section 2.2 in addition to the portions of the Rights Agreement to which the Joining Party is made a party hereby; and provided further, that the Joining Party shall in no event be, or be deemed to be, an "Initiating Holder" under Sections 2.1(e) or 2.2 of the Rights Agreement.. This Joinder Agreement may be executed in any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the parties have duly executed this Joinder Agreement as of May 17, 2002. "JOINING PARTY": SILICON VALLEY BANK By: /s/ Michael J. Hancwich ----------------------------- Name: Michael J. Hancwich ----------------------------- Title: SVP ----------------------------- "COMPANY": NANOSYS, INC. By: /s/ Lawrence Bock ----------------------------- Name: Lawrence Bock ----------------------------- Title: CEO ----------------------------- [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": ARCH VENTURE FUND V, L.P. By: ARCH Venture Partners V, L.P. Its: General Partner By: ARCH Venture Partners V, L.L.C. Its: General Partner By: /s/ Clint Bybee ----------------------------- Managing Director ARCH V ENTREPRENEURS FUND, L.P. By: ARCH Venture Partners V, L.P. Its: General Partner By: ARCH Venture Partners V, L.L.C. Its: General Partner By: /s/ Clint Bybee ----------------------------- Managing Director "MAJORITY HOLDERS": POLARIS VENTURE PARTNERS III, L.P. By: Polaris Venture Management Co. III, L.L.C. Its: General Partner By: /s/ William E. Bilodeau ----------------------------- Name: William E. Bilodeau Title: Attorney-in-fact POLARIS VENTURE PARTNERS ENTREPRENEURS' FUND III, L.P. By: Polaris Venture Management Co. III, L.L.C. Its: General Partner By: /s/ William E. Bilodeau ----------------------------- Name: William E. Bilodeau Title: Attorney-in-fact POLARIS VENTURE PARTNERS FOUNDERS' FUND III, L.P. By: Polaris Venture Management Co. III, L.L.C. Its: General Partner By: /s/ William E. Bilodeau ----------------------------- Name: William E. Bilodeau Title: Attorney-in-fact [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": VENROCK ASSOCIATES By: /s/ Bryan E. Roberts ----------------------------- Name: Bryan E. Roberts Title: General Partner VENROCK ASSOCIATES III, L.P. By: Venrock Management III LLC Its: General Partner By: /s/ Bryan E. Roberts ----------------------------- Name: Bryan E. Roberts Title: Member VENROCK ENTREPRENEURS FUND III, L.P. By: VEF Management III LLC Its: General Partner By: /s/ Bryan E. Roberts ----------------------------- Name: Bryan E. Roberts Title: Member [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": CW VENTURES III, L.P. By: /s/ Lawrence Bock ----------------------------- CW Partners IV, L.L.C. General Partner CW VENTURES III - A CO-INVESTMENT FUND, L.P. By: /s/ Lawrence Bock ----------------------------- CW Partners IV, L.L.C. General Partner J.P. MORGAN/CW VENTURES III (NANOSYS), L.P. By: /s/ Lawrence Bock ----------------------------- CW Partners IV, L.L.C. General Partner [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": PROSPECT VENTURE PARTNERS II, L.P. By: Prospect Management Co. II, LLC Its: General Partner By: /s/ James Tananbaum ----------------------------- Name: James Tananbaum Title: Managing Member PROSPECT ASSOCIATES II, L.P. By: Prospect Management Co. II, LLC Its: General Partner By: /s/ James Tananbaum ----------------------------- Name: James Tananbaum Title: Managing Member [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": /s/ Charles Lieber ------------------------------------------- DR. CHARLES LIEBER [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": /s/ Hongkun Park ------------------------------------------- DR. HONGKUN PARK [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": /s/ Robert M. Metcalfe ------------------------------------------- ROBERT M. METCALFE [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": ------------------------------------------- ALAN CHOW C/F TIFFANY CHOW UGMA CA "INVESTORS" [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": ------------------------------------------- ALAN CHOW C/F HARRISON CHOW UGMA CA [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": ------------------------------------------- ALAN CHOW C/F STEPHANIE CHOW UGMA CA [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": MCKENNA VENTURES, LP BY: ----------------------------------- TITLE: -------------------------------- [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": ------------------------------------------- MICHAEL O'DONNELL [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": ------------------------------------------- R. RANDOLPH SCOTT [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": ------------------------------------------- KAREN L. VERGURA [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": WS INVESTMENT COMPANY, LLC BY: ----------------------------------- TITLE: -------------------------------- [Signature Page to Joinder Agreement] "MAJORITY HOLDERS": ALEXANDRIA EQUITIES, LLC, a Delaware limited liability company By: ALEXANDRIA REAL ESTATE EQUITIES, INC., a Maryland corporation, managing member By: -------------------------------------- Laurie A. Allen, Senior Vice President, Business Development & Legal Affairs [Signature Page to Joinder Agreement] EX-10.1 10 f97636orexv10w1.txt EXHIBIT 10.1 EXHIBIT 10.1 NANOSYS, INC. 2001 AMENDED STOCK PLAN 1. Purposes of the Plan. The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company's business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan. 2. Definitions. As used herein, the following definitions shall apply: (a) "Administrator" means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof. (b) "Applicable Laws" means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan. (c) "Board" means the Board of Directors of the Company. (d) "Change in Control" means the occurrence of any of the following events: (i) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities; or (ii) The consummation of the sale or disposition by the Company of all or substantially all of the Company's assets; or (iii) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result 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 its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation. (e) "Code" means the Internal Revenue Code of 1986, as amended. (f) "Committee" means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof. (g) "Common Stock" means the Common Stock of the Company. (h) "Company" means Nanosys, Inc., a Delaware corporation. (i) "Consultant" means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity. (j) "Director" means a member of the Board. (k) "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code. (l) "Employee" means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. (m) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (n) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination; or (iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. (o) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. (p) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. (q) "Option" means a stock option granted pursuant to the Plan. (r) "Option Agreement" means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. -2- (s) "Optioned Stock" means the Common Stock subject to an Option or a Stock Purchase Right. (t) "Optionee" means the holder of an outstanding Option or Stock Purchase Right granted under the Plan. (u) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (v) "Plan" means this 2001 Amended Stock Plan. (w) "Restricted Stock" means Shares issued pursuant to a Stock Purchase Right or Shares of restricted stock issued pursuant to an Option. (x) "Restricted Stock Purchase Agreement" means a written agreement between the Company and the Optionee evidencing the terms and restrictions applying to Shares purchased under a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the notice of grant. (y) "Securities Act means the Securities Act of 1933, as amended. (z) "Service Provider" means an Employee, Director or Consultant. (aa) "Share" means a share of the Common Stock, as adjusted in accordance with Section 12 below. (bb) "Stock Purchase Right" means a right to purchase Common Stock pursuant to Section 11 below. (cc) "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code. 3. Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares that may be subject to option and sold under the Plan is 9,137,000 Shares. In no event shall the number of Shares issued pursuant to Incentive Stock Options exceed 9,137,000 Shares. The Shares may be authorized but unissued, or reacquired Common Stock. If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, the unpurchased Shares that were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan. -3- 4. Administration of the Plan. (a) Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws. (b) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion: (i) to determine the Fair Market Value; (ii) to select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder; (iii) to determine the number of Shares to be covered by each such award granted hereunder; (iv) to approve forms of agreement for use under the Plan; (v) to determine the terms and conditions of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; (vi) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws; (vii) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and (viii) to construe and interpret the terms of the Plan and Options granted pursuant to the Plan. (c) Effect of Administrator's Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees. -4- 5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 6. Limitations. (a) Incentive Stock Option Limit. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. (b) At-Will Employment. Neither the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any right with respect to continuing the Optionee's relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate such relationship at any time, with or without cause, and with or without notice. 7. Term of Plan. Subject to shareholder approval in accordance with Section 19, the Plan shall become effective upon its adoption by the Board. Unless sooner terminated under Section 15, it shall continue in effect for a term of ten (10) years from the later of (i) the effective date of the Plan, or (ii) the earlier of the most recent board or shareholder approval of an increase in the number of Shares reserved for issuance under the Plan. 8. Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement. 9. Option Exercise Price and Consideration. (a) Exercise Price. The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following: (i) In the case of an Incentive Stock Option (A) granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. -5- (B) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. (ii) In the case of a Nonstatutory Stock Option (A) granted to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. (B) granted to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant. (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction. (b) Forms of Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of, without limitation, (1) cash, (2) check, (3) promissory note, (4) other Shares, provided Shares acquired directly from the Company (x) have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. 10. Exercise of Option. (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share. Except in the case of Options granted to officers, Directors and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted. An Option shall be deemed exercised when the Company receives (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such -6- Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan. Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within thirty (30) days of termination, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee's Disability, the Optionee may exercise his or her Option within six (6) months of termination, or such longer period of time as specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within six (6) months following Optionee's death, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee's designated beneficiary, provided such beneficiary has been designated prior to Optionee's death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee's estate or by the person(s) to whom the Option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (e) Leaves of Absence. (i) Unless the Administrator provides otherwise, vesting of Options granted hereunder to officers and Directors shall be suspended during any unpaid leave of absence. -7- (ii) A Service Provider shall not cease to be an Employee in the case of (A) any leave of absence approved by the Company or (B) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. (iii) For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave, any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. 11. Stock Purchase Rights. (a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer. The terms of the offer shall comply in all respects with Section 260.140.42 of Title 10 of the California Code of Regulations. The offer shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator. (b) Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable within 90 days of the voluntary or involuntary termination of the purchaser's service with the Company for any reason (including death or disability). The purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine. (c) Other Provisions. The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. (d) Rights as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a shareholder and shall be a shareholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 13 of the Plan. 12. Limited Transferability of Options and Stock Purchase Rights. Unless determined otherwise by the Administrator, Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee. If the Administrator in its sole discretion makes an Option or Stock Purchase Right transferable, such Option or Stock Purchase Right may only be transferred (i) by will, (ii) by the -8- laws of descent and distribution, or (iii) to family members (within the meaning of Rule 701 of the Securities Act) through gifts or domestic relations orders, as permitted by Rule 701 of the Securities Act. 13. Adjustments; Dissolution or Liquidation; Merger or Change in Control. (a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Option or Stock Purchase Right; provided, however, that the Administrator shall make such adjustments to the extent required by Section 25102(o) of the California Corporations Code. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Option or Stock Purchase Right will terminate immediately prior to the consummation of such proposed action. (c) Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation in a merger or Change in Control refuses to assume or substitute for the Option or Stock Purchase Right, then the Optionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Administrator shall notify the Optionee in writing or electronically that such Option or Stock Purchase Right shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right shall terminate upon expiration of such period. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to -9- be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of common stock in the merger or Change in Control. 14. Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such later date as is determined by the Administrator. Notice of the determination shall be given to each Service Provider to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant. 15. Amendment and Termination of the Plan. (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. (b) Shareholder Approval. The Board shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. (c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination. 16. Conditions Upon Issuance of Shares. (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. (b) Investment Representations. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 17. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 18. Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. -10- 19. Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws. 20. Information to Optionees. The Company shall provide to each Optionee and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such Optionee has one or more Options or Stock Purchase Rights outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of annual financial statements. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information. -11- EX-10.2 11 f97636orexv10w2.txt EXHIBIT 10.2 EXHIBIT 10.2 NANOSYS, INC. 2004 STOCK PLAN 1. Purposes of the Plan. The purposes of this Plan are: - to attract and retain the best available personnel for positions of substantial responsibility, - to provide additional incentive to Employees, Directors and Consultants, and - to promote the success of the Company's business. The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Stock Appreciation Rights, Performance Units and Performance Shares. 2. Definitions. As used herein, the following definitions will apply: (a) "Administrator" means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan. (b) "Affiliated SAR" means an SAR that is granted in connection with a related Option, and which automatically will be deemed to be exercised at the same time that the related Option is exercised. (c) "Applicable Laws" means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan. (d) "Award" means, individually or collectively, a grant under the Plan of Options, SARs, Restricted Stock, Performance Units or Performance Shares. (e) "Award Agreement" means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. (f) "Board" means the Board of Directors of the Company. (g) "Change in Control" means the occurrence of any of the following events: (i) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities; or (ii) The consummation of the sale or disposition by the Company of all or substantially all of the Company's assets; (iii) A change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. "Incumbent Directors" means directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or (iv) The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result 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 its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation. (h) "Code" means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code. (i) "Committee" means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan. (j) "Common Stock" means the common stock of the Company. (k) "Company" means Nanosys, Inc., a Delaware corporation, or any successor thereto. (l) "Consultant" means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. (m) "Director" means a member of the Board. (n) "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time. (o) "Employee" means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director's fee by the Company will be sufficient to constitute "employment" by the Company. (p) "Exchange Act" means the Securities Exchange Act of 1934, as amended. -2- (q) "Exchange Program" means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise prices and different terms), Awards of a different type, and/or cash, and/or (ii) the exercise price of an outstanding Award is reduced. The terms and conditions of any Exchange Program will be determined by the Administrator in its sole discretion. (r) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (iii) For purposes of any Awards granted on the Registration Date, the Fair Market Value will be the initial price to the public as set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Company's Common Stock; or (iv) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator. (s) "Fiscal Year" means the fiscal year of the Company. (t) "Freestanding SAR" means a SAR that is granted independently of any Option. (u) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (v) "Inside Director" means a Director who is an Employee. (w) "Nonstatutory Stock Option" means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option. (x) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (y) "Option" means a stock option granted pursuant to the Plan. -3- (z) "Optioned Stock" means the Common Stock subject to an Award. (aa) "Outside Director" means a Director who is not an Employee. (bb) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. (cc) "Participant" means the holder of an outstanding Award. (dd) "Performance Share" means an Award granted to a Participant pursuant to Section 9. (ee) "Performance Unit" means an Award granted to a Participant pursuant to Section 9. (ff) "Period of Restriction" means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator. (gg) "Plan" means this 2004 Stock Plan. (hh) "Registration Date" means the effective date of the first registration statement that is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Company's securities. (ii) "Restricted Stock" means shares of Common Stock issued pursuant to a Restricted Stock award under Section 7 of the Plan or issued pursuant to the early exercise of an Option. (jj) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. (kk) "Section 16(b) " means Section 16(b) of the Exchange Act. (ll) "Service Provider" means an Employee, Director or Consultant. (mm) "Share" means a share of the Common Stock, as adjusted in accordance with Section 13 of the Plan. (nn) "Stock Appreciation Right" or "SAR" means an Award, granted alone or in connection with an Option, that pursuant to Section 8 is designated as a SAR. (oo) "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424(f) of the Code. (pp) "Tandem SAR" means a SAR that is granted in connection with a related Option, the exercise of which will require forfeiture of the right to purchase an equal number of -4- Shares under the related Option (and when a Share is purchased under the Option, the SAR will be canceled to the same extent). 3. Stock Subject to the Plan. (a) Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares that may be optioned and sold under the Plan is 3,000,000 Shares, plus (a) the number of Shares which have been reserved but not issued under the Company's 2001 Amended Stock Plan (the "2001 Plan") as of the Registration Date, (b) any Shares returned to the Company's 2001 Plan as a result of termination of options or repurchase of Shares issued under such plan, and (c) an annual increase to be added on the first day of the Company's fiscal year beginning in 2005, equal to the lesser of (i) 6,000,000 Shares, (ii) 5% of the outstanding Shares on such date or (iii) an amount determined by the Board. The Shares may be authorized, but unissued, or reacquired Common Stock. Shares shall not be deemed to have been issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. Upon payment in Shares pursuant to the exercise of an SAR, the number of Shares available for issuance under the Plan shall be reduced only by the number of Shares actually issued in such payment. If the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of Shares owned by the Participant, the number of Shares available for issuance under the Plan shall be reduced by the gross number of Shares for which the Option is exercised. (b) Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Exchange Program, the unpurchased Shares which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan, whether upon exercise of an Award, will not be returned to the Plan and will not become available for future distribution under the Plan, except that if unvested Shares are forfeited or repurchased by the Company, such Shares will become available for future grant under the Plan. 4. Administration of the Plan. (a) Procedure. (i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan. (ii) Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as "performance-based compensation" within the meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more "outside directors" within the meaning of Section 162(m) of the Code. (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3. (iv) Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws. -5- (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion: (i) to determine the Fair Market Value; (ii) to select the Service Providers to whom Awards may be granted hereunder; (iii) to determine the number of Shares to be covered by each Award granted hereunder; (iv) to approve forms of agreement for use under the Plan; (v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine; (vi) to institute an Exchange Program; (vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; (viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws; (ix) to modify or amend each Award (subject to Section 17(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Awards longer than is otherwise provided for in the Plan; (x) to allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Award that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld (the Fair Market Value of the Shares to be withheld will be determined on the date that the amount of tax to be withheld is to be determined and all elections by a Participant to have Shares withheld for this purpose will be made in such form and under such conditions as the Administrator may deem necessary or advisable); (xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; (xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award; -6- (xiii) to make all other determinations deemed necessary or advisable for administering the Plan. (c) Effect of Administrator's Decision. The Administrator's decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards. 5. Eligibility. Nonstatutory Stock Options, Restricted Stock, Stock Appreciation Rights, Performance Units and Performance Shares may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 6. Stock Options. (a) Limitations. (i) Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted. (ii) The following limitations will apply to grants of Options and Stock Appreciation Rights: (1) No Service Provider will be granted, in any Fiscal Year, Options to purchase more than 2,250,000 Shares. (2) In connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 4,500,000 Shares, which will not count against the limit set forth in Section 6(a)(2)(ii)(1) above. (3) The foregoing limitations will be adjusted proportionately in connection with any change in the Company's capitalization as described in Section 13. (4) If an Option is cancelled in the same Fiscal Year in which it was granted (other than in connection with a transaction described in Section 13), the cancelled Option will be counted against the limits set forth in subsections (1) and (2) above. For this purpose, if the exercise price of an Option is reduced, the transaction will be treated as a cancellation of the Option and the grant of a new Option. (b) Term of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of -7- all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement. (c) Option Exercise Price and Consideration. (i) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following: (1) In the case of an Incentive Stock Option a) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant. b) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant. (2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant. (3) Notwithstanding the foregoing, Incentive Stock Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction. (ii) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised. (iii) Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory note; (4) other Shares, provided Shares acquired directly or indirectly from the Company, (A) have been owned by the Participant and not subject to substantial risk of forfeiture for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option will be exercised; (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; (6) a reduction in the amount of any Company liability to the Participant, including any liability attributable to the Participant's participation in any Company-sponsored deferred compensation program or arrangement; (7) any combination of the foregoing methods of payment; or (8) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws. -8- (d) Exercise of Option. (i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. An Option will be deemed exercised when the Company receives: (x) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option, and (y) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant's death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant's termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan. (iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant's Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant's termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the -9- time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. (iv) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant's death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant's designated beneficiary, provided such beneficiary has been designated prior to Participant's death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant's estate or by the person(s) to whom the Option is transferred pursuant to the Participant's will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant's death. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. 7. Restricted Stock. (a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine. (b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held by the Company as escrow agent until the restrictions on such Shares have lapsed. (c) Transferability. Except as provided in this Section 7, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. (d) Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate. (e) Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed. (f) Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. -10- (g) Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. (h) Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan. 8. Stock Appreciation Rights. (a) Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. The Administrator may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination thereof. (b) Number of Shares. The Administrator will have complete discretion to determine the number of SARs granted to any Service Provider; provided, however that no Service Provider shall be granted, in any fiscal year of the Company, Options and/or Stock Appreciation Rights to purchase more than an aggregate of 2,250,000 Shares. Notwithstanding the foregoing limitation, in connection with a Participant's initial service as an Employee, an Employee may be granted SARs covering up to an additional 4,500,000 Shares. (c) Exercise Price and Other Terms. The Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of SARs granted under the Plan. However, the exercise price of Tandem or Affiliated SARs will equal the exercise price of the related Option. (d) Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. With respect to a Tandem SAR granted in connection with an Incentive Stock Option: (a) the Tandem SAR will expire no later than the expiration of the underlying Incentive Stock Option; (b) the value of the payout with respect to the Tandem SAR will be for no more than one hundred percent (100%) of the difference between the exercise price of the underlying Incentive Stock Option and the Fair Market Value of the Shares subject to the underlying Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem SAR will be exercisable only when the Fair Market Value of the Shares subject to the Incentive Stock Option exceeds the Exercise Price of the Incentive Stock Option. (e) Exercise of Affiliated SARs. An Affiliated SAR will be deemed to be exercised upon the exercise of the related Option. The deemed exercise of an Affiliated SAR will not necessitate a reduction in the number of Shares subject to the related Option. (f) Exercise of Freestanding SARs. Freestanding SARs will be exercisable on such terms and conditions as the Administrator, in its sole discretion, will determine. -11- (g) SAR Agreement. Each SAR grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine. (h) Expiration of SARs. An SAR granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(d) also will apply to SARs. (i) Payment of SAR Amount. Upon exercise of an SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying: (i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times (ii) The number of Shares with respect to which the SAR is exercised. At the discretion of the Administrator, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof. 9. Performance Units and Performance Shares. (a) Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant. (b) Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. (c) Performance Objectives and Other Terms. The Administrator will set performance objectives in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during which the performance objectives must be met will be called the "Performance Period." Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion. (d) Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives for such Performance Unit/Share. -12- (e) Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof. (f) Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan. 10. Formula Option Grants to Outside Directors. All grants of Options to Outside Directors pursuant to this Section will be automatic and nondiscretionary and will be made in accordance with the following provisions: (a) Type of Option. All Options granted pursuant to this Section will be Nonstatutory Stock Options and, except as otherwise provided herein, will be subject to the other terms and conditions of the Plan. (b) No Discretion. No person will have any discretion to select which Outside Directors will be granted Options under this Section or to determine the number of Shares to be covered by such Options (except as provided in Sections 10(f) and 13). (c) First Option. Each person who first becomes an Outside Director following the Registration Date automatically will be granted an Option to purchase 45,000 Shares (the "First Option") on or about the date on which such person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who remains a Director will not receive a First Option. (d) Annual Option. Each Outside Director automatically will be granted an Option to purchase 9,000 Shares (an "Annual Option") on (i) the Registration Date, provided he or she is serving as an Outside Director on such date, and (ii) each date of the annual meeting of the stockholders of the Company beginning in 2005, if as of such date and only with respect to the Option to be granted on the date of the Company's annual stockholder meeting, he or she is serving and will have served on the Board for at least the preceding six (6) months. (e) Audit Committee Member Option. Each Outside Director that is a member of the Audit Committee automatically will be granted an Option (an " AC Option") to purchase 3,000 Shares (4,500 Shares for the Chairman of the Audit Committee) on (i) the Registration Date, provided he or she is serving as a member of the Audit Committee on such date, and (ii) each date of the annual meeting of the stockholders of the Company beginning in 2005, if as of such date and only with respect to the Option to be granted on the date of the Company's annual stockholder meeting, he or she is serving and will have served on the Audit Committee for at least the preceding six (6) months. -13- (f) Compensation Committee Member Option. Each Outside Director that is a member of the Compensation Committee automatically will be granted an Option (a "CC Option") to purchase 3,000 Shares (4,500 Shares for the Chairman of the Compensation Committee) on (i) the Registration Date, provided he or she is serving as a member of the Compensation Committee on such date, and (ii) each date of the annual meeting of the stockholders of the Company beginning in 2005, if as of such date and only with respect to the Option to be granted on the date of the Company's annual stockholder meeting, he or she is serving and will have served on the Compensation Committee for at least the preceding six (6) months. (g) Terms. The terms of each Option granted pursuant to this Section will be as follows: (i) The term of the Option will be ten (10) years. (ii) The exercise price per Share will be 100% of the Fair Market Value per Share on the date of grant of the Option. (iii) Subject to Section 13, the First Option will vest and become exercisable as to one-third (1/3rd) of the Shares subject to the First Option on each anniversary of its date of grant, provided that the Participant continues to serve as a Director through each such date; (iv) Subject to Section 13, the Annual Option, the AC Option and the CC Option will vest and become exercisable as to 100% of the Shares subject to the Annual Option, the AC Option or the CC Option, as applicable, on the one-year anniversary of its respective date of grant, provided that the Participant continues to serve as a Director, in the case of the Annual Option, or as a member of the Audit Committee or Compensation Committee, as applicable, for each of the AC Option and CC Option, through such date. (h) Amendment. The Administrator in its discretion may change the number of Shares subject to the First Options, Annual Options, AC Options and CC Options. 11. Leaves of Absence. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Service Provider will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three months following the 91st day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option. 12. Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate. -14- 13. Adjustments; Dissolution or Liquidation; Merger or Change in Control. (a) Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, the numerical Share limits in Sections 3 and 6 of the Plan and the number of Shares issuable pursuant to Section 10. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action. (c) Change in Control. In the event of a Change in Control, each outstanding Award will be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock shall lapse, and, with respect to Performance Shares and Performance Units, all performance goals will be deemed achieved at target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period. With respect to Awards granted to an Outside Director that are assumed or substituted for, if on the date of or following such assumption or substitution the Participant's status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant, then the Participant will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to all of the Optioned Stock, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock shall lapse, and, with respect to Performance Shares and Performance Units, all performance goals will be deemed achieved at target levels and all other terms and conditions met. For the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which the Administrator determines to pay cash or a Performance Share or Performance Unit which the Administrator can determine to pay in cash, the fair market value of the consideration -15- received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Performance Share or Performance Unit, for each Share subject to such Award (or in the case of Performance Units, the number of implied shares determined by dividing the value of the Performance Units by the per share consideration received by holders of Common Stock in the Change in Control), to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control. Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant's consent; provided, however, a modification to such performance goals only to reflect the successor corporation's post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption. 14. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant's relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant's right or the Company's right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws. 15. Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant. 16. Term of Plan. Subject to Section 20 of the Plan, the Plan will become effective upon its adoption by the Board. It will continue in effect for a term of ten (10) years unless terminated earlier under Section 17 of the Plan. 17. Amendment and Termination of the Plan. (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. (b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. (c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator's ability -16- to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. 18. Conditions Upon Issuance of Shares. (a) Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance. (b) Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 19. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained. 20. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws. -17- EX-10.4 12 f97636orexv10w4.txt EXHIBIT 10.4 EXHIBIT 10.4 NANOSYS, INC. INDEMNIFICATION AGREEMENT This Indemnification Agreement ("AGREEMENT") is made as of this ___ day of ___________, ______, by and between Nanosys, Inc., a Delaware corporation (the "COMPANY"), and _____________________ ("INDEMNITEE"). WHEREAS, the Company and Indemnitee recognize the significant cost of directors' and officers' liability insurance and the general reductions in the coverage of such insurance; WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting officers and directors to expensive litigation risks at the same time as the coverage of liability insurance has been severely limited; and WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve as officers and directors of the Company and to indemnify its officers and directors so as to provide them with the maximum protection permitted by law. NOW, THEREFORE, in consideration for Indemnitee's services as an officer or director of the Company, the Company and Indemnitee hereby agree as follows: 1. INDEMNIFICATION. (a) Third Party Proceedings. The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or any alternative dispute resolution mechanism, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) actually and reasonably incurred by Indemnitee in connection with such action, suit or proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee's conduct was unlawful. (b) Proceedings By or in the Right of the Company. The Company shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company or any subsidiary of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, or any subsidiary of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) and, to the fullest extent permitted by law, amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the defense or settlement of such action or suit if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. (c) Mandatory Payment of Expenses. To the extent that Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Subsections (a) and (b) of this Section 1, or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by Indemnitee in connection therewith. 2. EXPENSES; INDEMNIFICATION PROCEDURE. (a) Advancement of Expenses. The Company shall advance all expenses incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of any civil or criminal action, suit or proceeding referenced in Section 1(a) or (b) hereof (but not amounts actually paid in settlement of any such action, suit or proceeding). Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Company as authorized hereby. The advances to be made hereunder shall be paid by the Company to Indemnitee within thirty (30) days following delivery of a written request therefor by Indemnitee to the Company. (b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a condition precedent to his right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be directed to the President of the Company at the address shown on the signature page of this Agreement (or such other address as the Company shall designate in writing to Indemnitee). Notice shall be deemed received three business days after the date postmarked if sent by domestic certified or registered mail, properly addressed, five business -2- days if sent by airmail to a country outside of North America; otherwise notice shall be deemed received when such notice shall actually be received by the Company. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee's power. (c) Procedure. Any indemnification and advances provided for in Section 1 and this Section 2 shall be made no later than thirty (30) days after receipt of the written request of Indemnitee. If a claim under this Agreement, under any statute, or under any provision of the Company's Certificate of Incorporation or Bylaws providing for indemnification, is not paid in full by the Company within thirty (30) days after a written request for payment thereof has first been received by the Company, Indemnitee may, but need not, at any time thereafter bring an action against the Company to recover the unpaid amount of the claim and, subject to Section 12 of this Agreement, Indemnitee shall also be entitled to be paid for the expenses (including attorneys' fees) of bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any action, suit or proceeding in advance of its final disposition) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. However, Indemnitee shall be entitled to receive interim payments of expenses pursuant to Subsection 2(a) unless and until such defense may be finally adjudicated by court order or judgment from which no further right of appeal exists. It is the parties' intention that if the Company contests Indemnitee's right to indemnification, the question of Indemnitee's right to indemnification shall be for the court to decide, and neither the failure of the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including it Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct. (d) Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 2(b) hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies. (e) Selection of Counsel. In the event the Company shall be obligated under Section 2(a) hereof to pay the expenses of any proceeding against Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, with counsel approved by Indemnitee, upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that (i) Indemnitee shall have the right to employ his counsel in any such proceeding at Indemnitee's expense; and (ii) if (A) the -3- employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the fees and expenses of Indemnitee's counsel shall be at the expense of the Company. 3. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY. (a) Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of its board of directors or an officer, such changes shall be, ipso facto, within the purview of Indemnitee's rights and Company's obligations, under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties' rights and obligations hereunder. (b) Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company's Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested Directors, the General Corporation Law of the State of Delaware, or otherwise, both as to action in Indemnitee's official capacity and as to action in another capacity while holding such office. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though he may have ceased to serve in such capacity at the time of any action, suit or other covered proceeding. 4. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the expenses, judgments, fines or penalties actually or reasonably incurred by him in the investigation, defense, appeal or settlement of any civil or criminal action, suit or proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such expenses, judgments, fines or penalties to which Indemnitee is entitled. 5. MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee. -4- 6. OFFICER AND DIRECTOR LIABILITY INSURANCE. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses from wrongful acts, or to ensure the Company's performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company's directors, if Indemnitee is a director; or of the Company's officers, if Indemnitee is not a director of the Company but is an officer. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company. 7. SEVERABILITY. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company's inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. The provisions of this Agreement shall be severable as provided in this Section 7. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms. 8. EXCEPTIONS. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement: (a) Claims Initiated by Indemnitee. To indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law, but such indemnification or advancement of expenses may be provided by the Company in specific cases if the Board of Directors has approved the initiation or bringing of such suit; or (b) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred by the Indemnitee with respect to any proceeding instituted by Indemnitee to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous; or (c) Insured Claims. To indemnify Indemnitee for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and -5- amounts paid in settlement) which have been paid directly to Indemnitee by an insurance carrier under a policy of officers' and directors' liability insurance maintained by the Company. (d) Claims Under Section 16(b). To indemnify Indemnitee for expenses and the payment of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute. 9. CONSTRUCTION OF CERTAIN PHRASES. (a) For purposes of this Agreement, references to the "Company" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued. (b) For purposes of this Agreement, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to "serving at the request of the Company" shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement. 10. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall constitute an original. 11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns. 12. ATTORNEYS' FEES. In the event that any action is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be entitled to be paid all court costs and expenses, including reasonable attorneys' fees, incurred by Indemnitee with respect to such action, unless as a part of such action, the court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such action were not made in good faith or were frivolous. In the event of an action instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be paid all court costs and expenses, including attorneys' fees, incurred by Indemnitee in defense of such action (including with respect to Indemnitee's counterclaims and cross-claims made -6- in such action), unless as a part of such action the court determines that each of Indemnitee's material defenses to such action were made in bad faith or were frivolous. 13. NOTICE. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressee, on the date of such receipt, or (ii) if mailed by domestic certified or registered mail with postage prepaid, on the third business day after the date postmarked. Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice. 14. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts of the State of Delaware. 15. CHOICE OF LAW. This Agreement shall be governed by and its provisions construed in accordance with the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware without regard to the conflict of law principles thereof. 16. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, such shorter period shall govern. 17. SUBROGATION. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights. 18. AMENDMENT AND TERMINATION. No amendment, modification, termination or cancellation of this Agreement shall be effective unless it is in writing signed by both the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 19. INTEGRATION AND ENTIRE AGREEMENT. This Agreement sets forth the entire understanding between the parties hereto and supersedes and merges all previous written and oral negotiations, commitments, understandings and agreements relating to the subject matter hereof between the parties hereto -7- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. NANOSYS, INC. _____________________________ Signature of Authorized Signatory _____________________________ Print Name and Title Address:_____________________ _____________________ AGREED TO AND ACCEPTED: INDEMNITEE: ___________________________ Signature ___________________________ Print Name and Title Address:___________________ ___________________ ___________________ EX-10.5 13 f97636orexv10w5.txt EXHIBIT 10.5 EXHIBIT 10.5 LICENCE AGREEMENT (CASE#[*** Redacted]) Between President and Fellows of Harvard College And NanoSys, Inc. Effective as of October 4, 2001 ("Effective Date") Re: Harvard Case#[*** Redacted] In consideration of the mutual promises and covenants set forth below, the parties hereto agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the following meanings: 1.1 ACADEMIC RESEARCH PURPOSE: use of PATENT RIGHTS solely for academic non-commercial research or other non-for-profit scholarly purposes, which use in undertaken at a non-profit or governmental institution. ACADEMIC RESEARCH PURPOSES does not include selling products covered by PATENT RIGHTS or using PATENT RIGHTS in researching, developing, producing or manufacturing products for sale, or performance of services a free or other financial consideration. It is understood that using the PATENT RIGHTS to conduct normal research activities at non-profit or governmental institution is within the defined term of ACADEMIC RESEARCH PURPOSE. 1.2 AFFILIATE: any entity which controls, is controlled by, or is under common control with a party. An entity shall be regarded as in control of another entity for purposes of this definition if it owns or control at least fifty percent (50%) of the shares entitled to vote in the election of directors (or in the case of an entity that is not a corporation, for the election of the corresponding managing authority). Unless otherwise specified, the term LICENSEE includes AFFILIATES. 1.3 FIELD: All fields of use. 1.4 HARVARD: President and Fellows of Harvard College, a nonprofit Massachusetts educational corporation having offices at the Office for Technology and Trademark *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Licensing, Holyoke Centre, Suite 727, 1350 Massachusetts Avenue, Cambridge, Massachusetts 02138. 1.5 LICENSED PROCESSES: methods, processes or procedures covered by at least one VALID CLAIM included within the PATENT RIGHTS. 1.6 LICENSED PRODUCTS: products covered by at least one VALID CLAIM included within the PATENT RIGHTS or products made in accordance with LICENSED PROCESSES. 1.7 LICENSEE: Nanosys, Inc., a corporation organized under the laws of Delaware having its principal offices at CW Group East, 1041 Third Avenue, New York, New York 10021. 1.8 NET SALES: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2 [*** Redacted] 1.9 PATENT RIGHTS: PATENT RIGHTS shall include (i) the applications and patents as listed in Appendix A of this Agreement, (ii) any foreign counterparts to such patents and patent applications, (iii) the inventions described and claimed in the foregoing, (iv) any divisions, continuations, substitution of the foregoing, and (v) specific claims of any continuations-in-part of the foregoing to the extent the specific claims are directed to subject matter described in the foregoing in a manner sufficient to support such specific claims under 35 U.S.C. and to the extent Licensable by HARVARD, (vi) all patents issuing on any of the foregoing, and (vii) registrations, renewals, reissues, reexaminations, extensions or patents of addition of any kind with respect to any of such patents. For purposes of this Agreement "Licensable" shall mean those claims of continuations-in-parts filed after the Effective Date for which HARVARD has sole ownership (or has been granted the sole right to license by a co-owner) and where there are no obligations to grant licenses to a third party as the result of research support provided to one or more of the inventors. 1.10 SERVICES INCOME: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 3 1.11 SUBLICENSE INCOME: [*** Redacted] 1.12 TERRITORY: Worldwide. 1.13 VALID CLAIM: either (i) a claim of an issued patent that has not expired or been held unenforceable or invalid by an agency or a court of competent jurisdiction, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; provided, however, that if the holding of such court or agency is later reversed by a court or agency with overriding authority, the claim shall be reinstated as a Valid Claim with respect to Net Sales made after the date of such reversal, of (ii) a claim of a pending patent application that has not been abandoned or finally rejected without the possibility of appeal or re-filing and that has been pending for less than five (5) years from its priority date, and is being actively prosecuted in good faith. 1.14 The terms "Public Law 96-517" and "Public Law 98-620" include all amendments to those statutes. 1.15 The terms "sold" and "sell" include, without limitation, leases and other dispositions and similar transactions. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 4 1.16 RELATED LICENSE AGREEMENTS: Other patent license agreements between LICENSEE and HARVARD licensing patent rights known internally at HARVARD as Case [*** Redacted] to LICENSEE. 1.17 R&D SPENDING, MINIMUM INVESTMENT: shall have the meanings as set forth in Section 4.5. 1.18 DEVELOPMENT PAYMENT: [*** Redacted] ARTICLE II RECITALS 2.1 HARVARD is owner (or HARVARD will be owner) by assignment from [*** Redacted] of their entire right, title and interest in United States Patents [*** Redacted], issued [*** Redacted] and [*** Redacted] issued [*** Redacted] entitled [*** Redacted] (Harvard Case [*** Redacted]), in the foreign patent applications corresponding thereto, and in the inventions described and claimed therein. 2.2 HARVARD has the authority to issue license under PATENT RIGHTS. 2.3 HARVARD is committed to the policy that ideas or creative works produced at HARVARD should be used for the greatest possible public benefit, and believes that every reasonable incentive should be provided for the prompt introduction of such ideas into public use, all in a manner consistent with the public interest. 2.4 LICENSEE intends to use commercially reasonable efforts to develop the invention(s), and to bring to market at least one product falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in the patents rights licensed under such agreements. 2.5 LICENSEE is desirous of obtaining an exclusive license in the TERRITORY in order to practice the above-referenced in invention covered by PATENT RIGHTS in the United States and in certain foreign countries, and to manufacture, use and sell in the commercial market the products made in accordance therewith, and HARVARD is desirous of granting such a license to LICENSEE in accordance with the terms of this Agreement. ARTICLE III GRANT OF RIGHTS 3.1 HARVARD hereby grants to LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, an exclusive (except as set forth in Sections 3.2(a) and 3.2(b) license under PATENT RIGHTS in the TERRITORY and in the FIELD (i) to make and have made, to use and have used, to sell and have sold, to offer for sale, import, export, or *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 5 otherwise distribute the LICENSED PRODUCTS, (ii) to practice the LICENSED PROCESSES, and (iii) to otherwise fully exploit the PATENT RIGHTS, and (iv) to have the foregoing performed on behalf of LICENSEE by a third party, in each case for the life of the PATENT RIGHTS. The foregoing license under PATENT RIGHTS shall include the full right to grant sublicenses, and LICENSEE shall promptly provide copies of any sublicenses of PATENT RIGHTS to HARVARD for its review. Unless HARVARD has rendered the license under PATENT RIGHTS non-exclusive under Section 3.2 (d), HARVARD agrees that it will not grant licenses under PATENT RIGHTS to others, nor make, use, sell, offer for sale, import or otherwise exploit PATENT RIGHTS itself except as required by HARVARD's obligations in Section 3.2 (a) or as permitted in Section 3.2 (b). 3.2 The granting and exercise of this license is subject to the following conditions: (a) HARVARD's "Statement of Policy in Regard to Inventions, Patents and Copyrights," dated August 10, 1998, Public Law 96-517 and Public Law 98-620, and HARVARD's obligations under prior or current agreements with other sponsors of research and, with regard to continuations-in-part. contained in the PATENT RIGHTS, any future agreements with other sponsors of research related to such continuations-in-part. Any right granted in this Agreement greater than that permitted under Public Law 96-517, or Public Law 98-620, shall be subject to modification to the extent required to conform to the provisions of those status. (b) HARVARD reserves the right to make and use, and grant to other non-profit or governmental institutions non-exclusive licenses to make and use, in each case solely for ACADEMIC RESEARCH PURPOSES the subject matter described and claimed in PATENT RIGHTS. HARVARD shall promptly notify LICENSEE of any rights granted to any third party (other than the U.S. government) under Sections 3.2(a) and (b). (c) LICENSEE shall use commercially reasonable efforts to effect introduction into the commercial market at least [*** Redacted] falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in PATENT RIGHTS, consistent with sound and reasonable business practice and judgment; thereafter, until the expiration of this Agreement, LICENSEE shall use commercially reasonable efforts to endeavor to keep any [*** Redacted] reasonably available to the public so long as it shall be a sound and reasonable commercial practice to do so. (d) At any time after [*** Redacted] from the effective date of this Agreement, HARVARD may render this license non-exclusive if LICENSEE has not: (i) used commercially reasonable efforts to put the licensed subject matter into commercial use in one or more of the countries hereby licensed, directly or through a sublicense; nor *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 6 (ii) used commercially reasonable efforts to keep products falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in PATENT RIGHTS reasonably available to the public so long as it shall be a sound and reasonable commercial practice to do so; nor (iii) engaged in research, development, manufacturing, marketing or sublicensing activity that is commercially reasonably appropriate to achieving Section 3.2(d)(i) or 3.2(d)(ii). LICENSEE shall be deemed to have satisfied Section 3.2(d)(iii), and HARVARD shall not render the license of PATENT RIGHTS granted hereunder non-exclusive, if LICENSEE'S R&D SPENDING exceeds the MINIMUM INVESTMENT for such year as set forth in Section 4.5. (e) In all sublicenses granted by LICENSEE hereunder, LICENSEE shall include a requirement that the sublicensee use commercially reasonable efforts to put the subject matter of the sublicense into commercial use, provided that such sublicensee is authorized to develop and sell to the public a [*** Redacted] covered by PATENT RIGHTS on its own behalf. LICENSEE shall further provide that such sublicenses are subject and subordinate to the terms and conditions of this Agreement, except for the [*** Redacted] paid by such sublicensee to the LICENSEE. Copies of all sublicense agreements hereunder shall be provided promptly to HARVARD. All sublicense agreements of LICENSEE provided to HARVARD shall deemed Confidential Information of LICENSEE subject to Section 11.1. (f) At any time [*** Redacted] years after the effective date of this Agreement, if LICENSEE is unable or unwilling to grant sublicenses, either [*** Redacted] by HARVARD or [*** Redacted] or otherwise, then HARVARD may directly license such [*** Redacted], but only if: (i) LICENSEE is not currently pursuing development of LICENSED PRODUCTS for the same application as contemplated by the potential sublicensee, or LICENSEE commits to do so within a [*** Redacted] period, (ii) the granting of such a license by HARVARD to the potential sublicensee will increase the availability of useful products to the public, (iii) the granting of such license by HARVARD will not materially adversely affect LICENSEE'S then current business or reasonably foreseeable future business (e.g., such license is not intended for an application competitive with LICENSEE) and (iv) HARVARD notifies LICENSEE of its intention to grant such license and permits LICENSEE a reasonable period to negotiate a sublicense on its own. (g) To the extent required by law, during the period of exclusivity of this license in the United States, LICENSEE shall cause any LICENSED PRODUCT produced for sale in the United States to be manufactured substantially in the United States. 3.3 All rights reserved to the United States Government and others under Public Law 96-517, and Public Law 98-620, shall remain and shall in no way be affected by this Agreement. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 7 3.4 HARVARD shall promptly notify LICENSEE when any new patent or patent application arises from (i) research conducted in the laboratory of [*** Redacted], or (ii) improvements made by HARVARD [*** Redacted] on the subject matter described in PATENT RIGHTS. If LICENSEE so requests and the intellectual property is available for licensing, HARVARD will evaluate in good faith LICENSEE'S proposal along with proposals received from any third parties. Any decision to grant a license to LICENSEE shall be subject to approval by HARVARD'S Committee on Patents and Copyrights. In the event LICENSEE and HARVARD cannot agree on terms for a license to any new intellectual property which is dominated by PATENT RIGHTS, HARVARD shall not offer any third party terms more favorable than the terms offered to LICENSEE. ARTICLE IV ROYALTIES 4.1 LICENSEE shall pay to HARVARD a non-refundable license royalty fee in the sum of [*** Redacted] dollars ($[*** Redacted]) upon execution of this Agreement. 4.2 As consideration for the rights granted hereunder, LICENSEE shall pay to HARVARD a non-refundable fee in the form of stock of LICENSEE as follows: (i) LICENSEE shall issue to HARVARD [*** Redacted] ([*** Redacted]) fully vested shares, at a price per share of $0.001 per share and an aggregate value of $[*** Redacted] of LICENSEE'S common stock which represent [*** Redacted] percent ([*** Redacted]%) of the reserved shares for founders (total [*** Redacted] shares) shown on the capitalization table of LICENSEE attached as Appendix B ("Shares") upon execution of this Agreement, provided, however, that HARVARD shall be subject to and enter into (1) appropriate agreements and related documents as required of other stockholders of LICENSEE, including without limitation a Common Stock Purchase Agreement, and (2) a Voting Agreement by and among the LICENSEE, HARVARD and certain other holders of common stock of LICENSEE dated as of even date hereof. (ii) HARVARD'S ownership rights to Shares shall not be affected should the license pursuant to this Agreement be terminated by LICENSEE or HARVARD. 4.3(a) LICENSEE shall pay to HARVARD during the term of this Agreement a royalty on NET SALES by LICENSEE according to the following schedule: (i) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications; (ii) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications; or *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 8 (iii) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications. In the event, any NET SALES by LICENSEE reasonably falls within more than one of categories (i) to (iii) above, LICENSEE shall pay to HARVARD the lowest applicable royalty set forth in such categories. (b) For each LICENSED PRODUCT sold by LICENSEE, LICENSEE may credit up to [*** Redacted] ([*** Redacted]) of royalties that LICENSEE is paying to third parties (or HARVARD under agreements not included within section 4.3(c)) on LICENSEE'S sales of that LICENSED PRODUCT, provided that the royalty paid to HARVARD shall not be reduced below [*** Redacted] percent ([*** Redacted]%) of the NET SALES of that LICENSED PRODUCT for which such third party royalties are being paid. (c) In the event that sales of a LICENSED PRODUCT are subject to the payment of royalties under one or more of the RELATED LICENSE AGREEMENTS or any license agreements with HARVARD with the same effective date as this Agreement, then the total royalty payment due HARVARD under all such agreements including this Agreement shall be at most the royalty payment due under this Section 4.3 on such NET SALE, no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such agreement. LICENSEE shall notify HARVARD of the identity of each license agreement that includes patent rights covering the product or process, and HARVARD shall distribute the royalties evenly among such agreements, including this Agreement. (d) LICENSEE shall pay HARVARD [*** Redacted] percent ([*** Redacted]%) of SUBLICENSE INCOME received by LICENSEE for a sublicense of PATENT RIGHTS. If compensation for such a sublicense of PATENT RIGHTS is bundled with compensation received for the sublicensing of the other HARVARD patents rights or other HARVARD intellectual property licensed to LICENSEE under the RELATED LICENSE AGREEMENTS or any agreements with HARVARD having the same effective date as this Agreement, then LICENSEE shall pay HARVARD at most the royalty payment due under this Section 4.3(d) for such SUBLICENSE INCOME no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such license agreements. In such a case, LICENSEE shall notify HARVARD of the identity of each license agreement involved and HARVARD shall distribute the royalties equally among those license agreements, including this Agreement. (e) For provision of services under PATENT RIGHTS, LICENSEE shall pay a royalty of [*** Redacted] percent ([*** Redacted]%) of SERVICE INCOME received by LICENSEE from each and every third party ("Third Party") to whom LICENSEE provides such services. In the event any services from which SERVICE INCOME is derived are subject to the payment of royalties under the RELATED LICENSE AGREEMENTS or any agreement with HARVARD having the same effective date as this Agreement, then the total royalty due under all such agreements, including this Agreement, shall be at most the royalty *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 9 payment due under this Section 4.3 on such services, no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such license agreements. In such event, LICENSEE shall notify HARVARD of the identity of each license agreement involved and HARVARD shall distribute the royalties equally among those license agreements, including this Agreement. (f) If the license pursuant to this Agreement is converted to a non-exclusive one under Section 3.2(d) and if another non-exclusive license to any of PATENT RIGHTS is granted or otherwise exists for any field or territory, then the royalty rate of this Agreement shall be adjusted so as not to exceed the royalty rate payable by such other non-exclusive licensee under such PATENT RIGHTS in such field or territory, provided that LICENSEE agrees to amend this Agreement to include terms requested by HARVARD that have been accepted by such other non-exclusive licensee. (g) On sales between LICENSEE and its AFFILIATES for resale, the royalty shall be paid on the NET SALES of the AFFILIATE. (h) In the event that more than one VALID CLAIM within PATENT RIGHTS is applicable to any LICENSED PRODUCT subject to royalties under this Section 4.3, then only one royalty shall be paid to HARVARD in respect of such LICENSED PRODUCT. In no event shall more than one royalty be due to HARVARD with respect to any LICENSED PRODUCT unit; nor shall a royalty be payable under this Section 4.3 with respect to sales of LICENSED PRODUCTS for clinical trials or as samples nor the use of LICENSED PRODUCTS or LICENSED PROCESSES by LICENSEE for such purposes, in each case whether or not in collaboration with a third party. 4.4 No later than January 1 of each calendar year after the effective date of this Agreement, LICENSEE shall pay to HARVARD the following non-refundable license maintenance royalty and/or advance on royalties. Such payments may be credited against running royalties due for that calendar year and Royalty Reports shall reflect such a credit. Such payments shall not be credited against milestone payments (if any) nor against royalties due for any subsequent calendar year. January 1, 2002 $[*** Redacted] January 1, 2003 $[*** Redacted] January 1, 2004 $[*** Redacted] January 1, 2005 $[*** Redacted] January 1, 2006 $[*** Redacted] January 1, 2007 $[*** Redacted] each year thereafter $[*** Redacted] 4.5 Notwithstanding Section 4.4, the minimum royalty set forth in Section 4.4 for the years 2002, 2003, and 2004 will be waived if LICENSEE'S spending on research and development (LICENSEE'S "R&D SPENDING") exceeds the amount set forth below for each category for such year (such amounts below, the "MINIMUM INVESTMENT"). *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 10

LICENSEE'S MINIMUM INVESTMENT may be allocated by LICENSEE in any way within the three categories set forth above among the different subject matter of the RELATED LICENSE AGREEMENTS. ARTICLE V REPORTING 5.1 Within [*** Redacted] of the Effective Date, LICENSEE will provide to HARVARD a written research and development plan acceptable to LICENSEE'S investors under which LICENSEE intends to bring the subject matter of the licenses granted hereunder into commercial use upon execution of this Agreement. Such plan will include projections of sales and proposed marketing efforts. It is understood that LICENSEE may provide one research and development plan for all RELATED LICENSE AGREEMENTS. 5.2 No later than [*** Redacted] days after [*** Redacted] of each [*** Redacted], LICENSEE shall provide to HARVARD a written annual Progress Report describing progress on the commercialization of PATENT RIGHTS during the most recent [*** Redacted] period ending [*** Redacted], the amount of LICENSEE'S R&D SPENDING relating to the subject matter described or claimed in PATENT RIGHTS during such time, and plans for the forthcoming year. If multiple technologies are covered by the license granted hereunder, the Progress Report shall provide the information set forth above for each technology. If progress differs from that anticipated in the plan required under Section 5.1, LICENSEE shall explain the reasons for the difference and, if appropriate or necessary, provide a modified research and development plan for HARVARD'S review. It is understood that LICENSEE may provide one Progress Report covering all RELATED LICENSE AGREEMENTS. 5.3 LICENSEE shall report to HARVARD the date of its first NET SALE of a LICENSED PRODUCT (or the date of its first use of a LICENSED PROCESS from which SERVICE INCOME is derived) in each country within [*** Redacted] days of occurrence. It is understood that LICENSEE shall be obligated to report the date of first sale of LICENSED PRODUCTS (or the first commercial use of LICENSED PROCESSES) under this Section 5.3 only once for each country. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 11 5.4 (a) LICENSEE shall submit to HARVARD within [*** Redacted] days after each calendar [*** Redacted] ending [*** Redacted], a Royalty Report setting forth, for the most recent [*** Redacted] that ended on [*** Redacted] or [*** Redacted], at least the following information: (i) the number and identification of LICENSED PRODUCTS sold by LICENSEE that constitute a NET SALE, in each country; (ii) total amounts received for such LICENSED PRODUCTS; (iii) an accounting for all LICENSED PROCESSES used or sold; (iv) deductions applicable to determine the NET SALES thereof; (v) the amount of SUBLICENSE INCOME received by LICENSEE; (vi) the amount of SERVICE INCOME received by LICENSEE; and (vii) the amount of royalty due for such reporting period, or, if no royalties are due to HARVARD for such reporting period, the statement that no royalties are due. Such report shall be certified as correct by an officer of LICENSEE and shall include a listing of all deductions from royalties. It is understood that LICENSEE may submit one Royalty Report covering all RELATED LICENSE AGREEMENTS. However, the Royalty Report shall, for each type of income, provide a detailed listing of the RELATED LICENSE AGREEMENTS that are involved. (b) LICENSEE shall pay to HARVARD with each such Royalty Report the amount of royalty due with respect to such [*** Redacted]. If multiple technologies are covered by the license granted hereunder, LICENSEE shall specify which PATENT RIGHTS are utilized for each category of LICENSED PRODUCTS and/or LICENSED PROCESSES for which royalties are separately reported in the Royalty Report. (c) All payments due hereunder shall be deemed received when funds are credited to HARVARD'S bank account and shall be payable by check or wire transfer in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the New York Times or the Wall Street Journal) on the last working day of each royalty period. No transfer, exchange, collection or other charges shall be deducted from such payments. If legal restrictions block the removal of local currency from any country where a LICENSED PRODUCT is sold, the royalties payable under this Agreement on NET SALES, SERVICE INCOME and SUBLICENSING INCOME earned in such currency in such country shall continue to be reported and accrued, but will not be paid until such currency may be removed from such country. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 12 (d) All plans or reports received under Sections 5.1, 5.2, 5.3, 5.4 shall deemed Confidential Information of LICENSEE subject to Section 11.1; provided, however, that HARVARD may disclose such information as required by law under Section 11.1 (b), and may include in its usual reports the annual amounts of royalties paid. (e) Late payments shall be subject to a charge of [*** Redacted] and [*** Redacted] percent [*** Redacted%] per month, or $[*** Redacted], whichever is greater. 5.5 In the event of acquisition, merger, change of corporate name, or change of make-up, organization, or identity, LICENSEE shall notify HARVARD in writing within [*** Redacted] days of such event. 5.6 If LICENSEE or any of its sublicensees does not qualify as a "small entity" as provided by the United States Patent and Trademark Office, LICENSEE must notify HARVARD immediately. ARTICLE VI RECORD KEEPING 6.1 LICENSEE shall keep accurate records (together with supporting documentation) of LICENSED PRODUCTS made, used or sold under this Agreement, sufficient to determine the amount of royalties due to HARVARD hereunder. Such records shall be retained for at least [*** Redacted] years following the end of the reporting period to which they relate. They shall be available during normal business hours for examination, upon HARVARD'S reasonable request, not more than once in any [*** Redacted] month period and upon at least [*** Redacted] days prior notice, by an independent accountant under a duty of confidentiality, selected by HARVARD and reasonably acceptable to LICENSEE, for the sole purpose of verifying reports and payments under Section 5.4. In conducting examinations pursuant to this Section, HARVARD'S accountant shall have access to records materially relevant to the calculation of royalties under Article IV. 6.2 HARVARD'S accountant shall only disclose to HARVARD whether the reports and payments of royalties hereunder are accurate, and the amount of the underreporting or underpayment of royalties by LICENSEE, if any. 6.3 Such examination by HARVARD'S accountant shall be at HARVARD'S expense, except that if such examination shows an underreporting or underpayment in excess of [*** Redacted] percent ([*** Redacted]%) for any [*** Redacted] month period, then LICENSEE shall pay the reasonable out-of-pocket cost of such examination as well as any additional sum that would have been payable to HARVARD had the LICENSEE reported correctly, plus interest on said sum at the rate of [*** Redacted] percent [*** Redacted] per month. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 13 ARTICLE VII DOMESTIC AND FOREIGN PATENT FILING AND MAINTENANCE 7.1 Within 30 days of the closing of LICENSEE'S sale of Series A Preferred Stock to venture capital investors, but not later than 60 days after the Effective Date, LICENSEE shall reimburse HARVARD for all reasonable out-of-pocket expenses HARVARD has incurred for the preparation, filing, prosecution and maintenance of PATENT RIGHTS, including for counseling with regard to such preparation, filing, prosecution and maintenance. Such expenses total [*** Redacted] as of the most recent invoice paid by HARVARD. Thereafter, LICENSEE shall reimburse HARVARD for all such future expenses upon receipt of quarterly invoices from HARVARD. Late payment of these invoices shall be subject to interest charges of [*** Redacted] percent ([*** Redacted]%) per month. HARVARD shall be responsible for the preparation, filing, prosecution and maintenance of any and all patent applications and patents included in PATENT RIGHTS. HARVARD will instruct counsel to directly notify HARVARD and LICENSEE and provide them copies of any communications to and from the United States and foreign patent offices relating to said prosecution, and drafts of all communications to the various patent offices, and will instruct counsel to consider any comments on such drafts, so that LICENSEE will be informed and apprised of the continuing prosecution of patent applications in PATENT RIGHTS. LICENSEE shall have reasonable opportunity to participate in decision making on key decisions affecting filing, prosecution and maintenance of patents and patent applications in PATENT RIGHTS. 7.2 HARVARD and LICENSEE shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS and of all patents and patent applications licensed to LICENSEE hereunder, executing all papers and instruments or requiring members of HARVARD to execute such papers and instruments so as to enable HARVARD to apply for, to prosecute and to maintain patent applications and patents in HARVARD'S name in any country. Each party shall provide to the other [*** Redacted] notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents. In particular, LICENSEE must immediately notify HARVARD if LICENSEE does not qualify as a "small entity" as provided by the United States Patent and Trademark Office. 7.3 LICENSEE may elect to surrender its rights to any patent or patent application within PATENT RIGHTS in any country upon [*** Redacted] days written notice to HARVARD. Such notice shall not relieve LICENSEE from responsibility to reimburse HARVARD for expenses under Section 7.1 relating to the filing, prosecution or maintenance of such patent or patent application incurred prior to the receipt of the written notice by HARVARD (or a longer period if specified in LICENSEE'S notice). *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 14 ARTICLE VIII INFRINGEMENT 8.1 With respect to any PATENT RIGHTS that have not been rendered non-exclusive under Section 3.2(d), LICENSEE shall have the right to enforce in its own name and at its own expense any patents within such PATENT RIGHTS. HARVARD agrees to notify LICENSEE promptly of each infringement of such patents of which HARVARD is or becomes aware. 8.2 (a) If LICENSEE elects to commence an action as described above, HARVARD may, to the extent permitted by law, elect to join as a party in that action. Regardless of whether HARVARD elects to join as a party, HARVARD shall cooperate fully with LICENSEE in connection with any such action, including making available relevant personnel, information, records, papers, samples, specimens and other similar materials for the purposes of such action as reasonably requested by LICENSEE through the Office of Technology and Trademark Licensing at HARVARD. (b) If HARVARD elects to join as a party pursuant to Subsection (a), HARVARD shall jointly control the action with LICENSEE. (c) LICENSEE shall reimburse HARVARD for any out-of-pocket costs HARVARD reasonably incurs, including reasonable attorneys' fees, as part of an action brought by LICENSEE under Section 8.1, whether or not HARVARD becomes a co-plaintiff. 8.3 If LICENSEE elects to commence an action as described above, LICENSEE may deduct from its [*** Redacted] to HARVARD with respect to the patent(s) subject to suit an amount not exceeding [*** Redacted] percent ([*** Redacted]%) of LICENSEE'S expenses and costs of such action, including reasonable attorneys' fees and reimbursement of amounts under Section 8.2(c) above; provided, however, that such reduction shall not exceed [*** Redacted] percent ([*** Redacted]%) of the [*** Redacted] due to HARVARD with respect to the patent(s) subject to suit for each calendar year. If such [*** Redacted] percent ([*** Redacted]%) of LICENSEE'S expenses and costs exceeds the amount of [*** Redacted] deducted by LICENSEE for any calendar year, LICENSEE may to that extent reduce [*** Redacted] due to HARVARD from LICENSEE in succeeding calendar years, but never by more than [*** Redacted] percent ([*** Redacted]%) of the [*** Redacted] due in any [*** Redacted] with respect to the patent(s) subject to suit. 8.4 Neither party may enter into a settlement, consent judgment or other voluntary final disposition of any suit under Section 8.1, 8.6, 8.7 and 8.8 without the prior written consent of other party, which consent shall not be unreasonably withheld, if such settlement, consent judgment or other voluntary final disposition includes any admissions or statements about the validity or enforceability of PATENT RIGHTS. 8.5 Recoveries or reimbursements from actions commenced pursuant to this Article shall first be applied to reimburse LICENSEE and HARVARD for litigation costs not paid from royalties [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 15 pursuant to Section 8.3. Any remaining recoveries or reimbursements shall be shared as follows: [*** Redacted]% to LICENSEE and [*** Redacted]% to HARVARD. 8.6 If LICENSEE elects not to exercise its right to enforce the PATENT RIGHTS against any infringement pursuant to this Article, HARVARD may do so at its own expense, controlling such action and retaining all recoveries therefrom. LICENSEE shall cooperate fully with HARVARD in connection with any such action. 8.7 Without limiting the generality of Section 8.6, HARVARD may, at its election and by notice to LICENSEE, establish a time limit of [*** Redacted] days for LICENSEE to decide whether to enforce the PATENT RIGHTS against any infringement of which HARVARD is or becomes aware. If, by the end of such [*** Redacted] day period, LICENSEE has not commenced such an action or taken reasonable efforts to settle such infringement, HARVARD may enforce the PATENT RIGHTS against such an infringement at its own expense, controlling such action and retaining all recoveries therefrom. Notwithstanding sections 8.6 and 8.7, HARVARD shall not bring any action alleging the infringement of PATENT RIGHTS against any sublicensee of LICENSEE under PATENT RIGHTS, without the consent of LICENSEE. 8.8 If a declaratory judgment action is brought naming LICENSEE as a defendant and alleging invalidity of any of the PATENT RIGHTS, if both parties agree, HARVARD may take over the sole defense of the action at its own expense. LICENSEE shall cooperate fully with HARVARD in connection with any such action. 8.9 If LICENSEE or any sublicensee, distributor or other customer is sued by a third party charging infringement of patent rights that dominate a claim of PATENT RIGHTS, with respect to the manufacture, use, distribution or sale of LICENSED PRODUCT or practice or use of a LICENSED PROCESS, LICENSEE will promptly notify HARVARD. As between the parties to this Agreement, LICENSEE will be entitled to control the defense in any such action(s) and withhold up to one-half (1/2) of the amounts otherwise payable to HARVARD hereunder to pay for defense costs, attorneys fees and any liability incurred in such infringement suit(s). If Licensee is required to pay a royalty or other amount to a third party as a result of a final judgment or settlement, the amounts payable to HARVARD hereunder will be reduced as provided in Section 4.3 above. ARTICLE IX TERMINATION OF AGREEMENT 9.1 This Agreement, unless terminated as provided herein, shall remain in effect until the last patent or patent application in PATENT RIGHTS has expired or been abandoned. 9.2 HARVARD may terminate this Agreement as follows: (a) If LICENSEE does not make a payment due hereunder and fails to cure such nonpayment (including the payment of interest in accordance with Section 5.4(e)) within [*** Redacted] days after the date of notice in writing of such non-payment by HARVARD. If LICENSEE disputes the amount of such non-payment in writing *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 16 within such [*** Redacted] day period, HARVARD shall not have the right to terminate this Agreement until it has been determined in an arbitration proceeding under Section 11.10 below that LICENSEE has failed to pay amounts owed hereunder, and thereafter Licensee does not cure such failure within [*** Redacted] days after such determination. This Section 9.2(a) shall not, however, suspend any obligation of LICENSEE to compensate HARVARD for any undisputed amounts, as provided for under any term of this Agreement, during the pendency of the foregoing arbitration and cure period. (b) If LICENSEE defaults in its obligations under Sections 11.2(c) and 11.2(d) to procure and maintain insurance, and fails to cure such breach within [*** Redacted] days after notice in writing of such breach by HARVARD. (c) If LICENSEE shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it, provided that such bankruptcy petition is not dismissed within [*** Redacted] days after its filing. Such termination shall be effective immediately upon HARVARD giving written notice to LICENSEE. (d) If LICENSEE is convicted of a felony within the United States relating to the manufacture, use, or sale of LICENSED PRODUCTS. (e) Except as provided in Subsections (a), (b), (c), (d) above, if LICENSEE materially breaches any obligations under this Agreement and the breach has not been cured within [*** Redacted] days after the date of notice in writing of such breach by HARVARD. If LICENSEE disputes in writing that it has materially breached this Agreement within such [*** Redacted] day period, HARVARD shall not have the right to terminate this Agreement until it has been determined in an arbitration proceeding under Section 11.10 below that LICENSEE has materially breached this Agreement, and thereafter Licensee does not cure such breach within [*** Redacted] days after such determination. This Section 9.2(e) shall not, however, suspend any obligation of LICENSEE to compensate HARVARD for any undisputed amounts, as provided for under any term of this Agreement, during the pendency of the foregoing arbitration and cure period. 9.3 All sublicenses granted by LICENSEE under this Agreement in compliance with the terms and conditions hereof shall survive the termination of this Agreement upon the request of the party to whom such sublicense is granted, provided that such party agrees in writing that (i) it will pay all royalties or other amounts that otherwise would have been due thereafter under such sublicense directly to HARVARD rather than LICENSEE, and (ii) HARVARD shall not be held liable for the breach or the performance of any obligations stated in such sublicense unless such obligations have been expressly assumed in writing by HARVARD. 9.4 LICENSEE may terminate this Agreement by giving [*** Redacted] days advance written notice of termination to HARVARD. Upon termination, LICENSEE shall promptly *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 17 submit a Royalty Report to HARVARD for the final reporting period and any royalty payments incurred during such reporting period, and any unreimbursed patent expenses under Section 7 that have been invoiced by HARVARD, shall become immediately payable with such Royalty Report. 9.5 Articles I, VI, IX, X and XI (except for Section 11.7) of this Agreement shall survive termination. Article VIII shall survive with respect to any infringement of third parties and/or any lawsuits filed by or against LICENSEE, prior to the termination of this Agreement. In the event this Agreement is terminated for any reason, LICENSEE may, within [*** Redacted] after the effective date of such termination, sell or otherwise dispose of all LICENSED PRODUCTS that LICENSEE may have on hand on the effective date of such termination, and fulfill any contracts requiring the use of LICENSED PRODUCTS and/or LICENSED PROCESSES that LICENSEE may have entered into prior to the date of such termination, subject to LICENSEE'S payment of amounts due to HARVARD under Section 4.3 of this Agreement. 9.6 In the event that after termination of this Agreement, HARVARD licenses PATENT RIGHTS to another licensee, HARVARD shall use commercially reasonable efforts to require such other licensee to pay the costs of the preparation, filing, prosecution and maintenance of PATENT RIGHTS. HARVARD shall reimburse LICENSEE for any costs so paid by such other licensee to the extent LICENSEE paid for such costs under Section 7.1. ARTICLE X REPRESENTATIONS AND WARRANTIES 10.1 Except for the rights, if any, of the Government of the United States, HARVARD represents and warrants that: (a) HARVARD is the owner of the entire right, title and interest in and to the PATENT RIGHTS as they exist on the Effective Date; (b) HARVARD has the right and authority to enter into this Agreement and grant the rights and licenses set forth herein, including without limitation under PATENT RIGHTS; (c) HARVARD has not previously granted, and will not grant in the future, any rights in the PATENT RIGHTS that are inconsistent with the rights and licenses granted to LICENSEE herein; (d) To the best knowledge of HARVARD without having made an investigation, as of the Effective Date, practice of inventions within the PATENT RIGHTS does not infringe any patent rights, trade secrets or other proprietary rights of any third party, (e) To the best knowledge of HARVARD, as of the Effective Date, HARVARD does not own any rights in any other patent or patent application, the claims of which would *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 18 dominate the claims of a patent or patent application within the PATENT RIGHTS or any practice of PATENT RIGHTS. If HARVARD owns, now or thereafter, any such rights in such patents or patent applications on which [*** Redacted] is an inventor, HARVARD will negotiate in good faith to the extent it has the legal right to do so with LICENSEE to grant LICENSEE rights to the extent sufficient to practice PATENT RIGHTS. (f) To the best knowledge of HARVARD, all prior and current agreements between HARVARD and other sponsors of research under which HARVARD has obligations relating to PATENT RIGHTS are listed on Appendix C. 10.2 Except as set forth in this Agreement, HARVARD does not warrant the validity of the PATENT RIGHTS licensed hereunder and makes no representations whatsoever with regard to the scope of the licensed PATENT RIGHTS or that such PATENT RIGHTS may be exploited by LICENSEE, an AFFILIATE, or sublicensee without infringing other patents. 10.3 EXCEPT FOR THE WARRANTIES STATED IN THIS AGREEMENT, HARVARD EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PATENT RIGHTS OR INFORMATION SUPPLIED BY HARVARD, LICENSED PROCESSES OR LICENSED PRODUCTS CONTEMPLATED BY THIS AGREEMENT. ARTICLE XI GENERAL 11.1 (a) The parties may, from time to time, in connection with this Agreement disclose to each other Confidential Information. Any Confidential Information shall be in writing and marked "confidential" and disclosed only to the Office of Technology and Trademark Licensing. As used in the this Agreement, "Confidential Information" of a party shall mean (i) any information disclosed in writing by such party to the other party, which is marked by such party with the legend "CONFIDENTIAL" or other similar legend sufficient to identify the information as its confidential information, (ii) any information disclosed orally by such party to the other party which is identified as confidential at the time of disclosure and is confirmed as confidential in writing within thirty (30) days after such time of disclosure, or (iii) any information deemed Confidential Information under the terms of this Agreement. With respect to categories (i) and (ii) above, "Confidential Information" shall not include any information that is: (1) already known to the receiving party at the time of disclosure hereunder, or (2) now or hereafter becomes publicly known other than through acts or omissions of the receiving party, or (3) is disclosed to the receiving party by a third party under no obligation of confidentiality to the disclosing party or (4) is independently developed by the receiving party without use of the Confidential Information of the disclosing party. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 19 (b) Each party shall maintain in confidence, and shall not use for any purpose or disclose to any third party, the Confidential Information of the other party. Notwithstanding the foregoing, the receiving party may use or disclose the Confidential Information of the disclosing party (i) to the extent necessary to exercise its rights or fulfill its obligations and/or duties under this Agreement, and (ii) to comply with applicable law or governmental regulations or court order, provided that the receiving party will give reasonable advance notice to the disclosing party, and will use its reasonable efforts to minimize the disclosure of Confidential Information and to secure confidential treatment of any Confidential Information disclosed. (c) The terms of this Agreement shall be deemed "Confidential Information" of both parties. In addition to the permissible disclosures set forth in subsection (b) above, LICENSEE may disclose such terms in confidence to its financial and legal advisors, consultants, potential or actual investors, potential or actual merger or acquisition partners, and others on a need-to-know basis. 11.2 (a) LICENSEE shall indemnify, defend and hold harmless HARVARD and its current or former and future directors, governing board members, trustees, officers, faculty and employees (collectively, the "INDEMNITEES"), from and against any lawsuit or cause or action against the INDEMNITEES brought by a third party (collectively, "Claims"), based upon, arising out of, or otherwise relating to this Agreement, including without limitation any cause of action relating to product liability concerning any product, process, or service made, used or sold pursuant to any right or license granted under this Agreement, except to the extent such Claims arise out of or otherwise relate to the gross negligence or intentional misconduct of any INDEMNITEES; and further provided that (i) LICENSEE receives prompt notice of any such Claims; (ii) LICENSEE is given the exclusive right to control the defense and settlement of such Claims; and (iii) LICENSEE shall not be obligated to indemnify any INDEMNITEE in connection with any settlement for any Claim unless LICENSEE consents in writing to such settlement. (b) LICENSEE shall, at its own expense, defend against any actions brought or filed against any INDEMNITEE hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought. (c) Beginning at the time any such product, process or service is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by LICENSEE or by a SUBLICENSEE, AFFILIATE or agent of LICENSEE, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than [*** Redacted] per incident and [*** Redacted] annual aggregate and naming the Indemnitees as additional insureds. During clinical trials of any such product, process or service, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in such equal or lesser amount as HARVARD shall require, naming the Indemnitees as additional insureds. Such commercial general liability insurance shall provide: (i) product liability coverage; and (ii) broad form contractual liability coverage for LICENSEE'S indemnification under this Agreement. If LICENSEE elects to self- *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 20 insure all or part of the limits described above (including deductibles or retentions which are in excess of [*** Redacted] annual aggregate) such self-insurance program must be acceptable to HARVARD and the Risk Management Foundation of the Harvard Medical Institutions, Inc. in their sole discretion. The minimum amounts of insurance coverage required shall not be construed to create a limit of LICENSEE's liability with respect to its indemnification under this Agreement. (d) LICENSEE shall provide HARVARD with written evidence of such insurance upon request of HARVARD. LICENSEE shall provide HARVARD with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if LICENSEE does not obtain replacement insurance providing comparable coverage within such fifteen (15) day period, HARVARD shall have the right to terminate this Agreement in accordance with Section 9.2(b). (e) LICENSEE shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during: (i) the period that any product, process, or service, relating to, or developed pursuant to, this Agreement is being commercially distributed or sold by LICENSEE or by a sublicensee, AFFILIATE or agent of LICENSEE; and (ii) a reasonable period after the period referred to in Subsection (e)(i) above which in no event shall be less than [*** Redacted]. 11.3 Nothing in this Agreement shall be construed as conferring any right to use HARVARD's name or insignia, or any adaptation of them, or the name of any of HARVARD's inventors in any advertising, promotional or sales literature without the prior written approval of HARVARD, or the inventor in the case of the use of the name of an inventor. 11.4 Except as stated in this Section 11.4, without the prior written approval of HARVARD in each instance, neither this Agreement nor the rights granted hereunder shall be transferred or assigned in whole or in part by LICENSEE to any person whether voluntarily or involuntarily, by operation of law or otherwise. LICENSEE may transfer or assign this Agreement and all rights hereunder, upon notice to HARVARD but without its consent, to any entity that succeeds to all or substantially all of the business of LICENSEE to which this Agreements pertains, whether by merger, operation of law, purchase or sale of all or substantially all of LICENSEE's stock or assets or otherwise; provided that such assignee or transferee promptly agrees in writing to be bound by the terms and conditions of this Agreement. Subject to the foregoing, this Agreement shall be binding upon the respective successors, legal representatives and assignees of HARVARD and LICENSEE. 11.5 The interpretation and application of the provisions of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. 11.6 LICENSEE shall comply with all applicable laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations among other things, prohibit or *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 21 require a license for the export of certain types of technical data to certain specified countries. LICENSEE hereby agrees and gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by LICENSEE or its AFFILIATES or sublicensees, and that it will defend and hold HARVARD harmless in the event of any legal action of any nature occasioned by such violation with respect to LICENSED PRODUCTS. 11.7 LICENSEE agrees: (i) to obtain all regulatory approvals required for the manufacture and sale of LICENSED PRODUCTS and LICENSED PROCESSES; and (ii) to mark LICENSED PRODUCTS with the numbers of the applicable patents within PATENT RIGHTS, to the extent required by law. LICENSEE also agrees to register or record this Agreement as is required by law or regulation in any country where the license is in effect, and HARVARD shall cooperate fully with LICENSEE in connection with any such registration or recordation. 11.8 Any notices to be given hereunder shall be sufficient if signed by the party (or party's attorney) giving same and either: (i) delivered in person; (ii) mailed certified mail return receipt requested; or (iii) faxed to other party if the sender has evidence of successful transmission and if the sender promptly sends the original by ordinary mail, in any event to the following addresses: If to LICENSEE: c/o CW Group East 1041 Third Avenue New York, New York 10021 Attn: Lawrence A. Bock Fax: 212/644-0354 cc: Wilson, Sonsini, Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304 Attn: Michael J. O'Donnell, Esq. Fax: 650/493-6811 If to HARVARD: Office for Technology and Trademark Licensing Harvard University Holyoke Center, Suite 727 1350 Massachusetts Avenue Cambridge, MA 02138 Fax: (617)495-9568 By such notice either party may change their address for future notices. 22 Notices delivered in person shall be deemed given on the date delivered. Notices sent by fax shall be deemed given on the date faxed. Notices mailed shall be deemed given on the date postmarked on the envelope. 11.9 Should a court of competent jurisdiction later hold any provision of this Agreement to be invalid, illegal, or unenforceable, and such holding is not reversed on appeal, it shall be considered severed from this Agreement. All other provisions, rights and obligations shall continue without regard to the severed provision, provided that the remaining provisions of this Agreement are in accordance with the intention of the parties. 11.10 In the event of any controversy or claim arising out of or relating to any provision of this Agreement or the breach thereof, the parties shall try to settle such conflict amicably between themselves. Subject to the limitation stated in the final sentence of this Section, any such conflict which the parties are unable to resolve promptly shall be settled through arbitration conducted in accordance with the rules of the American Arbitration Association. The demand for arbitration shall be filed within a reasonable time after the controversy or claim has arisen, and in no event after the date upon which institution of legal proceedings based on such controversy or claim would be barred by the applicable statute of limitation. Such arbitration shall be held in Boston, Massachusetts. The award through arbitration shall be final and binding. Either party may enter any such award in a court having jurisdiction or may make application to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Notwithstanding the foregoing, either party may, without recourse to arbitration, assert against the other party a third-party claim or cross-claim in any action brought by a third party, to which the subject matter of this Agreement may be relevant. 11.11 This Agreement constitutes the entire understanding between the parties and neither party shall be obligated by any condition or representation other than those expressly stated herein or as may be subsequently agreed to by the parties hereto in writing. 11.12 Nothing in this Agreement shall be deemed to require LICENSEE to exploit the PATENT RIGHTS, except to the extent expressly set forth in this Agreement, and nothing in this Agreement shall be deemed to prevent LICENSEE from commercializing products similar to or competitive with a LICENSED PRODUCT. 11.13 The relationship between HARVARD and LICENSEE established by this Agreement is that of independent contractors. Nothing in this Agreement shall be construed to create any other relationship between HARVARD and LICENSEE. Neither party shall have any right, power or authority to assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other. 11.14 In the event either party hereto is prevented from or delayed in the performance of any of its obligations hereunder by reason of acts of God, war, strikes, riots, storms, fires or any other cause whatsoever beyond the reasonable control of the party, the party so prevented or delayed shall be excused from the performance of any such obligation to the extent and during the period of such prevention or delay. 23 11.15 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OF LIKELIHOOD OF SAME. 11.16 This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives. PRESIDENT AND FELLOWS OF HARVARD COLLEGE COMPANY /s/ Joyce Brinton /s/ Lawrence A. Bock - --------------------------------------------- --------------------------- Joyce Brinton, Director Signature Office for Technology and Trademark Licensing 10/2/01 Lawrence A. Bock ------------ --------------------------- Date Name President and CEO --------------------------- Title 10/3/01 ------------------- Date 24 APPENDIX A The following comprise PATENT RIGHTS: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 25 APPENDIX B NANOSYS, INC. CAPITALIZATION TABLE - CONFIDENTIAL FOUNDERS' STOCK (Common Stock Capitalization Before Series A Preferred Stock Financing)

PROPOSED SERIES A PREFERRED STOCK ~~Investors as a group 5,000,000-6,666,667 $ 1,500-2,000,000 Total Series A Preferred Shares 5,000,000-6,666,667 $ 1,500-2,000,000~~

# Founders stock will vest monthly over a five year period + [*** Redacted] shares will be fully vested * Shares will be issued in the form of an option *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 26 APPENDIX C
CASE LEAD INVENTOR REPORT DATE TITLE AGENCY GRANT NUMBERS - ---- --------------- ----------- -------------------- ------------------------ ---------------- ~~[***Redacted]~~
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. EX-10.5.1 14 f97636orexv10w5w1.txt EXHIBIT 10.5.1 EXHIBIT 10.5.1 CO-EXCLUSIVE LICENSE AGREEMENT (CASE [*** Redacted]) Between President and Fellows of Harvard College And NanoSys, Inc. Effective as of October 4, 2001 ("Effective Date") Re: Harvard Case [*** Redacted] In consideration of the mutual promises and covenants set forth below, the parties hereto agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the following meanings: 1.1 ACADEMIC RESEARCH PURPOSES: use of PATENT RIGHTS solely for academic non-commercial research or other not-for-profit scholarly purposes, which use is undertaken at a non-profit or governmental institution. ACADEMIC RESEARCH PURPOSES does not include selling products covered by PATENT RIGHTS or using PATENT RIGHTS in researching, developing, producing or manufacturing products for sale, or performance of services for a fee or other financial consideration. It is understood that using the PATENT RIGHTS to conduct normal research activities at non-profit or governmental institution is within the defined term of ACADEMIC RESEARCH PURPOSES. 1.2 AFFILIATE: any entity which controls, is controlled by, or is under common control with a party. An entity shall be regarded as in control of another entity for purposes of this definition if it owns or controls at least fifty percent (50%) of the shares entitled to vote in the election of directors (or in the case of an entity that is not a corporation, for the election of the corresponding managing authority). Unless otherwise specified, the term LICENSEE includes AFFILIATES. 1.3 FIELD: All fields of use. 1.4 HARVARD: President and Fellows of Harvard College, a nonprofit Massachusetts educational corporation having offices at the Office for Technology and Trademark *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Licensing, Holyoke Center, Suite 727, 1350 Massachusetts Avenue, Cambridge, Massachusetts 02138. 1.5 LICENSED PROCESSES: methods, processes or procedures covered by at least one VALID CLAIM included within the PATENT RIGHTS. 1.6 LICENSED PRODUCTS: products covered by at least one VALID CLAIM included within the PATENT RIGHTS or products made in accordance with LICENSED PROCESSES. 1.7 LICENSEE: Nanosys, Inc., a corporation organized under the laws of Delaware having its principal offices at CW Group East, 1041 Third Avenue, New York, New York 10021. 1.8 NET SALES: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2 [*** Redacted] 1.9 PATENT RIGHTS: PATENT RIGHTS shall include (i) the applications and patents as listed in Appendix A of this Agreement, (ii) any foreign counterparts to such patents and patent applications, (iii) the inventions described and claimed in the foregoing; (iv) any divisions, continuations, substitutions of the foregoing, and (v) specific claims of any continuations-in-part of the foregoing to the extent the specific claims are directed to subject matter described in the foregoing in a manner sufficient to support such specific claims under 35 U.S.C. and to the extent Licensable by HARVARD, (vi) all patents issuing on any of the foregoing, and (vii) registrations, renewals, reissues, reexaminations, extensions or patents of addition of any kind with respect to any of such patents. For purposes of this Agreement "Licensable" shall mean those claims of continuations-in- part filed after the Effective Date for which HARVARD has sole ownership (or has been granted the sole right to license by a co-owner) and where there are no obligations to grant licenses to a third party as the result of research support provided to one or more of the inventors. 1.10 SERVICE INCOME: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 3 [*** Redacted] 1.11 SUBLICENSE INCOME: [*** Redacted] 1.12 TERRITORY: Worldwide. 1.13 VALID CLAIM: either (i) a claim of an issued patent that has not expired or been held unenforceable or invalid by an agency or a court of competent jurisdiction, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; provided, however, that if the holding of such court or agency is later reversed by a court or agency with overriding authority, the claim shall be reinstated as a Valid Claim with respect to Net Sales made after the date of such reversal, or (ii) a claim of a pending patent application that has not been abandoned or finally rejected without the possibility of appeal or re-filing and that has been pending for less than five (5) years from its priority date, and is being actively prosecuted in good faith. 1.14 The terms "Public Law 96-517" and "Public Law 98-620" include all amendments to those statutes. 1.15 The terms "sold" and "sell" include, without limitation, leases and other dispositions and similar transactions. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -4- 1.16 RELATED LICENSE AGREEMENTS: Other patent license agreements between LICENSEE and HARVARD licensing patent rights known internally at HARVARD as Case [*** Redacted] to LICENSEE. 1.17 R&D SPENDING, MINIMUM INVESTMENT: shall have the meanings as set forth in Section 4.5. 1.18 DEVELOPMENT PAYMENTS: DEVELOPMENT PAYMENTS shall mean (a) any payments, in consideration for, or to support, research and/or development efforts by LICENSEE and (b) any reimbursement of expenses including without limitation patent expenses. ARTICLE II RECITALS 2.1 HARVARD is owner (or HARVARD will be owner) by assignment from [*** Redacted] of their entire right, title and interest in the PCT application [*** Redacted] (claiming priority to US Provisional Application [*** Redacted], in the foreign and US patent applications corresponding thereto, and in the inventions described and claimed therein. 2.2 HARVARD has the authority to issue licenses under PATENT RIGHTS. 2.3 HARVARD is committed to the policy that ideas or creative works produced at HARVARD should be used for the greatest possible public benefit, and believes that every reasonable incentive should be provided for the prompt introduction of such ideas into public use, all in a manner consistent with the public interest. 2.4 LICENSEE intends to use commercially reasonable efforts to develop the invention(s), and to bring to market at least one product falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in the patents rights licensed under such agreements. 2.5 LICENSEE is desirous of obtaining a co-exclusive license in the TERRITORY in order to practice the above-referenced invention covered by PATENT RIGHTS in the United States and in certain foreign countries, and to manufacture, use and sell in the commercial market the products made in accordance therewith, and HARVARD is desirous of granting such a license to LICENSEE in accordance with the terms of this Agreement. ARTICLE III GRANT OF RIGHTS 3.1 HARVARD hereby grants to LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, a co-exclusive license (with Nantero, Inc. and except as set forth in Sections 3.2(a) and 3.2(b)) under PATENT RIGHTS in the TERRITORY and in the FIELD (i) to make and have made, to use and have used, to sell and have sold, to offer for *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 5 sale, import, export, or otherwise distribute the LICENSED PRODUCTS, (ii) to practice the LICENSED PROCESSES, and (iii) to otherwise fully exploit the PATENT RIGHTS, and (iv) to have the foregoing performed on behalf of LICENSEE by a third party, in each case for the life of the PATENT RIGHTS. The foregoing license under PATENT RIGHTS shall include the right to grant sublicenses only in accordance with Section 3.2(b)(iii). LICENSEE shall promptly provide copies of any sublicenses of PATENT RIGHTS to HARVARD for its review. Unless HARVARD has rendered the license under PATENT RIGHTS non-exclusive under Section 4.3(d), HARVARD agrees that it will not grant licenses under PATENT RIGHTS to others, nor make, use, sell, offer for sale, import or otherwise exploit PATENT RIGHTS itself except to Nantero Inc. and as required by HARVARD's obligations in Section 3.2(a) or as permitted in Section 3.2(b) 3.2 The granting and exercise of this license is subject to the following conditions: (a) HARVARD's "Statement of Policy in Regard to Inventions, Patents and Copyrights," dated August 10, 1998, Public Law 96-517 and Public Law 98-620, and HARVARD's obligations under prior or current agreements with other sponsors of research and, with regard to continuations-in-part contained in the PATENT RIGHTS, any future agreements with other sponsors of research related to such continuations-in-part. Any right granted in this Agreement greater than that permitted under Public Law 96-517, or Public Law 98-620, shall be subject to modification to the extent required to conform to the provisions of those statutes. (b) This co-exclusive license shall mean that LICENSEE shall have the exclusive rights to PATENT RIGHTS except as provided in 3.2(a) and as provided below. (i) HARVARD reserves the right to make and use, and grant to other non-profit or governmental institutions non-exclusive licenses to make and use, in each case solely for ACADEMIC RESEARCH PURPOSES the subject matter described and claimed in PATENT RIGHTS. HARVARD shall promptly notify LICENSEE of any rights granted to any third party (other than the U.S. government) under Sections 3.2(a) and (b). (ii) LICENSEE expressly recognizes that Nantero, Inc. ("NANTERO") currently has the right to obtain a co-exclusive license under PATENT RIGHTS. In the event that NANTERO's rights should expire or terminate for any reason, HARVARD shall immediately notify LICENSEE, and LICENSEE shall have the right to convert its license to PATENT RIGHTS hereunder to an exclusive (subject to Sections 3.2(a) and 3.2(b)(i)) and fully sublicensable license upon the payment of [*** Redacted] to HARVARD. (iii) Neither LICENSEE nor NANTERO may grant sublicenses under PATENT RIGHTS unless (x) such entity can demonstrate to HARVARD that it has added significant value to the PATENT RIGHTS to be sublicensed, and that its sublicense of PATENT RIGHTS accompanies a substantial and essentially simultaneous license of such added value in the form of LICENSEE-owned intellectual property, or (y) such entity is granting an authorized sublicense under other patent rights licensed exclusively from HARVARD which are *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. dominated by PATENT RIGHTS, and its sublicense of PATENT RIGHTS is therefore necessary to permit the sublicensee to practice such other HARVARD patent rights, or (z) such entity obtains the approval of HARVARD and the other co-exclusive licensee of PATENT RIGHTS. Notwithstanding the foregoing, the restrictions on sublicensing set forth in this Section 3.2(b)(iii) shall not apply to LICENSEE, and LICENSEE shall have the full unrestricted right to grant sublicenses, in the event LICENSEE's license to PATENT RIGHTS is converted to an exclusive license under Section 3.2(b)(ii). (c) LICENSEE shall use commercially reasonable efforts to effect introduction into the commercial market at least [*** Redacted] falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in PATENT RIGHTS, consistent with sound and reasonable business practice and judgment; thereafter, until the expiration of this Agreement, LICENSEE shall use commercially reasonable efforts to endeavor to keep any [*** Redacted] reasonably available to the public so long as it shall be a sound and reasonable commercial practice to do so. (d) At any time after [*** Redacted] years from the effective date of this Agreement, HARVARD may render the license non-exclusive if LICENSEE has not: (i) used commercially reasonable efforts to put the licensed subject matter into commercial use in one or more of the countries hereby licensed, directly or through a sublicense; nor (ii) used commercially reasonable efforts to keep products falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in PATENT RIGHTS reasonably available to the public so long as it shall be a sound and reasonable commercial practice to do so; nor (iii) engaged in research, development, manufacturing, marketing or sublicensing activity that is commercially reasonably appropriate to achieving Section 3.2(d)(i) or 3.2(d)(ii). LICENSEE shall be deemed to have satisfied Section 3.2(d)(iii), and HARVARD shall not render the license of PATENT RIGHTS granted hereunder non-exclusive, if LICENSEE's R&D SPENDING exceeds the MINIMUM INVESTMENT for such year as set forth in Section 4.5. (e) In all sublicenses granted by LICENSEE hereunder, LICENSEE shall include a requirement that the sublicensee use commercially reasonable efforts to put the subject matter of the sublicense into commercial use, provided that such sublicensee is authorized to develop and sell to the public a [*** Redacted] covered by PATENT RIGHTS on its own behalf. LICENSEE shall further provide that such sublicenses are subject and subordinate to the terms and conditions of this Agreement, except for *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 7 the [*** Redacted] paid by such sublicensee to the LICENSEE. Copies of all sublicense agreements hereunder shall be provided promptly to HARVARD. All sublicense agreements of LICENSEE provided to HARVARD shall deemed Confidential Information of LICENSEE subject to Section 11.1. (f) At any time [*** Redacted] years after the effective date of this Agreement, if LICENSEE is unable or unwilling to grant sublicenses, either [*** Redacted] by HARVARD or by a [*** Redacted] or otherwise, then HARVARD may directly license such [*** Redacted], but only if: (i) LICENSEE is not currently pursuing development of LICENSED PRODUCTS for the same application as contemplated by the potential sublicensee, or LICENSEE commits to do so within a [*** Redacted] period, (ii) the granting of such a license by HARVARD to the potential sublicensee will increase the availability of useful products to the public, (iii) the granting of such license by HARVARD will not materially adversely affect LICENSEE's then current business or reasonably foreseeable future business (e.g., such license is not intended for an application competitive with LICENSEE) and (iv) HARVARD notifies LICENSEE of its intention to grant such license and permits LICENSEE a reasonable period to negotiate a sublicense on its own. (g) To the extent required by law, until this license is rendered non-exclusive in the United States under Section 3.2 (d), LICENSEE shall cause any LICENSED PRODUCT produced for sale in the United States to be manufactured substantially in the United States. 3.3 All rights reserved to the United States Government and others under Public Law 96-517, and Public Law 98-620, shall remain and shall in no way be affected by this Agreement. 3.4 HARVARD shall promptly notify LICENSEE when any new patent or patent application arises from (i) research conducted in the laboratory of [*** Redacted], or (ii) improvements made by HARVARD under the direction of [*** Redacted] on the subject matter described in PATENT RIGHTS. If LICENSEE so requests and the intellectual property is available for licensing, HARVARD will evaluate in good faith LICENSEE's proposal along with proposals received from any third parties. Any decision to grant a license to LICENSEE shall be subject to approval by HARVARD's Committee on Patents and Copyrights. In the event LICENSEE and HARVARD cannot agree on terms for a license to any new intellectual property which is dominated by PATENT RIGHTS, HARVARD shall not offer any third party terms more favorable than the terms offered to LICENSEE. ARTICLE IV ROYALTIES 4.1 LICENSEE shall pay to HARVARD a non-refundable license royalty fee in the sum of [*** Redacted] upon execution of this Agreement. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 8 4.2 As consideration for the rights granted hereunder, LICENSEE shall pay to HARVARD a non-refundable fee in the form of stock of LICENSEE as follows: (i) LICENSEE shall issue to HARVARD [*** Redacted] fully vested shares, at a price per share of $0.001 per share and an aggregate value of $[*** Redacted] of LICENSEE's common stock which represent [*** Redacted] percent ([*** Redacted]%) of the reserved shares for founders (total [*** Redacted] shares) shown on the capitalization table of LICENSEE attached as Appendix B ("Shares") upon execution of this Agreement, provided, however, that HARVARD shall be subject to and enter into (1) appropriate agreements and related documents as required of other stockholders of LICENSEE, including without limitation a Common Stock Purchase Agreement, and (2) a Voting Agreement by and among the LICENSEE, HARVARD and certain other holders of common stock of LICENSEE dated as of even date hereof. (ii) HARVARD's ownership rights to Shares shall not be affected should the license pursuant to this Agreement be terminated by LICENSEE or HARVARD. 4.3 (a) LICENSEE shall pay to HARVARD during the term of this Agreement a royalty on NET SALES by LICENSEE according to the following schedule: (i) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications; (ii) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications; or (iii) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications. In the event, any NET SALES by LICENSEE reasonably falls within more than one of categories (i) to (iii) above, LICENSEE shall pay to HARVARD the lowest applicable royalty set forth in such categories. (b) For each LICENSED PRODUCT sold by LICENSEE, LICENSEE may credit up to [*** Redacted] of royalties that LICENSEE is paying to third parties (or HARVARD under agreements not included within section 4.3(c)) on LICENSEE's sales of that LICENSED PRODUCT, provided that the royalty paid to HARVARD shall not be reduced below [*** Redacted] percent ([*** Redacted]%) of the NET SALES of that LICENSED PRODUCT for which such third party royalties are being paid. (c) In the event that sales of a LICENSED PRODUCT are subject to the payment of royalties under one or more of the RELATED LICENSE AGREEMENTS or any license agreements with HARVARD with the same effective date as this Agreement, then the total royalty payment due HARVARD under all such agreements including this Agreement shall be at most the royalty payment due under this Section 4.3 on such *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 9 NET SALE, no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such agreement. LICENSEE shall notify HARVARD of the identity of each license agreement that includes patent rights covering the product or process, and HARVARD shall distribute the royalties evenly among such agreements, including this Agreement. (d) LICENSEE shall pay HARVARD [*** Redacted] percent ([*** Redacted]%) of SUBLICENSE INCOME received by LICENSEE for a sublicense of PATENT RIGHTS. If compensation for such a sublicense of PATENT RIGHTS is bundled with compensation received for the sublicensing of the other HARVARD patents rights or other HARVARD intellectual property, licensed to LICENSEE under the RELATED LICENSE AGREEMENTS or any agreements with HARVARD having the same effective date as this Agreement, then LICENSEE shall pay HARVARD at most the royalty payment due under this Section 4.3(d) for such SUBLICENSE INCOME no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such license agreements. In such a case, LICENSEE shall notify HARVARD of the identity of each license agreement involved and HARVARD shall distribute the royalties equally among those license agreements, including this Agreement. (e) For provision of services under PATENT RIGHTS, LICENSEE shall pay a royalty of [*** Redacted] percent ([*** Redacted]%) of SERVICE INCOME received by LICENSEE from each and every third party ("Third Party") to whom LICENSEE provides such services. In the event any services from which SERVICE INCOME is derived are subject to the payment of royalties under the RELATED LICENSE AGREEMENTS or any agreement with HARVARD having the same effective date as this Agreement, then the total royalty due under all such agreements, including this Agreement, shall be at most the royalty payment due under this Section 4.3 on such services, no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such license agreements. In such event, LICENSEE shall notify HARVARD of the identity of each license agreement involved and HARVARD shall distribute the royalties equally among those license agreements, including this Agreement. (f) If the license pursuant to this Agreement is converted to a non-exclusive one under Section 3.2(d) and if another non-exclusive license to any of PATENT RIGHTS is granted or otherwise exists for any field or territory, then the royalty rate of this Agreement shall be adjusted so as not to exceed the royalty rate payable by such other non-exclusive licensee under such PATENT RIGHTS in such field or territory, provided that LICENSEE agrees to amend this Agreement to include terms requested by HARVARD that have been accepted by such other non-exclusive licensee. (g) On sales between LICENSEE and its AFFILIATES for resale, the royalty shall be paid on the NET SALES of the AFFILIATE. (h) In the event that more than one VALID CLAIM within PATENT RIGHTS is applicable to any LICENSED PRODUCT subject to royalties under this Section 4.3, then only one royalty shall be paid to HARVARD in respect of such LICENSED PRODUCT. In no *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 10 event shall more than one royalty be due to HARVARD with respect to any LICENSED PRODUCT unit; nor shall a royalty be payable under this Section 4.3 with respect to sales of LICENSED PRODUCTS for clinical trials or as samples nor the use of LICENSED PRODUCTS or LICENSED PROCESSES by LICENSEE for such purposes, in each case whether or not in collaboration with a third party. 4.4 No later than January 1 of each calendar year after the effective date of this Agreement, LICENSEE shall pay to HARVARD the following non-refundable license maintenance royalty and/or advance on royalties. Such payments may be credited against running royalties due for that calendar year and Royalty Reports shall reflect such a credit. Such payments shall not be credited against milestone payments (if any) nor against royalties due for any subsequent calendar year.
January 1, 2002 [*** Redacted] January 1, 2003 [*** Redacted] January 1, 2004 [*** Redacted] January 1, 2005 [*** Redacted] January 1, 2006 [*** Redacted] January 1, 2007 [*** Redacted] each year thereafter [*** Redacted]
4.5 Notwithstanding Section 4.4, the minimum royalty set forth in Section 4.4 for the years 2002, 2003, and 2004 will be waived if LICENSEE's spending on research and development (LICENSEE's "R&D SPENDING") exceeds the amount set forth below for each category for such year (such amounts below, the "MINIMUM INVESTMENT").
CHEMICAL AND BIOLOGICAL SENSOR OPTOELECTRONICS NANOELECTRONICS APPLICATIONS APPLICATIONS APPLICATIONS Year 2002: [*** Redacted] [*** Redacted] [*** Redacted] Year 2003: [*** Redacted] [*** Redacted] [*** Redacted] Year 2004: [*** Redacted] [*** Redacted] [*** Redacted] Year 2005 [*** Redacted] [*** Redacted] [*** Redacted] Year 2006 [*** Redacted] [*** Redacted] [*** Redacted] Each Year Thereafter [*** Redacted] [*** Redacted] [*** Redacted]
LICENSEE's MINIMUM INVESTMENT may be allocated by LICENSEE in any way within the three categories set forth above among the different subject matter of the RELATED LICENSE AGREEMENTS. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 11 ARTICLE V REPORTING 5.1 Within [*** Redacted] months of the Effective Date, LICENSEE will provide to HARVARD a written research and development plan acceptable to LICENSEE's investors under which LICENSEE intends to bring the subject matter of the licenses granted hereunder into commercial use upon execution of this Agreement. Such plan will include projections of sales and proposed marketing efforts. It is understood that LICENSEE may provide one research and development plan for all RELATED LICENSE AGREEMENTS. 5.2 No later than [*** Redacted] days after [*** Redacted] of each calendar year, LICENSEE shall provide to HARVARD a written annual Progress Report describing progress on the commercialization of PATENT RIGHTS during the most recent [*** Redacted] month period ending [*** Redacted], the amount of LICENSEE's R&D SPENDING relating to the subject matter described or claimed in PATENT RIGHTS during such time, and plans for the forthcoming year. If multiple technologies are covered by the license granted hereunder, the Progress Report shall provide the information set forth above for each technology. If progress differs from that anticipated in the plan required under Section 5.1, LICENSEE shall explain the reasons for the difference and, if appropriate or necessary, provide a modified research and development plan for HARVARD's review. It is understood that LICENSEE may provide one Progress Report covering all RELATED LICENSE AGREEMENTS. 5.3 LICENSEE shall report to HARVARD the date of its first NET SALE of a LICENSED PRODUCT (or the date of its first use of a LICENSED PROCESS from which SERVICE INCOME is derived) in each country within [*** Redacted] days of occurrence. It is understood that LICENSEE shall be obligated to report the date of first sale of LICENSED PRODUCTS (or the first commercial use of LICENSED PROCESSES) under this Section 5.3 only once for each country. 5.4 (a) LICENSEE shall submit to HARVARD within [*** Redacted] days after each calendar [*** Redacted] ending [*** Redacted], a Royalty Report setting forth, for the most recent [*** Redacted] that ended on [*** Redacted], at least the following information: (i) the number and identification of LICENSED PRODUCTS sold by LICENSEE that constitute a NET SALE, in each country; (ii) total amounts received for such LICENSED PRODUCTS; (iii) an accounting for all LICENSED PROCESSES used or sold; (iv) deductions applicable to determine the NET SALES thereof; (v) the amount of SUBLICENSE INCOME received by LICENSEE; *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 12 (vi) the amount of SERVICE INCOME received by LICENSEE; and (vii) the amount of royalty due for such reporting period, or, if no royalties are due to HARVARD for such reporting period, the statement that no royalties are due. Such report shall be certified as correct by an officer of LICENSEE and shall include a listing of all deductions from royalties. It is understood that LICENSEE may submit one Royalty Report covering all RELATED LICENSE AGREEMENTS. However, the Royalty Report shall, for each type of income, provide a detailed listing of the RELATED LICENSE AGREEMENTS that are involved. (b) LICENSEE shall pay to HARVARD with each such Royalty Report the amount of royalty due with respect to such [*** Redacted]. If multiple technologies are covered by the license granted hereunder, LICENSEE shall specify which PATENT RIGHTS are utilized for each category of LICENSED PRODUCTS and/or LICENSED PROCESSES for which royalties are separately reported in the Royalty Report. (c) All payments due hereunder shall be deemed received when funds are credited to HARVARD's bank account and shall be payable by check or wire transfer in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the New York Times or the Wall Street Journal) on the last working day of each royalty period. No transfer, exchange, collection or other charges shall be deducted from such payments. If legal restrictions block the removal of local currency from any country where a LICENSED PRODUCT is sold, the royalties payable under this Agreement on NET SALES, SERVICE INCOME and SUBLICENSING INCOME earned in such currency in such country shall continue to be reported and accrued, but will not be paid until such currency may be removed from such country. (d) All plans or reports received under Sections 5.1, 5.2, 5.3, 5.4 shall deemed Confidential Information of LICENSEE subject to Section 11.1; provided, however, that HARVARD may disclose such information as required by law under Section 11.1(b), and may include in its usual reports the annual amounts of royalties paid. (e) Late payments shall be subject to a charge of [*** Redacted] percent ([***Redacted]%) per month, or $[*** Redacted], whichever is greater. 5.5 In the event of acquisition, merger, change of corporate name, or change of make-up, organization, or identity, LICENSEE shall notify HARVARD in writing within [*** Redacted] days of such event. 5.6 If LICENSEE or any of its sublicensees does not qualify as a "small entity" as provided by the United States Patent and Trademark Office, LICENSEE must notify HARVARD immediately. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 13 ARTICLE VI RECORD KEEPING 6.1 LICENSEE shall keep accurate records (together with supporting documentation) of LICENSED PRODUCTS made, used or sold under this Agreement, sufficient to determine the amount of royalties due to HARVARD hereunder. Such records shall be retained for at least [*** Redacted] years following the end of the reporting period to which they relate. They shall be available during normal business hours for examination, upon HARVARD's reasonable request, not more than once in any [*** Redacted] month period and upon at least [*** Redacted] days prior notice, by an independent accountant under a duty of confidentiality, selected by HARVARD and reasonably acceptable to LICENSEE, for the sole purpose of verifying reports and payments under Section 5.4. In conducting examinations pursuant to this Section, HARVARD's accountant shall have access to records materially relevant to the calculation of royalties under Article IV. 6.2 HARVARD's accountant shall only disclose to HARVARD whether the reports and payments of royalties hereunder are accurate, and the amount of the underreporting or underpayment of royalties by LICENSEE, if any. 6.3 Such examination of HARVARD's accountant shall be at HARVARD's expense, except that if such examination shows an underreporting or underpayment in excess of [*** Redacted] percent ([*** Redacted]%) for any [*** Redacted] month period, then LICENSEE shall pay the reasonable out-of-pocket cost of such examination as well as any additional sum that would have been payable to HARVARD had the LICENSEE reported correctly, plus interest on said sum at the rate of [*** Redacted] percent ([*** Redacted]%) per month. ARTICLE VII DOMESTIC AND FOREIGN PATENT FILING AND MAINTENANCE 7.1 Within 30 days of the closing of LICENSEE's sale of Series A Preferred Stock to venture capital investors, but not later than 60 days after the Effective Date, LICENSEE shall reimburse HARVARD for [*** Redacted] percent ([*** Redacted]%) of all reasonable out-of-pocket expenses HARVARD has incurred for the preparation, filing, prosecution and maintenance of PATENT RIGHTS, including for counseling with regard to such preparation, filing, prosecution and maintenance. [*** Redacted] percent of such expenses total $[*** Redacted] as of the most recent invoice paid by HARVARD. Thereafter, LICENSEE shall reimburse HARVARD for [*** Redacted] percent ([*** Redacted]%) of all such future expenses upon receipt of quarterly invoices from HARVARD. Should this license be converted to an exclusive one, LICENSEE shall then reimburse all such expenses. Late payment of these invoices shall be subject to interest charges of [*** Redacted] percent ([*** Redacted]%) per month. HARVARD shall be responsible for the preparation, filing, prosecution and maintenance of any and all patent applications and patents included in PATENT RIGHTS. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 14 HARVARD will instruct counsel to directly notify HARVARD and LICENSEE and provide them copies of any communications to and from the United States and foreign patent offices relating to said prosecution, and drafts of all communications to the various patent offices, and will instruct counsel to consider any comments on such drafts, so that LICENSEE will be informed and apprised of the continuing prosecution of patent applications in PATENT RIGHTS. LICENSEE (as well as NANTERO) shall have reasonable opportunity to participate in decision making on key decisions affecting filing, prosecution and maintenance of patents and patent applications in PATENT RIGHTS. 7.2 HARVARD and LICENSEE shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS and of all patents and patent applications licensed to LICENSEE hereunder, executing all papers and instruments or requiring members of HARVARD to execute such papers and instruments so as to enable HARVARD to apply for, to prosecute and to maintain patent applications and patents in HARVARD's name in any country. Each party shall provide to the other [*** Redacted] notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents. In particular, LICENSEE must immediately notify HARVARD if LICENSEE does not qualify as a "small entity" as provided by the United States Patent and Trademark Office. 7.3 LICENSEE may elect to surrender its rights to any patent or patent application within PATENT RIGHTS in any country upon [*** Redacted] days written notice to HARVARD. Such notice shall not relieve LICENSEE from responsibility to reimburse HARVARD for expenses under Section 7.1 relating to the filing, prosecution or maintenance of such patent or patent application incurred prior to the receipt of the written notice by HARVARD (or a longer period if specified in LICENSEE'S notice). ARTICLE VIII INFRINGEMENT 8.1 With respect to any PATENT RIGHTS that have not been rendered non-exclusive under Section 4.3(d), LICENSEE shall have the right to enforce in its own name and at its own expense any patents within such PATENT RIGHTS. HARVARD agrees to notify LICENSEE promptly of each infringement of such patents of which HARVARD is or becomes aware. 8.2 LICENSEE acknowledges that the other co-exclusive licensee of PATENT RIGHTS shall have rights identical to LICENSEE to prosecute infringers and that both co-exclusive licensees shall be bound by the identical terms of this Section 8.2. In any prosecution instituted by LICENSEE, LICENSEE must notify the other co-exclusive licensee of the existence of such legal action and allow the other co-exclusive licensee to join as a plaintiff. In addition, in the event the other co-exclusive licensee instigates and infringement prosecution, LICENSEE hereby consents to being joined as a plaintiff in such suit solely for the purpose of procuring standing to bring the action and at the sole expenses of the instigating party. To the extent that LICENSEE desires to participate in *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 15 any strategic decisions affecting the prosecution of an action brought by the other co-exclusive licensee, LICENSEE acknowledges and it and the other co-exclusive licensee will necessarily have to reach a mutual agreement concerning litigation expenses and strategy. In no event shall HARVARD incur any liability or expense in connection with any action brought by LICENSEE or the other co-exclusive licensee, joint or otherwise. During any such litigation, HARVARD will agree to not license any defendant or accused infringer of the PATENT RIGHTS in the litigation, without LICENSEE's prior written consent. 8.3 (a) If LICENSEE elects to commence an action as described above, HARVARD may, to the extent permitted by law, elect to join as a party in that action. Regardless of whether HARVARD elects to join as a party, HARVARD shall cooperate fully with LICENSEE in connection with any such action, including making available relevant personnel, information, records, papers, samples, specimens and other similar materials for the purposes of such action as reasonably requested by LICENSEE through the Office of Technology and Trademark Licensing at HARVARD. (b) If HARVARD elects to join as a party pursuant to Subsection (a), HARVARD shall jointly control the action with LICENSEE. (c) LICENSEE shall reimburse HARVARD for any out-of-pocket costs HARVARD reasonably incurs, including reasonable attorneys' fees, as part of an action brought by LICENSEE under Section 8.1, whether or not HARVARD becomes a co-plaintiff. 8.4 If LICENSEE elects to commence an action as described above, LICENSEE may deduct from its royalty payments to HARVARD with respect to the patent(s) subject to suit an amount not exceeding [*** Redacted] percent ([*** Redacted]%) of LICENSEE's expenses and costs of such action, including reasonable attorneys' fees and reimbursement of amounts under Section 8.3(c) above; provided, however, that such reduction shall not exceed [*** Redacted] percent [[*** Redacted]%] of the [*** Redacted] due to HARVARD with respect to the patent(s) subject to suit for each calendar year. If such [*** Redacted] percent [*** Redacted] of LICENSEE's expenses and costs exceeds the amount of [*** Redacted] deducted by LICENSEE for any calendar year, LICENSEE may to that extent reduce the [*** Redacted] due to HARVARD from LICENSEE in succeeding calendar years, but never by more than [*** Redacted] percent [*** Redacted] of the [*** Redacted] due in any [*** Redacted] with respect to the patent(s) subject to suit. 8.5 Neither LICENSEE nor the other co-exclusive licensee may enter into a settlement, consent judgment or other voluntary final disposition of any suit under Article 8 (except for Section 8.10) without the prior written consent of HARVARD, which consent shall not be unreasonably withheld. 8.6 Recoveries or reimbursements from actions commenced by LICENSEE pursuant to this Article shall first be applied to reimburse LICENSEE and HARVARD for litigation costs not paid from royalties and [*** Redacted] pursuant to Section 8.4. Any remaining recoveries or reimbursements shall be shared as follows: [*** Redacted]% to LICENSEE and [*** Redacted]% to HARVARD. In the event both co- *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 16 exclusive licensees undertake the suit, the provisions of this Section will be modified to take into account each licensee's expenses and lost profits/revenues. Such modification shall be negotiated by the parties and the other co-exclusive licensee in good faith. 8.7 If LICENSEE elects not to exercise its right to enforce the PATENT RIGHTS against any infringement pursuant to this Article, HARVARD may do so at its own expense, controlling such action and retaining all recoveries therefrom. LICENSEE shall cooperate fully with HARVARD in connection with any such action. 8.8 Without limiting the generality of Section 8.7, HARVARD may, at its election and by notice to LICENSEE, establish a time limit of [*** Redacted] days for LICENSEE to decide whether to enforce the PATENT RIGHTS against any infringement of which HARVARD is or becomes aware. If, by the end of such [*** Redacted] day period, LICENSEE has not commenced such an action or taken reasonable efforts to settle such infringement, HARVARD may enforce the PATENT RIGHTS against such an infringement at its own expense, controlling such action and retaining all recoveries therefrom. Notwithstanding sections 8.7 and 8.8, HARVARD shall not bring any action alleging the infringement of PATENT RIGHTS against any sublicensee of LICENSEE under PATENT RIGHTS, without the consent of LICENSEE. 8.9 If a declaratory judgment action is brought naming LICENSEE as a defendant and alleging invalidity of any of the PATENT RIGHTS, if both parties agree, HARVARD may take over the sole defense of the action at its own expense. LICENSEE shall cooperate fully with HARVARD in connection with any such action. 8.10 If LICENSEE or any sublicensee, distributor or other customer is sued by a third party charging infringement of patent rights that dominate a claim of PATENT RIGHTS, with respect to the manufacture, use, distribution or sale of LICENSED PRODUCT or practice or use of a LICENSED PROCESS, LICENSEE will promptly notify HARVARD. As between the parties to this Agreement, LICENSEE will be entitled to control the defense in any such action(s) and withhold up to [*** Redacted] ( [*** Redacted]) of the amount otherwise payable to HARVARD hereunder to pay for defense costs, attorneys fees and any liability incurred in such infringement suit(s). If Licensee is required to pay a royalty or other amount to a third party as a result of a final judgment or settlement, the amounts payable to HARVARD hereunder will be reduced as provided in Section 4.3 above. ARTICLE IX TERMINATION OF AGREEMENT 9.1 This Agreement, unless terminated as provided herein, shall remain in effect until the last patent or patent application in PATENT RIGHTS has expired or been abandoned. 9.2 HARVARD may terminate this agreement as follows: (a) If LICENSEE does not make a payment due hereunder and fails to cure such non-payment (including the payment of interest in accordance with Section 5.4(e)) within [*** Redacted] days after date of notice in writing of such non-payment by *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 17 HARVARD. If LICENSEE disputes the amount of such non-payment in writing within such [*** Redacted] day period, HARVARD shall not have the right to terminate this Agreement until it has been determined in an arbitration proceeding under Section 11.10 below that LICENSEE has failed to pay amounts owed hereunder, and thereafter Licensee does not cure such failure within [*** Redacted] days after such determination. This Section 9.2(a) shall not, however, suspend any obligation of LICENSEE to compensate HARVARD for any undisputed amounts, as provided for under any term of this Agreement, during the pendency of the foregoing arbitration and cure period. (b) If LICENSEE defaults in its obligations under Sections 11.2(c) and 11.2(d) to procure and maintain insurance, and fails to cure such breach within [*** Redacted] days after notice in writing of such breach by HARVARD. (c) If LICENSEE shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it, provided that such bankruptcy petition is not dismissed within [*** Redacted] days after its filing. Such termination shall be effective immediately upon HARVARD giving written notice to LICENSEE. (d) If LICENSEE is convicted of a felony within the United States relating to the manufacture, use, or sale of LICENSED PRODUCTS. (e) Except as provided in Subsections (a), (b), (c), (d) above, if LICENSEE materially breaches any obligations under this Agreement and the breach has not been cured within [*** Redacted] days after the date of notice in writing of such breach by HARVARD. If LICENSEE disputes in writing that it has materially breached this Agreement within such [*** Redacted] day period, HARVARD shall not have the right to terminate this Agreement until it has been determined in an arbitration proceeding under Section 11.10 below that LICENSEE has materially breached this Agreement, and thereafter Licensee does not cure such breach within [*** Redacted] days after such determination. This Section 9.2(e) shall not, however, suspend any obligation of LICENSEE to compensate HARVARD for any undisputed amounts, as provided for under any term of this Agreement, during the pendency of the foregoing arbitration and cure period. 9.3 All sublicenses granted by LICENSEE under this Agreement in compliance with the terms and conditions hereof shall survive the termination of this Agreement upon the request of the party to whom such sublicense is granted, provided that such party agrees in writing that (i) it will pay all royalties or other amounts that otherwise would have been due thereafter under such sublicense directly to HARVARD rather than LICENSEE, and (ii) HARVARD shall not be held liable for the breach or the performance of any obligations stated in such sublicense unless such obligations have been expressly assumed in writing by HARVARD. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 18 9.4 LICENSEE may terminate this Agreement by giving [*** Redacted] days advance written notice of termination to HARVARD. Upon termination, LICENSEE shall promptly submit a Royalty Report to HARVARD for the final reporting period and any royalty payments incurred during such reporting period, and any unreimbursed patent expenses under Section 7 that have been invoiced by HARVARD, shall become immediately payable with such Royalty Report. 9.5 Articles I, VI, IX, X and XI (except for Section 11.7) of this Agreement shall survive termination. Article VIII shall survive with respect to any infringement of third parties and/or any lawsuits filed by or against LICENSEE, prior to the termination of this Agreement. In the event this Agreement is terminated for any reason, LICENSEE may, within [*** Redacted] after the effective date of such termination, sell or otherwise dispose of all LICENSED PRODUCTS that LICENSEE may have on hand on the effective date of such termination, and fulfill any contracts requiring the use of LICENSED PRODUCTS and/or LICENSED PROCESSES that LICENSEE may have entered into prior to the date of such termination, subject to LICENSEE's payment of amounts due to HARVARD under Section 4.3 of this Agreement. 9.6 In the event that after termination of this Agreement, HARVARD licenses PATENT RIGHTS to another licensee, HARVARD shall use commercially reasonable efforts to require such other licensee to pay the costs of the preparation, filing, prosecution and maintenance of PATENT RIGHTS. HARVARD shall reimburse LICENSEE for any costs so paid by such other licensee to the extent LICENSEE paid for such costs under Section 7.1. ARTICLE X REPRESENTATIONS AND WARRANTIES 10.1 Except for the rights, if any, of the Government of the United States, HARVARD represents and warrants that: (a) HARVARD is the owner of the entire right, title and interest in and to the PATENT RIGHTS as they exist on the Effective Date; (b) HARVARD has the right and authority to enter into this Agreement and grant the rights and licenses set forth herein, including without limitation under PATENT RIGHTS; (c) HARVARD has not previously granted, and will not grant in the future, any rights in the PATENT RIGHTS that are inconsistent with the rights and licenses granted to LICENSEE herein; (d) To the best knowledge of HARVARD without having made an investigation, as of the Effective Date, practice of inventions within the PATENT RIGHTS does not infringe any patent rights, trade secrets or other proprietary rights of any third party, *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 19 (e) To the best knowledge of HARVARD, as of the Effective Date, HARVARD does not own any rights in any other patent application, the claims of which would dominate the claims of a patent or patent application within the PATENT RIGHTS, or any practice of PATENT RIGHTS. IF HARVARD owns, now or thereafter, any such rights in such patents or patent applications on which [*** Redacted] is an inventor, HARVARD will negotiate in good faith to the extent it has the legal right to do so with LICENSEE to grant LICENSEE rights to the extent sufficient to practice PATENT RIGHTS. (f) To the best knowledge of HARVARD, all prior and current agreements between HARVARD and other sponsors of research under which HARVARD has obligations relating to PATENT RIGHTS are listed on Appendix C. 10.2 Except as set forth in this Agreement, HARVARD does not warrant the validity of the PATENT RIGHTS licensed hereunder and makes no representations whatsoever with regard to the scope of the licensed PATENT RIGHTS or that such PATENT RIGHTS may be exploited by LICENSEE, an AFFILIATE, or sublicensee without infringing other patents. 10.3 EXCEPT FOR THE WARRANTIES STATED IN THIS AGREEMENT, HARVARD EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PATENT RIGHTS OR INFORMATION SUPPLIED BY HARVARD, LICENSED PROCESSES OR LICENSED PRODUCTS CONTEMPLATED BY THIS AGREEMENT. ARTICLE XI GENERAL 11.1 (a) The parties may, from time to time, in connection with this Agreement disclose to each Confidential Information. Any Confidential Information shall be in writing and marked "confidential" and disclosed only to the Office of Technology and Trademark Licensing. As used in this Agreement, "Confidential Information" of a party shall mean (i) any information disclosed in writing by such party to the other party, which is marked by such party with the legend "CONFIDENTIAL" or other similar legend sufficient to identify the information as its confidential information, (ii) any information disclosed orally by such party to the other party which is identified as confidential at the time of disclosure and is confirmed as confidential in writing within thirty (30) days after such time of disclosure, or (iii) any information deemed "Confidential Information under the terms of this Agreement. With respect to categories (i) and (ii) above, "Confidential Information" shall not include any information that is: (1) already known to the receiving party at the time of disclosure hereunder, or (2) now or hereafter becomes publicly known other than through acts or omissions of the receiving party, or (3) is disclosed to the receiving party by a third party under no obligation of confidentiality *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 20 to the disclosing party or (4) is independently developed by the receiving party without use of the Confidential Information of the disclosing party. (b) Each party shall maintain in confidence, and shall not use for any purpose or disclose to any third party, the Confidential Information of the other party. Notwithstanding the foregoing, the receiving party may use or disclose the Confidential Information of the disclosing party (i) to the extent necessary to exercise its rights or fulfill its obligations and/or duties under this Agreement, and (ii) to comply with applicable law or governmental regulations or court order, provided that the receiving party will give reasonable advance notice to the disclosing party, and will use its reasonable efforts to minimize the disclosure of Confidential Information and to secure confidential treatment of any Confidential Information disclosed. (c) The terms of this Agreement shall be deemed "Confidential Information" of both parties. In addition to the permissible disclosures set forth in subsection (b) above, LICENSEE may disclose such terms in confidence to its financial and legal advisors, consultants, potential or actual investors, potential or actual merger or acquisition partners, and others on a need-to-know basis. 11.2 (a) LICENSEE shall indemnify, defend and hold harmless HARVARD and its current or former and future directors, governing board members, trustees, officers, faculty and employees (collectively, the "INDEMNITEES"), from and against any lawsuit or cause or action against the INDEMNITEES brought by a third party (collectively, "Claims"), based upon, arising out of, or otherwise relating to this Agreement, including without limitation any cause of action relating to product liability concerning any product, process, or service made, used or sold pursuant to any right of license granted under this Agreement, except to the extent such Claims arise out of or otherwise relate to the gross negligence or intentional misconduct of any INDEMNITEES; and further provided that (i) LICENSEE receives prompt notice of any such Claims; (ii) LICENSEE is given the exclusive right to control the defense and settlement of such Claims; and (iii) LICENSEE shall not be obligated to indemnify any INDEMNITEE in connection with any settlement for any Claim unless LICENSEE consents in writing to such settlement. (b) LICENSEE shall, at its own expense, defend against any actions brought or filed against any INDEMNITEE hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought. (c) Beginning at the time any such product, process or service is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by LICENSEE or by a SUBLICENSEE, AFFILIATE or agent of LICENSEE, LICENSEE shall, at its sold cost and expense, procure and maintain commercial general liability insurance in amounts not less than $[*** Redacted] per incident and $[*** Redacted] annual aggregate and naming the Indemnitees as additional insureds. During clinical trials of any such product, process or service, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in such equal or lesser amount as HARVARD shall require, naming the Indemnitees as *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 21 additional insureds. Such commercial general liability insurance shall provide: (i) product liability coverage; and (ii) broad form contractual liability coverage for LICENSEE's indemnification under this Agreement. If LICENSEE elects to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of $[*** Redacted] annual aggregate) such self-insurance program must be acceptable to HARVARD and the Risk Management Foundation of the Harvard Medical Institutions, Inc. in their sole discretion. The minimum amounts of insurance coverage required shall not be construed to create a limit of LICENSEE's liability with respect to its indemnification under this Agreement. (d) LICENSEE shall provide HARVARD with written evidence of such insurance upon request of HARVARD. LICENSEE shall provide HARVARD with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if LICENSEE does not obtain replacement insurance providing comparable coverage within such fifteen (15) day period, HARVARD shall have the right to terminate this Agreement in accordance with Section 9.2(c). (e) LICENSEE shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during: (i) the period that any product, process, or service, relating to, or developed pursuant to, this Agreement is being commercially distributed or sold by LICENSEE or by a sublicensee, AFFILIATE or agent of LICENSEE; and (ii) a reasonable period after the period referred to in Subsection (e)(i) above which in no event shall be less than [*** Redacted] years. 11.3 Nothing in this Agreement shall be construed as conferring any right to use HARVARD's name or insignia, or any adaptation of them, or the name of any of HARVARD's inventors in any advertising, promotional or sales literature without the prior written approval of HARVARD, or the inventor in the case of the use of the name of an inventor. 11.4 Except as stated in this Section 11.4, without the prior written approval of HARVARD in each instance, neither this Agreement nor the rights granted hereunder shall be transferred or assigned in whole or in part by LICENSEE to any person whether voluntarily or involuntarily, by operation of law or otherwise. LICENSEE may transfer or assign this Agreement and all rights hereunder, upon notice to HARVARD but without its consent, to any entity that succeeds to all or substantially all of the business of LICENSEE to which this Agreement pertains, whether by merger, operation of law, purchase or sale of all or substantially all of LICENSEE's stock or assets or otherwise; provided that such assignee or transferee promptly agrees in writing to be bound by the terms and conditions of this Agreement. Subject to the foregoing, this Agreement shall be binding upon the respective successors, legal representatives and assignees of HARVARD and LICENSEE. 11.5 The interpretation and application of the provisions of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. 11.6 LICENSEE shall comply with all applicable laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 22 is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations among other things, prohibit or require a license for the export of certain types of technical data to certain specified countries. LICENSEE hereby agrees and gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by LICENSEE or its AFFILIATES or sublicensees, and that it will defend and hold HARVARD harmless in the event of any legal action of any nature occasioned by such violation with respect to LICENSED PRODUCTS. 11.7 LICENSEE agrees: (i) to obtain all regulatory approvals required for the manufacture and sale of LICENSED PRODUCTS and LICENSED PROCESSES; and (ii) to mark LICENSED PRODUCTS with the numbers of the applicable patents within PATENT RIGHTS, to the extent required by law. LICENSEE also agrees to register or record this Agreement as is required by law or regulation in any country where the license is in effect, and HARVARD shall cooperate fully with LICENSEE in connection with any such registration or recordation. 11.8 Any notices to be given hereunder shall be sufficient if signed by the party (or party's attorney) giving same and either: (i) delivered in person; (ii) mailed certified mail return receipt requested; or (iii) faxed to other party if the sender has evidence of successful transmission and if the sender promptly sends the original by ordinary mail, in any event to the following addresses: If to LICENSEE: c/o CW Group East 1041 Third Avenue New York, New York 10021 Attn: Lawrence A. Bock Fax: 212/644-0354 cc: Wilson, Sonsini, Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304 Attn: Michael J. O'Donnell, Esq. Fax: 650/493-6811 If to HARVARD: Office for Technology and Trademark Licensing Harvard University Holyoke Center, Suite 727 1350 Massachusetts Avenue Cambridge, MA 02138 Fax: (617)495-9568 23 By such notice either party may change their address for future notices. Notices delivered in person shall be deemed given on the date delivered. Notices sent by fax shall be deemed given on the date faxed. Notices mailed shall be deemed given on the date postmarked on the envelope. 11.9 Should a court of competent jurisdiction later hold any provision of this Agreement to be invalid, illegal, or unenforceable, and such holding is not reversed on appeal, it shall be considered severed from this Agreement. All other provisions, rights and obligations shall continue without regard to the severed provision, provided that the remaining provisions of this Agreement are in accordance with the intention of the parties. 11.10 In the event of any controversy or claim arising out of or relating to any provision of this Agreement or the breach thereof, the parties shall try to settle such conflict amicably between themselves. Subject to the limitation stated in the final sentence of this Section, any such conflict which the parties are unable to resolve promptly shall be settled through arbitration conducted in accordance with the rules of the American Arbitration Association. The demand for arbitration shall be filed within a reasonable time after the controversy or claim has arisen, and in no event after the date upon which institution of legal proceedings based on such controversy or claim would be barred by the applicable statute of limitation. Such arbitration shall be held in Boston, Massachusetts. The award through arbitration shall be final and binding. Either party may enter any such award in a court having jurisdiction or may make application to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Notwithstanding the foregoing, either party may, without recourse to arbitration, assert against the other party a third-party claim or cross-claim in any action brought by a third party, to which the subject matter of this Agreement may be relevant. 11.11 This Agreement constitutes the entire understanding between the parties and neither party shall be obligated by any condition or representation other than those expressly stated herein or as may be subsequently agreed to by the parties hereto in writing. 11.12 Nothing in this Agreement shall be deemed to require LICENSEE to exploit the PATENT RIGHTS, except to the extent expressly set forth in this Agreement, and nothing in this Agreement shall be deemed to prevent LICENSEE from commercializing products similar to or competitive with a LICENSED PRODUCT. 11.13 The relationship between HARVARD and LICENSEE established by this Agreement is that of independent contractors. Nothing in this Agreement shall be construed to create any other relationship between HARVARD and LICENSEE. Neither party shall have any right, power or authority to assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other. 11.14 In the event either party hereto is prevented from or delayed in the performance of any of its obligations hereunder by reason of acts of God, war, strikes, riots, storms, fires or any other cause whatsoever beyond the reasonable control of the party, the party so prevented 24 or delayed shall be excused from the performance of any such obligation to the extent and during the period of such prevention or delay. 11.15 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OF LIKELIHOOD OF SAME. 11.16 This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives.
PRESIDENT AND FELLOWS COMPANY OF HARVARD COLLEGE /s/ Joyce Brinton /s/ Lawrence A. Bock - --------------------------------------------- --------------------------------------------- Joyce Brinton, Director Signature Office for Technology and Trademark Licensing Lawrence A. Bock --------------------------------------------- Name 10/2/01 President and CEO - --------------------------------------------- --------------------------------------------- Date Title 10/3/01 --------------------------------------------- Date
25 APPENDIX A The following comprise PATENT RIGHTS: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 26 APPENDIX B NANOSYS, INC. CAPITALIZATION TABLE - CONFIDENTIAL FOUNDERS' STOCK (Common Stock Capitalization Before Series A Preferred Stock Financing)
% of Founders Stock # of Shares of Common Stock Amount Invested [*** Redacted]# 11.0% 550,000 $550 [*** Redacted]# 9.0% 450,000 $450 [*** Redacted]@ 2.0% 100,000 $100 CW Group * 12.0% 600,000 $600 Other advisor (tbd) 2% 100,000 $100 Reserve 64.0% 3,200,000 $3,200 Total Common Shares 100.0% 5,000,000 $5,000 PROPOSED SERIES A PREFERRED STOCK Investors as a group 5,000,000-6,666,667 $1,500-2,000,000 Total Series A Preferred Shares 5,000,000-6,666,667 $1,500-2,000,000
# Founders stock will vest monthly over a five year period @ [*** Redacted] shares will be fully vested * Shares will be issued in the form of an option *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. APPENDIX C CASE LEAD INVENTOR REPORT TITLE AGENCY GRANT NUMBERS DATE ~~[*** Redacted]~~
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. EX-10.5.2 15 f97636orexv10w5w2.txt EXHIBIT 10.5.2 EXHIBIT 10.5.2 LICENSE AGREEMENT (CASE # [*** Redacted]) Between President and Fellows of Harvard College And NanoSys, Inc. Effective as of February 1, 2002 ("Effective Date") Re: Harvard Case # [*** Redacted] In consideration of the mutual promises and covenants set forth below, the parties hereto agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the following meanings: 1.1 ACADEMIC RESEARCH PURPOSES: use of PATENT RIGHTS solely for academic non-commercial research or other not-for-profit scholarly purposes, which use is undertaken at a non-profit or governmental institution. ACADEMIC RESEARCH PURPOSES does not include selling products covered by PATENT RIGHTS or using PATENT RIGHTS in researching, developing, producing or manufacturing products for sale, or performance of services for a fee of other financial consideration. It is understood that using the PATENT RIGHTS to conduct normal research activities at non-profit or governmental institution is within the defined term of ACADEMIC RESEARCH PURPOSES. 1.2 AFFILIATE: any entity which controls, is controlled by, or is under common control with a party. An entity shall be regarded as in control of another entity for purposes of this definition if it owns or controls at least fifty percent (50%) of the shares entitled to vote in the election of directors (or in the case of an entity that is not a corporation, for the election of the corresponding managing authority). Unless otherwise specified, the term LICENSEE includes AFFILIATES. 1.3 FIELD: All fields of use. 1.4 HARVARD: President and Fellows of Harvard College, a nonprofit Massachusetts educational corporation having offices at the Office for Technology and Trademark *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Licensing, Holyoke Center, Suite 727, 1350 Massachusetts Avenue, Cambridge, Massachusetts 02138. 1.5 LICENSED PROCESSES: methods, processes or procedures covered by at least one VALID CLAIM included within the PATENT RIGHTS. 1.6 LICENSED PRODUCTS: products covered by at least one VALID CLAIM included within the PATENT RIGHTS or products made in accordance with LICENSED PROCESSES. 1.7 LICENSEE: Nanosys, Inc., a corporation organized under the laws of Delaware having its principal offices at CW Group East, 1041 Third Avenue, New York, New York 10021. 1.8 NET SALES: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2 [*** Redacted] 1.9 PATENT RIGHTS: PATENT RIGHTS shall include (i) the applications and patents as listed in Appendix A of this Agreement, (ii) any foreign counterparts to such patents and patent applications, (iii) the inventions described and claimed in the foregoing, (iv) any divisions, continuations, substitutions of the foregoing, and (v) specific claims of any continuations-in-part of the foregoing to the extent the specific claims are directed to subject matter described in the foregoing in a manner sufficient to support such specific claims under 35 U.S.C. and to the extent Licensable by HARVARD, (vi) all patents issuing on any of the foregoing, and (vii) registrations, renewals, reissues, reexaminations, extensions or patents of addition of any kind with respect to any of such patents. For purposes of this Agreement "Licensable" shall mean those claims of continuations-in-part filed after the Effective Date for which HARVARD has sole ownership (or has been granted the sole right to license by a co-owner) and where there are no obligations to grant licenses to a third party as the result of research support provided to one or more of the inventors. 1.10 SERVICE INCOME: [*** Redacted] [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 3 [*** Redacted] 1.11 SUBLICENSE INCOME: [*** Redacted] [*** Redacted] 1.12 TERRITORY: Worldwide. 1.13 VALID CLAIM: either (i) a claim of an issued patent that has not expired or been held unenforceable or invalid by an agency or a court of competent jurisdiction, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; provided, however, that if the holding of such court or agency is later reversed by a court or agency with overriding authority, the claim shall be reinstated as a Valid Claim with respect to Net Sales made after the date of such reversal, or (ii) a claim of a pending patent application that has not been abandoned or finally rejected without the possibility of appeal or re-filing and that has been pending for less than five (5) years from its priority date, and is being actively prosecuted in good faith. 1.14 The terms "Public Law 96-517" and "Public Law 98-620" include all amendments to those statutes. 1.15 The terms "sold" and "sell" include, without limitation, leases and other dispositions and similar transactions. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately, with the Commission. 4 1.16 RELATED LICENSE AGREEMENTS: Other patent license agreements between LICENSEE and HARVARD licensing patent rights known internally at HARVARD as Case [*** Redacted] 1.17 R&D SPENDING, MINIMUM INVESTMENT: shall have the meanings as set forth in Section 4.5. 1.18 DEVELOPMENT PAYMENTS: [*** Redacted] ARTICLE II RECITALS 2.1 HARVARD is owner (or HARVARD will be owner) by assignment from [*** Redacted] et al of his/their entire right, title and interest in a United States Provisional Patent Application [serial number N/A] filed [*** Redacted], entitled [*** Redacted] (Harvard Case [*** Redacted]), in the U.S., and foreign patent applications corresponding thereto, and in the inventions described and claimed therein. 2.2 HARVARD has the authority to issue licenses under PATENT RIGHTS. 2.3 HARVARD is committed to the policy that ideas or creative works produced at HARVARD should be used for the greatest possible public benefit, and believes that every reasonable incentive should be provided for the prompt introduction of such ideas into public use, all in a manner consistent with the public interest. 2.4 LICENSEE intends to use commercially reasonable efforts to develop the invention(s), and to bring to market at least one product falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in the patents rights licensed under such agreements. 2.5 LICENSEE is desirous of obtaining on exclusive license in the TERRITORY in order to practice the above-referenced invention covered by PATENT RIGHTS in the United States and in certain foreign countries, and to manufacture, use and sell in the commercial market the products made in accordance therewith, and HARVARD is desirous of granting such a license to LICENSEE in accordance with the terms of this Agreement. 2.6 LICENSEE and HARVARD recognize that this invention is dominated by and is an improvement upon inventions already licensed to LICENSEE under RELATED LICENSE AGREEMENTS. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 5 ARTICLE III GRANT OF RIGHTS 3.1 HARVARD hereby grants to LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, an exclusive (except as set forth in Sections 3.2(a) and 3.2(b)) license under PATENT RIGHTS in the TERRITORY and in the FIELD (i) to make and have made, to use and have used, to sell and have sold, to offer for sale, import, export, or otherwise distribute the LICENSED PRODUCTS, (ii) to practice the LICENSED PROCESSES, and (iii) to otherwise fully exploit the PATENT RIGHTS, and (iv) to have the foregoing performed on behalf of LICENSEE by a third party, in each case for the life of the PATENT RIGHTS. The foregoing license under PATENT RIGHTS shall include the full right to grant sublicenses, and LICENSEE shall promptly provide copies of any sublicenses of PATENT RIGHTS to HARVARD for its review. Unless HARVARD has rendered the license under PATENT RIGHTS non-exclusive under Section 3.2(d), HARVARD agrees that it will not grant licenses under PATENT RIGHTS to others, nor make, use, sell, offer for sale, import or otherwise exploit PATENT RIGHTS itself except as required by HARVARD's obligations in Section 3.2(a) or as permitted in Section 3.2(b). 3.2 The granting and exercise of this license is subject to the following conditions: (a) HARVARD's "Statement of Policy in Regard to Inventions, Patents and Copyrights," dated August 10, 1998, Public law 96-517 and Public Law 98-620, and HARVARD's obligations under prior or current agreements with other sponsors of research and, with regard to continuations-in-part contained in the PATENT RIGHTS, any future agreements with other sponsors of research related to such continuations-in-part. Any right granted in this Agreement greater than that permitted under Public Law 96-517, or Public Law 98-620, shall be subject to modification to the extent required to conform to the provisions of those statutes. (b) HARVARD reserves the right to make and use, and grant to other non-profit or governmental institutions non-exclusive licenses to make and use, in each case solely for ACADEMIC RESEARCH PURPOSES the subject matter described and claimed in PATENT RIGHTS. HARVARD shall promptly notify LICENSEE of any rights granted to any third party (other than the U.S. government) under Sections 3.2(a) and (b). (c) LICENSEE shall use commercially reasonable efforts to effect introduction into the commercial market at least [*** Redacted] falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in PATENT RIGHTS, consistent with sound and reasonable business practice and judgment; thereafter, until the expiration of this Agreement, LICENSEE shall use commercially reasonable efforts to endeavor to keep any [*** Redacted] reasonably available to the public so long as it shall be a sound and reasonable commercial practice to do so. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 6 (d) At any time after [*** Redacted] years from the effective date of this Agreement, HARVARD may render this license non-exclusive if LICENSEE has not: (i) used commercially reasonable efforts to put the licensed subject matter into commercial use in one or more of the countries hereby licensed, directly or through a sublicense; nor (ii) used commercially reasonable efforts to keep products falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in PATENT RIGHTS reasonably available to the public so long as it shall be a sound and reasonable commercial practice to do so; nor (iii) engaged in research, development, manufacturing, marketing or sublicensing activity that is commercially reasonably appropriate to achieving Section 3.2(d)(i) or 3.2(d)(ii). LICENSEE shall be deemed to have satisfied Section 3.2(d)(iii), and HARVARD shall not render the license of PATENT RIGHTS granted hereunder non-exclusive, if LICENSEE's R&D SPENDING exceeds the MINIMUM INVESTMENT for such year as set forth in Section 4.5. (e) In all sublicenses granted by LICENSEE hereunder, LICENSEE shall include a requirement that the sublicensee use commercially reasonable efforts to put the subject matter of the sublicense into commercial use, provided that such sublicensee is authorized to develop and sell to the public a [*** Redacted] covered by PATENT RIGHTS on its own behalf. LICENSEE shall further provide that such sublicenses are subject and subordinate to the terms and conditions of this Agreement, except for the rate of [*** Redacted] paid by such sublicensee to the LICENSEE. Copies of all sublicense agreements hereunder shall be provided promptly to HARVARD. All sublicense agreements of LICENSEE provided to HARVARD shall deemed Confidential Information of LICENSEE subject to Section 11.1. (f) At any time [*** Redacted] years after the effective date of this Agreement, if LICENSEE is unable or unwilling to grant sublicenses, either [*** Redacted] by HARVARD or by a [*** Redacted] or otherwise, then HARVARD may directly license such [*** Redacted], but only if: (i) LICENSEE is not currently pursuing development of LICENSED PRODUCTS for the same application as contemplated by the potential sublicensee, or LICENSEE commits to do so within a [*** Redacted] period, (ii) the granting of such a license by HARVARD to the potential sublicensee will increase the availability of useful products to the public, (iii) the granting of such license by HARVARD will not materially adversely affect LICENSEE's then current business or reasonably foreseeable future business (e.g., such license is not intended for an application competitive with LICENSEE) and (iv) HARVARD notifies LICENSEE of its intention to grant such license and permits LICENSEE a reasonable period to negotiate a sublicense on its own. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 7 (g) To the extent required by law, during the period of exclusivity of this license in the United States, LICENSEE shall cause any LICENSED PRODUCT produced for sale in the United States to be manufactured substantially in the United States. 3.3 All rights reserved to the United States Government and others under Public Law 96-517, and Public Law 98-620, shall remain and shall in no way be affected by this Agreement. 3.4 HARVARD shall promptly notify LICENSEE when any new patent or patent application arises from (i) research conducted in the laboratory of [*** Redacted], or (ii) improvements made by HARVARD [*** Redacted] on the subject matter described in PATENT RIGHTS. If LICENSEE so requests and the intellectual property is available for licensing, HARVARD will evaluate in good faith LICENSEE's proposal along with proposals received from any third parties. Any decision to grant a license to LICENSEE shall be subject to approval by HARVARD's Committee on Patents and Copyrights. In the event LICENSEE and HARVARD cannot agree on terms for a license to any new intellectual property which is dominated by PATENT RIGHTS, HARVARD shall not offer any third party terms more favorable than the terms offered to LICENSEE. ARTICLE IV ROYALTIES 4.1 LICENSEE shall pay to HARVARD a non-refundable license royalty fee in the sum of [*** Redacted] upon execution of this Agreement. 4.2 (a) LICENSEE shall pay to HARVARD during the term of this Agreement a royalty on NET SALES by LICENSEE according to the following schedule: (i) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted]; (ii) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications; or (iii) [*** Redacted] of NET SALES by LICENSEE in [*** Redacted] excluding [***Redacted] applications and [*** Redacted] applications. In the event, any NET SALES by LICENSEE reasonably falls within more than one of categories (i) to (iii) above, LICENSEE shall pay to HARVARD the lowest applicable royalty set forth in such categories. (b) For each LICENSED PRODUCT sold by LICENSEE, LICENSEE may credit up to [*** Redacted] of royalties that LICENSEE is paying to third parties (or HARVARD under agreements not included within section 4.3(c)) on LICENSEE's sales of that LICENSED PRODUCT, provided that the royalty paid to HARVARD shall not be *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 8 reduced below [*** Redacted] percent ([*** Redacted]%) of the NET SALES of that LICENSED PRODUCT for which such third party royalties are being paid. (c) In the event that sales of a LICENSED PRODUCT arc subject to the payment of royalties under one or more of the RELATED LICENSE AGREEMENTS or any license agreements with HARVARD with the same effective date as this Agreement, then the total royalty payment due HARVARD under all such agreements including this Agreement shall be at most the royalty payment due under this Section 4.3 on such NET SALE, no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such agreement. LICENSEE shall notify HARVARD of the identity of each license agreement that includes patent rights covering the product or process, and HARVARD shall distribute the royalties evenly among such agreements, including this Agreement. (d) LICENSEE shall pay HARVARD [*** Redacted] percent ([*** Redacted]%) of SUBLICENSE INCOME received by LICENSEE for a sublicense of PATENT RIGHTS. If compensation for such a sublicense of PATENT RIGHTS is bundled with compensation received for the sublicensing of the other HARVARD patents rights or other HARVARD intellectual property, licensed to LICENSEE under the RELATED LICENSEE AGREEMENTS or any agreements with HARVARD having the same effective date as this Agreement, then LICENSEE shall pay HARVARD at most the royalty payment due under this Section 4.3(d) for such SUBLICENSE INCOME no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such license agreements. In such a case, LICENSEE shall notify HARVARD of the identity of each license agreement involved and HARVARD shall distribute the royalties equally among those license agreements, including this Agreement. (e) For provision of services under PATENT RIGHTS, LICENSEE shall pay a royalty of [*** Redacted] percent ([*** Redacted]%) of SERVICE INCOME received by LICENSEE from each and every third party ("Third Party") to whom LICENSEE provides such services. In the event any services from which SERVICE INCOME is derived are subject to the payment of royalties under the RELATED LICENSE AGREEMENTS or any agreement with HARVARD having the same effective date as this Agreement, then the total royalty due under all such agreements, including this Agreement, shall be at most the royalty payment due under this Section 4.3 on such services, no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such license agreements. In such event, LICENSEE shall notify HARVARD of the identity of each license agreement involved and HARVARD shall distribute the royalties equally among those license agreements, including this Agreement. (f) If the license pursuant to this Agreement is converted to a non-exclusive one under Section 3.2(d) and if another non-exclusive license to any of PATENT RIGHTS is granted or otherwise exists for any field or territory, then the royalty rate of this Agreement shall be adjusted so as not to exceed the royalty rate payable by such other non-exclusive licensee under such PATENT RIGHTS in such field or territory, provided *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 9 that LICENSEE agrees to amend this Agreement to include terms requested by HARVARD that have been accepted by such other non-exclusive licensee. (g) On sales between LICENSEE and its AFFILIATES for resale, the royalty shall be paid on the NET SALES of the AFFILIATE. (h) In the event that more than one VALID CLAIM within PATENT RIGHTS is applicable to any LICENSED PRODUCT subject to royalties under this Section 4.3, then only one royalty shall be paid to HARVARD in respect of such LICENSED PRODUCT. In no event shall more than one royalty be due to HARVARD with respect to any LICENSED PRODUCT unit; nor shall a royalty be payable under this Section 4.3 with respect to sales of LICENSED PRODUCTS for clinical trials or as samples nor the use of LICENSED PRODUCTS or LICENSED PROCESSES by LICENSEE for such purposes, in each case whether or not in collaboration with a third party. 4.3 No later than January 1 of each calendar year after the effective date of this Agreement, LICENSEE shall pay to HARVARD the following non-refundable license maintenance royalty and/or advance on royalties. Such payments may be credited against running royalties due for that calendar year and Royalty Reports shall reflect such a credit. Such payments shall not be credited against milestone payments (if any) nor against royalties due for any subsequent calendar year. January 1, 2003 $[*** Redacted] January 1, 2004 $[*** Redacted] January 1, 2005 $[*** Redacted] January 1, 2006 $[*** Redacted] January 1, 2007 $[*** Redacted] each year thereafter $[*** Redacted]

4.5 Notwithstanding Section 4.4, the minimum royalty set forth in Section 4.3 for the years 2003, and 2004 will be waived if LICENSEE's spending on research and development (LICENSEE's "R&D SPENDING") exceeds the amount set forth below for each category for such year (such amounts below, the "MINIMUM INVESTMENT").
CHEMICAL AND BIOLOGICAL SENSOR OPTOELECTRONICS NANOELECTRONICS APPLICATIONS APPLICATIONS APPLICATIONS Year 2002: $[*** Redacted] [*** Redacted] [*** Redacted] Year 2003: $[*** Redacted] [*** Redacted] [*** Redacted] Year 2004: $[*** Redacted] [*** Redacted] [*** Redacted] Year 2005 $[*** Redacted] [*** Redacted] [*** Redacted] Year 2006 $[*** Redacted] [*** Redacted] [*** Redacted] Each Year Thereafter $[*** Redacted] [*** Redacted] [*** Redacted]
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 10 LICENSEE's MINIMUM INVESTMENT may be allocated by LICENSEE in any way within the three categories set forth above among the different subject matter of the RELATED LICENSE AGREEMENTS. ARTICLE V REPORTING 5.1 Within [*** Redacted] months of the Effective Date, LICENSEE will provide to HARVARD a written research and development plan acceptable to LICENSEE's investors under which LICENSEE intends to bring the subject matter of the licenses granted hereunder into commercial use upon execution of this Agreement. Such plan will include projections of sales and proposed marketing efforts. It is understood that LICENSEE may provide one research and development plan for all RELATED LICENSE AGREEMENTS. 5.2 No later than [*** Redacted] days after [*** Redacted] of each [*** Redacted] LICENSEE shall provide to HARVARD a written annual Progress Report describing progress on the commercialization of PATENT RIGHTS during the most recent [*** Redacted] period ending [*** Redacted], the amount of LICENSEE's R&D SPENDING relating to the subject matter described or claimed in PATENT RIGHTS during such time, and plans for the forthcoming year. If multiple technologies are covered by the license granted hereunder, the Progress Report shall provide the information set forth above for each technology. If progress differs from that anticipated in the plan required under Section 5.1, LICENSEE shall explain the reasons for the difference and, if appropriate or necessary, provide a modified research and development plan for HARVARD's review. It is understood that LICENSEE may provide one Progress Report covering all RELATED LICENSE AGREEMENTS. 5.3 LICENSEE shall report to HARVARD the date of its first NET SALE of a LICENSED PRODUCT (or the date of its first use of a LICENSED PROCESS from which SERVICE INCOME is derived) in each country within [*** Redacted] days of occurrence. It is understood that LICENSEE shall be obligated to report the date of first sale of LICENSED PRODUCTS (or the first commercial use of LICENSED PROCESSES) under this Section 5.3 only once for each country. 5.4 (a) LICENSEE shall submit to HARVARD within [*** Redacted] days after each calendar [*** Redacted] ending [*** Redacted], a Royalty Report setting forth, for the most recent [*** Redacted] that ended on [*** Redacted], at least the following information: (i) the number and identification of LICENSED PRODUCTS sold by LICENSEE that constitute a NET SALE, in each country; (ii) total amounts received for such LICENSED PRODUCTS; (iii) an accounting for all LICENSED PROCESSES used or sold; (iv) deductions applicable to determine the NET SALES thereof; *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 11 (v) the amount of SUBLICENSE INCOME received by LICENSEE; (vi) the amount of SERVICE INCOME received by LICENSEE; and (vii) the amount of royalty due for such reporting period, or, if no royalties are due to HARVARD for such reporting period, the statement that no royalties are due. Such report shall be certified as correct by an officer of LICENSEE and shall include a listing of all deductions from royalties. It is understood that LICENSEE may submit one Royalty Report covering all RELATED LICENSE AGREEMENTS. However, the Royalty Report shall, for each type of income, provide a detailed listing of the RELATED LICENSE AGREEMENTS that are involved. (b) LICENSEE shall pay to HARVARD with each such Royalty Report the amount of royalty due with respect to such [*** Redacted]. If multiple technologies are covered by the license granted hereunder, LICENSEE shall specify which PATENT RIGHTS are utilized for each category of LICENSED PRODUCTS and/or LICENSED PROCESSES for which royalties are separately reported in the Royalty Report. (c) All payments due hereunder shall be deemed received when funds are credited to HARVARD's bank account and shall be payable by check or wire transfer in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the New York Times or the Wall Street Journal) on the last working day of each royalty period. No transfer, exchange, collection or other charges shall be deducted from such payments. If legal restrictions block the removal of local currency from any country where a LICENSED PRODUCT is sold, the royalties payable under this Agreement on NET SALES, SERVICE INCOME and SUBLICENSING INCOME earned in such currency in such country shall continue to be reported and accrued, but will not be paid until such currency may be removed from such country. (d) All plans or reports received under Sections 5.1, 5.2, 5.3, 5.4 shall deemed Confidential Information of LICENSEE subject to Section 11.1; provided, however, that HARVARD may disclose such information as required by law under Section 11.1 (b), and may include in its usual reports the annual amounts of royalties paid. (e) Late payments shall be subject to a charge of [*** Redacted] percent ([*** Redacted]%) per month, or $[*** Redacted], whichever is greater. 5.5 In the event of acquisition, merger, change of corporate name, or change of make-up, organization, or identity, LICENSEE shall notify HARVARD in writing within [*** Redacted] days of such event. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 12 5.6 If LICENSEE or any of its sublicensees does not qualify as a "small entity" as provided by the United States Patent and Trademark Office, LICENSEE must notify HARVARD immediately. ARTICLE VI RECORD KEEPING 6.1 LICENSEE shall keep accurate records (together with supporting documentation) of LICENSED PRODUCTS made, used or sold under this Agreement, sufficient to determine the amount of royalties due to HARVARD hereunder. Such records shall be retained for at least [*** Redacted] following the end of the reporting period to which they relate. They shall be available during normal business hours for examination, upon HARVARD's reasonable request, not more than once in any [*** Redacted] month period and upon at least [*** Redacted] days prior notice, by an independent accountant under a duty of confidentiality, selected by HARVARD and reasonably acceptable to LICENSEE, for the sole purpose of verifying reports and payments under Section 5.4. In conducting examinations pursuant to this Section, HARVARD's accountant shall have access to records materially relevant to the calculation of royalties under Article IV. 6.2 HARVARD's accountant shall only disclose to HARVARD whether the reports and payments of royalties hereunder are accurate, and the amount of the underreporting or underpayment of royalties by LICENSEE, if any. 6.3 Such examination by HARVARD's accountant shall be at HARVARD's expense, except that if such examination shows an underreporting or underpayment in excess of [*** Redacted] percent ([*** Redacted]%) for any [*** Redacted] month period, then LICENSEE shall pay the reasonable out-of-pocket cost of such examination as well as any additional sum that would have been payable to HARVARD had the LICENSEE reported correctly, plus interest on said sum at the rate of [*** Redacted] percent ([*** Redacted]%) per month. ARTICLE VII DOMESTIC AND FOREIGN PATENT FILING AND MAINTENANCE 7.1 LICENSEE shall reimburse HARVARD for all reasonable out-of-pocket expenses HARVARD has incurred, or will incur during the term of this Agreement, for the preparation, filing, prosecution and maintenance of PATENT RIGHTS, including for counseling with regard to such preparation, filing, prosecution and maintenance upon receipt of quarterly invoices from HARVARD. Late payment of these invoices shall be subject to interest charges of [*** Redacted] percent ([*** Redacted]%) per month. HARVARD shall be responsible for the preparation, filing, prosecution and maintenance of any and all patent applications and patents included in PATENT RIGHTS. HARVARD will instruct counsel to directly notify HARVARD and LICENSEE and *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 13 provide them copies of any communications to and from the United States and foreign patent offices relating to said prosecution, and drafts of all communications to the various patent offices, and will instruct counsel to consider any comments on such drafts, so that LICENSEE will be informed and apprised of the continuing prosecution of patent applications in PATENT RIGHTS. LICENSEE shall have reasonable opportunity to participate in decision making on key decisions affecting filing, prosecution and maintenance of patents and patent applications in PATENT RIGHTS. 7.2 HARVARD and LICENSEE shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS and of all patents and patent applications licensed to LICENSEE hereunder, executing all papers and instruments or requiring members of HARVARD to execute such papers and instruments so as to enable HARVARD to apply for, to prosecute and to maintain patent applications and patents in HARVARD's name in any country. Each party shall provide to the other [*** Redacted] notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents. In particular, LICENSEE must immediately notify HARVARD if LICENSEE does not qualify as a "small entity" as provided by the United States Patent and Trademark Office. 7.3 LICENSEE may elect to surrender its rights to any patent or patent application within PATENT RIGHTS in any country upon [*** Redacted] days written notice to HARVARD. Such notice shall not relieve LICENSEE from responsibility to reimburse HARVARD for expenses under Section 7.1 relating to the filing, prosecution or maintenance of such patent or patent application incurred prior to the receipt of the written notice by HARVARD (or a longer period if specified in LICENSEE's notice). ARTICLE VIII INFRINGEMENT 8.1 With respect to any PATENT RIGHTS that have not been rendered non-exclusive under Section 3.2(d), LICENSEE shall have the right to enforce in its own name and at its own expense any patents within such PATENT RIGHTS. HARVARD agrees to notify LICENSEE promptly of each infringement of such patents of which HARVARD is or becomes aware. 8.2 (a) If LICENSEE elects to commence an action as described above, HARVARD may, to the extent permitted by law, elect to join as a party in that action. Regardless of whether HARVARD elects to join as a party, HARVARD shall cooperate fully with LICENSEE in connection with any such action, including making available relevant personnel, information, records, papers, samples, specimens and other similar materials for the purposes of such action as reasonably requested by LICENSEE through the Office of Technology and Trademark Licensing at HARVARD. (b) If HARVARD elects to join as a party pursuant to Subsection (a), HARVARD shall jointly control the action with LICENSEE. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 14 (c) LICENSEE shall reimburse HARVARD for any out-of-pocket costs HARVARD reasonably incurs, including reasonable attorneys' fees, as part of an action brought by LICENSEE under Section 8.1, whether or not HARVARD becomes a co-plaintiff. 8.3 If LICENSEE elects to commence an action as described above, LICENSEE may deduct from its [*** Redacted] to HARVARD with respect to the patent(s) subject to suit an amount not exceeding [*** Redacted] percent ([*** Redacted]%) of LICENSEE's expenses and costs of such action, including reasonable attorneys' fees and reimbursement of amounts under Section 8.2(c) above; provided, however, that such reduction shall not exceed [*** Redacted] percent ([*** Redacted]%) of the [*** Redacted] due to HARVARD with respect to the patent(s) subject to suit for each calendar year. If such [*** Redacted] percent ([*** Redacted]%) of LICENSEE's expenses and costs exceeds the amount of [*** Redacted] deducted by LICENSEE for any calendar year, LICENSEE may to that extent reduce [*** Redacted] due to HARVARD from LICENSEE in succeeding calendar years, but never by more than [*** Redacted] percent ([*** Redacted]%) of the [*** Redacted] due in any [*** Redacted] with respect to the patent(s) subject to suit. 8.4 Neither party may enter into a settlement, consent judgment or other voluntary final disposition of any suit under Section 8.1, 8.6, 8.7 and 8.8 without the prior written consent of other party, which consent shall not be unreasonably withheld, if such settlement, consent judgment or other voluntary final disposition includes any admissions or statements about the validity or enforceability of PATENT RIGHTS. 8.5 Recoveries or reimbursements from actions commenced pursuant to this Article shall first be applied to reimburse LICENSEE and HARVARD for litigation costs not paid from royalties [*** Redacted] pursuant to Section 8.3. Any remaining recoveries or reimbursements shall be shared as follows: [*** Redacted]% to LICENSEE and [*** Redacted]% to HARVARD. 8.6 If LICENSEE elects not to exercise its right to enforce the PATENT RIGHTS against any infringement pursuant to this Article, HARVARD may do so at its own expense, controlling such action and retaining all recoveries therefrom. LICENSEE shall cooperate fully with HARVARD in connection with any such action. 8.7 Without limiting the generality of Section 8.6, HARVARD may, at its election and by notice to LICENSEE, establish a time limit of [*** Redacted] days for LICENSEE to decide whether to enforce the PATENT RIGHTS against any infringement of which HARVARD is or becomes aware. If, by the end of such [*** Redacted] day period, LICENSEE has not commenced such an action or taken reasonable efforts to settle such infringement, HARVARD may enforce the PATENT RIGHTS against such an infringement at its own expense, controlling such action and retaining all recoveries therefrom. Notwithstanding sections 8.6 and 8.7, HARVARD shall not bring any action alleging the infringement of PATENT RIGHTS against any sublicensee of LICENSEE under PATENT RIGHTS, without the consent of LICENSEE. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 15 8.8 If a declaratory judgment action is brought naming LICENSEE as a defendant and alleging invalidity of any of the PATENT RIGHTS, if both parties agree, HARVARD may take over the sole defense of the action at its own expense. LICENSEE shall cooperate fully with HARVARD in connection with any such action. 8.9 If LICENSEE or any sublicensee, distributor or other customer is sued by a third party charging infringement of patent rights that dominate a claim of PATENT RIGHTS, with respect to the manufacture, use, distribution or sale of LICENSED PRODUCT or practice or use of a LICENSED PROCESS, LICENSEE will promptly notify HARVARD. As between the parties to this Agreement, LICENSEE will be entitled to control the defense in any such action(s) and withhold up to one-half (1/2) of the amounts otherwise payable to HARVARD hereunder to pay for defense costs, attorneys fees and any liability incurred in such infringement suit(s). If Licensee is required to pay a royalty or other amount to a third party as a result of a final judgment or settlement, the amounts payable to HARVARD hereunder will be reduced as provided in Section 4.3 above. ARTICLE IX TERMINATION OF AGREEMENT 9.1 This Agreement, unless terminated as provided herein, shall remain in effect until the last patent or patent application in PATENT RIGHTS has expired or been abandoned. 9.2 HARVARD may terminate this Agreement as follows; (a) If LICENSEE does not make a payment due hereunder and fails to cure such non-payment (including the payment of interest in accordance with Section 5.4(e)) within [*** Redacted] days after the date of notice in writing of such non-payment by HARVARD. If LICENSEE disputes the amount of such non-payment in writing within such [*** Redacted] day period, HARVARD shall not have the right to terminate this Agreement until it has been determined in an arbitration proceeding under Section 11.10 below that LICENSEE has failed to pay amounts owed hereunder, and thereafter Licensee does not cure such failure within [*** Redacted] days after such determination. This Section 9.2(a) shall not, however, suspend any obligation of LICENSEE to compensate HARVARD for any undisputed amounts, as provided for under any term of this Agreement, during the pendency of the foregoing arbitration and cure period. (b) If LICENSEE defaults in its obligations under Sections 11.2(c) and 11.2(d) to procure and maintain insurance, and fails to cure such breach within [*** Redacted] days after notice in writing of such breach by HARVARD. (c) If LICENSEE shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it, provided that such bankruptcy petition is not dismissed within [*** Redacted] days after its filing. Such termination shall be effective immediately upon HARVARD giving written notice to LICENSEE. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 16 (d) If LICENSEE is convicted of a felony within the United States relating to the manufacture, use, or sale of LICENSED PRODUCTS. (e) Except as provided in Subsections (a), (b), (c), (d) above, if LICENSEE materially breaches any obligations under this Agreement and the breach has not been cured within [*** Redacted] days after the date of notice in writing of such breach by HARVARD. If LICENSEE disputes in writing that it has materially breached this Agreement within such [*** Redacted] day period, HARVARD shall not have the right to terminate this Agreement until it has been determined in an arbitration proceeding under Section 11.10 below that LICENSEE has materially breached this Agreement, and thereafter Licensee does not cure such breach within [*** Redacted] days after such determination. This Section 9.2(c) shall not, however, suspend any obligation of LICENSEE to compensate HARVARD for any undisputed amounts, as provided for under any term of this Agreement, during the pendency of the foregoing arbitration and cure period. 9.3 All sublicenses granted by LICENSEE under this Agreement in compliance with the terms and conditions hereof shall survive the termination of this Agreement upon the request of the party to whom such sublicense is granted, provided that such party agrees in writing that (i) it will pay all royalties or other amounts that otherwise would have been due thereafter under such sublicense directly to HARVARD rather than LICENSEE, and (ii) HARVARD shall not be held liable for the breach or the performance of any obligations stated in such sublicense unless such obligations have been expressly assumed in writing by HARVARD. 9.4 LICENSEE may terminate this Agreement by giving [*** Redacted] days advance written notice of termination to HARVARD. Upon termination, LICENSEE shall promptly submit a Royalty Report to HARVARD for the final reporting period and any royalty payments incurred during such reporting period, and any unreimbursed patent expenses under Section 7 that have been invoiced by HARVARD, shall become immediately payable with such Royalty Report. 9.5 Articles I, VI, IX, X and XI (except for Section 11.7) of this Agreement shall survive termination. Article VIII shall survive with respect to any infringement of third parties and/or any lawsuits filed by or against LICENSEE, prior to the termination of this Agreement. In the event this Agreement is terminated for any reason, LICENSEE may, within [*** Redacted] after the effective date of such termination, sell or otherwise dispose of all LICENSED PRODUCTS that LICENSEE may have on hand on the effective date of such termination, and fulfill any contracts requiring the use of LICENSED PRODUCTS and/or LICENSED PROCESSES that LICENSEE may have entered into prior to the date of such termination, subject to LICENSEE's payment of amounts due to HARVARD under Section 4.3 of this Agreement. 9.6 In the event that after termination of this Agreement, HARVARD licenses PATENT RIGHTS to another licensee, HARVARD shall use commercially reasonable efforts to *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 17 require such other licensee to pay the costs of the preparation, filing, prosecution and maintenance of PATENT RIGHTS. HARVARD shall reimburse LICENSEE for any costs so paid by such other licensee to the extent LICENSEE paid for such costs under Section 7.1. ARTICLE X REPRESENTATIONS AND WARRANTIES 10.1 Except for the rights, if any, of the Government of the United States, HARVARD represents and warrants that: (a) HARVARD is the owner of the entire right, title and interest in and to the PATENT RIGHTS as they exist on the Effective Date; (b) HARVARD has the right and authority to enter into this Agreement and grant the rights and licenses set forth herein, including without limitation under PATENT RIGHTS; (c) HARVARD has not previously granted, and will not grant in the future, any rights in the PATENT RIGHTS that are inconsistent with the rights and licenses granted to LICENSEE herein; (d) To the best knowledge of HARVARD without having made an investigation, as of the Effective Date, practice of inventions within the PATENT RIGHTS does not infringe any patent rights, trade secrets or other proprietary rights of any third party. (e) To the best knowledge of HARVARD, as of the Effective Date, HARVARD does not own any rights in any other patent or patent application, the claims of which would dominate the claims of a patent or patent application within the PATENT RIGHTS or any practice of PATENT RIGHTS. If HARVARD owns, now or thereafter, any such rights in such patents or patent applications on which [*** Redacted] is an inventor, HARVARD will negotiate in good faith to the extent it has the legal right to do so with LICENSEE to grant LICENSEE rights to the extent sufficient to practice PATENT RIGHTS. (f) To the best knowledge of HARVARD, all prior and current agreements between HARVARD and other sponsors of research under which HARVARD has obligations relating to PATENT RIGHTS are listed on Appendix B. 10.2 Except as set forth in this Agreement, HARVARD does not warrant the validity of the PATENT RIGHTS licensed hereunder and makes no representations whatsoever with regard to the scope of the licensed PATENT RIGHTS or that such PATENT RIGHTS may be exploited by LICENSEE, an AFFILIATE, or sublicensee without infringing other patents. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 18 10.3 EXCEPT FOR THE WARRANTIES STATED IN THIS AGREEMENT, HARVARD EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PATENT RIGHTS OR INFORMATION SUPPLIED BY HARVARD, LICENSED PROCESSES OR LICENSED PRODUCTS CONTEMPLATED BY THIS AGREEMENT. ARTICLE XI GENERAL 11.1 (a) The parties may, from time to time, in connection with this Agreement disclose to each other Confidential Information. Any Confidential Information shall be in writing and marked "confidential" and disclosed only to the Office of Technology and Trademark Licensing. As used in the this Agreement, "Confidential Information" of a party shall mean (i) any information disclosed in writing by such party to the other party, which is marked by such party with the legend "CONFIDENTIAL" or other similar legend sufficient to identify the information as its confidential information, (ii) any information disclosed orally by such party to the other party which is identified as confidential at the time of disclosure and is confirmed as confidential in writing within thirty (30) days after such time of disclosure, or (iii) any information deemed Confidential Information under the terms of this Agreement. With respect to categories (i) and (ii) above, "Confidential Information" shall nor include any information that is: (1) already known to the receiving party at the time of disclosure hereunder, or (2) now or hereafter becomes publicly known other than through acts or omissions of the receiving party, or (3) is disclosed to the receiving party by a third party under no obligation of confidentiality to the disclosing party or (4) is independently developed by the receiving party without use of the Confidential Information of the disclosing party. (b) Each party shall maintain in confidence, and shall not use for any purpose or disclose to any third party, the Confidential Information of the other party. Notwithstanding the foregoing, the receiving party may use or disclose the Confidential Information of the disclosing party (i) to the extent necessary to exercise its rights or fulfill its obligations and/or duties under this Agreement, and (ii) to comply with applicable law or governmental regulations or court order, provided that the receiving party will give reasonable advance notice to the disclosing party, and will use its reasonable efforts to minimize the disclosure of Confidential Information and to secure confidential treatment of any Confidential Information disclosed. (c) The terms of this Agreement shall be deemed "Confidential Information" of both parties. In addition to the permissible disclosures set forth in subsection (b) above, LICENSEE may disclose such terms in confidence to its financial and legal advisors, consultants, potential or actual investors, potential or actual merger or acquisition partners, and others on a need-to-know basis. 11.2 (a) LICENSEE shall indemnify, defend and hold harmless HARVARD and its current or former and future directors, governing board members, trustees, officers, faculty and 19 employees (collectively, the "INDEMNITEES"), from and against any lawsuit or cause or action against the INDEMNITEES brought by a third party (collectively, "Claims"), based upon, arising out of, or otherwise relating to this Agreement, including without limitation any cause of action relating to product liability concerning any product, process, or service made, used or sold pursuant to any right or license granted under this Agreement, except to the extent such Claims arise out of or otherwise relate to the gross negligence or intentional misconduct of any INDEMNITEES; and further provided that (i) LICENSEE receives prompt notice of any such Claims; (ii) LICENSEE is given the exclusive right to control the defense and settlement of such Claims; and (iii) LICENSEE shall not be obligated to indemnify any INDEMNITEE in connection with any settlement for any Claim unless LICENSEE consents in writing to such settlement. (b) LICENSEE shall, at its own expense, defend against any actions brought or filed against any INDEMNITEE hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought. (c) Beginning at the time any such product, process or service is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by LICENSEE or by a SUBLICENSEE, AFFILIATE or agent of LICENSEE, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than [*** Redacted] per incident and [*** Redacted] annual aggregate and naming the Indemnitees as additional insureds. During clinical trials of any such product, process or service, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in such equal or lesser amount as HARVARD shall require, naming the Indemnitees as additional insureds. Such commercial general liability insurance shall provide: (i) product liability coverage; and (ii) broad form contractual liability coverage for LICENSEE's indemnification under this Agreement. If LICENSEE elects to self-insure all or part of the limits described above (including deductibles or retentions Which are in excess of [*** Redacted] annual aggregate) such self-insurance program must be acceptable to HARVARD and the Risk Management Foundation of the Harvard Medical Institutions, Inc. in their sole discretion. The minimum amounts of insurance coverage required shall not be construed to create a limit of LICENSEE's liability with respect to its indemnification under this Agreement. (d) LICENSEE shall provide HARVARD with written evidence of such insurance upon request of HARVARD. LICENSEE shall provide HARVARD with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if LICENSEE does not obtain replacement insurance providing comparable coverage within such fifteen (15) day period, HARVARD shall have the right to terminate this Agreement in accordance with Section 9.2(b). (e) LICENSEE shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during: (i) the period that any product, process, or service, relating to, or developed pursuant to, this Agreement is being *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 20 commercially distributed or sold by LICENSEE or by a sublicensee, AFFILIATE or agent of LICENSEE; and (ii) a reasonable period after the period referred to in Subsection (c)(i) above which in no event shall be less than [*** Redacted]. 11.3 Nothing in this Agreement shall be construed as conferring any right to use Harvard's name or insignia, or any adaptation of them, or the name of any of HARVARD'S inventors in any advertising, promotional or sales literature without the prior written approval of HARVARD, or the inventor in the case of the use of the name of an inventor. 11.4 Except as stated in this Section 11.4, without the prior written approval of HARVARD in each instance, neither this Agreement nor the rights granted hereunder shall be transferred or assigned in whole or in part by LICENSEE to any person whether voluntarily or involuntarily, by operation of law or otherwise. LICENSEE may transfer or assign this Agreement and all rights hereunder, upon notice to HARVARD but without its consent, to any entity that succeeds to all or substantially all of the business of LICENSEE to which this Agreements pertains, whether by merger, operation of law, purchase or sale of all or substantially all of LICENSEE's stock or assets or otherwise; provided that such assignee or transferee promptly agrees in writing to be bound by the terms and conditions of this Agreement. Subject to the foregoing, this Agreement shall be binding upon the respective successors, legal representatives and assignees of HARVARD and LICENSEE. 11.5 The interpretation and application of the provisions of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. 11.6 LICENSEE shall comply with all applicable laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations among other things, prohibit or require a license for the export of certain types of technical data to certain specified countries. LICENSEE hereby agrees and gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by LICENSEE or its AFFILIATES or sublicensees, and that it will defend and hold HARVARD harmless in the event of any legal action of any nature occasioned by such violation with respect to LICENSED PRODUCTS. 11.7 LICENSEE agrees: (i) to obtain all regulatory approvals required for the manufacture and sale of LICENSED PRODUCTS and LICENSED PROCESSES; and (ii) to mark LICENSED PRODUCTS with the numbers of the applicable patents within PATENT RIGHTS, to the extent required by law. LICENSEE also agrees to register or record this Agreement as is required by law or regulation in any country where the license is in effect, and HARVARD shall cooperate fully with LICENSEE in connection with any such registration or recordation. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 21 11.8 Any notices to be given hereunder shall be sufficient if signed by the party (or party's attorney) giving same and either: (i) delivered in person; (ii) mailed certified mail return receipt requested; or (iii) faxed to other party if the sender has evidence of successful transmission and if the sender promptly sends the original by ordinary mail, in any event to the following addresses: If to LICENSEE: Nanosys Inc. 200 Boston Ave Suite 4700 Medford, MA 02l55 Attn: Lawrence A. Bock Fax: 718-391-3803 cc: Wilson, Sonsini, Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304 Attn: Michael J. O'Donnell, Esq. Fax: 650/493-6811 If to HARVARD: Office for Technology and Trademark Licensing Harvard University Holyoke Center, Suite 727 1350 Massachusetts Avenue Cambridge, MA 02138 Fax: (617) 495-9568 by such notice either party may change their address for future notices. Notices delivered in person shall be deemed given on the date delivered. Notices sent by fax shall be deemed given on the date faxed. Notices mailed shall be deemed given on the date postmarked on the envelope. 11.9 Should a court of competent jurisdiction later hold any provision of this Agreement to be invalid, illegal, or unenforceable, and such holding is not reversed on appeal, it shall be considered severed from this Agreement. All other provisions, rights and obligations shall continue without regard to the severed provision, provided that the remaining provisions of this Agreement are in accordance with the intention of the parties. 11.10 In the event of any controversy or claim arising out of or relating to any provision of this Agreement or the breach thereof, the parties shall try to settle such conflict amicably between themselves. Subject to the limitation stated in the final sentence of this Section, any such conflict which the parties are unable to resolve promptly shall be settled through arbitration conducted in accordance with the rules of the American Arbitration Association. The demand for arbitration shall be filed within a [*** Redacted] after the controversy or claim has arisen, and in no event after the date upon which institution of *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 22 legal proceeding based on such controversy or claim would be barred by the applicable statute of limitation. Such arbitration shall be held in Boston, Massachusetts. The award through arbitration shall be final and binding. Either party may enter any such award in a court having jurisdiction or may make application to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Notwithstanding the foregoing, either party may, without recourse to arbitration, assert against the other party a third-party claim or cross-claim in any action brought by a third party, to which the subject matter of this Agreement may be relevant. 11.11 This Agreement constitutes the entire understanding between the parties and neither party shall be obligated by any condition or representation other than those expressly stated herein or as may be subsequently agreed to by the parties hereto in writing. 11.12 Nothing in this Agreement shall be deemed to require LICENSEE to exploit the PATENT RIGHTS, except to the extent expressly set forth in this Agreement, and nothing in this Agreement shall be deemed to prevent LICENSEE from commercializing products similar to or competitive with a LICENSED PRODUCT. 11.13 The relationship between HARVARD and LICENSEE established by this Agreement is that of independent contractors. Nothing in this Agreement shall be construed to create any other relationship between HARVARD and LICENSEE. Neither party shall have any right, power or authority to assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other. 11.14 In the event either party hereto is prevented from or delayed in the performance of any of its obligations hereunder by reason of acts of God, war, strikes, riots, storms, fires or any other cause whatsoever beyond the reasonable control of the party, the party so prevented or delayed shall be excused from the performance of any such obligation to the extent and during the period of such prevention or delay. 11.15 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OF LIKELIHOOD OF SAME. 23 11.16 This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives. PRESIDENT AND FELLOWS COMPANY OF HARVARD COLLEGE /s/ JOYCE BRINTON /s/ LAWRENCE BOCK ----------------- ----------------- Joyce Brinton, Director Signature Office for Technology and Trademark Licensing LAWRENCE BOCK ----------------- Name President ----------------- 2/11/02 Title ------------ Date 2/18/02 ----------------- Date 24 APPENDIX A The following comprise PATENT RIGHTS: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 25 APPENDIX B Sponsorship for the research which led to PATENT RIGHTS was provided by the following grants/contractor: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 26 EX-10.5.3 16 f97636orexv10w5w3.txt EXHIBIT 10.5.3 EXHIBIT 10.5.3 EXCLUSIVE LICENSE AGREEMENT Between President and Fellows of Harvard College And NanoSys, Inc. Re: Harvard Case [*** Redacted] In consideration of the mutual promises and covenants set forth below, the parties hereto agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the following meanings: 1.1 ACADEMIC RESEARCH PURPOSES: use of PATENT RIGHTS solely for academic non-commercial research or other not-for-profit scholarly purposes, which use is undertaken at a non-profit or governmental institution. ACADEMIC RESEARCH PURPOSES does not include selling products covered by PATENT RIGHTS or using PATENT RIGHTS in researching, developing, producing or manufacturing products for sale, or performance of services for a fee or other financial consideration. It is understood that using the PATENT RIGHTS to conduct normal research activities at non-profit or governmental institution is within the defined term of ACADEMIC RESEARCH PURPOSES. 1.2 AFFILIATE: any entity which controls, is controlled by, or is under common control with a party. An entity shall be regarded as in control of another entity for purposes of this definition if it owns or controls at least fifty percent (50%) of the shares entitled to vote in the election of directors (or in the case of an entity that is not a corporation, for the election of the corresponding managing authority). Unless otherwise specified, the term LICENSEE includes AFFILIATES. 1.3 FIELD: All fields of use. 1.4 HARVARD: President and Fellows of Harvard College, a nonprofit Massachusetts educational corporation having offices at the Office for Technology and Trademark *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Licensing, Holyoke Center, Suite 727, 1350 Massachusetts Avenue, Cambridge, Massachusetts 02138. 1.5 LICENSED PROCESSES: methods, processes or procedures covered by at least one VALID CLAIM included within the PATENT RIGHTS. 1.6 LICENSED PRODUCTS: products covered by at least one VALID) CLAIM included within the PATENT RIGHTS or products made in accordance with LICENSED PROCESSES. 1.7 LICENSEE: Nanosys, Inc., a corporation organized under the laws of Delaware having its principal offices at 2625 Hanover Street, Palo Alto, CA 94304 1.8 NET SALES: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2 1.9 PATENT RIGHTS: PATENT RIGHTS shall include (i) the applications and patents as listed in Appendix A of this Agreement, (ii) any foreign counterparts to such patents and patent applications, (iii) the inventions described and claimed in the foregoing, (iv) any divisions- or continuations of the foregoing, and (v) specific claims of any continuations-in-part of the foregoing to the extent the specific claims are directed to subject matter described in the foregoing in a manner sufficient to support such specific claims under 35 U.S.C. and to the extent Licensable by HARVARD; claims in said continuations-in-part covering minor improvements over the claims of parent patent applications may, at HARVARD'S discretion, be included in PATENT RIGHTS by amendment of this Agreement for no increase in the royalties of Article IV, (vi) all patents issuing on any of the foregoing, and (vii) registrations, renewals, reissues, reexaminations, extensions or patents of addition of any kind with respect to any of such patents. For purposes of this Agreement "Licensable" shall mean those claims of continuations-in-part filed after the Effective Date for which HARVARD has sole ownership (or has been granted the sole right to license by a co-owner) and where there are no obligations to grant licenses to a third party as the result of research support provided to one or more of the inventors. 1.10 SERVICE INCOME: [*** Redacted] [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 3 [*** Redacted] 1.11 SUBLICENSE INCOME: [*** Redacted] [*** Redacted] 1.12 TERRITORY: Worldwide. 1.13 VALID CLAIM: either (i) a claim of an issued patent that has not expired or been held unenforceable or invalid by an agency or a court of competent jurisdiction, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; provided, however, that if the holding of such court or agency is later reversed by a court or agency with overriding authority, the claim shall be reinstated as a Valid Claim with respect to Net Sales made after the date of such reversal, or (ii) a claim of a pending patent application that has not been abandoned or finally rejected without the possibility of *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 4 appeal or re-filing and that has been pending for less than seven (7) years from its priority date, and is being actively prosecuted in good faith. 1.14 The terms "Public Law 96-517" and "Public Law 98-620" include all amendments to those statutes. 1.15 The terms "sold" and "sell" include, without limitation, leases and other dispositions and similar transactions. 1.16 RELATED LICENSE AGREEMENTS: Other patent license agreements between LICENSEE and HARVARD licensing patent rights known internally at HARVARD as Case [*** Redacted]. 1.17 DEVELOPMENT PAYMENTS: [*** Redacted]. ARTICLE II RECITALS 2.1 HARVARD is owner (or HARVARD will be owner) by assignment from [*** Redacted] of their entire right, title and interest in the United States Provisional Application, [*** Redacted], filed [*** Redacted], a PCT International Patent Application, filed [*** Redacted] and the foreign and US patent applications corresponding thereto, and in the inventions described and claimed therein. 2.2 HARVARD has the authority to issue licenses under PATENT RIGHTS. 2.3 HARVARD is committed to the policy that ideas or creative works produced at HARVARD should be used for the greatest possible public benefit, and believes that every reasonable incentive should be provided for the prompt introduction of such ideas into public use, all in a manner consistent with the public interest. 2.4 LICENSEE intends to use commercially reasonable efforts to develop the invention(s), and to bring to market at least one product falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in the patent rights licensed under such agreements. 2.5 LICENSEE is desirous of obtaining an exclusive license in the TERRITORY in order to practice the above-referenced invention covered by PATENT RIGHTS in the United States and in certain foreign countries, and to manufacture, use and sell in the commercial market the products made in accordance therewith, and HARVARD is desirous of granting such a license to LICENSEE in accordance with the terms of this Agreement. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 5 ARTICLE III GRANT OF RIGHTS 3.1 HARVARD hereby grants to LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, an exclusive license (except as set forth in Sections 3.2(a) and 3.2(b)) under PATENT RIGHTS in the TERRITORY and in the FIELD (i) to make and have made, to use and have used, to sell and have sold, to offer for sale, import, export, or otherwise distribute the LICENSED PRODUCTS, (ii) to practice the LICENSED PROCESSES, and (iii) to otherwise fully exploit the PATENT RIGHTS, and (iv) to have the foregoing performed on behalf of LICENSEE by a third party, in each case for the life of the PATENT RIGHTS. The foregoing license under PATENT RIGHTS shall include the full right to grant sublicenses, and LICENSEE shall promptly provide copies of any sublicenses of PATENT RIGHTS to HARVARD for its review. Unless HARVARD has rendered the license under PATENT RIGHTS non-exclusive under Section 3.2(d), HARVARD agrees that it will not grant licenses under PATENT RIGHTS to others, nor make, use, sell, offer for sale, import or otherwise exploit PATENT RIGHTS itself except as required by HARVARD'S obligations in Section 3.2(a) or as permitted in Section 3.2(b). 3.2 The granting and exercise of this license is subject to the following conditions: (a) HARVARD'S "Statement of Policy in Regard to Inventions, Patents and Copyrights," dated August 10, 1998, Public Law 96-517 and Public Law 98-620, and HARVARD'S obligations under prior or current agreements with other sponsors of research and, with regard to continuations-in-part contained in the PATENT RIGHTS, any future agreements with other sponsors of research related to such continuations-in-part. Any right granted in this Agreement greater than that permitted under Public Law 96-517, or Public Law 98-620, shall be subject to modification to the extent required to conform to the provisions of those statutes. (b) HARVARD reserves the right to make and use, and grant to other non-profit or governmental institutions non-exclusive licenses to make and use, in each case solely for ACADEMIC RESEARCH PURPOSES the subject matter described and claimed in PATENT RIGHTS. HARVARD shall promptly notify LICENSEE of any rights granted to any third party (other than the U.S. government) under Sections 3.2(a) and (b). (c) LICENSEE shall use commercially reasonable efforts to effect introduction into the commercial market at least [*** Redacted] falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in PATENT RIGHTS within [*** Redacted] years of the effective date of this Agreement; thereafter, until the expiration of this Agreement, LICENSEE shall use commercially reasonable efforts to endeavor to keep any [*** Redacted] reasonably available to the public so long as it shall be a sound and reasonable commercial practice to do so. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 6 At any time after [*** Redacted] years from the effective date of this Agreement, HARVARD may render this license non-exclusive if LICENSEE has not, either by itself or through a sublicensee: (i) introduced into commercial use at least [*** Redacted] falling within the definition of LICENSED PRODUCT or made by a LICENSED PROCESS; and (ii) used commercially reasonable efforts to put the licensed subject matter into commercial use as broadly as commercially reasonable in one or more of the countries hereby licensed, directly or through a sublicense, as described in LICENSEE'S development plan required by Paragraph 5.1 (b); and (iii) used commercially reasonable efforts to keep products falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in PATENT RIGHTS reasonably available to the public so long as it shall be a sound and reasonable commercial practice to do so; and (iv) engaged in research, development, manufacturing, marketing or sublicensing activity that is commercially reasonably appropriate to achieving Section 3.2(d)(ii) or 3.2(d)(iii). (e) In all sublicenses granted by LICENSEE hereunder, LICENSEE shall include a requirement that the sublicensee use commercially reasonable efforts to put the subject matter of the sublicense into commercial use, provided that such sublicensee is authorized to develop and sell to the public a [*** Redacted] covered by PATENT RIGHTS on its own behalf. LICENSEE shall further provide that such sublicenses are subject and subordinate to the terms and conditions of this Agreement, except for the [*** Redacted] paid by such sublicensee to the LICENSEE. Copies of all sublicense agreements hereunder shall be provided promptly to HARVARD. Such copies of sublicense agreements may be provided to HARVARD in redacted form, provided that such copies contain all relevant terms necessary for HARVARD to monitor LICENSEE'S compliance with the terms of this Agreement. Unredacted copies of said sublicense agreements shall be made available for review by HARVARD or its representatives at LICENSEE'S Medford, MA facility, or whichever facility is closest to HARVARD, within one week of HARVARD'S request. All sublicense agreements of LICENSEE provided to HARVARD shall be deemed Confidential Information of LICENSEE subject to Section 11.1. (f) At any time [*** Redacted] years after the effective date of this Agreement, if LICENSEE is unable or unwilling to grant sublicenses, either [*** Redacted] by HARVARD [*** Redacted] or otherwise, then HARVARD may directly license such [*** Redacted], but only if: (i) LICENSEE is not currently pursuing development of LICENSED PRODUCTS for the same application or an application that is reasonably competitive with the application as contemplated by the potential *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 7 sublicensee as demonstrated by annual progress reports from LICENSEE required by Paragraph 5.2, or the research and development plan required by Paragraph 5.1(b) of this agreement or within a [*** Redacted] LICENSEE makes a commitment to do so, said commitment being satisfied by a written research and development plan, acceptable to HARVARD and said acceptance given within the [*** Redacted], said acceptance not to be unreasonably denied, any applications which LICENSEE fails to develop according to the research and development plan, as potentially amended according to Paragraph 5.2, immediately becomes subject to this Paragraph. (ii) the granting of such a license by HARVARD to the potential sublicensee will increase the availability of useful products to the public, and (iii) HARVARD notifies LICENSEE of its intention to grant such license and permits LICENSEE a [*** Redacted] period to negotiate a sublicense on its own. (g) To the extent required by law, until this license is rendered non-exclusive in the United States under Section 3.2(d), LICENSEE shall cause any LICENSED PRODUCT produced for sale in the United States to be manufactured substantially in the United States. (h) HARVARD recognizes that LICENSEE's success in meeting the obligations set forth in this paragraph may be enhanced by consultation with the inventor(s) of the PATENT RIGHTS. Accordingly, Harvard will use reasonable efforts to make such inventors reasonably available to LICENSEE for such consultation. 3.3 All rights reserved to the United States Government and others under Public Law 96-517, and Public Law 98-620, shall remain and shall in no way be affected by this Agreement. 3.4 HARVARD shall promptly notify LICENSEE when any new patent or patent application arises from (i) research conducted in the laboratory of [*** Redacted], or (ii) improvements made by HARVARD [*** Redacted] on the subject matter described in PATENT RIGHTS. If LICENSEE so requests and the intellectual property is available for licensing, HARVARD will evaluate in good faith LICENSEE's proposal along with proposals received from any third parties. Any decision to grant a license to LICENSEE shall be subject to approval by HARVARD's Committee on Patents and Copyrights. In the event LICENSEE and HARVARD cannot agree on terms for a license to any new intellectual property which is dominated by PATENT RIGHTS, HARVARD shall not offer any third party terms more favorable, in toto, than the terms offered to LICENSEE. ARTICLE IV ROYALTIES 4.1 LICENSEE shall owe to HARVARD a non-refundable license royalty fee in the sum of [*** Redacted] ($[*** Redacted]) dollars upon execution of this Agreement, which shall be payable as follows: [*** Redacted] ($[*** Redacted]) dollars payable within [*** Redacted] days of this Agreement becoming effective, and another [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 8 [*** Redacted] ($[*** Redacted]) dollars at the first anniversary of this Agreement becoming effective.. 4.2 As consideration for the rights granted hereunder, LICENSEE shall pay to HARVARD a non-refundable fee in the form of stock of LICENSEE as follows: (i) LICENSEE shall issue to HARVARD twenty thousand (20,000) fully vested shares, at a price per share of $0.12 per share and an aggregate value of $2,400.00 of LICENSEE's common stock upon execution of this Agreement, provided, however, that HARVARD shall be subject to and enter into (1) appropriate agreements and related documents as required of other stockholders of LICENSEE, including without limitation a Common Stock Purchase Agreement, and (2) a Voting Agreement by and among the LICENSEE, HARVARD and certain other holders of common stock of LICENSEE dated as of even date hereof. (ii) HARVARD's ownership rights to Shares shall not be affected should the license pursuant to this Agreement be terminated by LICENSEE or HARVARD. 4.3 (a) LICENSEE shall pay to HARVARD during the term of this Agreement a royalty on NET SALES by LICENSEE according to the following schedule: (i) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications; (ii) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications; or (iii) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] excluding [*** Redacted] applications and [*** Redacted] applications. In the event, any NET SALES by LICENSEE reasonably falls within more than one of categories (i) to (iii) above, LICENSEE shall pay to HARVARD the lowest applicable royalty set forth in such categories. (b) For each LICENSED PRODUCT sold by LICENSEE, LICENSEE may credit up to [*** Redacted] of royalties that LICENSEE is paying to third parties (or HARVARD under agreements not included within section 4.3(c)) on LICENSEE's sales of that LICENSED PRODUCT, provided that the royalty paid to HARVARD shall not be reduced below [*** Redacted] percent ([*** Redacted]%) of the NET SALES of that LICENSED PRODUCT for which such third party royalties are being paid. LICENSEE may only offset royalties owed under license agreements to third parties where said license agreements provide for similar offsets of comparable scale of third party royalties. Any such offsets must be specifically and thoroughly reported in the royalty reports required by Paragraph 5.4. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 9 (c) In the event that sales of a LICENSED PRODUCT are subject to the payment of royalties under one or more of the RELATED LICENSE AGREEMENTS or any license agreements with HARVARD with the same effective date as this Agreement, then the total royalty payment due HARVARD under all such agreements including this Agreement shall be at most the royalty payment due under this Section 4.3 on such NET SALE, no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such agreement. LICENSEE shall notify HARVARD of the identity of each license agreement that includes patent rights covering the product or process, and HARVARD shall distribute the royalties evenly among such agreements, including this Agreement. (d) LICENSEE shall pay HARVARD [*** Redacted] percent ([*** Redacted]%) of SUBLICENSE INCOME received by LICENSEE for a sublicense of PATENT RIGHTS. If compensation for such a sublicense of PATENT RIGHTS is bundled with compensation received for the sublicensing of the other HARVARD patents rights or other HARVARD intellectual property licensed to LICENSEE under the RELATED LICENSE AGREEMENTS or any agreements with HARVARD having the same effective date as this Agreement, then LICENSEE shall pay HARVARD at most the royalty payment due under this Section 4.3(d) for such SUBLICENSE INCOME no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such license agreements. In such a case, LICENSEE shall notify HARVARD of the identity of each license agreement involved and HARVARD shall distribute the royalties equally among those license agreements, including this Agreement. (e) For provision of services under PATENT RIGHTS, LICENSEE shall pay a royalty of [*** Redacted] percent ([*** Redacted]%) of SERVICE INCOME received by LICENSEE from each and every third party ("Third Party") to whom LICENSEE provides such services. In the event any services from which SERVICE INCOME is derived are subject to the payment of royalties under the RELATED LICENSE AGREEMENTS or any agreement with HARVARD having the same effective date as this Agreement, then the total royalty due under all such agreements, including this Agreement, shall be at most the royalty payment due under this Section 4.3 on such services, no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such license agreements. In such event, LICENSEE shall notify HARVARD of the identity of each license agreement involved and HARVARD shall distribute the royalties equally among those license agreements, including this Agreement. (f) If the license pursuant to this Agreement is converted to a non-exclusive one under Section 3.2(d) and if another non-exclusive license to any of PATENT RIGHTS is granted or otherwise exists for any field or territory, then the royalty rate of this Agreement shall be adjusted so as not to exceed the royalty rate payable by such other non-exclusive licensee under such PATENT RIGHTS in such field or territory, provided that LICENSEE agrees to amend this Agreement to include terms requested by HARVARD that have been accepted by such other non-exclusive licensee. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 10 (g) On sales between LICENSEE and its AFFILIATES for resale, the royalty shall be paid on the NET SALES of the AFFILIATE. (h) In the event that more than one VALID CLAIM within PATENT RIGHTS is applicable to any LICENSED PRODUCT subject to royalties under this Section 4.3, then only one royalty shall be paid to HARVARD in respect of such LICENSED PRODUCT. In no event shall more than one royalty be due to HARVARD with respect to any LICENSED PRODUCT unit; nor shall a royalty be payable under this Section 4.3 with respect to sales of LICENSED PRODUCTS for clinical trials nor the use of LICENSED PRODUCTS or LICENSED PROCESSES by LICENSEE for such a purpose whether or not in collaboration with a third party. 4.4 No later than January 1 of each calendar year after the effective date of this Agreement, LICENSEE shall pay to HARVARD the following non-refundable license maintenance royalty and/or advance on royalties. Such payments may be credited against running royalties due for that calendar year and Royalty Reports shall reflect such a credit. Such payments shall not be credited against milestone payments (if any) nor against royalties due for any subsequent calendar year. January 1, 2003 $[*** Redacted] January 1, 2004 $[*** Redacted] January 1, 2005 $[*** Redacted] January 1, 2006 $[*** Redacted] January 1, 2007 $[*** Redacted] January 1, 2008 $[*** Redacted] January 1, 2009 $[*** Redacted] January 1, 2010 $[*** Redacted] each year thereafter $[*** Redacted]

ARTICLE V REPORTING 5.1 a) In compliance of earlier RELATED LICENSE AGREEMENTS, LICENSEE has provided to HARVARD a written research and development plan acceptable to LICENSEE's investors under which LICENSEE intends to bring the subject matter of the earlier RELATED LICENSE AGREEMENTS (though not specifically of this Agreement) granted earlier into commercial use. Such plan included projections of sales and proposed marketing efforts. b) LICENSEE agrees to provide, no later than [*** Redacted] years after the effective date of this Agreement, a written research and development plan, requiring written approval by HARVARD, which shall not unreasonably be denied, under which LICENSEE intends to bring the subject matter of PATENT RIGHTS into commercial use. Such a plan shall *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 11 include a description of each LICENSED PRODUCT to be developed, a developmental timeline showing the technical, regulatory, business and marketing steps (benchmarks) needed to bring the LICENSED PRODUCT into commercial use and the resources in funds and personnel that LICENSEE will bring to bear for the successful accomplishment of each such step, and shall include projected sales and a proposed marketing effort 5.2 No later than [*** Redacted] days after [*** Redacted] of each [*** Redacted], LICENSEE shall provide to HARVARD a written annual Progress Report describing progress on the commercialization of PATENT RIGHTS during the most recent [*** Redacted] month period ending [*** Redacted], the amount of LICENSEE's R&D spending relating to the subject matter described or claimed in PATENT RIGHTS during such time, and plans for the forthcoming year. If multiple technologies are covered by the license granted hereunder, the Progress Report shall provide the information set forth above for each technology. If progress differs from that anticipated in the plan required under Section 5.1(b), LICENSEE shall explain the reasons for the difference and, if appropriate or necessary, provide a modified research and development plan for HARVARD's review and approval, such approval not to be unreasonably denied. It is understood that LICENSEE may provide one Progress Report covering all RELATED LICENSE AGREEMENTS. 5.3 LICENSEE shall report to HARVARD the date of its first NET SALE of a LICENSED PRODUCT (or the date of its first use of a LICENSED PROCESS from which SERVICE INCOME is derived) in each country within [*** Redacted] days of occurrence. It is understood that LICENSEE shall be obligated to report the date of first sale of LICENSED PRODUCTS (or the first commercial use of LICENSED PROCESSES) under this Section 5.3 only once for each country. 5.4 (a) LICENSEE shall submit to HARVARD within [*** Redacted] days after each calendar [*** Redacted] ending [*** Redacted], a Royalty Report setting forth, for the most recent [*** Redacted] that ended on [*** Redacted] or [*** Redacted], at least the following information: (i) the number and identification of LICENSED PRODUCTS sold by LICENSEE and its AFFILIATES that constitute a NET SALE, in each country; (ii) total amounts received for such LICENSED PRODUCTS sold by LICENSEE and its AFFILIATES; (iii) an accounting for all LICENSED PROCESSES used or sold by LICENSEE and its AFFILIATES; (iv) deductions applicable to determine the NET SALES thereof; (v) the amount of SUBLICENSE INCOME received by LICENSEE from each sublicensee, and for each sublicensee the categories of LICENSED PRODUCTS sold and gross sales of each category; (vi) the amount of SERVICE INCOME received by LICENSEE; and *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 12 (vii) the amount of royalty due for such reporting period, or, if no royalties are due to HARVARD for such reporting period, the statement that no royalties are due. Such report shall be certified as correct by an officer of LICENSEE and shall include a listing of all deductions from royalties. It is understood that LICENSEE may submit one Royalty Report covering all RELATED LICENSE AGREEMENTS. However, the Royalty Report shall, for each type of income, provide a detailed listing of the RELATED LICENSE AGREEMENTS that are involved. (b) LICENSEE shall pay to HARVARD with each such Royalty Report the amount of royalty due with respect to such [*** Redacted]. If multiple technologies are covered by the license granted hereunder, LICENSEE shall specify which PATENT RIGHTS are utilized for each category of LICENSED PRODUCTS and/or LICENSED PROCESSES for which royalties are separately reported in the Royalty Report. (c) All payments due hereunder shall be deemed received when funds are credited to HARVARD's bank account and shall be payable by check or wire transfer in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the New York Times or the Wall Street Journal) on the last working day of each royalty period. No transfer, exchange, collection or other charges shall be deducted from such payments. If legal restrictions block the removal of local currency from any country where a LICENSED PRODUCT is sold, the royalties payable under this Agreement on NET SALES, SERVICE INCOME and SUBLICENSING INCOME earned in such currency in such country shall continue to be reported and accrued, but will not be paid until such currency may be removed from such country. (d) All plans or reports received under Sections 5.1, 5.2, 5.3, 5.4 shall be deemed Confidential Information of LICENSEE subject to Section 11.1; provided, however, that HARVARD may disclose such information as required by law under Section 11.1(b), and may include in its usual reports the annual amounts of royalties paid. (e) Late payments shall be subject to a charge of [*** Redacted] percent ([*** Redacted]%) per month, or $[*** Redacted], whichever is greater. 5.5 In the event of acquisition, merger, change of corporate name, or change of make-up, organization, or identity, LICENSEE shall notify HARVARD in writing within [*** Redacted] days of such event. 5.6 If LICENSEE or any of its sublicensees does not qualify as a "small entity" as provided by the United States Patent and Trademark Office, LICENSEE must notify HARVARD immediately. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 13 ARTICLE VI RECORD KEEPING 6.1 LICENSEE shall keep accurate records (together with supporting documentation) of LICENSED PRODUCTS made, used or sold under this Agreement, sufficient to determine the amount of royalties due to HARVARD hereunder. Such records shall be retained for at least [*** Redacted] years following the end of the reporting period to which they relate. They shall be available during normal business hours for examination, upon HARVARD's reasonable request, not more than once in any [*** Redacted] month period and upon at least [*** Redacted] days prior notice, by an independent accountant under a duty of confidentiality, selected by HARVARD and reasonably acceptable to LICENSEE, for the sole purpose of verifying reports and payments under Section 5.4. In conducting examinations pursuant to this Section, HARVARD's accountant shall have access to records materially relevant to the calculation of royalties under Article IV. 6.2 HARVARD's accountant shall only disclose to HARVARD whether the reports and payments of royalties hereunder are accurate, and the amount of the underreporting or underpayment of royalties by LICENSEE, if any. 6.3 Such examination by HARVARD's accountant shall be at HARVARD's expense, except that if such examination shows an underreporting or underpayment in excess of [*** Redacted] ([*** Redacted]%)for any [*** Redacted] month period, then LICENSEE shall pay the reasonable out-of-pocket cost of such examination as well as any additional sum that would have been payable to HARVARD had the LICENSEE reported correctly, plus interest on said sum at the rate of [*** Redacted] percent ([*** Redacted]) per month. ARTICLE VII DOMESTIC AND FOREIGN PATENT FILING AND MAINTENANCE 7.1 Upon execution of this Agreement, LICENSEE shall reimburse HARVARD for all reasonable expenses HARVARD has incurred for the preparation, filing, prosecution and maintenance of PATENT RIGHTS. Thereafter, LICENSEE shall reimburse HARVARD for all such future expenses within [*** Redacted] days of receipt of invoices from HARVARD. Late payment of these invoices shall be subject to interest charges of [*** Redacted] percent ([*** Redacted]%) per month. HARVARD shall, in its sole discretion, be responsible for the preparation, filing, prosecution and maintenance of any and all patent applications and patents included in PATENT RIGHTS. HARVARD shall consult with LICENSEE as to the preparation, filing, prosecution and maintenance of such patent applications and patents and shall furnish to LICENSEE copies of documents relevant to any such preparation, filing, prosecution or maintenance. HARVARD shall be responsible for the preparation, filing, prosecution and maintenance of any and all patent applications and patents included in PATENT RIGHTS. HARVARD will instruct counsel to directly notify HARVARD and LICENSEE and *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 14 provide them copies of any communications to and from the United States and foreign patent offices relating to said prosecution, and drafts of all communications to the various patent offices, and will instruct counsel to consider any comments on such drafts, so that LICENSEE will be informed and apprised of the continuing prosecution of patent applications in PATENT RIGHTS. LICENSEE shall have reasonable opportunity to participate in decision making on key decisions affecting filing, prosecution and maintenance of patents and patent applications in PATENT RIGHTS. 7.2 HARVARD and LICENSEE shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS and of all patents and patent applications licensed to LICENSEE hereunder, executing all papers and instruments or requiring members of HARVARD to execute such papers and instruments so as to enable HARVARD to apply for, to prosecute and to maintain patent applications and patents in HARVARD's name in any country. Each party shall provide to the other [*** Redacted] notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents. In particular, LICENSEE must immediately notify HARVARD if LICENSEE does not qualify as a "small entity" as provided by the United States Patent and Trademark Office. 7.3 LICENSEE may elect to surrender its rights to any patent or patent application within PATENT RIGHTS in any country upon [*** Redacted] days written notice to HARVARD. Such notice shall not relieve LICENSEE from responsibility to reimburse HARVARD for expenses under Section 7.1 relating to the filing, prosecution or maintenance of such patent or patent application incurred prior to the receipt of the written notice by HARVARD (or a longer period if specified in LICENSEE's notice). ARTICLE VIII INFRINGEMENT 8.1 With respect to any PATENT RIGHTS that have not been rendered non-exclusive under Section 3.2(d), LICENSEE shall have the right to enforce in its own name and at its own expense any patents within such PATENT RIGHTS. HARVARD agrees to notify LICENSEE promptly of each infringement of such patents of which HARVARD is or becomes aware. 8.2 (a) If LICENSEE elects to commence an action as described above, HARVARD may, to the extent permitted by law, elect to join as a party in that action. Regardless of whether HARVARD elects to join as a party, HARVARD shall cooperate fully with LICENSEE in connection with any such action, including making available relevant personnel, information, records, papers, samples, specimens and other similar materials for the purposes of such action as reasonably requested by LICENSEE through the Office of Technology and Trademark Licensing at HARVARD. (b) If HARVARD elects to join as a party pursuant to Subsection (a), HARVARD shall jointly control the action with LICENSEE. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 15 (c) LICENSEE shall reimburse HARVARD for any out-of-pocket costs HARVARD reasonably incurs, including reasonable attorneys' fees, as part of an action brought by LICENSEE under Section 8.1, whether or not HARVARD becomes a co-plaintiff. 8.3 If LICENSEE elects to commence an action as described above and desires that HARVARD be responsible for some of its expenses as described immediately below, LICENSEE shall explain its strategy to HARVARD in any detail requested by HARVARD. If HARVARD approves of said action in writing, LICENSEE may deduct from its [*** Redacted] to HARVARD with respect to the patent(s) subject to suit an amount not exceeding [*** Redacted] percent ([*** Redacted]%) of LICENSEE's expenses and costs of such action, including reasonable attorneys' fees and reimbursement of amounts under Section 8.2(c) above; provided, however, that such reduction shall not exceed [*** Redacted] percent ([*** Redacted]%) of the [*** Redacted] due to HARVARD with respect to the patent(s) subject to suit for each calendar year. If such [*** Redacted] percent ([*** Redacted]%) of LICENSEE's expenses and costs exceeds the amount of royalties deducted by LICENSEE for any calendar year, LICENSEE may to that extent reduce [*** Redacted] due to HARVARD from LICENSEE in succeeding calendar years, but never by more than [*** Redacted] percent ([*** Redacted]%) of the [*** Redacted] due in any [*** Redacted] with respect to the patent(s) subject to suit. 8.4 Neither party may enter into a settlement, consent judgment or other voluntary final disposition of any suit under Section 8.1, 8.6, 8.7 and 8.8 without the prior written consent of the other party, which consent shall not be unreasonably withheld. 8.5 Recoveries or reimbursements from actions commenced pursuant to this Article shall first be applied to reimburse LICENSEE and HARVARD for litigation costs not paid from royalties [*** Redacted] pursuant to Section 8.3. Any remaining recoveries or reimbursements shall be shared as follows: if HARVARD approved of said action(s) as described in Paragraph 8.3, [*** Redacted]% to LICENSEE and [*** Redacted]% to HARVARD, if HARVARD did not approve of said action(s) then [*** Redacted] shall be treated as [*** Redacted] and LICENSEE shall pay an [*** Redacted] of [*** Redacted]% to HARVARD. 8.6 If LICENSEE elects not to exercise its right to enforce the PATENT RIGHTS against any infringement pursuant to this Article, HARVARD may do so at its own expense, controlling such action and retaining all recoveries therefrom. LICENSEE shall cooperate fully with HARVARD in connection with any such action. 8.7 Without limiting the generality of Section 8.6, HARVARD may, at its election and by notice to LICENSEE, establish a time limit of [*** Redacted] days for LICENSEE to decide whether to enforce the PATENT RIGHTS against any infringement of which HARVARD is or becomes aware. If, by the end of such [*** Redacted] day period, LICENSEE has not (a) commenced such an action; (b) taken reasonable efforts to settle such infringement; or (c) provided HARVARD with a written report that provides LICENSEE's plans to commence such action or settle such infringement in the future and the reasons for any proposed delay in commencing such action or settling such *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 16 infringment, which report must be approved by HARVARD, which approval will not unreasonably be denied or delayed and which approval shall not be construed as giving approval for Paragraph 8.3 purposes, HARVARD may enforce the PATENT RIGHTS against such an infringement at its own expense, controlling such action and retaining all recoveries therefrom. Notwithstanding sections 8.6 and 8.7, HARVARD shall not bring any action alleging the infringement of PATENT RIGHTS against any sublicensee of LICENSEE under PATENT RIGHTS, without the consent of LICENSEE. 8.8 If a declaratory judgment action is brought naming LICENSEE as a defendant and alleging invalidity of any of the PATENT RIGHTS, if both parties agree, HARVARD may take over the sole defense of the action at its own expense. LICENSEE shall cooperate fully with HARVARD in connection with any such action. ARTICLE IX TERMINATION OF AGREEMENT 9.1 The effective date of this Agreement shall be the date that both parties have signed the Agreement. This Agreement, unless terminated as provided herein, shall remain in effect until the last patent or patent application in PATENT RIGHTS has expired or been abandoned. 9.2 HARVARD may terminate this Agreement as follows: (a) If LICENSEE does not make a payment due hereunder and fails to cure such non-payment (including the payment of interest in accordance with Section 5.4(e)) within [*** Redacted] days after the date of notice in writing of such non-payment by HARVARD. If LICENSEE disputes the amount of such non-payment in writing within such [*** Redacted] day period, HARVARD shall not have the right to terminate this Agreement until it has been determined in an arbitration proceeding under Section 11.10 below that LICENSEE has failed to pay amounts owed hereunder, in which case LICENSEE shall pay [*** Redacted] for the arbitration, and thereafter Licensee does not cure such failure within [*** Redacted] days after such determination. This Section 9.2(a) shall not, however, suspend any obligation of LICENSEE to compensate HARVARD for any undisputed amounts, as provided for under any term of this Agreement, during the pendency of the foregoing arbitration and cure period. (b) If LICENSEE defaults in its obligations under Sections 11.2(c) and 11.2(d) to procure and maintain insurance, and fails to cure such breach within [*** Redacted] days after notice in writing of such breach by HARVARD. (c) If LICENSEE shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it, provided that such bankruptcy petition is *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 17 not dismissed within [*** Redacted] days after its filing. Such termination shall be effective immediately upon HARVARD giving written notice to LICENSEE. (d) If LICENSEE is convicted of a felony within the United States relating to the manufacture, use, or sale of LICENSED PRODUCTS. (e) Except as provided in Subsections (a), (b), (c), (d) above, if LICENSEE materially breaches any obligations under this Agreement and the breach has not been cured within [*** Redacted] days after the date of notice in writing of such breach by HARVARD. If LICENSEE disputes in writing that it has materially breached this Agreement within such [*** Redacted] day period, HARVARD shall not have the right to terminate this Agreement until it has been determined in an arbitration proceeding under Section 11.10 below that LICENSEE has materially breached this Agreement, in which case LICENSEE shall pay [*** Redacted] for the arbitration, and thereafter Licensee does not cure such breach within sixty [*** Redacted] after such determination. This Section 9.2(e) shall not, however, suspend any obligation of LICENSEE to compensate HARVARD for any undisputed amounts, as provided for under any term of this Agreement, during the pendency of the foregoing arbitration and cure period. 9.3 All sublicenses granted by LICENSEE under this Agreement in compliance with the terms and conditions hereof shall survive the termination of this Agreement upon the request of the party to whom such sublicense is granted, provided that such party agrees in writing that (i) it will pay all royalties or other amounts that otherwise would have been due thereafter under such sublicense directly to HARVARD rather than LICENSEE, and (ii) HARVARD shall not be held liable for the breach or the performance of any obligations stated in such sublicense unless such obligations have been expressly assumed in writing by HARVARD. 9.4 LICENSEE may terminate this Agreement by giving [*** Redacted] days advance written notice of termination to HARVARD. Upon termination, LICENSEE shall promptly submit a Royalty Report to HARVARD for the final reporting period and any royalty payments incurred during such reporting period, and any unreimbursed patent expenses under Section 7 that have been invoiced by HARVARD, shall become immediately payable with such Royalty Report. 9.5 Articles I, VI, IX, X and XI (except for Section 11.7) of this Agreement shall survive termination. Article VIII shall survive with respect to any infringement of third parties and/or any lawsuits filed by or against LICENSEE, prior to the termination of this Agreement. In the event this Agreement is terminated for any reason, LICENSEE may, within [*** Redacted] after the effective date of such termination, sell or otherwise dispose of all LICENSED PRODUCTS that LICENSEE may have on hand on the effective date of such termination, and fulfill any contracts requiring the use of LICENSED PRODUCTS and/or LICENSED PROCESSES that LICENSEE may have entered into prior to the date of such termination, subject to LICENSEE'S payment of amounts due to HARVARD under Section 4.3 of this Agreement. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 18 ARTICLE X REPRESENTATIONS AND WARRANTIES 10.1 Except for the rights, if any, of the Government of the United States, HARVARD represents and warrants that: (a) HARVARD is the owner of the entire right, title and interest in and to the PATENT RIGHTS as they exist on the Effective Date; (b) HARVARD has the right and authority to enter into this Agreement and grant the rights and licenses set forth herein, including without limitation under PATENT RIGHTS; (c) HARVARD has not previously granted, and will not grant in the future, any rights in the PATENT RIGHTS that are inconsistent with the rights and licenses granted to LICENSEE herein; (d) To the best knowledge of HARVARD without having made an investigation, as of the Effective Date, practice of inventions within the PATENT RIGHTS does not infringe any patent rights, trade secrets or other proprietary rights of any third party, (e) To the best knowledge of HARVARD, as of the Effective Date, HARVARD does not own any rights in any other patent or patent application, the claims of which would dominate the claims of a patent or patent application within the PATENT RIGHTS or any practice of PATENT RIGHTS. If HARVARD owns, now or thereafter, any such rights in such patents or patent applications on which [*** Redacted] is an inventor, HARVARD will negotiate in good faith to the extent it has the legal right to do so with LICENSEE to grant LICENSEE rights to the extent sufficient to practice PATENT RIGHTS, and at commercially reasonable royalties. (f) To the best knowledge of HARVARD, all prior and current agreements between HARVARD and other sponsors of research under which HARVARD has obligations relating to PATENT RIGHTS are listed on Appendix C. 10.2 Except as set forth in this Agreement, HARVARD does not warrant the validity of the PATENT RIGHTS licensed hereunder and makes no representations whatsoever with regard to the scope of the licensed PATENT RIGHTS or that such PATENT RIGHTS may be exploited by LICENSEE, an AFFILIATE, or sublicensee without infringing other patents. 10.3 EXCEPT FOR THE WARRANTIES STATED IN THIS AGREEMENT, HARVARD EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PATENT RIGHTS OR *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 19 INFORMATION SUPPLIED BY HARVARD, LICENSED PROCESSES OR LICENSED PRODUCTS CONTEMPLATED BY THIS AGREEMENT. ARTICLE XI GENERAL 11.1 (a) The parties may, from time to time, in connection with this Agreement disclose to each other Confidential Information. Any Confidential Information shall be in writing and marked "confidential" and disclosed only to the Office of Technology and Trademark Licensing. As used in this Agreement, "Confidential Information" of a party shall mean (i) any information disclosed in writing by such party to the other party, which is marked by such party with the legend "CONFIDENTIAL" or other similar legend sufficient to identify the information as its confidential information, (ii) any information disclosed orally by such party to the other party which is identified as confidential at the time of disclosure and is confirmed as confidential in writing within thirty (30) days after such time of disclosure, or (iii) any information deemed Confidential Information under the terms of this Agreement. With respect to categories (i) and (ii) above, "Confidential Information" shall not include any information that is: (1) already known to the receiving party at the time of disclosure hereunder, or (2) now or hereafter becomes publicly known other than through acts or omissions of the receiving party, or (3) is disclosed to the receiving party by a third party under no obligation of confidentiality to the disclosing party or (4) is independently developed by the receiving party without use of the Confidential Information of the disclosing party. (b) Each party shall maintain in confidence, and shall not use for any purpose or disclose to any third party, the Confidential Information of the other party. Notwithstanding the foregoing, the receiving party may use or disclose the Confidential Information of the disclosing party (i) to the extent necessary to exercise its rights or fulfill its obligations and/or duties under this Agreement, and (ii) to comply with applicable law or governmental regulations or court order, provided that the receiving party will give reasonable advance notice to the disclosing party, and will use its reasonable efforts to minimize the disclosure of Confidential Information and to secure confidential treatment of any Confidential Information disclosed. (c) The royalty terms of this Agreement shall be deemed "Confidential Information" of both parties. In addition to the permissible disclosures set forth in subsection (b) above, LICENSEE may disclose such terms in confidence to its financial and legal advisors, consultants, potential or actual investors, potential or actual merger or acquisition partners, and others on a need-to-know basis. 11.2 (a) LICENSEE shall indemnify, defend and hold harmless HARVARD and its current or former and future directors, governing board members, trustees, officers, faculty and employees (collectively, the "INDEMNITEES"), from and against any claim, lawsuit, cause of action , liability, cost, expense, damage, deficiency, loss or obligation of any kind or nature (including, without limitation, reasonable attorney's fees and other costs and expenses of litigation) (collectively, "Claims"), based upon, 20 arising out of, or otherwise relating to: LICENSEE'S or any sublicensee's performance of (or failure to perform) any of its obligations under this Agreement or any sublicense agreement, or the practice by LICENSEE or any sublicensee of any right or license granted under this Agreement or any sublicense agreement, or any product, process, or service made, used or sold pursuant to any right or license granted under this Agreement or any sublicense agreement, including without limitation any Claim relating to product liability (whether based on negligence or other tort, warranty, strict liability, or any other theory), except to the extent such Claims are directly attributable to intentional misconduct of any INDEMNITEES. It shall be a condition of the foregoing obligation that (i) LICENSEE receives prompt notice of any such Claims; (ii) LICENSEE is given the exclusive right to control the defense and settlement of such Claims, provided that LICENSEE shall not settle any such Claim without the prior written consent of HARVARD, which consent shall not be unreasonably withheld; and (iii) LICENSEE shall not be obligated to indemnify any INDEMNITEE in connection with any settlement for any Claim unless LICENSEE consents in writing to such settlement. (b) LICENSEE shall, at its own expense, defend against any actions brought or filed against any INDEMNITEE hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought. (c) Beginning at the time any such product, process or service is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by LICENSEE or by a SUBLICENSEE, AFFILIATE or agent of LICENSEE, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than [*** Redacted] per incident and [*** Redacted] annual aggregate and naming the Indemnitees as additional insureds. During clinical trials of any such product, process or service, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in such equal or lesser amount as HARVARD shall require, naming the Indemnitees as additional insureds. Such commercial general liability insurance shall provide: (i) product liability coverage; and (ii) broad form contractual liability coverage for LICENSEE'S indemnification under this Agreement. If LICENSEE elects to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of [*** Redacted] annual aggregate) such self-insurance program must be acceptable to HARVARD and the Risk Management Foundation of the Harvard Medical Institutions, Inc. in their sole discretion. The minimum amounts of insurance coverage required shall not be construed to create a limit of LICENSEE'S liability with respect to its indemnification under this Agreement. (d) LICENSEE shall provide HARVARD with written evidence of such insurance upon request of HARVARD. LICENSEE shall provide HARVARD with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if LICENSEE does not obtain replacement insurance providing comparable coverage within such fifteen (15) day period, HARVARD shall have the right to terminate this Agreement in accordance with Section 9.2(b). *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 21 (e) LICENSEE shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during: (i) the period that any product, process, or service, relating to, or developed pursuant to, this Agreement is being commercially distributed or sold by LICENSEE or by a sublicensee, AFFILIATE or agent of LICENSEE; and (ii) a reasonable period after the period referred to in Subsection (e)(i) above which in no event shall be less than [*** Redacted] 11.3 Nothing in this Agreement shall be construed as conferring any right to use HARVARD's name or insignia, or any adaptation of them, or the name of any of HARVARD's inventors in any advertising, promotional or sales literature without the prior written approval of HARVARD, or the inventor in the case of the use of the name of an inventor. 11.4 Except as stated in this Section 11.4, without the prior written approval of HARVARD in each instance, neither this Agreement nor the rights granted hereunder shall be transferred or assigned in whole or in part by LICENSEE to any person whether voluntarily or involuntarily, by operation of law or otherwise. LICENSEE may transfer or assign this Agreement and all rights hereunder, upon notice to HARVARD but without its consent, to any entity that succeeds to all or substantially all of the business of LICENSEE to which this Agreements pertains, whether by merger, operation of law, purchase or sale of all or substantially all of LICENSEE'S stock or assets or otherwise; provided that such assignee or transferee promptly agrees in writing to be bound by the terms and conditions of this Agreement. Subject to the foregoing, this Agreement shall be binding upon the respective successors, legal representatives and assignees of HARVARD and LICENSEE. 11.5 The interpretation and application of the provisions of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. 11.6 LICENSEE shall comply with all applicable laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations among other things, prohibit or require a license for the export of certain types of technical data to certain specified countries. LICENSEE hereby agrees and gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by LICENSEE or its AFFILIATES or sublicensees, and that it will defend and hold HARVARD harmless in the event of any legal action of any nature occasioned by such violation with respect to LICENSED PRODUCTS. 11.7 LICENSEE agrees: (i) to obtain all regulatory approvals required for the manufacture and sale of LICENSED PRODUCTS and LICENSED PROCESSES; and (ii) to mark LICENSED PRODUCTS with the numbers of the applicable patents within PATENT RIGHTS, to the extent required by law. LICENSEE also agrees to register or record this Agreement as is required by law or regulation in any country where the license is in effect, *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 22 and HARVARD shall cooperate fully with LICENSEE in connection with any such registration or recordation. 11.8 Any notices to be given hereunder shall be sufficient if signed by the party (or party's attorney) giving same and either: (i) delivered in person; (ii) mailed certified mail return receipt requested; or (iii) faxed to other party if the sender has evidence of successful transmission and if the sender promptly sends the original by ordinary mail, in any event to the following addresses: If to LICENSEE: NanoSys, Inc. 2625 Hanover Street Palo Alto, CA 94304 Attn: Lawrence A. Bock Fax: 650-745-1273 cc: Wilson, Sonsini, Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304 Attn: Michael J. O'Donnell, Esq. Fax: 650/493-6811 If to HARVARD: Office for Technology and Trademark Licensing Harvard University Holyoke Center, Suite 727 1350 Massachusetts Avenue Cambridge, MA 02138 Fax: (617) 495-9568 By such notice either party may change their address for future notices. Notices delivered in person shall be deemed given on the date delivered. Notices sent by fax shall be deemed given on the date faxed. Notices mailed shall be deemed given on the date postmarked on the envelope. 11.9 Should a court of competent jurisdiction later hold any provision of this Agreement to be invalid, illegal, or unenforceable, and such holding is not reversed on appeal, it shall be considered severed from this Agreement. All other provisions, rights and obligations shall continue without regard to the severed provision, provided that the remaining provisions of this Agreement are in accordance with the intention of the parties. 11.10 In the event of any controversy or claim arising out of or relating to any provision of this Agreement or the breach thereof, the parties shall try to settle such conflict amicably between themselves. Subject to the limitation stated in the final sentence of this Section, any such conflict which the parties are unable to resolve promptly shall be settled through 23 arbitration conducted in accordance with the rules of the American Arbitration Association. The demand for arbitration shall be filed within a [*** Redacted] after the controversy or claim has arisen, and in no event after the date upon which institution of legal proceedings based on such controversy or claim would be barred by the applicable statute of limitation. Such arbitration shall be held in Boston, Massachusetts. The award through arbitration shall be final and binding. Either party may enter any such award in a court having jurisdiction or may make application to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Notwithstanding the foregoing, either party may, without recourse to arbitration, assert against the other party a third-party claim or cross-claim in any action brought by a third party, to which the subject matter of this Agreement may be relevant. 11.11 This Agreement constitutes the entire understanding between the parties and neither party shall be obligated by any condition or representation other than those expressly stated herein or as may be subsequently agreed to by the parties hereto in writing. 11.12 Nothing in this Agreement shall be deemed to prevent LICENSEE from commercializing products similar to or competitive with a LICENSED PRODUCT, so long as LICENSEE complies with its obligations under this Agreement. 11.13 The relationship between HARVARD and LICENSEE established by this Agreement is that of independent contractors. Nothing in this Agreement shall be construed to create any other relationship between HARVARD and LICENSEE. Neither party shall have any right, power or authority to assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other. 11.14 In the event either party hereto is prevented from or delayed in the performance of any of its obligations hereunder by reason of acts of God, war, strikes, riots, storms, fires or any other cause whatsoever beyond the reasonable control of the party, the party so prevented or delayed shall be excused from the performance of any such obligation to the extent and during the period of such prevention or delay. 11.15 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SAME. For the avoidance of doubt, the parties acknowledge that the foregoing limitation of liability is not intended to apply to any of the following damages of HARVARD (and accordingly such damages shall be recoverable by HARVARD to the same extent they would be in the absence of that limitation): (i) amounts owed to HARVARD pursuant to the terms of this Agreement; (ii) amounts covered by LICENSEE'S indemnity of Section 11.2; (iii) damages for infringement or violation of any patent, copyright, trademark, or other intellectual *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 24 property right of HARVARD; and (iv) damages arising from the willful misconduct of LICENSEE. 11.16 HARVARD'S AGGREGATE LIABILITY FOR ALL DAMAGES OF ANY KIND RELATING TO THIS AGREEMENT OR ITS SUBJECT MATTER (WHETHER SUCH DAMAGES ARE BASED ON CONTRACT, TORT, INCLUDING NEGLIGENCE, OR OTHERWISE) SHALL NOT EXCEED THE AMOUNT PAID BY LICENSEE TO HARVARD UNDER THIS AGREEMENT. 11.17 This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives. PRESIDENT AND FELLOWS NANOSYS, INC OF HARVARD COLLEGE /s/ JOYCE BRINTON /s/ LAWRENCE A. BOCK ----------------- -------------------- Joyce Brinton, Director Signature Office for Technology and Trademark Licensing LAWRENCE A. BOCK ---------------- Name PRESIDENT & CEO 9/23/02 --------------- ------- Title Date 10/2/02 ------- Date 25 APPENDIX A The following comprise PATENT RIGHTS: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 26 APPENDIX B
CASE LEAD INVENTOR REPORT DATE TITLE AGENCY GRANT NUMBERS - ---- ------------- ----------- ----- ------ ------------- ~~[*** Redacted]~~
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 27 EX-10.5.4 17 f97636orexv10w5w4.txt EXHIBIT 10.5.4 EXHIBIT 10.5.4 EXCLUSIVE LICENSE AGREEMENT Between President and Fellows of Harvard College And NanoSys, Inc Re: Harvard Case [*** Redacted] In consideration of the mutual promises and covenants set forth below, the parties hereto agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the following meanings: 1.1 ACADEMIC RESEARCH PURPOSES: use of PATENT RIGHTS solely for academic non-commercial research or other not-for-profit scholarly purposes, which use is undertaken at a non-profit or governmental institution. ACADEMIC RESEARCH PURPOSES does not include selling products covered by PATENT RIGHTS or using PATENT RIGHTS in researching, developing, producing or manufacturing products for sale, or performance of services for a fee or other financial consideration. It is understood that using the PATENT RIGHTS to conduct normal research activities at non-profit or governmental institution is within the defined term of ACADEMIC RESEARCH PURPOSES. 1.2 AFFILIATE: any entity which controls, is controlled by, or is under common control with a party. An entity shall be regarded as in control of another entity for purposes of this definition if it owns or controls at least fifty percent (50%) of the shares entitled to vote in the election of directors (or in the case of an entity that is not a corporation, for the election of the corresponding managing authority). Unless otherwise specified, the term LICENSEE includes AFFILIATES. 1.3 FIELD: All fields of use. 1.4 HARVARD: President and Fellows of Harvard College, a nonprofit Massachusetts educational corporation having offices at the Office for Technology and Trademark *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Licensing, Holyoke Center, Suite 727, 1350 Massachusetts Avenue, Cambridge, Massachusetts 02138. 1.5 LICENSED PROCESSES: methods, processes or procedures covered by at least one VALID CLAIM included within the PATENT RIGHTS. 1.6 LICENSED PRODUCTS: products covered by at least one VALID CLAIM included within the PATENT RIGHTS or products made in accordance with LICENSED PROCESSES. 1.7 LICENSEE: Nanosys, Inc., a corporation organized under the laws of Delaware having its principal offices at 2625 Hanover Street, Palo Alto, CA 94304 1.8 NET SALES: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2 [*** Redacted] 1.9 PATENT RIGHTS: PATENT RIGHTS shall include (i) the applications and patents as listed in Appendix A of this Agreement, (ii) any foreign counterparts to such patents and patent applications, (iii) the inventions described and claimed in the foregoing, (iv) any divisions- or continuations of the foregoing, (v) applications from which the patents and applications listed in Appendix A claim priority, and which have been abandoned, and (vi) specific claims of any continuations-in-part of the foregoing to the extent the specific claims are directed to subject matter described in the foregoing in a manner sufficient to support such specific claims under 35 U.S.C. and to the extent Licensable by HARVARD; claims in said continuations-in-part covering minor improvements over the claims of parent patent applications may, at HARVARD'S discretion, be included in PATENT RIGHTS by amendment of this Agreement for no increase in the royalties of Article IV, (vi) all patents issuing on any of the foregoing, and (vii) registrations, renewals, reissues, reexaminations, extensions or patents of addition of any kind with respect to any of such patents. For purposes of this Agreement "Licensable" shall mean those claims of continuations-in-part filed after the Effective Date for which HARVARD has sole ownership (or has been granted the sole right to license by a co-owner) and where there are no obligations to grant licenses to a third party as the result of research support provided to one or more of the inventors. 1.10 SERVICE INCOME: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 3 [*** Redacted] 1.11 SUBLICENSE INCOME: [*** Redacted] 1.12 TERRITORY: Worldwide. 1.13 VALID CLAIM: either (i) a claim of an issued patent that has not expired or been held unenforceable or invalid by an agency or a court of competent jurisdiction, and which has not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; provided, however, that if the holding of such court or agency is later reversed by a court or agency with overriding authority, the claim shall be reinstated as a Valid Claim with respect to Net Sales made after the date of such reversal, or (ii) a claim of a pending patent *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 4 application that has not been abandoned or finally rejected without the possibility of appeal or re-filing and that has been pending for less than seven (7) years from its priority date, and is being actively prosecuted in good faith. 1.14 The terms "Public Law 96-517" and "Public Law 98-620" include all amendments to those statutes. 1.15 The terms "sold" and "sell" include, without limitation, leases and other dispositions and similar transactions. 1.16 RELATED LICENSE AGREEMENTS: Other patent license agreements between LICENSEE and HARVARD licensing patent rights known internally at HARVARD as Case [*** Redacted]. 1.17 DEVELOPMENT PAYMENTS: [*** Redacted]. ARTICLE II RECITALS 2.1 HARVARD is owner (or HARVARD will be owner) by assignment from [*** Redacted] of HARVARD [*** Redacted] of their entire right, title and interest in the United States Patent Application Serial Number [*** Redacted], filed [*** Redacted], and [*** Redacted] filed [*** Redacted], and corresponding International Patent Application Serial No. [*** Redacted], filed [*** Redacted], all entitled [*** Redacted], and the foreign patent applications corresponding thereto, and in the inventions described and claimed therein. [*** Redacted] was an owner by assignment from [*** Redacted], and has assigned its interest to HARVARD, a copy of said assignment is attached in Appendix C. 2.2 HARVARD has the authority to issue licenses under PATENT RIGHTS. 2.3 HARVARD is committed to the policy that ideas or creative works produced at HARVARD should be used for the greatest possible public benefit, and believes that every reasonable incentive should be provided for the prompt introduction of such ideas into public use, all in a manner consistent with the public interest. 2.4 LICENSEE intends to use commercially reasonable efforts to develop the invention(s), and to bring to market at least one product falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in the patent rights licensed under such agreements. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 5 2.5 LICENSEE is desirous of obtaining an exclusive license in the TERRITORY in order to practice the above-referenced invention covered by PATENT RIGHTS in the United States and in certain foreign countries, and to manufacture, use and sell in the commercial market the products made in accordance therewith, and HARVARD is desirous of granting such a license to LICENSEE in accordance with the terms of this Agreement. ARTICLE III GRANT OF RIGHTS 3.1 HARVARD hereby grants to LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, an exclusive license (except as set forth in Sections 3.2(a) and 3.2(b)) under PATENT RIGHTS in the TERRITORY and in the FIELD (i) to make and have made, to use and have used, to sell and have sold, to offer for sale, import, export, or otherwise distribute the LICENSED PRODUCTS, (ii) to practice the LICENSED PROCESSES, and (iii) to otherwise fully exploit the PATENT RIGHTS, and (iv) to have the foregoing performed on behalf of LICENSEE by a third party, in each case for the life of the PATENT RIGHTS. The foregoing license under PATENT RIGHTS shall include the full right to grant sublicenses, and LICENSEE shall promptly provide copies of any sublicenses of PATENT RIGHTS to HARVARD for its review. Unless HARVARD has rendered the license under PATENT RIGHTS non-exclusive under Section 3.2(c), and with the exception of rights already granted to Nantero, Inc., under HARVARD Case # [*** Redacted], as provided in Section 3.2(b)(ii), below, HARVARD agrees that it will not grant licenses under PATENT RIGHTS to others nor make, use, sell, offer for sale, import or otherwise exploit PATENT RIGHTS itself except as required by HARVARD'S obligations in Section 3.2(a) or as permitted in Sections 3.2(b)(i) and 3.2(f). 3.2 The granting and exercise of this license is subject to the following conditions: (a) HARVARD'S "Statement of Policy in Regard to Inventions, Patents and Copyrights," dated August 10, 1998, Public Law 96-517 and Public Law 98-620, and HARVARD'S obligations under prior or current agreements with other sponsors of research and, with regard to continuations-in-part contained in the PATENT RIGHTS, any future agreements with other sponsors of research related to such continuations-in-part. Any right granted in this Agreement greater than that permitted under Public Law 96-517, or Public Law 98-620, shall be subject to modification to the extent required to conform to the provisions of those statutes. (b) (i) HARVARD reserves the right to make and use, and grant to other non-profit or governmental institutions non-exclusive licenses to make and use, in each case solely for ACADEMIC RESEARCH PURPOSES the subject matter described and claimed in PATENT RIGHTS. HARVARD shall promptly notify LICENSEE of any rights granted to any third party (other than the U.S. government) under Sections 3.2(a) and (b). (c) (ii) LICENSEE expressly recognizes that Nantero, Inc. ("NANTERO") currently has a limited license under PATENT RIGHTS, to the extent PATENT RIGHTS are included in NANTERO'S co-exclusive license under the patent rights comprising *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 6 HARVARD case [*** Redacted] (but not to practice any technology of PATENT RIGHTS that is not within the technology of HARVARD case [*** Redacted]). (d) LICENSEE shall use commercially reasonable efforts to effect introduction into the commercial market at least [*** Redacted] falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in PATENT RIGHTS within [*** Redacted] years of the effective date of this Agreement; thereafter, until the expiration of this Agreement, LICENSEE shall use commercially reasonable efforts to endeavor to keep any [*** Redacted] reasonably available to the public so long as it shall be a sound and reasonable commercial practice to do so. At any time after [*** Redacted] years from the effective date of this Agreement, HARVARD may render this license non-exclusive if LICENSEE has not, either by itself or through a sublicensee: (i) introduced into commercial use at least [*** Redacted] falling within the definition of LICENSED PRODUCT or made by a LICENSED PROCESS; and (ii) used commercially reasonable efforts to put the licensed subject matter into commercial use as broadly as commercially reasonable in one or more of the countries hereby licensed, directly or through a sublicense, as described in LICENSEE'S development plan required by Paragraph 5.1 (b);and (iii) used commercially reasonable efforts to keep products falling within the definition of LICENSED PRODUCT or otherwise embodying the subject matter described or claimed in PATENT RIGHTS reasonably available to the public so long as it shall be a sound and reasonable commercial practice to do so; and (iv) engaged in research, development, manufacturing, marketing or sublicensing activity that is commercially reasonably appropriate to achieving Section 3.2(d)(ii) or 3.2(d)(iii). (e) In all sublicenses granted by LICENSEE hereunder, LICENSEE shall include a requirement that the sublicensee use commercially reasonable efforts to put the subject matter of the sublicense into commercial use, provided that such sublicensee is authorized to develop and sell to the public a [*** Redacted] covered by PATENT RIGHTS on its own behalf. LICENSEE shall further provide that such sublicenses are subject and subordinate to the terms and conditions of this Agreement, except for the [*** Redacted] paid by such sublicensee to the LICENSEE. Copies of all sublicense agreements hereunder shall be provided promptly to HARVARD. Such copies of sublicense agreements may be provided to HARVARD in redacted form, provided that such copies contain all relevant terms necessary for HARVARD to monitor LICENSEE'S compliance with the terms of this Agreement. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 7 Unredacted copies of said sublicense agreements shall be made available for review by HARVARD or its representatives at LICENSEE'S Medford, MA facility, or whichever facility is closest to HARVARD, within one week, of HARVARD'S request. All sublicense agreements of LICENSEE provided to HARVARD shall be deemed Confidential Information of LICENSEE subject to Section 11.1. (f) At any time [*** Redacted] years after the effective date of this Agreement, if LICENSEE is unable or unwilling to grant sublicenses, either [*** Redacted] by HARVARD or [*** Redacted] or otherwise, then HARVARD may directly license such [*** Redacted], but only if: (i) LICENSEE is not currently pursuing development of LICENSED PRODUCTS for the same application, or an application that is reasonably competitive with the application as contemplated by the potential sublicensee, as demonstrated by annual progress reports from LICENSEE required by Paragraph 5.2, or the research and development plan required by Paragraph 5.1(b) of this agreement or within a [*** Redacted] LICENSEE makes a commitment to do so , said commitment being satisfied by a written research and development plan, acceptable to HARVARD and said acceptance given within the [*** Redacted], said acceptance not to be unreasonably denied. (if, in subsequent reports by LICENSEE to HARVARD as required under Section 5.2, LICENSEE fails to develop any applications according to the research and development plan, as potentially amended according to Section 5.2, such applications become subject to this Paragraph); (ii) the granting of such a license by HARVARD to the potential sublicensee will increase the availability of useful products to the public, and (iii) HARVARD notifies LICENSEE of its intention to grant such license and permits LICENSEE a [*** Redacted] period to negotiate a sublicense on its own, said [*** Redacted] period, unless otherwise agreed to by the Parties, shall be no less than [*** Redacted], nor greater than [*** Redacted]. (g) To the extent required by law, until this license is rendered non-exclusive in the United States under Section 3.2 (d), LICENSEE shall cause any LICENSED PRODUCT produced for sale in the United States to be manufactured substantially in the United States. (h) HARVARD recognizes that LICENSEE'S success in meeting the obligations set forth in this paragraph may be enhanced by consultation with the inventor(s) of the PATENT RIGHTS. Accordingly, Harvard will use reasonable efforts to make such inventors reasonably available to LICENSEE for such consultation. 3.3 All rights reserved to the United States Government and others under Public Law 96-517, and Public Law 98-620, shall remain and shall in no way be affected by this Agreement. 3.4 HARVARD shall promptly notify LICENSEE when any new patent or patent application arises from (i) research conducted in the laboratory of [*** Redacted], or (ii) improvements made by HARVARD [*** Redacted] on the subject matter described in PATENT RIGHTS. If LICENSEE so requests and the intellectual property is available for licensing, HARVARD will evaluate in good faith LICENSEE'S proposal along with proposals received from any third parties. Any decision to grant a license to LICENSEE shall be subject to approval by HARVARD'S Committee *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 8 on Patents and Copyrights. In the event LICENSEE and HARVARD cannot agree on terms for a license to any new intellectual property which is dominated by PATENT RIGHTS, HARVARD shall not offer any third party terms more favorable, in toto, than the terms offered to LICENSEE. ARTICLE IV ROYALTIES 4.1 LICENSEE shall owe to HARVARD a non-refundable license royalty fee in the sum of [*** Redacted] ($*** Redacted) dollars upon execution of this Agreement, which shall be payable within [*** Redacted] days of this Agreement becoming effective. 4.2 As consideration for the rights granted hereunder, LICENSEE shall pay to HARVARD a non-refundable fee in the form of stock of LICENSEE as follows: (i) LICENSEE shall issue to HARVARD and HARVARD shall purchase ten thousand (10,000) fully vested shares, at a price per share of $0.19 per share and an aggregate value of $1,900.00 of LICENSEE'S common stock upon execution of this Agreement, provided, however, that HARVARD shall be subject to and enter into (1) appropriate agreements and related documents as required of other stockholders of LICENSEE, including without limitation a Common Stock Purchase Agreement, and (2) a Voting Agreement by and among the LICENSEE, HARVARD and certain other holders of common stock of LICENSEE dated as of even date hereof. (ii) HARVARD'S ownership rights to Shares shall not be affected should the license pursuant to this Agreement be terminated by LICENSEE or HARVARD. 4.3 (a) LICENSEE shall pay to HARVARD during the term of this Agreement a royalty on NET SALES by LICENSEE according to the following schedule: (i) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications; (ii) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] applications; or (iii) [*** Redacted]% of NET SALES by LICENSEE in [*** Redacted] excluding [*** Redacted] applications and [*** Redacted] applications. In the event, any NET SALES by LICENSEE reasonably falls within more than one of categories (i) to (iii) above, LICENSEE shall pay to HARVARD the lowest applicable royalty set forth in such categories. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 9 (b) For each LICENSED PRODUCT sold by LICENSEE, LICENSEE may credit up to [*** Redacted] of royalties that LICENSEE is paying to third parties (or HARVARD under agreements not included within section 4.3(c)) on LICENSEE'S sales of that LICENSED PRODUCT, provided that the royalty paid to HARVARD shall not be reduced below [*** Redacted] percent ([*** Redacted]%) of the NET SALES of that LICENSED PRODUCT for which such third party royalties are being paid. LICENSEE may only offset royalties owed under license agreements to third parties where said license agreements provide for similar offsets of comparable scale of third party royalties. Any such offsets must be specifically and thoroughly reported in the royalty reports required by Paragraph 5.4. (c) In the event that sales of a LICENSED PRODUCT are subject to the payment of royalties under one or more of the RELATED LICENSE AGREEMENTS or any license agreements with HARVARD with the same effective date as this Agreement, then the total royalty payment due HARVARD under all such agreements including this Agreement shall be at most the royalty payment due under this Section 4.3 on such NET SALE, no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such agreement. LICENSEE shall notify HARVARD of the identity of each license agreement that includes patent rights covering the product or process, and HARVARD shall distribute the royalties evenly among such agreements, including this Agreement. (d) LICENSEE shall pay HARVARD [*** Redacted] percent ([*** Redacted]%) of SUBLICENSE INCOME received by LICENSEE for a sublicense of PATENT RIGHTS. If compensation for such a sublicense of PATENT RIGHTS is bundled with compensation received for the sublicensing of the other HARVARD patents rights or other HARVARD intellectual property licensed to LICENSEE under the RELATED LICENSE AGREEMENTS or any agreements with HARVARD having the same effective date as this Agreement, then LICENSEE shall pay HARVARD at most the royalty payment due under this Section 4.3(d) for such SUBLICENSE INCOME no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such license agreements. In such a case, LICENSEE shall notify HARVARD of the identity of each license agreement involved and HARVARD shall distribute the royalties equally among those license agreements, including this Agreement. (e) For provision of services under PATENT RIGHTS, LICENSEE shall pay a royalty of [*** Redacted] percent ([*** Redacted]%) of SERVICE INCOME received by LICENSEE from each and every third party ("Third Party") to whom LICENSEE provides such services. In the event any services from which SERVICE INCOME is derived are subject to the payment of royalties under the RELATED LICENSE AGREEMENTS or any agreement with HARVARD having the same effective date as this Agreement, then the total royalty due under all such agreements, including this Agreement, shall be at most the royalty payment due under this Section 4.3 on such services, no matter how many license agreements from HARVARD are involved, and notwithstanding the terms of any such license agreements. In such event, LICENSEE shall notify HARVARD of the identity of each license agreement involved and HARVARD shall distribute the royalties equally among those license agreements, including this Agreement. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 10 (f) If the license pursuant to this Agreement is converted to a non-exclusive one under Section 3.2(d) and if another non-exclusive license to any of PATENT RIGHTS is granted or otherwise exists for any field or territory, then the royalty rate of this Agreement shall be adjusted so as not to exceed the royalty rate payable by such other non-exclusive licensee under such PATENT RIGHTS in such field or territory, provided that LICENSEE agrees to amend this Agreement to include terms requested by HARVARD that have been accepted by such other non-exclusive licensee. (g) On sales between LICENSEE and its AFFILIATES for resale, the royalty shall be paid on the NET SALES of the AFFILIATE. (h) In the event that more than one VALID CLAIM within PATENT RIGHTS is applicable to any LICENSED PRODUCT subject to royalties under this Section 4.3, then only one royalty shall be paid to HARVARD in respect of such LICENSED PRODUCT. In no event shall more than one royalty be due to HARVARD with respect to any LICENSED PRODUCT unit; nor shall a royalty be payable under this Section 4.3 with respect to sales of LICENSED PRODUCTS for clinical trials nor the use of LICENSED PRODUCTS or LICENSED PROCESSES by LICENSEE for such a purpose whether or not in collaboration with a third party. 4.4 No later than January 1 of each calendar year after the effective date of this Agreement, LICENSEE shall pay to HARVARD the following non-refundable license maintenance royalty and/or advance on royalties. Such payments may be credited against running royalties due for that calendar year and Royalty Reports shall reflect such a credit. Such payments shall not be credited against milestone payments (if any) nor against royalties due for any subsequent calendar year. January 1, 2004 [*** Redacted] January 1, 2005 [*** Redacted] January 1, 2006 [*** Redacted] January 1, 2007 [*** Redacted] January 1, 2008 [*** Redacted] January 1, 2009 [*** Redacted] January 1, 2010 [*** Redacted] each January 1 thereafter [*** Redacted]

ARTICLE V REPORTING 5.1 a) In compliance of earlier RELATED LICENSE AGREEMENTS, LICENSEE has provided to HARVARD a written research and development plan acceptable to LICENSEE'S investors under which LICENSEE intends to bring the subject matter of the *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 11 earlier RELATED LICENSE AGREEMENTS (though not specifically of this Agreement) granted earlier into commercial use. Such plan included projections of sales and proposed marketing efforts. b) LICENSEE agrees to provide, no later than [*** Redacted] years after the effective date of this Agreement, a written research and development plan, under which LICENSEE intends to bring the subject matter of PATENT RIGHTS into commercial use. Such research and development plan shall be subject to the written approval or disapproval of HARVARD, which written approval shall not be unreasonably withheld. Failure to provide written disapproval within [*** Redacted] days of receipt of such research and development plan shall constitute HARVARD'S approval in accordance with this section. Such a plan shall include a description of each LICENSED PRODUCT to be developed, a developmental timeline showing the technical, regulatory, business and marketing steps (benchmarks) needed to bring the LICENSED PRODUCT into commercial use and the resources in funds and personnel that LICENSEE will bring to bear for the successful accomplishment of each such step, and shall include projected sales and a proposed marketing effort 5.2 No later than [*** Redacted] days after [*** Redacted] of each [*** Redacted], LICENSEE shall provide to HARVARD a written annual Progress Report describing progress on the commercialization of PATENT RIGHTS during the most recent [*** Redacted] period ending [*** Redacted], the amount of LICENSEE'S R&D spending relating to the subject matter described or claimed in PATENT RIGHTS during such time, and plans for the forthcoming year. If multiple technologies are covered by the license granted hereunder, the Progress Report shall provide the information set forth above for each technology. If progress differs from that anticipated in the plan required under Section 5.1(b), LICENSEE shall explain the reasons for the difference and, if appropriate or necessary, provide a modified research and development plan for HARVARD'S review and approval, such approval not to be unreasonably denied. It is understood that LICENSEE may provide one Progress Report covering all RELATED LICENSE AGREEMENTS. 5.3 LICENSEE shall report to HARVARD the date of its first NET SALE of a LICENSED PRODUCT (or the date of its first use of a LICENSED PROCESS from which SERVICE INCOME is derived) in each country within [*** Redacted] days of occurrence. It is understood that LICENSEE shall be obligated to report the date of first sale of LICENSED PRODUCTS (or the first commercial use of LICENSED PROCESSES) under this Section 5.3 only once for each country. 5.4 (a) LICENSEE shall submit to HARVARD within [*** Redacted] days after each calendar [*** Redacted] ending [*** Redacted], a Royalty Report setting forth, for the most recent [*** Redacted] that ended on [*** Redacted], at least the following information: (i) the number and identification of LICENSED PRODUCTS sold by LICENSEE and its AFFILIATES that constitute a NET SALE, in each country; *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 12 (ii) total amounts received for such LICENSED PRODUCTS sold by LICENSEE and its AFFILIATES; (iii) an accounting for all LICENSED PROCESSES used or sold by LICENSEE and its AFFILIATES; (iv) deductions applicable to determine the NET SALES thereof; (v) the amount of SUBLICENSE INCOME received by LICENSEE from each sublicensee, and for each sublicensee the categories of LICENSED PRODUCTS sold and gross sales of each category; (vi) the amount of SERVICE INCOME received by LICENSEE; and (vii) the amount of royalty due for such reporting period, or, if no royalties are due to HARVARD for such reporting period, the statement that no royalties are due. Such report shall be certified as correct by an officer of LICENSEE and shall include a listing of all deductions from royalties. It is understood that LICENSEE may submit one Royalty Report covering all RELATED LICENSE AGREEMENTS. However, the Royalty Report shall, for each type of income, provide a detailed listing of the RELATED LICENSE AGREEMENTS that are involved. (b) LICENSEE shall pay to HARVARD with each such Royalty Report the amount of royalty due with respect to such [*** Redacted]. If multiple technologies are covered by the license granted hereunder, LICENSEE shall specify which PATENT RIGHTS are utilized for each category of LICENSED PRODUCTS and/or LICENSED PROCESSES for which royalties are separately reported in the Royalty Report. (c) All payments due hereunder shall be deemed received when funds are credited to HARVARD'S bank account and shall be payable by check or wire transfer in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the New York Times or the Wall Street Journal) on the last working day of each royalty period. No transfer, exchange, collection or other charges shall be deducted from such payments. If legal restrictions block the removal of local currency from any country where a LICENSED PRODUCT is sold, the royalties payable under this Agreement on NET SALES, SERVICE INCOME and SUBLICENSING INCOME earned in such currency in such country shall continue to be reported and accrued, but will not be paid until such currency may be removed from such country. (d) All plans or reports received under Sections 5.1, 5.2, 5.3, 5.4 shall be deemed Confidential Information of LICENSEE subject to Section 11.1; provided, however, that HARVARD may disclose such information as required by law under Section 1l.l(b), and may include in its usual reports the annual amounts of royalties paid. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 13 (e) Late payments shall be subject to a charge of [*** Redacted] percent ([*** Redacted]%) per month, or $[*** Redacted], whichever is greater. 5.5 In the event of acquisition, merger, change of corporate name, or change of make-up, organization, or identity, LICENSEE shall notify HARVARD in writing within [*** Redacted] days of such event. 5.6 If LICENSEE or any of its sublicensees does not qualify as a "small entity" as provided by the United States Patent and Trademark Office, LICENSEE must notify HARVARD immediately. ARTICLE VI RECORD KEEPING 6.1 LICENSEE shall keep accurate records (together with supporting documentation) of LICENSED PRODUCTS made, used or sold under this Agreement, sufficient to determine the amount of royalties due to HARVARD hereunder. Such records shall be retained for at least [*** Redacted] years following the end of the reporting period to which they relate. They shall be available during normal business hours for examination, upon HARVARD'S reasonable request, not more than once in any [*** Redacted] month period and upon at least [*** Redacted] days prior notice, by an independent accountant under a duty of confidentiality, selected by HARVARD and reasonably acceptable to LICENSEE, for the sole purpose of verifying reports and payments under Section 5.4. In conducting examinations pursuant to this Section, HARVARD'S accountant shall have access to records materially relevant to the calculation of royalties under Article IV. 6.2 HARVARD'S accountant shall only disclose to HARVARD whether the reports and payments of royalties hereunder are accurate, and the amount of the underreporting or underpayment of royalties by LICENSEE, if any. 6.3 Such examination by HARVARD'S accountant shall be at HARVARD'S expense, except that if such examination shows an underreporting or underpayment in excess of [*** Redacted] percent ([*** Redacted]%) for any [*** Redacted] month period, then LICENSEE shall pay the reasonable out-of-pocket cost of such examination as well as any additional sum that would have been payable to HARVARD had the LICENSEE reported correctly, plus interest on said sum at the rate of [*** Redacted] percent ([*** Redacted]%) per month. ARTICLE VII DOMESTIC AND FOREIGN PATENT FILING AND MAINTENANCE 7.1 Upon execution of this Agreement, LICENSEE shall reimburse HARVARD for all reasonable expenses HARVARD has incurred for the preparation, filing, prosecution and *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 14 maintenance of PATENT RIGHTS. Thereafter, LICENSEE shall reimburse HARVARD for all such future expenses within [*** Redacted] days of receipt of invoices from HARVARD. Late payment of these invoices shall be subject to interest charges of [*** Redacted] percent ([*** Redacted]%) per month. HARVARD shall, in its sole discretion, be responsible for the preparation, filing, prosecution and maintenance of any and all patent applications and patents included in PATENT RIGHTS. HARVARD shall consult with LICENSEE as to the preparation, filing, prosecution and maintenance of such patent applications and patents and shall furnish to LICENSEE copies of documents relevant to any such preparation, filing, prosecution or maintenance. HARVARD shall be responsible for the preparation, filing, prosecution and maintenance of any and all patent applications and patents included in PATENT RIGHTS. HARVARD will instruct counsel to directly notify HARVARD and LICENSEE and provide them copies of any communications to and from the United States and foreign patent offices relating to said prosecution, and drafts of all communications to the various patent offices, and will instruct counsel to consider any comments on such drafts, so that LICENSEE will be informed and apprised of the continuing prosecution of patent applications in PATENT RIGHTS. LICENSEE shall have reasonable opportunity to participate in decision making on key decisions affecting filing, prosecution and maintenance of patents and patent applications in PATENT RIGHTS. 7.2 HARVARD and LICENSEE shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS and of all patents and patent applications licensed to LICENSEE hereunder, executing all papers and instruments or requiring members of HARVARD to execute such papers and instruments so as to enable HARVARD to apply for, to prosecute and to maintain patent applications and patents in HARVARD'S name in any country. Each party shall provide to the other [*** Redacted] notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents. In particular, LICENSEE must immediately notify HARVARD if LICENSEE does not qualify as a "small entity" as provided by the United States Patent and Trademark Office. 7.3 LICENSEE may elect to surrender its rights to any patent or patent application within PATENT RIGHTS in any country upon [*** Redacted] days written notice to HARVARD. Such notice shall not relieve LICENSEE from responsibility to reimburse HARVARD for expenses under Section 7.1 relating to the filing, prosecution or maintenance of such patent or patent application incurred prior to the receipt of the written notice by HARVARD (or a longer period if specified in LICENSEE'S notice). ARTICLE VIII INFRINGEMENT 8.1 With respect to any PATENT RIGHTS that have not been rendered non-exclusive under Section 3.2(d), LICENSEE shall have the right to enforce in its own name and at its own expense any patents within such PATENT RIGHTS. HARVARD agrees to notify *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 15 LICENSEE promptly of each infringement of such patents of which HARVARD is or becomes aware. 8.2 (a) If LICENSEE elects to commence an action as described above, HARVARD may, to the extent permitted by law, elect to join as a party in that action. Regardless of whether HARVARD elects to join as a party, HARVARD shall cooperate fully with LICENSEE in connection with any such action, including making available relevant personnel, information, records, papers, samples, specimens and other similar materials for the purposes of such action as reasonably requested by LICENSEE through the Office of Technology and Trademark Licensing at HARVARD. (b) If HARVARD elects to join as a party pursuant to Subsection (a), HARVARD shall jointly control the action with LICENSEE. (c) LICENSEE shall reimburse HARVARD for any out-of-pocket costs HARVARD reasonably incurs, including reasonable attorneys' fees, as part of an action brought by LICENSEE under Section 8.1, whether or not HARVARD becomes a co-plaintiff. 8.3 If LICENSEE elects to commence an action as described above and desires that HARVARD be responsible for some of its expenses as described immediately below, LICENSEE shall explain its strategy to HARVARD in any detail requested by HARVARD. If HARVARD approves of said action in writing, LICENSEE may deduct from its [*** Redacted] to HARVARD with respect to the patent(s) subject to suit an amount not exceeding [*** Redacted] percent ([*** Redacted]%) of LICENSEE'S expenses and costs of such action, including reasonable attorneys' fees and reimbursement of amounts under Section 8.2(c) above; provided, however, that such reduction shall not exceed [*** Redacted] percent ([*** Redacted]%) of the [*** Redacted] due to HARVARD with respect to the patent(s) subject to suit for each calendar year. If such [*** Redacted] percent ([*** Redacted]%) of LICENSEE's expenses and costs exceeds the amount of [*** Redacted] deducted by LICENSEE for any calendar year, LICENSEE may to that extent reduce [*** Redacted] due to HARVARD from LICENSEE in succeeding calendar years, but never by more than [*** Redacted] percent ([*** Redacted]%) of the [*** Redacted] due in any [*** Redacted] with respect to the patent(s) subject to suit. 8.4 Neither party may enter into a settlement, consent judgment or other voluntary final disposition of any suit under Section 8.1, 8.6, 8.7 and 8.8 without the prior written consent of the other party, which consent shall not be unreasonably withheld. 8.5 Recoveries or reimbursements from actions commenced pursuant to this Article shall first be applied to reimburse LICENSEE and HARVARD for litigation costs not paid from royalties [*** Redacted] pursuant to Section 8.3. Any remaining recoveries or reimbursements shall be shared as follows: if HARVARD approved of said action(s) as described in Paragraph 8.3, [*** Redacted]% to LICENSEE and [*** Redacted]% to HARVARD, if HARVARD did not approve of said action(s) then [*** Redacted] shall be treated as [*** Redacted] and LICENSEE shall pay [*** Redacted] of [*** Redacted]% to HARVARD. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 16 8.6 If LICENSEE elects not to exercise its right to enforce the PATENT RIGHTS against any infringement pursuant to this Article, HARVARD may do so at its own expense, controlling such action and retaining all recoveries therefrom. LICENSEE shall cooperate fully with HARVARD in connection with any such action. 8.7 Without limiting the generality of Section 8.6, HARVARD may, at its election and by notice to LICENSEE, establish a time limit of [*** Redacted] days for LICENSEE to decide whether to enforce the PATENT RIGHTS against any infringement of which HARVARD is or becomes aware. If, by the end of such [*** Redacted] day period, LICENSEE has not (a) commenced such an action; (b) taken reasonable efforts to settle such infringement; or (c) provided HARVARD with a written report that provides LICENSEE'S plans to commence such action or settle such infringement in the future and the reasons for any proposed delay in commensing such action or settling such infringment, which report must be approved by HARVARD, which approval will not unreasonably be denied or delayed and which approval shall not be construed as giving approval for Paragraph 8.3 purposes, HARVARD may enforce the PATENT RIGHTS against such an infringement at its own expense, controlling such action and retaining all recoveries therefrom. Notwithstanding sections 8.6 and 8.7, HARVARD shall not bring any action alleging the infringement of PATENT RIGHTS against any sublicensee of LICENSEE under PATENT RIGHTS, without the consent of LICENSEE. 8.8 If a declaratory judgment action is brought naming LICENSEE as a defendant and alleging invalidity of any of the PATENT RIGHTS, if both parties agree, HARVARD may take over the sole defense of the action at its own expense. LICENSEE shall cooperate fully with HARVARD in connection with any such action. ARTICLE IX TERMINATION OF AGREEMENT 9.1 The effective date of this Agreement shall be the date that both parties have signed the Agreement. This Agreement, unless terminated as provided herein, shall remain in effect until the last patent or patent application in PATENT RIGHTS has expired or been abandoned. 9.2 HARVARD may terminate this Agreement as follows: (a) If LICENSEE does not make a payment due hereunder and fails to cure such nonpayment (including the payment of interest in accordance with Section 5.4(e)) within [*** Redacted] days after the date of notice in writing of such non-payment by HARVARD. If LICENSEE disputes the amount of such non-payment in writing within such [*** Redacted] day period, HARVARD shall not have the right to terminate this Agreement until it has been determined in an arbitration proceeding under Section 11.10 below that LICENSEE has failed to pay amounts owed hereunder, in which case LICENSEE shall pay [*** Redacted] for the *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 17 arbitration, and thereafter Licensee does not cure such failure within [*** Redacted] days after such determination. This Section 9.2(a) shall not, however, suspend any obligation of LICENSEE to compensate HARVARD for any undisputed amounts, as provided for under any term of this Agreement, during the pendency of the foregoing arbitration and cure period. (b) If LICENSEE defaults in its obligations under Sections 11.2(c) and 11.2(d) to procure and maintain insurance, and fails to cure such breach within [*** Redacted] days after notice in writing of such breach by HARVARD. (c) If LICENSEE shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it, provided that such bankruptcy petition is not dismissed within [*** Redacted] days after its filing. Such termination shall be effective immediately upon HARVARD giving written notice to LICENSEE. (d) If LICENSEE is convicted of a felony within the United States relating to the manufacture, use, or sale of LICENSED PRODUCTS. (e) Except as provided in Subsections (a), (b), (c), (d) above, if LICENSEE materially breaches any obligations under this Agreement and the breach has not been cured within [*** Redacted] days after the date of notice in writing of such breach by HARVARD. If LICENSEE disputes in writing that it has materially breached this Agreement within such [*** Redacted] day period, HARVARD shall not have the right to terminate this Agreement until it has been determined in an arbitration proceeding under Section 11.10 below that LICENSEE has materially breached this Agreement, in which case LICENSEE shall pay [*** Redacted] for the arbitration, and thereafter Licensee does not cure such breach within [*** Redacted] days after such determination. This Section 9.2(e) shall not, however, suspend any obligation of LICENSEE to compensate HARVARD for any undisputed amounts, as provided for under any term of this Agreement, during the pendency of the foregoing arbitration and cure period. 9.3 All sublicenses granted by LICENSEE under this Agreement in compliance with the terms and conditions hereof shall survive the termination of this Agreement upon the request of the party to whom such sublicense is granted, provided that such party agrees in writing that (i) it will pay all royalties or other amounts that otherwise would have been due thereafter under such sublicense directly to HARVARD rather than LICENSEE, and (ii) HARVARD shall not be held liable for the breach or the performance of any obligations stated in such sublicense unless such obligations have been expressly assumed in writing by HARVARD. 9.4 LICENSEE may terminate this Agreement by giving [*** Redacted] days advance written notice of termination to HARVARD. Upon termination, LICENSEE shall promptly submit a Royalty Report to HARVARD for the final reporting period and any royalty payments incurred during such reporting period, and any unreimbursed patent expenses *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 18 under Section 7 that have been invoiced by HARVARD, shall become immediately payable with such Royalty Report. 9.5 Articles I, VI, IX, X and XI (except for Section 11.7) of this Agreement shall survive termination. Article VIII shall survive with respect to any infringement of third parties and/or any lawsuits filed by or against LICENSEE, prior to the termination of this Agreement. In the event this Agreement is terminated for any reason, LICENSEE may, within [*** Redacted] after the effective date of such termination, sell or otherwise dispose of all LICENSED PRODUCTS that LICENSEE may have on hand on the effective date of such termination, and fulfill any contracts requiring the use of LICENSED PRODUCTS and/or LICENSED PROCESSES that LICENSEE may have entered into prior to the date of such termination, subject to LICENSEE'S payment of amounts due to HARVARD under Section 4.3 of this Agreement. ARTICLE X REPRESENTATIONS AND WARRANTIES 10.1 Except for the rights, if any, of the Government of the United States, HARVARD represents and warrants that: (a) HARVARD is the owner of the entire right, title and interest in and to the PATENT RIGHTS as they exist on the Effective Date; (b) HARVARD has the right and authority to enter into this Agreement and grant the rights and licenses set forth herein, including without limitation under PATENT RIGHTS; (c) HARVARD has not previously granted, and will not grant in the future, any rights in the PATENT RIGHTS that are inconsistent with the rights and licenses granted to LICENSEE herein; (d) To the best knowledge of HARVARD without having made an investigation, as of the Effective Date, practice of inventions within the PATENT RIGHTS does not infringe any patent rights, trade secrets or other proprietary rights of any third party, (e) To the best knowledge of HARVARD, as of the Effective Date, HARVARD does not own any rights in any other patent or patent application, the claims of which would dominate the claims of a patent or patent application within the PATENT RIGHTS or any practice of PATENT RIGHTS. If HARVARD owns, now or thereafter, any such rights in such patents or patent applications on [*** Redacted] is an inventor, HARVARD will negotiate in good faith to the extent it has the legal right to do so with LICENSEE to grant LICENSEE rights to the extent sufficient to practice PATENT RIGHTS, and at commercially reasonable royalties. (f) To the best knowledge of HARVARD, all prior and current agreements between HARVARD and other sponsors of research under which HARVARD has obligations relating to PATENT RIGHTS are listed on Appendix C. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 19 10.2 Except as set forth in this Agreement, HARVARD does not warrant the validity of the PATENT RIGHTS licensed hereunder and makes no representations whatsoever with regard to the scope of the licensed PATENT RIGHTS or that such PATENT RIGHTS may be exploited by LICENSEE, an AFFILIATE, or sublicensee without infringing other patents. 10.3 EXCEPT FOR THE WARRANTIES STATED IN THIS AGREEMENT, HARVARD EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PATENT RIGHTS OR INFORMATION SUPPLIED BY HARVARD, LICENSED PROCESSES OR LICENSED PRODUCTS CONTEMPLATED BY THIS AGREEMENT. ARTICLE XI GENERAL 11.1 (a) The parties may, from time to time, in connection with this Agreement disclose to each other Confidential Information. Any Confidential Information shall be in writing and marked "confidential" and disclosed only to the Office of Technology and Trademark Licensing. As used in this Agreement, "Confidential Information" of a party shall mean (i) any information disclosed in writing by such party to the other party, which is marked by such party with the legend "CONFIDENTIAL" or other similar legend sufficient to identify the information as its confidential information, (ii) any information disclosed orally by such party to the other party which is identified as confidential at the time of disclosure and is confirmed as confidential in writing within thirty (30) days after such time of disclosure, or (iii) any information deemed Confidential Information under the terms of this Agreement. With respect to categories (i) and (ii) above, "Confidential Information" shall not include any information that is: (1) already known to the receiving party at the time of disclosure hereunder, or (2) now or hereafter becomes publicly known other than through acts or omissions of the receiving party, or (3) is disclosed to the receiving party by a third party under no obligation of confidentiality to the disclosing party or (4) is independently developed by the receiving party without use of the Confidential Information of the disclosing party. (b) Each party shall maintain in confidence, and shall not use for any purpose or disclose to any third party, the Confidential Information of the other party. Notwithstanding the foregoing, the receiving party may use or disclose the Confidential Information of the disclosing party (i) to the extent necessary to exercise its rights or fulfill its obligations and/or duties under this Agreement, and (ii) to comply with applicable law or governmental regulations or court order, provided that the receiving party will give reasonable advance notice to the disclosing party, and will use its reasonable efforts to minimize the disclosure of Confidential Information and to secure confidential treatment of any Confidential Information disclosed. 20 (c) The royalty terms of this Agreement shall be deemed "Confidential Information" of both parties. In addition to the permissible disclosures set forth in subsection (b) above, LICENSEE may disclose such terms in confidence to its financial and legal advisors, consultants, potential or actual investors, potential or actual merger or acquisition partners, and others on a need-to-know basis. 11.2 (a) LICENSEE shall indemnify, defend and hold harmless HARVARD and its current or former and future directors, governing board members, trustees, officers, faculty and employees (collectively, the "INDEMNITEES"), from and against any claim, lawsuit, cause of action , liability, cost, expense, damage, deficiency, loss or obligation of any kind or nature (including, without limitation, reasonable attorney's fees and other costs and expenses of litigation) (collectively, "Claims"), based upon, arising out of, or otherwise relating to: LICENSEE'S or any sublicensee's performance of (or failure to perform) any of its obligations under this Agreement or any sublicense agreement, or the practice by LICENSEE or any sublicensee of any right or license granted under this Agreement or any sublicense agreement, or any product, process, or service made, used or sold pursuant to any right or license granted under this Agreement or any sublicense agreement, including without limitation any Claim relating to product liability (whether based on negligence or other tort, warranty, strict liability, or any other theory), except to the extent such Claims are directly attributable to intentional misconduct of any INDEMNITEES. It shall be a condition of the foregoing obligation that (i) LICENSEE receives prompt notice of any such Claims; (ii) LICENSEE is given the exclusive right to control the defense and settlement of such Claims, provided that LICENSEE shall not settle any such Claim without the prior written consent of HARVARD, which consent shall not be unreasonably withheld; and (iii) LICENSEE shall not be obligated to indemnify any INDEMNITEE in connection with any settlement for any Claim unless LICENSEE consents in writing to such settlement. (b) LICENSEE shall, at its own expense, defend against any actions brought or filed against any INDEMNITEE hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought. (c) Beginning at the time any such product, process or service is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by LICENSEE or by a SUBLICENSEE, AFFILIATE or agent of LICENSEE, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than [*** Redacted] per incident and [*** Redacted] annual aggregate and naming the Indemnitees as additional insureds. During clinical trials of any such product, process or service, LICENSEE shall, at its sole cost and expense, procure and maintain commercial general liability insurance in such equal or lesser amount as HARVARD shall require, naming the Indemnitees as additional insureds. Such commercial general liability insurance shall provide: (i) product liability coverage; and (ii) broad form contractual liability coverage for LICENSEE'S indemnification under this Agreement. If LICENSEE elects to self-insure all or part of the limits described above (including deductibles or retentions *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 21 which are in excess of [*** Redacted] annual aggregate) such self-insurance program must be acceptable to HARVARD and the Risk Management Foundation of the Harvard Medical Institutions, Inc. in their sole discretion. The minimum amounts of insurance coverage required shall not be construed to create a limit of LICENSEE'S liability with respect to its indemnification under this Agreement. (d) LICENSEE shall provide HARVARD with written evidence of such insurance upon request of HARVARD. LICENSEE shall provide HARVARD with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if LICENSEE does not obtain replacement insurance providing comparable coverage within such fifteen (15) day period, HARVARD shall have the right to terminate this Agreement in accordance with Section 9.2(b). (e) LICENSEE shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during: (i) the period that any product, process, or service, relating to, or developed pursuant to, this Agreement is being commercially distributed or sold by LICENSEE or by a sublicensee, AFFILIATE or agent of LICENSEE; and (ii) a reasonable period after the period referred to in Subsection (e)(i) above which in no event shall be less than [*** Redacted]. 11.3 Nothing in this Agreement shall be construed as conferring any right to use HARVARD's name or insignia, or any adaptation of them, or the name of any of HARVARD's inventors in any advertising, promotional or sales literature without the prior written approval of HARVARD, or the inventor in the case of the use of the name of an inventor. 11.4 Except as stated in this Section 11.4, without the prior written approval of HARVARD in each instance, neither this Agreement nor the rights granted hereunder shall be transferred or assigned in whole or in part by LICENSEE to any person whether voluntarily or involuntarily, by operation of law or otherwise. LICENSEE may transfer or assign this Agreement and all rights hereunder, upon notice to HARVARD but without its consent, to any entity that succeeds to all or substantially all of the business of LICENSEE to which this Agreements pertains, whether by merger, operation of law, purchase or sale of all or substantially all of LICENSEE's stock or assets or otherwise; provided that such assignee or transferee promptly agrees in writing to be bound by the terms and conditions of this Agreement. Subject to the foregoing, this Agreement shall be binding upon the respective successors, legal representatives and assignees of HARVARD and LICENSEE. 11.5 The interpretation and application of the provisions of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts. 11.6 LICENSEE shall comply with all applicable laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations among other things, prohibit or require a license for the export of certain types of technical data to certain specified *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 22 countries. LICENSEE hereby agrees and gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by LICENSEE or its AFFILIATES or sublicensees, and that it will defend and hold HARVARD harmless in the event of any legal action of any nature occasioned by such violation with respect to LICENSED PRODUCTS. 11.7 LICENSEE agrees: (i) to obtain all regulatory approvals required for the manufacture and sale of LICENSED PRODUCTS and LICENSED PROCESSES; and (ii) to mark LICENSED PRODUCTS with the numbers of the applicable patents within PATENT RIGHTS, to the extent required by law. LICENSEE also agrees to register or record this Agreement as is required by law or regulation in any country where the license is in effect, and HARVARD shall cooperate fully with LICENSEE in connection with any such registration or recordation. 11.8 Any notices to be given hereunder shall be sufficient if signed by the party (or party's attorney) giving same and either: (i) delivered in person; (ii) mailed certified mail return receipt requested; or (iii) faxed to other party if the sender has evidence of successful transmission and if the sender promptly sends the original by ordinary mail, in any event to the following addresses: If to LICENSEE: NanoSys, Inc. 2625 Hanover Street Palo Alto, CA 94304 Attn: Lawrence A. Bock Fax: 650-745-1273 cc: Wilson, Sonsini, Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94304 Attn: Michael J. O'Donnell, Esq. Fax: 650/493-6811 If to HARVARD: Office for Technology and Trademark Licensing Harvard University Holyoke Center, Suite 727 1350 Massachusetts Avenue Cambridge, MA 02138 Fax: (617) 495-9568 By such notice either party may change their address for future notices. 23 Notices delivered in person shall be deemed given on the date delivered. Notices sent by fax shall be deemed given on the date faxed. Notices mailed shall be deemed given on the date postmarked on the envelope. 11.9 Should a court of competent jurisdiction later hold any provision of this Agreement to be invalid, illegal, or unenforceable, and such holding is not reversed on appeal, it shall be considered severed from this Agreement. All other provisions, rights and obligations shall continue without regard to the severed provision, provided that the remaining provisions of this Agreement are in accordance with the intention of the parties. 11.10 In the event of any controversy or claim arising out of or relating to any provision of this Agreement or the breach thereof, the parties shall try to settle such conflict amicably between themselves. Subject to the limitation stated in the final sentence of this Section, any such conflict which the parties are unable to resolve promptly shall be settled through arbitration conducted in accordance with the rules of the American Arbitration Association. The demand for arbitration shall be filed within [*** Redacted] after the controversy or claim has arisen, and in no event after the date upon which institution of legal proceedings based on such controversy or claim would be barred by the applicable statute of limitation. Such arbitration shall be held in Boston, Massachusetts. The award through arbitration shall be final and binding. Either party may enter any such award in a court having jurisdiction or may make application to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Notwithstanding the foregoing, either party may, without recourse to arbitration, assert against the other party a third-party claim or cross-claim in any action brought by a third party, to which the subject matter of this Agreement may be relevant. 11.11 This Agreement constitutes the entire understanding between the parties and neither party shall be obligated by any condition or representation other than those expressly stated herein or as may be subsequently agreed to by the parties hereto in writing. 11.12 Nothing in this Agreement shall be deemed to prevent LICENSEE from commercializing products similar to or competitive with a LICENSED PRODUCT, so long as LICENSEE complies with its obligations under this Agreement. 11.13 The relationship between HARVARD and LICENSEE established by this Agreement is that of independent contractors. Nothing in this Agreement shall be construed to create any other relationship between HARVARD and LICENSEE. Neither party shall have any right, power or authority to assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other. 11.14 In the event either party hereto is prevented from or delayed in the performance of any of its obligations hereunder by reason of acts of God, war, strikes, riots, storms, fires or any other cause whatsoever beyond the reasonable control of the party, the party so prevented or delayed shall be excused from the performance of any such obligation to the extent and during the period of such prevention or delay. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 24 11.15 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SAME. For the avoidance of doubt, the parties acknowledge that the foregoing limitation of liability is not intended to apply to any of the following damages of HARVARD (and accordingly such damages shall be recoverable by HARVARD to the same extent they would be in the absence of that limitation): (i) amounts owed to HARVARD pursuant to the terms of this Agreement; (ii) amounts covered by LICENSEE's indemnity of Section 11.2; (iii) damages for infringement or violation of any patent, copyright, trademark, or other intellectual property right of HARVARD; and (iv) damages arising from the willful misconduct of LICENSEE. 11.16 HARVARD'S AGGREGATE LIABILITY FOR ALL DAMAGES OF ANY KIND RELATING TO THIS AGREEMENT OR ITS SUBJECT MATTER (WHETHER SUCH DAMAGES ARE BASED ON CONTRACT, TORT, INCLUDING NEGLIGENCE, OR OTHERWISE) SHALL NOT EXCEED THE AMOUNT PAID BY LICENSEE TO HARVARD UNDER THIS AGREEMENT. 11.17 This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives. PRESIDENT AND FELLOWS NANOSYS, INC OF HARVARD COLLEGE /s/ Joyce Brinton /s/ Calvin Chow ------------------------------------------ ----------------------- Joyce Brinton, Director Signature Office for Technology and Trademark Licensing Calvin Chow ----------------------- Name 4/15/03 Chief Operating Officer ------------------------------ ----------------------- Date Title 4-25-03 ----------------------- Date 25 APPENDIX A The following comprise PATENT RIGHTS: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 26 APPENDIX B
CASE LEAD INVENTOR TITLE AGENCY GRANT NUMBERS - --------------------------------------------------------------------------------------------------------------------- ~~[*** Redacted]~~
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 27 APPENDIX C Exclusive License of Harvard Case 2058 to Nano Sys, Inc. ASSIGNMENT THIS ASSIGNMENT is made effective on 1st day of January, 2003 between: (1) [*** Redacted], a legal body organised under the laws of England (hereinafter the "Assignor") and (2) PRESIDENT AND FELLOWS OF HARVARD COLLEGE, a nonprofit Massachusetts educational corporation having offices at the Office for Technology and Trademark Licensing, Holyoke Center, Suite 727,1350 Massachusetts Avenue, Cambridge, Massachusetts 02138 (hereinafter the "Assignee"). WHEREAS: (A) The Assignor has ownership rights in the invention of U.S. Patent Application serial number [*** Redacted], and corresponding International Patent Application Serial No. [*** Redacted], both entitled "[*** Redacted]", both filed [*** Redacted], which carry the internal Assignee case number designation of [*** Redacted] and the internal Assignor case number designation of [*** Redacted] (hereinafter "the Patent Applications"), by virtue of the contract of employment of [*** Redacted] with the Assignor; and (B) The Assignor wishes to assign its ownership rights in the invention including the Patent Applications to the Assignee. NOW THIS ASSIGNMENT WITNESSETH: In consideration of the sum of one pound sterling and other good and valuable consideration the receipt of which the Assignor hereby acknowledges the Assignor *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. hereby assigns and conveys unto the Assignee absolutely the invention and the Patent Applications thereto together with all right, title and interest in and to said applications and in and to any continuations, divisionals, continuation-in-part patent applications (to the extent a person under an obligation to assign patent rights to the Assignee and [*** Redacted] are both properly named inventors, based on U.S. patent law) and patents which issue on said applications including patents of reissue or re-examination, worldwide, together with all rights of action powers and benefits belonging or accrued to the same including the right to claim priority under the Paris Convention. IN WITNESS WHEREOF the parties have executed and delivered these presents in the United Kingdom: EXECUTED by [*** Redacted]. in accordance with its charter of incorporation: 19, Dec. 2002 [*** Redacted] ---------------------------------- Date EXECUTED by the PRESIDENT AND FELLOWS OF HARVARD COLLEGE. in accordance with the laws of its incorporation: /s/ Joyce Brinton 1/6/03 - ----------------------- ---------------------------------- Joyce Brinton Date Director of the Office for Technology and Trademark Licensing Harvard University *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. EX-10.6 18 f97636orexv10w6.txt EXHIBIT 10.6 EXHIBIT 10.6 LEASE AGREEMENT THIS LEASE AGREEMENT is dated as of January 30, 2002 between ARE-2625/2627/2631 HANOVER, LLC, a Delaware limited liability company ("LANDLORD"), and NANOSYS, INC., a Delaware corporation ("TENANT"). BUILDING: 2625 Hanover Street, Palo Alto, California PREMISES: That portion of the Building, containing approximately 8,424 rentable square feet, as determined by Landlord, as shown on EXHIBIT A. PROJECT: The real property on which the Building is located, together with all improvements thereon and appurtenances thereto as described on EXHIBIT B. BASE RENT: $29,484.00 per month during the Term. TENANT'S SHARE: 26.26% SECURITY DEPOSIT: $29,484 TARGET COMMENCEMENT DATE: March 1, 2002 TERM: Beginning on the Commencement Date and ending on March 31, 2004. PERMITTED USE: Research and development laboratory, related office and other related uses consistent with the character of the Project and otherwise in compliance with the provisions of Section 6 hereof
ADDRESS FOR RENT PAYMENT: LANDLORD'S NOTICE ADDRESS: TENANT'S NOTICE ADDRESS: 135 N. Los Robles Avenue 135 N. Los Robles Avenue 2625 Hanover Street Suite 250 Suite 250 Palo Alto, CA 94301 Pasadena, CA 91101 Pasadena, CA 91101 Attention: CFO Attention: Accounts Receivable Attention: Corporate Secretary Facsimile: Facsimile: (626) 578-0770 WITH A COPY TO: Calvin Chou 455 Minoca Road Portola Valley. CA 94028
1. LEASE OF PREMISES AND TEMPORARY SPACE. Upon and subject to all of the terms and conditions hereof, Landlord hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord. The portions of the Project that are for the non-exclusive use of tenants of the Project are collectively referred to herein as the "COMMON AREAS", which Tenant may use in common with other tenants of the Project. Landlord reserves the right to modify Common Areas so long as any modification does not unreasonably interfere with Tenant's use of the Premises. Tenant hereby acknowledges and agrees that the Premises is currently subject to a lease (the "EXISTING LEASE") with Xenoport, Inc. Xenoport, Inc. has informed Landlord of its intention to vacate the Premises no later than February 28, 2002. This Lease and Landlord's obligations hereunder shall be subject to (i) Landlord negotiating an agreement ("TERMINATION AGREEMENT") with Xenoport, Inc., regarding the termination of the Existing Lease on terms and conditions acceptable to Landlord in its sole and absolute discretion, (ii) Landlord's receipt of a fully executed Termination Agreement with respect to the Existing Lease and the vacation of the Premises by Xenoport, Inc., and (iii) Landlord's receipt of final decommissioning certification with respect to the Premises from all applicable governmental authorities. (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 2 2. DELIVERY; ACCEPTANCE OF PREMISES; COMMENCEMENT DATE. Landlord shall use reasonable efforts to deliver the Premises to Tenant for the conduct of Tenant's business on or before the Target Commencement Date ("DELIVERY" or "DELIVER"). The parties acknowledge that Delivery of the Premises is subject to Landlord's receipt of final decommissioning certification of the Premises from all applicable governmental authorities. If Landlord fails to timely Deliver the Premises, Landlord shall not be liable to Tenant for any loss or damage resulting therefrom, and this Lease shall not be void or voidable except as provided herein. If Landlord fails to so Deliver the Premises within 30 days of the Target Commencement Date, then after actual Delivery, payment of Base Rent under this Lease shall abate one day for each day that Landlord failed to deliver the Premises after the end of such 30 day period. If Landlord fails to Deliver the Premises for more than 60 days after the Target Commencement Date, then, for a period of 5 business days after the end of such 60 day period, this Lease shall be voidable by Tenant by written notice to Landlord, and if so voided: (a) the Security Deposit, or any balance thereof (i.e., after deducting therefrom all amounts to which Landlord is entitled under the provisions of this Lease), shall be returned to Tenant, and (b) neither Landlord nor Tenant shall have any further rights, duties or obligations under this Lease. The "COMMENCEMENT DATE" shall be the later of (i) the date Landlord Delivers possession of the Premises to Tenant, or (ii) March 1, 2002. Upon request of Landlord, Tenant shall execute and deliver a written acknowledgment of the Commencement Date and the expiration date of the Term when such are established in the form of the "Acknowledgement of Commencement Date" attached to this Lease as EXHIBIT D; provided, however, Tenant's failure to execute and deliver such acknowledgment shall not affect Landlord's rights hereunder. Effective as of the Commencement Date, except as otherwise expressly provided herein: (i) Tenant shall accept the Premises in their condition as of such date, subject to all applicable Legal Requirements (as defined in Section 6 hereof); (ii) Landlord shall have no obligation for any defects in the Premises; and (iii) Tenant's taking possession of the Premises shall be conclusive evidence that Tenant accepts the Premises and that the Premises were in good condition at the time of Delivery. To Landlord's actual knowledge, as of the date of completion of construction of the core and shell of the Building, the Building was in compliance with applicable law. To Landlord's actual knowledge, all of the Building systems function properly and are in good working order, and the roof of the Building does not leak. For a period of 90 days after the Commencement Date, Landlord and Tenant shall jointly monitor Building Systems and the roof, and Landlord will make any repairs deemed by the parties to be reasonably necessary. During such 90 day period, the cost of any such repair shall be paid by Landlord, unless Tenant was solely responsible for the cause of such repair, in which case Tenant shall pay the cost. Landlord, at its sole cost and expense (which shall not constitute an Operating Expense) shall promptly balance the heating and air conditioning system of the Premises if Tenant requests at any time prior to December 31, 2002. Tenant agrees and acknowledges that, except as expressly set forth herein, neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the condition of all or any portion of the Premises or the Project, and/or the suitability of the Premises or the Project for the conduct of Tenant's business, and Tenant waives any implied warranty that the Premises or the Project are suitable for the Permitted Use. This Lease constitutes the complete agreement of Landlord and Tenant with respect to the subject matter hereof and supersedes any and all prior representations, inducements, promises, agreements, understandings and negotiations which are not contained herein. 3. BASE RENT. (a) The first month's Base Rent and the Security Deposit shall be due and payable on delivery of an executed copy of this Lease to Landlord. Tenant shall pay to Landlord in advance, monthly installments of Base Rent on or before the first day of each calendar month during the Term hereof, in lawful money of the United States of America, at the office of Landlord for payment of Rent set forth above. Payments of Base Rent for any fractional calendar month shall be prorated. Tenant shall have no right at any time to abate, reduce, or set-off any Rent due hereunder. (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 3 (b) In addition to Base Rent, Tenant agrees to pay to Landlord as additional rent ("ADDITIONAL RENT"): (i) Tenant's Share of Operating Expenses (as defined in Section 4) and (ii) any and all other amounts Tenant assumes or agrees to pay under the provisions of this Lease, including, without limitation, any and all other reasonable sums that may become due by reason of any default of Tenant or failure to comply with the agreements, terms, covenants and conditions of this Lease to be performed by Tenant, after expiration of any applicable notice and cure period. Tenant's obligation to pay Base Rent and Additional Rent hereunder are collectively referred to herein as "RENT". 4. OPERATING EXPENSE PAYMENTS. During each month of the Term, on the same date that Base Rent is due, Tenant shall pay Landlord an amount equal to 1/12 of Tenant's Share of Landlord's written estimate of Operating Expenses for each calendar year during the Term (the "ANNUAL ESTIMATE"). Payments for any fractional calendar month shall be prorated. The term "OPERATING EXPENSES" means all costs and expenses, including but not limited to taxes and insurance, reasonably determined and actually incurred by Landlord, in accordance with Landlord's normal practice, to be properly allocable to tenants in the Building, capital repairs and improvements amortized over the lesser of 7 years and the useful life of such capital items, and as Additional Rent administration rent in the amount of 3% of Base Rent, but excluding: (a) the original construction costs of the Project and renovation prior to the date of the Lease and costs of correcting defects in such original construction or renovation; (b) capital expenditures for expansion of the Project; (c) interest, principal payments on any debts of Landlord, financing costs and amortization of funds borrowed by Landlord, whether secured or unsecured and all payments of base rent (but not taxes or operating expenses) under any ground lease or other underlying lease of all or any portion of the Project; (d) depreciation of the Project (except for capital improvements, the cost of which are includable in Operating Expenses); (e) advertising, legal and space planning expenses and leasing commissions and other costs and expenses incurred in procuring and leasing space to tenants for the Project, including any leasing office maintained in the Project, free rent and construction allowances for tenants; (f) legal and other expenses incurred in the negotiation or enforcement of leases; (g) completing, fixturing, improving, renovating, painting, redecorating or other work, which Landlord pays for or performs for other tenants within their premises, and costs of correcting defects in such work; (h) costs of utilities outside normal business hours sold to tenants of the Project; (i) costs to be reimbursed by other tenants of the Project or Taxes to be paid directly by Tenant or other tenants of the Project, whether or not actually paid; (j) salaries, wages, benefits and other compensation paid to officers and employees of Landlord who are not assigned in whole or in part to the operation, management, maintenance or repair of the Project; (k) general organizational, administrative and overhead costs relating to maintaining Landlord's existence, either as a corporation, partnership, or other entity, including general corporate, legal and accounting expenses; (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 4 (l) costs (including attorneys' fees and costs of settlement, judgments and payments in lieu thereof) incurred in connection with disputes with tenants, other occupants, or prospective tenants, and costs and expenses, including legal fees, incurred in connection with negotiations or disputes with employees, consultants, management agents, leasing agents, purchasers or mortgagees of the Building; (m) costs incurred by Landlord due to the violation by Landlord, its employees, agents or contractors or any tenant of the terms and conditions of any lease of space in the Project or any Legal Requirement; (n) penalties, fines or interest incurred as a result of Landlord's inability or failure to make payment of Taxes and/or to file any tax or informational returns when due, or from Landlord's failure to make any payment of Taxes required to be made by Landlord hereunder before delinquency; (o) overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or services in or to the Project to the extent the same exceeds the costs of such goods and/or services rendered by unaffiliated third parties on a competitive basis; (p) costs of Landlord's charitable or political contributions, or of fine art maintained at the Project; (q) costs in connection with services (including electricity), items or other benefits of a type which are not standard for the Project and which are not available to Tenant without specific charges therefor, but which are provided to another tenant or occupant of the Project, whether or not such other tenant or occupant is specifically charged therefor by Landlord; (r) costs incurred in the sale or refinancing of the Project; (s) net income taxes of Landlord or the owner of any interest in the Project, franchise, capital stock, gift, estate or inheritance taxes or any federal, state or local documentary taxes imposed against the Project or any portion thereof or interest therein; and (t) any expenses otherwise includable within Operating Expenses to the extent actually reimbursed by persons other than tenants of the Project under leases for space in the Project. Within 90 days after the end of each calendar year (or such longer period as may be reasonably required), Landlord shall furnish to Tenant a statement (an "ANNUAL STATEMENT") showing in reasonable detail: (a) the total and Tenant's Share of actual Operating Expenses for the previous calendar year, and (b) the total of Tenant's payments in respect of Operating Expenses for such year. If Tenant's Share of actual Operating Expenses for such year exceeds Tenant's payments of Operating Expenses for such year, the excess shall be due and payable by Tenant as Rent within 30 days after delivery of such Annual Statement to Tenant. If Tenant's payments of Operating Expenses for such year exceed Tenant's Share of actual Operating Expenses for such year Landlord shall pay the excess to Tenant within 30 days after delivery of such Annual Statement, except that after the expiration, or earlier termination of the Term or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord. 5. SECURITY DEPOSIT. Tenant shall deposit with Landlord upon delivery of an executed copy of this Lease to Landlord and at all times during the Term maintain security (the "SECURITY DEPOSIT") for the performance of all of its obligations in the amount set forth in the Basic Lease Provisions, which Security Deposit shall be in cash. Upon each occurrence of a Default (as defined in Section 16), Landlord may use all or any part of the Security Deposit as necessary to pay delinquent payments due under this Lease, and the cost of any damage, injury, expense or liability caused by such Default, without prejudice to any other remedy provided herein or by law. Tenant hereby waives the provisions of any law, now or hereafter in force, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of Rent, to repair damage caused by (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 5 Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums; reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or any officer, employee, agent or invitee of Tenant. 6. USE. The Premises shall be used solely for the Permitted Use set forth in the Basic Lease Provisions, in compliance with all laws, orders, judgments, ordinances, regulations, codes, directives, permits, licenses, covenants and restrictions now or hereafter applicable to Tenant's use and occupancy of the Premises (collectively, "LEGAL REQUIREMENTS"). Tenant will use the Premises in a careful, safe and proper manner and will not commit waste, overload the floor or structure of the Premises, subject the Premises to use that would damage the Premises or obstruct or interfere with the rights of Landlord or other tenants or occupants of the Project, including conducting or giving notice of any auction, liquidation, or going out of business sale on the Premises, or using or allowing the Premises to be used for any unlawful purpose. Tenant shall not be required to comply or to cause the Premises to comply with any laws, rules or regulations requiring the construction of alterations unless the requirement; for such alterations arises as a result of Tenant's particular use of the Premises. 7. HOLDING OVER. If Tenant remains in possession of the Premises after the expiration or earlier termination of the Term without the express written consent of Landlord, (A) Tenant shall become a tenant at sufferance upon the terms of this Lease except that the monthly rental shall be equal to 150% of the Rent in effect during the last 30 days of the Term, and (B) Tenant shall be responsible for all damages suffered by Landlord resulting from or occasioned by Tenant's holding over, including consequential damages. Acceptance by Landlord of Rent after the expiration of the Term or earlier termination of this Lease shall not result in a renewal or reinstatement of this Lease. 8. PARKING. At any time prior to January 1, 2003, Tenant shall be entitled to use an aggregate of 18 parking stalls, at no cost, in those areas designated for non-reserved parking in common with other tenants of the Project. From and after January 1, 2003, Landlord shall make a commercially reasonable effort to make available to Tenant 3 parking stalls for each 1,000 rentable square feet of the Premises; provided that Landlord shall not be in default of its obligation to provide those parking stalls if Landlord is unable to provide such parking stalls. If Landlord is unable to provide 3 parking stalls per 1,000 rentable square feet of the Premises, Landlord shall make a commercially reasonable effort to provide alternative parking to Tenant, at no cost to Tenant, until such time as Landlord can provide 3 parking stalls per 1,000 rentable square feet of the Premises. 9. UTILITIES, SERVICES. Landlord shall provide, subject to the terms of this Section 9, utilities to the Premises ("UTILITIES"). Tenant shall pay directly to the Utility provider, prior to delinquency, any separately metered Utilities and services which may be furnished to Tenant or the Premises during the Term. No interruption or failure of Utilities, from any cause whatsoever other than Landlord's willful misconduct, shall result in abatement of Rent. Tenant agrees to limit use of water and sewer with respect to Common Areas to normal restroom use. 10. ALTERATIONS. Tenant shall not make any alterations, additions, or improvements to the Premises of any kind whatsoever, except as provided in this Section 10. Any alterations, additions, or improvements made to the Premises by or on behalf of Tenant, including additional locks or bolts of any kind or nature upon any doors or windows in the Premises, but excluding installation, removal or realignment of furniture systems (other than removal of furniture systems owned or paid for by Landlord) not involving any modifications to the structure or connections (other than by ordinary plugs or jacks) to Building systems ("ALTERATIONS") shall be subject to Landlord's prior written consent, which may be given or withheld in Landlord's sole discretion if any such Alteration affects the laboratory use, the structure on any Building systems. Tenant may construct nonstructural Alterations in the Premises without Landlord's prior approval if the aggregate cost of all such work during the Term does not exceed $25,000 (a "NOTICE-ONLY ALTERATION"), provided Tenant notifies Landlord in writing of such intended Notice-Only Alteration and such notice shall be accompanied by plans, specifications, work contracts and such other information concerning the nature and cost of the Notice-Only Alteration as may be reasonably requested by Landlord, which notice and accompanying materials shall be delivered to Landlord not less than 15 (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 6 business days in advance of any proposed construction. If Landlord approves any Alterations, Landlord may impose such conditions on Tenant in connection with the commencement, performance and completion of such Alterations as Landlord may deem appropriate in Landlord's sole and absolute discretion. Any request for approval shall be in writing, delivered not less than 15 business days in advance of any proposed construction, and accompanied by plans, specifications, bid proposals, work contracts and such other information concerning the nature and cost of the alterations as may be reasonably requested by Landlord, including the identities and mailing addresses of all persons performing work or supplying materials. Landlord's right to review plans and specifications and to monitor construction shall be solely for its own benefit, and Landlord shall have no duty to ensure that such plans and specifications or construction comply with applicable Legal Requirements. Tenant shall cause, at its sole cost and expense, all Alterations to comply with insurance requirements and with Legal Requirements and shall implement at its sole cost and expense any Alteration or modification required by Legal Requirements as a result of any Alterations. Tenant shall pay to Landlord, as Additional Rent, on demand an amount equal to 2.5% of all charges up to $100,000, and 5% of all charges in excess of $100,000, incurred by Tenant or its contractors or agents in connection with any Alteration to cover Landlord's overhead and expenses for plan review, coordination, scheduling and supervision. Before tenant begins any Alteration, Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable law. Tenant shall reimburse Landlord for, and indemnify and hold Landlord harmless from, any expense incurred, by Landlord by reason of faulty work done by Tenant or its contractors, delays caused by such worK, or inadequate cleanup. Tenant shall furnish security or make other arrangements satisfactory to Landlord to assure payment for the completion of all Alterations work free and clear of liens, and shall provide (and cause each contractor or subcontractor to provide) certificates of insurance for workers' compensation and other coverage in amounts and from an insurance company satisfactory to Landlord protecting Landlord against liability for personal injury or property damage during construction. Upon completion of any Alterations, Tenant shall deliver to Landlord: (i) sworn statements setting forth the names of all contractors and subcontractors who did the work and final lien waivers from all such contractors and subcontractors; and (ii) "as built" plans for any such Alteration. Other than (i) the items, if any, listed on EXHIBIT E and EXHIBIT F attached hereto, (ii) any items agreed by Landlord in writing to be included on EXHIBIT E in the future, and (iii) any trade fixtures, machinery, equipment and other personal property which may be removed without material damage to the Premises, which damage shall be repaired (including capping or terminating utility hook-ups behind walls) by Tenant during the Term (collectively, "TENANT'S PROPERTY"), all Alterations, real property fixtures, built-in machinery and equipment, built-in casework and cabinets and other similar additions and improvements built into the Premises so as to become an integral part of the Premises such as fume hoods which penetrate the roof or plenum area, built-in cold rooms, built-in warm rooms, walk-in cold rooms, walk-in warm rooms, deionized water systems, glass washing equipment, autoclaves, chillers built-in plumbing, electrical and mechanical equipment and systems, and any power generator and transfer switch (collectively, "INSTALLATIONS") shall be and shall remain the property of Landlord during the Term and following the expiration or earlier termination of the Term, shall not be removed by Tenant at any time during the Term and shall remain upon and be surrendered with the Premises as a part thereof following the expiration or earlier termination of this Lease; provided, however, that Landlord shall, at the time its approval of such installation is requested or at the time it receives notice of a Notice-Only Alteration, notify Tenant if it has elected to cause Tenant to remove such Installation upon the expiration, or earlier termination of this Lease. If Landlord so elects, Tenant shall remove such Installation upon the expiration or earlier termination of this Lease and restore any damage caused by or occasioned as a result of such removal, including, when removing any of Tenant's Property which was plumbed, wired or otherwise connected to any of the Building Systems, capping off all such connections behind the walls of the Premises and repairing any holes. During any such restoration period, Tenant shall pay Rent to Landlord as provided herein as if said space were otherwise occupied by Tenant. Landlord shall pay up to $5,000 toward the cost of reinforcing the roof if necessary in connection with Tenant's installation of two HEPA filtration units, the installation of which shall be subject to the terms and conditions of this Section 10, Tenant is hereby granted permission to install, in accordance with the (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 7 provisions of this Section 10, at Tenant's sole cost those items listed as "Pre-Approved Alteration" on Exhibit F hereto, and shall not be required to remove such items at the end of the Term, provided that at any time Tenant may remove any "Pre-Approved Alterations" so long as Tenant repairs any damage caused by such removal to the reasonable satisfaction of Landlord. 11. LANDLORD'S REPAIRS. Landlord, as an Operating Expense, shall maintain all of the Project and the Premises in good repair, reasonable wear and tear and uninsured losses and damages caused by Tenant, or by any of Tenant's agents, servants, employees, invitees and contractors (collectively, "TENANT PARTIES") excluded. Landlord shall repair losses and damages caused by Tenant or any of Tenant Parties at Tenant's sole cost and expense. Landlord reserves the right to stop Building system services when necessary. Landlord shall have no responsibility or liability for failure to supply building system services during any such period of interruption; provided, however, that Landlord shall give Tenant 24 hours advance notice of any planned stoppage of building system services for routine maintenance, repairs, alterations or improvements. Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist for an unreasonable time (not to exceed 30 days) after Tenant's written notice of the need for such repairs or maintenance. 12. LIENS. Tenant shall discharge, by bond or otherwise, any liens filed against the Premises or against the Project arising out of work performed or claimed to have been performed on behalf of Tenant, materials furnished or claimed to have been furnished to Tenant, or obligations incurred or claimed to have been incurred by Tenant, within 10 days after Tenant receives notice of the filing thereof, at Tenant's sole cost. 13. INDEMNIFICATION. Tenant hereby indemnifies and agrees to defend, save and hold Landlord harmless from and against any and all claims for injury or death to persons or damage to property occurring within or about the Premises, arising directly or indirectly out of use or occupancy of the Premises or a breach or default by Tenant in the performance of any of its obligations hereunder, unless caused solely by the willful misconduct or gross negligence of Landlord. Landlord shall not be liable to Tenant for, and Tenant assumes all risk of damage to, personal property (including, without limitation, loss of records kept within the Premises). Tenant further waives any and all claims for injury to Tenant's business or loss of income relating to any such damage or destruction of personal property (including, without limitation, any loss of records). Landlord shall not be liable for any damages arising from any act, omission or neglect of any tenant in the Project or of any other third party. 14. INSURANCE. Landlord shall, as an Operating Expense, maintain such insurance covering the Project as Landlord shall determine, including "all risk" property insurance covering the full replacement cost of the Project. Tenant, at its sole cost and expense, shall maintain during the Term : workers' compensation insurance with no less than the minimum limits required by law; employer's liability insurance with such limits as required by law; commercial general liability insurance, with a minimum limit of not less than $2,000,000 per occurrence for bodily injury and property damage with respect to the Premises; and business interruption insurance covering not less than 12 months of Tenant's liabilities. The commercial general liability insurance policies maintained by Tenant shall name Landlord, its officers, directors, employees, managers, agents, invitees and contractors (collectively "LANDLORD PARTIES"), as additional insureds; insure on an occurrence and not a claims-made basis; be issued by insurance companies which have a rating of not less than policyholder rating of A and financial category rating of at least Class VII in "Best's Insurance Guide"; shall not be cancelable for nonpayment of premium unless 30 days prior written notice shall have been given to Landlord from the insurer; contain a hostile fire endorsement and a contractual liability endorsement; and provide primary coverage to Landlord (any policy issued to Landlord providing duplicate or similar coverage shall be deemed excess over Tenant's policies). Copies of such policies (if requested by Landlord), or certificates of insurance showing the limits of coverage required hereunder and showing Landlord as an additional insured, along with reasonable evidence of the payment of premiums for the applicable period, shall be delivered to Landlord by Tenant upon commencement of the Term and with respect to any renewal of insurance ;policy. no later than 5 days prior to the expiration of such policy. The property insurance obtained by landlord and Tenant shall include a waiver of subrogation by the insurers and all rights based upon an assignment from its insured, against Landlord or Tenant, and their respective officers, directors. (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 8 employees, managers, agents, invitees and contractors in connection with any loss or damage thereby insured against, or required to be insured against under this Lease. 15. CONDEMNATION AND CASUALTY. If at anytime during the Term the Premises are in whole or in part (i) materially damaged or destroyed by a fire or other casualty or (ii) taken for any public or quasi-public use under governmental law, ordinance, or regulation, or by right of eminent domain, or by private purchase in lieu thereof (a "TAKING"), this Lease shall, at the written election of Landlord or Tenant, terminate as of the date of such damage, destruction or Taking. Any statute or regulation which is now or may hereafter be in effect shall have no application to this Lease or any such damage, destruction or Taking, the parties hereto expressly agreeing that this Section sets forth their entire understanding and agreement with respect to such matters. Upon any fire or other casualty or Taking, Landlord shall be entitled to receive the entire proceeds of the insurance maintained by Landlord and the entire price or award from any such Taking without, in either case, any payment to Tenant, and Tenant hereby assigns to Landlord Tenant's interest, if any, in such proceeds or award. In the event of damage, destruction or a Taking which does not result in a termination of this Lease, to the extent not covered by Tenant's business interruption insurance required pursuant to Section 15 of this Lease, Rent shall be equitably abated from the date all required hazardous materials clearances are obtained until the Premises are repaired and restored, in the proportion which the area of the Premises, if any, which is not usable by Tenant bears to the total area of the Premises, unless Landlord provides Tenant with other space during the period of repair that is suitable for the temporary conduct of Tenant's business. 16. EVENTS OF DEFAULT. Each of the following events shall be a default ("DEFAULT") by Tenant under this Lease: (a) PAYMENT DEFAULTS. Tenant shall fail to pay any installment of Rent or any other payment hereunder when due; provided that one time in any 12 consecutive month period during the Term, no Default shall occur unless Tenant's failure to pay Rent or any other payment when due shall continue for a period of 5 business days after written notice of such failure to pay from Landlord. (b) INSURANCE. Any insurance required to be maintained by Tenant pursuant to this Lease shall be canceled or terminated or shall expire or shall be reduced or materially changed, or Landlord shall receive a notice of nonrenewal of any such insurance and Tenant shall fail to obtain replacement insurance at least 20 days before the expiration of the current coverage. (c) OTHER DEFAULTS. Tenant shall fail to comply with any provision of this Lease other than those specifically referred to in this Section 16, and, except as otherwise expressly provided herein, such failure shall continue for a period of 30 days after written notice thereof from Landlord to Tenant, or, if such failure to comply cannot reasonably be cured within such 30 day period, then for such longer period as is reasonably necessary, provided that Tenant commences to cure such Default within 30 days after written notice and diligently pursues curing such Default. Any notice given under Section 16(c) hereof shall: (i) specify the alleged default, (ii) demand that Tenant cure such default, (iii) be in lieu of, and not in addition to, or shall be deemed to be, any notice required under any provision of applicable law, and (iv) not be deemed a forfeiture or a termination of this Lease unless Landlord elects otherwise in such notice. Notwithstanding subsection (iii) immediately above, any notice to quit after default in the payment of Rent, as required by Section 1161 of the Code of Civil Procedure, shall comply with all of the provisions of Section 1161. 17. LANDLORD'S REMEDIES. (a) PAYMENT BY LANDLORD; INTEREST. Upon a Default by Tenant hereunder, Landlord may without waiving or releasing any obligation of Tenant hereunder, make such payment or perform such act All sums so paid or incurred by Landlord, together with interest thereon, from the date such sums were paid or incurred, at the annual rate equal to 12% per annum or the highest rate permitted by law (the "DEFAULT RATE"), whichever is less, shall be payable to Landlord on demand as Additional Rent. Nothing (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 9 herein shall be construed to create or impose a duty on Landlord to mitigate any damages resulting from Tenant's Default hereunder. (b) LATE PAYMENT RENT. Late payment by Tenant to Landlord of Rent and other sums due will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult and impracticable to ascertain. Such costs include, but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord under any Mortgage covering the Premises. Therefore, if any installment of Rent due from Tenant is not received by Landlord within 5 days after the date such payment is due, Tenant shall pay to Landlord an additional sum equal to 5% of the delinquent amount as a late charge. The parties agree that this late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. In addition to the late charge, Rent not paid when due shall bear interest at the Default Rate from the 5th day after the date due until paid. (c) OTHER REMEDIES. Upon the occurrence of a Default, Landlord, at its option, without further notice or demand to Tenant, shall have all rights and remedies provided at law or in equity. 18. ASSIGNMENT AND SUBLETTING. (a) GENERAL PROHIBITION. Tenant shall not, directly or indirectly, voluntarily or by operation of law, assign this Lease or mortgage, pledge, or hypothecate its leasehold interest or grant any concession or license within the Premises, and any attempt to do any of the foregoing shall be void and of no effect. (b) PERMITTED SUBLEASES. If Tenant desires to sublease or sublet the Premises, then at least 10 business days, but not more than 90 business days, before the date Tenant desires the sublease to be effective (the "SUBLEASE DATE"), Tenant shall give Landlord a notice (the "SUBLEASE NOTICE") containing such information about the proposed sublessee, including the proposed use of the Premises, business and financial information on the proposed sublessee, any Hazardous Materials proposed to be used, stored handled, treated, generated in or released or disposed of from the Premises, the Sublease Date, any relationship between Tenant and the proposed sublessee, and all material terms and conditions of the proposed sublease, including a copy of any proposed sublease in its final form, and such other information as Landlord may deem reasonably necessary or appropriate to its consideration whether to grant its consent. Landlord may, by giving written notice to Tenant within 15 business days after receipt of the Sublease Notice: (i) grant such consent, or (ii) refuse such consent, in its reasonable discretion. No failure of Landlord to deliver a timely notice in response to the Sublease Notice shall be deemed to be Landlord's consent to the proposed sublease. Tenant shall reimburse Landlord for up to $2,000 for Landlord's reasonable out-of-pocket expenses in connection with its consideration of any Sublease Notice. Notwithstanding the foregoing, Tenant may, without Landlord's consent, sublet or assign the Lease to (a) an entity controlling, controlled by or under common control with Tenant, (b) a successor entity resulting from a merger with or acquisition of Tenant, or (c) a purchaser of substantially all of Tenant's assets. The public offering or public trading of Tenant's capital stock shall not be deemed to be an assignment or subletting of this Lease. Institutional or venture financing by Tenant to raise additional contributed capital shall not be deemed to be an assignment or subletting of this Lease. (c) ADDITIONAL CONDITIONS. As a condition to any such subletting, whether or not Landlord's consent is required, Landlord may require: (i) that any sublessee agree, in writing at the time of such subletting, that if Landlord gives such party notice that Tenant is in default under this Lease beyond any applicable notice and cure period, such party shall thereafter make all payments otherwise due Tenant directly to Landlord, which payments will be received by Landlord without any liability except to credit such payment against those due under the Lease, and any such third party shall agree to attorn to Landlord or its successors and assigns should this Lease be terminated for any reason; provided, however, in no event shall Landlord or its successors or assigns be obligated to accept such attornment; and (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 10 (ii) A list of Hazardous Materials, certified by the proposed sublessee to be true and correct, which the proposed sublessee intends to use, store, handle, treat, generate in or release or dispose of from the Premises, together with copies of all documents relating to such use, storage, handling, treatment, generation, release or disposal of Hazardous Materials by the proposed subtenant in the Premises or on the Project, prior to the proposed subletting, including, without limitation, permits; approvals; reports and correspondence; storage and management plans; plans relating to the installation of any storage tanks to be installed in or under the Project (provided, said installation of tanks shall only be permitted after Landlord has given its written consent to do so, which consent may be withheld in Landlord's sole and absolute discretion); and all closure plans or any other documents required by any and all federal, state and local governmental authorities for any storage tanks installed in, on or under the Project for the closure of any such tanks. Neither Tenant nor any such proposed subtenant is required, however, to provide Landlord with any portion(s) of the such documents containing information of a proprietary nature which, in and of themselves, do not contain a reference to any Hazardous Materials or hazardous activities. (d) NO RELEASE OF TENANT, SHARING OF EXCESS RENTS. Notwithstanding any subletting, Tenant shall at all times remain fully and primarily responsible and liable for the payment of Rent and for compliance with all of Tenant's other obligations under this Lease. If the Rent due and payable by a sublessee (or a combination of the rental payable under such sublease plus any bonus or other consideration therefor or incident thereto in any form) exceeds the rental payable under this Lease, (excluding however, any Rent payable under this Section), then Tenant shall be bound and obligated to pay Landlord as Additional Rent hereunder 50% of such excess rent, after deducting Tenant's actual costs of brokerage commissions, reasonable attorneys' fees and remodeling the Premises in connection with such sublease, within 10 days following receipt thereof by Tenant. If Tenant shall sublet the Premises or any part thereof, Tenant hereby immediately and irrevocably assigns to Landlord, as security for Tenant's obligations under this Lease, all rent from any such subletting, and Landlord as assignee and as attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord's application, may collect such rent and apply it toward Tenant's obligations under this Lease; except that, until the occurrence of a Default, Tenant shall have the right to collect such rent. Under no circumstances shall Tenant permit any subtenant or assignee to change the laboratory use of any portion of the Premises. (e) NO WAIVER. The consent by Landlord to a subletting shall not relieve Tenant or any sublessees of the Premises from obtaining the consent of Landlord to any further subletting nor shall it release Tenant or sublessee of Tenant from full and primary liability under the Lease. The acceptance of Rent hereunder, or the acceptance of performance of any other term, covenant, or condition thereof, from any other person or entity shall not be deemed to be a waiver of any of the provisions of this Lease or a consent to any subletting, assignment or other transfer of the Premises. (f) PRIOR CONDUCT OF PROPOSED TRANSFEREE. Notwithstanding any other provision of this Section 18, if (i) the proposed sublessee of Tenant has been required by any prior landlord, lender or governmental authority to take remedial action in connection with Hazardous Materials contaminating a property, where the contamination resulted from such party's action or use of the property in question, (ii) the-proposed sublessee is subject to an enforcement order issued by any governmental authority in connection with the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials (including, without limitation, any order related to the failure to make a required reporting to any governmental authority), or (iii) because of the existence of a pre-existing environmental condition in the vicinity of or underlying the Project, the risk that Landlord would be targeted as a responsible party in connection with the remediation of such pre-existing environmental condition would be materially increased or exacerbated by the proposed use of Hazardous Materials by such proposed sublessee, Landlord shall have the absolute right to refuse to consent to any subletting to any such party. 19. ESTOPPEL CERTIFICATE. Tenant shall, within 10 business days of written notice from Landlord, execute, acknowledge and deliver an estoppel certificate on any form reasonably requested by a proposed lender or purchaser. (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 11 20. QUIET ENJOYMENT. So long as Tenant shall perform all of the covenants and agreements herein required to be performed by Tenant within applicable notice and cure periods, Tenant shall, subject to the terms of this Lease, at all times during the Term, have peaceful and quiet enjoyment of the Premises against any person claiming by, through or under Landlord. 21. PRORATIONS. All prorations required or permitted to be made hereunder shall be made on the basis of a 360 day year and 30 day months. 22. RULES AND REGULATIONS. Tenant shall, at all times during the Term and any extension thereof, comply with all reasonable rules and regulations at any time or from time to time established by Landlord covering use of the Premises and the Project. The current rules and regulations are attached hereto as EXHIBIT C. If there is any conflict between said rules and regulations and other provisions of this Lease, the terms and provisions of this Lease shall control. Landlord shall not have any liability or obligation for the breach of any rules or regulations by other tenants in the Project and shall not enforce such rules and regulations in a discriminatory manner. 23. SUBORDINATION. This Lease and Tenant's interest and rights hereunder are and shall be subject and subordinate at all times to the lien of any Mortgage now existing or hereafter created on or against the Project or the Premises, and all amendments, restatements, renewals, modifications, consolidations, refinancing, assignments and extensions thereof, without the necessity of any further instrument or act on the part of Tenant. Tenant agrees, at the election of the Holder of any such Mortgage, to attorn to any such Holder. Tenant agrees upon demand to execute, acknowledge and deliver such instruments confirming such subordination and/or attornment as shall be requested by any such Holder. 24. SURRENDER. Upon the expiration of the Term or earlier termination of Tenant's right of possession, Tenant shall surrender the Premises to Landlord in substantially the same condition as received, after removing any material quantities of Hazardous Materials brought upon, kept, used, stored, handled, treated, generated in, or released or disposed of from, the Premises by any person other than a Landlord Party (collectively, "TENANT HAZMAT OPERATIONS") and released of all Hazardous Materials clearances, disinfected and cleaned in accordance with prudent industry practices, and eliminating any contamination of Hazardous Materials in excess of any residual amounts shown in the Commencement Date HazMat Condition Report (as defined in Section 26(d) below), broom clean, with ordinary wear and tear and casualty loss and condemnation covered by Section 15 excepted. At least 2 months prior to the surrender of the Premises, Tenant shall deliver to Landlord a narrative description of the actions proposed (or required by any governmental authority) to be taken by Tenant in order to surrender the Premises at the expiration or earlier termination of the Term, free from material residual impact from the Tenant HazMat Operations and otherwise released for unrestricted use and occupancy (the "SURRENDER PLAN"). Such Surrender Plan shall be accompanied by a listing of (i) all Hazardous Materials licenses and permits held by or on behalf of any Tenant Party with respect to the Premises, and (ii) all Hazardous Materials used, stored, handled, treated, generated, released or disposed of from the Premises, and shall be subject to the review and approval of Landlord's environmental consultant. In connection with the review and approval of the Surrender Plan, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant such additional non-proprietary information concerning Tenant HazMat Operations as Landlord shall request. On or before such surrender, Tenant shall deliver to Landlord evidence that the approved Surrender Plan shall have been satisfactorily completed and Landlord shall have the right, subject to reimbursement at Tenant's expense as set forth below, to cause Landlord's environmental consultant to inspect the Premises and perform such additional procedures as may be deemed Reasonably necessary to confirm that the Premises are, as of the effective date of such surrender or early termination of the Lease, free from any residual impact from Tenant HazMat Operations. Tenant shall reimburse Landlord, as Additional Rent, for the actual out-of pocket expense incurred by Landlord for Landlord's environmental consultant to review and approve the Surrender Plan and to visit the Premises and verify satisfactory completion of the same, which cost shall not exceed $1,500. Landlord shall have the unrestricted right to deliver such Surrender Plan and any report by Landlord's environmental consultant with respect to the surrender of the Premises to third parties. (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 12 If Tenant shall fail to prepare or submit a Surrender Plan approved by Landlord, or if Tenant shall fail to complete the approved Surrender Plan, or if such Surrender Plan, whether or not approved by Landlord, shall fail to adequately address material residual effect of Tenant HazMat Operations in, on or about the Premises, Landlord shall have the right to take such actions as Landlord may deem reasonable or appropriate to assure that the Premises and the Project are surrendered free from any residual impact from Tenant HazMat Operations, the reasonable cost of which actions which is actually incurred shall be reimbursed by Tenant as Additional Rent, without regard to the limitation set forth in the first paragraph of this Section 28. Tenant shall immediately return to Landlord all keys and/or access cards to parking, the Project, restrooms or all or any portion of the Premises furnished to or otherwise procured by Tenant. If any such access card or key is lost, Tenant shall pay to Landlord, at Landlord's election, either the cost of replacing such lost access card or key or the cost of reprogramming the access security system in which such access card was used or changing the lock or locks opened by such lost key. Any Tenant's property not so removed by Tenant as permitted or required herein shall be deemed abandoned and may be stored, removed, and disposed of by Landlord at Tenant's expense, and Tenant waives all claims against Landlord for any damages resulting from Landlord's retention and/or disposition of such property. All Obligations of Tenant hereunder not fully performed as of the termination of the Term, including the obligations of Tenant under Section 26 hereof, shall survive the expiration or earlier termination of the Term, including, without limitation, indemnity obligations, payment obligations with respect to Rent and obligations concerning the condition and repair of the Premises. 25. WAIVER OF JURY TRIAL. TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO. 26. ENVIRONMENTAL REQUIREMENTS. (a) PROHIBITION/COMPLIANCE/INDEMNITY. Tenant shall not cause or permit any Hazardous Materials (as hereinafter defined) to be brought upon, kept, used, stored, handled, treated, generated in or about, or released or disposed of from, the Premises or the Project in violation of applicable Environmental Requirements (as hereinafter defined) by Tenant or any Tenant Party. If (i) Tenant breaches the obligation stated in the preceding sentence, (ii) if the presence of Hazardous Materials in the Premises during the Term or any holding over results in contamination of the Premises, the Project or any adjacent property above any residual levels of contamination shown on the Commencement Date HazMat Condition Report (as defined in Section 26(e) below), or (iii) if contamination of the Premises, the Project or any adjacent property by Hazardous Materials brought into, kept, used, stored, handled, treated, generated in or about, or released or disposed of from, the Premises by anyone other than Landlord and Landlord's employees, agents and contractors otherwise occurs during the Term or any holding over, Tenant hereby indemnifies and shall defend and hold Landlord, its officers, directors, employees, agents and contractors harmless from any and all actions (including, without limitation, remedial or enforcement actions of any kind, administrative or judicial proceedings, and orders or judgments arising out of or resulting therefrom), costs, claims, damages (including, without limitation punitive damages and damages based upon diminution in value of the Premises or the Project, or the loss of, or restriction on, use of the Premises or any portion of the Project), expenses (including, without limitation, attorneys', consultants' and experts' fees, court costs and amounts paid in settlement of any claims or actions), fines, forfeitures or other civil, administrative or criminal penalties, injunctive or other relief (whether or not based upon personal injury, property damage, or contamination of, or adverse effects upon, the environment, water tables or natural resources), liabilities or losses (collectively, "ENVIRONMENTAL CLAIMS") which arise during or after the Term as a result of such breach or contamination. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, treatment, remedial, removal, or restoration work required by any federal, state or local governmental authority because of an alleged violation of Tenant's obligations under this Section 26(a). Without limiting the foregoing, if the presence (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 13 of any Hazardous Materials on the Premises caused or permitted by Tenant or any Tenant Party, or the presence of Hazardous Materials on the Project outside of the Premises or any adjacent property actually caused by Tenant or any Tenant Party, results in any contamination of the Premises, the Project or any adjacent property, as applicable, Tenant shall promptly take all actions at its sole expense and in accordance with applicable Environmental Requirements as are necessary to return the Premises, the Project or any adjacent property to the condition existing prior to the time of such contamination, provided that Landlord's approval of such action shall first be obtained, which approval shall not unreasonably be withheld so long as such actions would not potentially have any material adverse long-term or short-term effect on the Premises or the Project. (b) BUSINESS. As a material inducement to Landlord to allow Tenant to use Hazardous Materials in connection with its business, Tenant agrees to deliver to Landlord prior to the Commencement Date a list identifying each type of Hazardous Materials to be brought upon, kept, used, stored, handled, treated, generated on, or released or disposed of from, the Premises and setting forth any and all governmental approvals or permits required in connection with the presence, use, storage, handling, treatment, generation, release or disposal of such Hazardous Materials on or from the Premises ("HAZARDOUS MATERIALS LIST"). Within a reasonable period after Landlord's request, Tenant shall deliver to Landlord an updated Hazardous Materials List at least once each year and shall also deliver an updated list before any new Hazardous Material is brought onto, kept, used, stored, handled, treated, generated on, or released or disposed of from, the Premises. Tenant shall deliver to Landlord true and correct copies of the following documents (the "HAZ MAT DOCUMENTS") relating to the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials prior to the Commencement Date, or if unavailable at that time, concurrent with the receipt from or submission to a governmental authority; permits; approvals; reports and correspondence; storage and management plans; and notices of violations of any Legal Requirements. (c) TENANT'S OBLIGATIONS. Tenant's obligations under this Section 26 shall survive the expiration or earlier termination of the Lease for one year. During any period of time after the expiration or earlier termination of this Lease required by Tenant or Landlord to complete the removal from the Premises of any Hazardous Materials (including, without limitation, the release and termination of any licenses or permits restricting the use of the Premises and the completion of the approved Surrender Plan), Tenant shall continue to pay the full Rent in accordance with this Lease for any portion of the Premises not relet by Landlord in Landlord's sole discretion, which Rent shall be prorated daily. (d) DEFINITIONS. As used herein, the term "ENVIRONMENTAL REQUIREMENTS" means all applicable present and future statutes, regulations, ordinances, rules, codes, judgments, orders or other similar enactments of any governmental authority regulating or relating to health, safety, or environmental conditions on, under, or. about the Premises or the Project, or the environment, including without limitation, the following: the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and Recovery Act; and all state and local counterparts thereto, and any regulations or policies promulgated or issued thereunder. As used herein, the term "HAZARDOUS MATERIALS" means and includes any substance, material, waste, pollutant, or contaminant listed or defined as hazardous or toxic, or regulated by reason of its impact or potential impact on humans, animals and/or the environment under any Environmental Requirements, asbestos and petroleum, including crude oil or any fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas). As defined in Environmental Requirements, Tenant is and shall be deemed to be the "OPERATOR" of Tenant's "FACILITY" and the "OWNER" of all Hazardous Materials brought on the Premises by Tenant or any Tenant Party, and the wastes, by-products, or residues generated, resulting, or produced therefrom. (e) CONDITION OF THE PREMISES. On the condition that Tenant shall execute and deliver an agreement to maintain the confidentiality of such reports, Landlord shall deliver to Tenant complete copies of the reports in Landlord's possession or under Landlord's control of all third party consultants who have prepared reports containing any information on the compliance of the Project with Environmental Requirements and the presence of any Hazardous Materials on or about the Project Such reports shall include a report, in reasonable detail, showing the condition of the Premises, and the (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 14 presence of any Hazardous Materials thereon, at or around the Commencement Date (the "COMMENCEMENT DATE HAZMAT CONDITION REPORT"). In addition, Landlord shall provide Tenant with reasonable evidence of the proper decommissioning of the Premises by the current tenant in possession. 27. TENANT'S REMEDIES/LIMITATION OF LIABILITY. Landlord shall not be in default hereunder unless Landlord fails to perform any of its obligations hereunder within 30 days after written notice from Tenant specifying such failure. TENANT'S SOLE REMEDY FOR ANY BREACH OR DEFAULT BY LANDLORD HEREUNDER SHALL BE TO TERMINATE THE LEASE AND TENANT HEREBY, TO THE MAXIMUM EXTENT POSSIBLE, KNOWINGLY WAIVES (i) THE PROVISIONS OF ANY LAW, NOW OR HEREAFTER IN FORCE WHICH PROVIDE ADDITIONAL OR OTHER REMEDIES TO TENANT AS A RESULT OF ANY BREACH BY LANDLORD HEREUNDER OR UNDER ANY SUCH LAW OR REGULATION. 28. INSPECTION AND ACCESS. Landlord and its agents, representatives, and contractors may enter the Premises at any reasonable time upon 24 hours advance notice to inspect the Premises and to make such repairs as may be required or permitted pursuant to this Lease, to perform such environmental tests as may be reasonably required to confirm Tenant's compliance with the terms hereof and for any other business purpose. Landlord and Landlord's representatives may enter the Premises during business hours on not less than 24 hours advance written notice (except in the case of emergencies in which case no such notice shall be required and such entry may be at any time) for the purpose of effecting any such repairs, inspecting the Premises, showing the Premises to prospective purchasers and, during the last 3 months of the Term, to prospective tenants, or for any other business purpose. 29. SECURITY. Tenant acknowledges and agrees that security devices and services, if any, while intended to deter crime may not in given instances prevent theft or other criminal acts and that Landlord is not providing any security services with respect to the Premises. Tenant agrees that Landlord shall not be liable to Tenant for, and Tenant waives any claim against Landlord with respect to, any loss by theft or any other damage suffered or incurred by Tenant in connection with any unauthorized entry into the Premises or any other breach of security with respect to the Premises. Tenant shall be solely responsible for the personal safety of Tenant's officers, employees, agents, contractors, guests and invitees while any such person is in, on or about the Premises and/or the Project. Tenant shall at Tenant's cost obtain insurance coverage to the extent Tenant desires protection against such criminal acts. 30. BROKERS, ENTIRE AGREEMENT, AMENDMENT. Landlord and Tenant each represents and warrants that it has not dealt with any broker, agent or other person (collectively, "BROKER) in connection with this transaction and that no Broker brought about this transaction other than Cornish & Carey Commercial. Landlord and Tenant each hereby agree to indemnify and hold the other harmless from and against any claims by any Broker, other than the broker, if any named in this Section 30, claiming a commission or other form of compensation by virtue of having dealt with Tenant or Landlord, as applicable, with regard to this leasing transaction. 31. LIMITATION ON LANDLORD'S LIABILITY. NOTWITHSTANDING ANYTHING SET FORTH HEREIN OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY: (A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR (AND TENANT AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO: TENANT'S PERSONAL PROPERTY OF EVERY KIND AND DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT, INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS, PRODUCT, SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER RECORDS OF EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL INCOME DERIVED OR DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL RECOURSE TO LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN ANY WAY UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT WITH RESPECT TO THE SUBJECT MATTER HEREOF AND ANY (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 15 LIABILITY OF LANDLORD HEREUNDER SHALL BE STRICTLY LIMITED SOLELY TO LANDLORD'S INTEREST IN THE PROJECT OR ANY PROCEEDS FROM SALE OR CONDEMNATION THEREOF AND ANY INSURANCE PROCEEDS PAYABLE IN RESPECT OF LANDLORD'S INTEREST IN THE PROJECT OR IN CONNECTION WITH ANY SUCH LOSS; AND (C) IN NO EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED AGAINST LANDLORD IN CONNECTION WITH THIS LEASE NOR SHALL ANY RECOURSE BE HAD TO ANY OTHER PROPERTY OR ASSETS OF LANDLORD OR ANY OF LANDLORD'S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS. UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF LANDLORD'S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR INJURY TO TENANT'S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM. 32. SEVERABILITY. If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby. 33. SIGNS; EXTERIOR APPEARANCE. Tenant shall not: (i) attach anything at any time to any outside wall of the Project, (ii) use any window coverings or sunscreen other than Landlord's standard window coverings, (iii) place any articles on the window sills, (iv) place any items on any exterior balcony, or (v) paint, affix or exhibit any signs or any kind in the Premises which can be viewed from the exterior of the Premises, Tenant shall be entitled to Building standard lobby signage and directional signage at no cost to Tenant. 34. INTENTIONALLY OMITTED. 35. MISCELLANEOUS. (a) NOTICES. Except as otherwise provided herein, all notices or other communications between the parties shall be in writing and shall be deemed duly given upon delivery or refusal to accept delivery by the addressee thereof if delivered in person, confirmed receipt by facsimile or upon actual receipt if delivered by reputable overnight guaranty courier, addressed and sent to the parties at their addresses set forth above. Landlord and Tenant may from time to time by written notice to the other designate another address for receipt of future notices. (b) RECORDATION. Neither this Lease nor a memorandum of lease shall be filed by or on behalf of Tenant in any public record. Landlord may prepare and file, and upon request by Landlord Tenant will execute, a memorandum of lease. (c) FINANCIAL INFORMATION. Tenant shall furnish Landlord with true and complete copies of (i) Tenant's most recent audited annual financial statements within 90 days of the end of each of Tenant's fiscal years during the Term, (ii) Tenant's most recent unaudited quarterly financial statements within 45 days of the end of each of Tenant's first three fiscal quarters of each of Tenant's fiscal years during the Term, (iii) at Landlord's request from time to time, updated business plans, including cash flow projections and/or pro forma balance sheets and income statements, all of which shall be treated by Landlord as confidential information belonging to Tenant, (iv) corporate brochures and/or profiles prepared by Tenant for prospective investors, and (v) any other financial information or summaries that Tenant typically provides to its lenders or shareholders. Landlord shall execute and deliver a reasonable agreement to maintain the confidentiality of any information prior to receipt of such information from Tenant. (d) INTERPRETATION. The normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Lease or any exhibits or amendments hereto. (e) NOT BINDING UNTIL EXECUTED. The submission by Landlord to Tenant of this Lease shall have no binding force or effect, shall not constitute an option for the leasing of the Premises, nor confer any right or impose any obligations upon either party until execution of this Lease by both parties. (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 16 (f) LIMITATIONS ON INTEREST. It is expressly the intent of Landlord and Tenant at all times to comply with applicable law governing the maximum rate or amount of any interest payable on or in connection with this Lease. If applicable law is ever judicially interpreted so as to render usurious any interest called for under this Lease, or contracted for, charged, taken, reserved, or received with respect to this Lease, then it is Landlord's and Tenant's express intent that all excess amounts theretofore collected by Landlord be credited on the applicable obligation (or, if the obligation has been or would thereby be paid in full, refunded to Tenant), and the provisions of this Lease immediately shall be deemed reformed and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder. (g) CHOICE OF LAW. Construction and interpretation of this Lease shall be governed by the internal laws of the state in which the Premises are located, excluding any principles of conflicts of laws. (h) TIME. Time is of the essence as to the performance of Tenant's obligations under this Lease. (i) REASONABLE EXPENDITURES. Except for specific provisions of this Lease relating to the obligations of either party to reimburse the other, including but not limited to the provisions relating to Operating Expenses, no party shall be entitled to reimbursement for any expenditure in an unreasonable amount therefor. (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 17 IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year first above written. TENANT: NANOSYS, INC. a Delaware corporation By: /s/ Calvin Chow ---------------------------------------- Its: COO LANDLORD: ARE-2625/2627/2631 HANOVER, LLC, a Delaware limited liability company By: ALEXANDRIA REAL ESTATE EQUITIES, L.P., a Delaware limited partnership, managing member By: ARE-QRS CORP., a Maryland corporation, general partner By: /s/ Joel Marcus ---------------------------- Its : CEO (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 1 EXHIBIT A TO LEASE DESCRIPTION OF PREMISES [Attached] (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY [FLOOR PLAN] 2625 HANOVER ST. STORY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 1 EXHIBIT B TO LEASE DESCRIPTION OF PROJECT [Attached] (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Real Property in the Palo Alto, County of Santa Clara, State of California, described as follows: Parcel One: Beginning at a concrete highway monument set on the Southwesterly line of E1 Camino Real opposite Engineer's Station 144+27.00, as surveyed by the California Division of Highways, as said line was established by Decree of Condemnation recorded July 7, 1930 in book 520, page 571, Official Records, at the point of intersection of said line with the Southeasterly line of the 1289-acre tract of land described in the deed from Evelyn C. Crosby et al to Leland Stanford dated September 8, 1885 and recorded in Book 80 of Deeds, page 382, Santa Clara County Records; thence North 58(degrees) 39' West along said line of E1 Camino Real, 2784.83 feet; thence South 33(degrees) 21' West 2175.49 feet to the true point of beginning. Thence, from said true point of beginning, South 56(degrees) 26' 7" East 240.53 feet, thence South 33(degrees) 38' 20" West 323.08 feet to a point on the Northeasterly line of Hanover Street, established by Easement Deed to the City of Palo Alto recorded November 14, 1956 in Book 3656, page 424, Official Records; thence North 56(degrees) 23' 40" West along said Northeasterly line of Hanover Street, 268.32 feet; thence North 33(degrees) 38' 20" East 322.80 feet; thence South 56(degrees) 26' 07" East 27.79 feet to the true point of beginning. APN: 142-20-056 ARB: 142-20-56 Parcel Two: BEGINNING at a concrete highway monument set on the Southwesterly line of E1 Camino Real opposite Engineer's Station 144+27.00, as surveyed by the California Division of Highways, as said line was established by Decree of Condemnation recorded July 7, 1930 in Book 520, page 571, Official Records, at the point of intersection of said line with the Southeasterly line of the 1289-acre tract of land described in the deed from Evelyn C. Crosby et al to Leland Stanford dated September 8, 1885 and recorded in Book 80 of Deeds, page, 382, Santa Clara County Records; thence North 58(degrees) 39' West along said line of E1 Camino Real, 2784.83 feet; thence South 33(degrees) 21' West 2175.49 feet; thence North 56(degrees) 39' West 257.79 feet to the true point of beginning. Thence, from said true point of beginning, South 33(degrees) 36' 20" West 321.76 feet to a point on the Northeasterly line of Hanover Street, as proposed to be established, 60.00 feet in width; thence North 56(degrees) 23' 40" West along said proposed Northeasterly line of Hanover Street, 367.67 feet; thence on the arc of a curve to the right, with a radius of 20.00 feet, through a central angle of 90(degrees) 00', a distance of 31.42 feet to a point in the Southeasterly line of California Avenue (66 feet in width); thence North 33(degrees) 36' 20" East along said Southeasterly line, 299.94 feet to an iron pipe which bears North 56(degrees) 39' West from the true point of beginning; thence South 56(degrees) 39' East 407.57 feet to the true point of beginning. APN: 142-20-005 ARB: 142-20-5 Parcel Three: BEGINNING at a point on the Northeasterly line of Hanover Street, 60.00 feet in width, established by Easement Deed to the City of Palo Alto recorded November 14, 1958 in Book 3556, page 424, Official Records, at the Southernmost corner of the 3.00-acre tract of land described in Memorandum of Lease by and between The Board of Trustees of The Leland Stanford Junior University and Palo Alto Clinic. Ltd. recorded January 18, 1957 in Book 3710, page 6, Official Records; thence from said point of beginning North 33(degrees) 36' 20" East along the Southeasterly line of said 3.00-acre tract, 321.76 feet to the Easternmost corner thereof on the Southwesterly line of the 5.479-acre tract of land described in the Memorandum of Lease by and between The Board of Trustees of The Leland Stanford Junior University and Beckman Instruments, Inc. recorded January 11, 1956 in Book 3384, page 14, Official Records; thence South 56(degrees) 39' East along said last named line, 230.00 feet to a point distant thereon North 56(degrees) 39' West 27.79 feet, from the Southernmost corner of said 5.479-acre tract; thence South 33(degrees) 36' 20" West 322.80 feat to a point on the said Northeasterly line of Hanover Street: thence North 56(degrees) 23' 40" West along said Northeasterly line 230.00 feet to the point of beginning. APN: 142-20-004 ARB: 142-20-4 Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 1 EXHIBIT C TO LEASE Rules and Regulations 1. The sidewalk, entries, and driveways of the Project shall not be obstructed by Tenant, or any Tenant Party, or used by them for any purpose other than ingress and egress to and from the Premises. 2. Tenant shall not, without Landlord's prior consent, place any objects, including antennas, outdoor furniture, etc., in the parking areas, landscaped areas or other areas outside of its Premises, or on the roof of the Project. 3. Except for animals assisting the disabled, no animals shall be. allowed in the offices, halls, or corridors in the Project. 4. Tenant shall not disturb the occupants of the Project or adjoining buildings by the use of any radio or musical instrument or by the making of loud or improper noises. 5. If Tenant desires telegraphic, telephonic or other electric connections in the Premises, Landlord or its agent will direct the electrician as to where and how the wires may be introduced; and, without such direction, no boring or cutting of wires will be permitted. Any such installation or connection shall be made at Tenant's expense. 6. Tenant shall not install or operate any steam or gas engine or boiler, or other mechanical apparatus in the Premises, except as specifically approved in the Lease. The use of oil, gas or inflammable liquids for heating, lighting or any other purpose except Laboratory purposes is expressly prohibited. Explosives or other articles deemed extra hazardous shall not be brought into the Project. 7. Parking any type of recreational vehicles is specifically prohibited on or about the Project. Except for the overnight parking of operative vehicles, no vehicle of any type 'shall be stored in the parking areas at any time. In the event that a vehicle is disabled, it shall be removed within 48 hours. There shall be no "For Sale" or other advertising signs on or about any parked vehicle. All vehicles shall be parked in the designated parking areas in conformity with all signs and other markings. All parking will be open parking, and no reserved parking, numbering or lettering of individual spaces will be permitted except as specified by Landlord. 8. Tenant shall maintain the Premises free from rodents, insects and other pests. 9. Landlord reserves the right to exclude or expel from the Project any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs or who shall in any manner do any act in violation of the Rules and Regulations of the Project. 10. Tenant shall not cause any unnecessary labor by reason of Tenant's carelessness or indifference in the preservation of good order and cleanliness. Landlord shall not be responsible to Tenant for any loss of property on the Premises, however occurring, or for any damage done to the effects of Tenant by the janitors or any other employee or person. 11. Tenant shall give Landlord prompt notice of any defects in the water, lawn sprinkler, sewage, gas pipes, electrical lights and fixtures, heating apparatus, or any other service equipment affecting the Premises. 12. Tenant shall not permit storage outside the Premises, including without limitation, outside storage of trucks and other vehicles, or dumping of waste or refuse or permit any harmful materials to be placed in any drainage system or sanitary system in or about the Premises. (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 2 13. All moveable trash receptacles provided by the trash disposal firm for the Premises must be kept in the trash enclosure areas, if any, provided for that purpose. 14. No auction, public or private, will be permitted on the Premises or the Project. 15. No awnings shall be placed over the windows in the Premises except with the prior written consent of Landlord. 16. The Premises shall not be used for lodging, sleeping or cooking or for any immoral or illegal purposes or for any purpose other than that specified in the Lease. No gaming devices shall be operated in the Premises. 17. Tenant shall ascertain from Landlord the maximum amount of electrical current which can safely be used in the Premises, taking into account the capacity of the electrical wiring in the Project and the Premises and the needs of other tenants, and shall not use more than such safe capacity. Landlord's consent to the installation of electric equipment shall not relieve Tenant from the obligation not to use more electricity than such safe capacity. 18. Tenant assumes full responsibility for protecting the Premises from theft, robbery and pilferage. 19. Tenant shall not install or operate on the Premises any machinery or mechanical devices of a nature not directly related to Tenant's ordinary use of the Premises and shall keep all such machinery free of vibration, noise and air waves which may be transmitted beyond the Premises. (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 1 EXHIBIT D TO LEASE ACKNOWLEDGMENT OF COMMENCEMENT DATE This ACKNOWLEDGMENT OF COMMENCEMENT DATE is made this_______________day of_______2002, between ARE-2625/2627/2631 HANOVER, LLC, a Delaware limited liability company ("LANDLORD"), and NANOSYS, INC, a Delaware corporation ("TENANT"), and is attached to and made a part of the Lease dated January_____, 2002 (the "LEASE"), by and between Landlord and Tenant. Any initially capitalized terms used but not defined herein shall have the meanings given them in the Lease. Landlord and Tenant hereby acknowledge and agree, for all purposes of the Lease, that the Commencement Date of the Term of the Lease is_____________,_______and the termination date of the Term of the Lease shall be midnight on___________,_______. IN WITNESS WHEREOF, Landlord and Tenant have executed this ACKNOWLEDGMENT OF COMMENCEMENT DATE to be effective on the date first above written. TENANT: NANOSYS, INC. a Delaware corporation By:________________________________________ Its:_______________________________________ LANDLORD: ARE-2625/2627/2631 HANOVER, LLC, a Delaware limited liability company By: ALEXANDRIA REAL ESTATE EQUITIES, L.P., a Delaware limited partnership, managing member By: ARE-QRS CORP., a Maryland corporation, general partner By:______________________________ Its:_____________________________ (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 1 EXHIBIT E TO LEASE TENANT'S PERSONAL PROPERTY (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Short Form 3N Laboratory Lease 2625 HANOVER STREET/NANOSYS - PAGE 1 EXHIBIT F TO LEASE PRE-APPROVED ALTERATIONS 2 HEPA Filters 1 D1 Water System 1 Vented Fume Hood (C) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY EX-10.6.1 19 f97636orexv10w6w1.txt EXHIBIT 10.6.1 EXHIBIT 10.6.1 FIRST AMENDMENT TO LEASE This First Amendment (this "FIRST AMENDMENT") to Lease is made as of September 27, 2002, by and between ARE-2625/2627/2631 HANOVER, LLC, a Delaware limited liability company ("LANDLORD"), and NANOSYS, INC., a Delaware corporation ("TENANT"). RECITALS A. Landlord and Tenant have entered into that certain Lease Agreement dated as of January 30, 2002 (the "LEASE"). B. Pursuant to the Lease, Tenant currently leases 8,424 rentable square feet (the "2625 PREMISES") in the building located at 2625 Hanover Street, Palo Alto, California 94301 (the "2625 BUILDING"), more particularly described in the Lease. Capitalized terms used herein without definition shall have the meanings defined for such terms in the Lease. C. Tenant desires to extend the term of the Lease and expand the Premises by adding 12,650 rentable square feet (the "2627 PREMISES") in the building located at 2627 Hanover Street, Palo Alto, California 94301 (the "2627 BUILDING"), and, subject to the terms and conditions set forth below, Landlord is willing to extend the term of the Lease and lease such additional portion of the Project to Tenant. AGREEMENT NOW THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree, and amend the Lease, as follows: 1. BUILDING. Effective as of the 2627 Premises Commencement Date (as hereinafter defined), the definition of "Building" on the first page of the Lease is deleted in its entirety and replaced with the following: "BUILDING: (a) 2625 Hanover Street, Palo Alto, California 94301 (the "2625 BUILDING"), and (b) 2627 Hanover Street, Palo Alto, California 94301 (the "2627 BUILDING" and together with the 2625 Building, collectively the "BUILDING")." 2. PREMISES. Effective as of the 2627 Premises Commencement Date, the definition of "Premises" on the first page of the Lease is deleted in its entirety and replaced with the following: "PREMISES: The (a) 2625 Building containing approximately 8,424 rentable square feet, as determined by Landlord, as shown on EXHIBIT A (the "2625 PREMISES"), and (b) 2627 Building containing approximately 12,650 rentable square feet, as determined by Landlord, as shown on EXHIBIT A-l [2627 HANOVER/NANOSYS] (c) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Page-2 (the "2627 PREMISES" and together with the 2625 PREMISES, collectively the "PREMISES")." From and after the 2627 Premises Commencement Date, Landlord and Tenant agree that the Premises shall consist of 21,074 rentable square feet of space. 3. BASE RENT. (a) Effective as of the 2627 Premises Commencement Date, the definition of "Base Rent" on the first page of the Lease is deleted in its entirety and replaced with the following: "BASE RENT: $64,904,00 per month, subject to adjustment as provided for in Section 3 below." (b) Effective as of the 2627 Premises Commencement Date, Section 3 OF THE LEASE is amended by adding the following at the end thereof: "Effective on (i) January 1, 2004, Base Rent shall be increased from $64.904.00 to $67,175.64 per month, and (ii) January 1, 2005, Base Rent shall be increased from $67,175.64 to $69,526.79 per month." 4. TENANT'S SHARE. Effective as of the 2627 Premises Commencement Date, definition of Tenant's Share on the first page of the Lease is deleted in its entirety and replaced with the following: "TENANT'S SHARE: 65.70%" 5. SECURITY DEPOSIT. The definition of Security Deposit on the first page of the Lease is hereby deleted in its entirety and replaced with the following: "SECURITY DEPOSIT: $64,904.00" Concurrently with the delivery of an executed copy of this First Amendment to Landlord, Tenant shall deposit $35,420.00 (such amount being the portion of the Security Deposit attributable to the 2627 Premises (the "2627 SECURITY DEPOSIT") with Landlord, which 2627 Security Deposit shall be in cash. 6. TERM. Effective as of the 2627 Premises Commencement Date, the definition of Term on the first page of the Lease is deleted in its entirety and replaced with the following: "TERM: Beginning on the Commencement Date and ending on December 31, 2005." 7. DELIVERY; ACCEPTANCE OF 2627 PREMISES; COMMENCEMENT DATE. Landlord shall use reasonable efforts to deliver the 2627 Premises to Tenant for the conduct of Tenant's business on or before January 1, 2003 (the "2627 TARGET COMMENCEMENT DATE") with [2627 HANOVER/NANOSYS] (c) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Landlord's Work substantially completed ("DELIVERY" OR "DELIVER"). "LANDLORD'S WORK" shall mean the construction of improvements in general accordance with the Floor Plans attached hereto as EXHIBITS C-1 AND C-2. If Landlord fails to timely Deliver the 2627 Premises, Landlord shall not be liable to Tenant for any loss or damage resulting therefrom, and the Lease shall not be void or voidable except as provided herein. If Landlord does not Deliver the 2627 Premises within 60 days of the 2627 Target Commencement Date for any reason other than Force Majeure Delays (as hereinafter defined), then, for a period of 5 business days after the end of such 60 day period, the Lease with respect only to the 2627 Premises shall be voidable by Tenant by written notice to Landlord, and if so voided: (a) the 2627 Security Deposit, or any balance thereof (i.e., after deducting therefrom all amounts to which Landlord is entitled under the provisions of the Lease), shall be returned to Tenant, and (b) neither Landlord nor Tenant shall have any further rights, duties or obligations with respect to the 2627 Premises under the Lease. If Tenant does not elect to void the Lease with respect to the 2627 Premises within 5 business days of the lapse of such 60 day period, such right to void the Lease with respect to the 2627 Premises shall be waived and the Lease shall remain in full force and effect. The "2627 PREMISES COMMENCEMENT DATE" shall be the later of: (i) the 2627 Target Commencement Date, or (ii) the date Landlord Delivers the 2627 Premises to Tenant. Upon request of Landlord, Tenant shall execute and deliver a written acknowledgment of the 2627 Premises Commencement Date when such date is established in the form of the "Acknowledgement of Commencement Date" attached hereto as EXHIBIT B; provided, however. Tenant's failure to execute and deliver such acknowledgment shall not affect Landlord's rights hereunder. For purposes hereof, (i) "FORCE MAJEURE DELAYS" shall mean delays arising by reason of any Force Majeure, and (ii) "FORCE MAJEURE" shall mean, strikes, lockouts, labor disputes, weather, natural disasters, inability to obtain labor or materials or reasonable substitutes therefor, governmental restrictions, governmental regulations, governmental- controls, delay in issuance of permits, enemy or hostile governmental action, civil commotion, fire or other casualty, and other causes beyond the reasonable control of Landlord. Effective as of the 2627 Premises Commencement Date, except as otherwise expressly provided herein: (i) Tenant shall accept the 2627 Premises in their condition as of such date, subject to all applicable Legal Requirements (as defined in Section 6 of the Lease), (ii) Landlord shall have no obligation for any defects in the 2627 Premises; and (iii) Tenant's taking possession of the 2627 Premises shall be conclusive evidence that Tenant accepts the 2627 Premises and that the 2627 Premises were in good condition at the time of Delivery. Landlord shall construct (a) the core and shell of the 2627 Building, and (b) Landlord's Work in compliance with applicable law. For a period of 90 days after the 2627 Premises Commencement Date, Landlord and Tenant shall jointly monitor the 2627 Building systems and the roof, and Landlord will make any repairs deemed by the parties to be reasonably necessary. During such 90 day period, the cost of any such repair shall be paid by Landlord, unless Tenant was solely responsible for the cause of such repair, in which case Tenant shall pay the cost. [2627 HANOVER/NANOSYS] (c) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY Landlord, at its sole cost and expense (which shall not constitute an Operating Expense (as defined in the Lease)) shall promptly balance the heating and air conditioning system of the 2627 Premises if Tenant requests at any time prior to August 31, 2003. 8. EXHIBIT A. Effective as of the 2627 Premises Commencement Date, the Lease is amended to add Exhibit A-1 thereto in the form of Exhibits A attached hereto. 9. FEE. As a material inducement for Landlord to enter into this First Amendment, Tenant shall, concurrently with the delivery of an executed copy of this First Amendment to Landlord, deposit $20,000.00 (the "FEE") with Landlord, which Fee shall be in cash. Tenant acknowledges and agrees that the Fee has been fully earned by Landlord on the 2627 Premises Commencement Date and is nonrefundable. In the event Landlord fails to deliver the 2627 Premises in accordance with the terms of this First Amendment, and Tenant voids the Lease with respect to the 2627 Premises pursuant to Tenant's rights hereunder, Landlord shall refund the Fee to Tenant. The Fee shall not be applied to any of Tenant's obligations under the Lease and is in addition to Tenant's obligation to pay all other amounts due under the Lease. 10. MISCELLANEOUS. (a) This First Amendment is the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral and written agreements and discussions. This First Amendment may be amended only by an agreement in writing, signed by the parties hereto. (b) This First Amendment is binding upon and shall inure to the benefit of the parties hereto, their respective agents, employees, representatives, officers, directors, divisions, subsidiaries, affiliates, assigns, heirs, successors in interest and shareholders (c) This First Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical thereto except having additional signature pages executed by other parties to this First Amendment attached thereto. (d) Landlord and Tenant each represent and warrant that it has not dealt with any broker, agent or other person (collectively "BROKER") in connection with this transaction, and that no Broker brought about this transaction other than Cornish & Carey Commercial. Landlord and Tenant each hereby agree to indemnify and hold the other harmless from and against any claims by any Broker, other than Cornish and Carey Commercial, claiming a commission or other form of compensation by virtue of having dealt with Tenant or Landlord, as applicable, with regard to this leasing transaction. (e) Except as amended and/or modified by this First Amendment, the Lease is hereby ratified and confirmed and all other terms of the Lease shall remain in full force and [2627 HANOVER/NANOSYS] (c) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY effect, unaltered and unchanged by this First Amendment. In the event of any conflict between the provisions of this First Amendment and the provisions of the Lease, the provisions of this First Amendment shall prevail. Whether or not specifically amended by this First Amendment, all of the terms and provisions of the Lease are hereby amended to the extent necessary to give effect to the purpose and intent of this First Amendment. [2627 HANOVER/NANOSYS] (c) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the day and year first above written. TENANT: NANOSYS, INC., a Delaware corporation By: /s/ Karen Vergura ---------------------- Its: VP, Finance LANDLORD: ARE-2625/2627/2631 HANOVER, LLC, a Delaware limited liability company By: ALEXANDRIA REAL ESTATE EQUITIES, L.P., a Delaware limited partnership, managing member By: ARE-QRS CORP., a Maryland corporation, general partner By: /s/ Joel S. Marcus ------------------ its: CEO [2627 HANOVER/NANOSYS] (c) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY EXHIBIT A Description of 2627 Premises [FLOOR PLANS] EXHIBIT B ACKNOWLEDGMENT OF COMMENCEMENT DATE This ACKNOWLEDGMENT OF COMMENCEMENT DATE is made this___________ day of ____, 2002, between ARE-2625/2627/2631 HANOVER, LLC, a Delaware limited liability company ("LANDLORD"), and NANOSYS, INC, a Delaware corporation ("TENANT"), and is attached to and made a part of the Lease dated January 30, 2002 (the "LEASE"), by and between Landlord and Tenant. Any initially capitalized terms used but not defined herein shall have the meanings given them in the Lease. Landlord and Tenant hereby acknowledge and agree, for all purposes of the Lease, that the 2627 Premises Commencement Date of the Term of the Lease is _____________ and the termination date of the term for the 2627 Premises shall be midnight on December 31, 2005. IN WITNESS WHEREOF, Landlord and Tenant have executed this ACKNOWLEDGMENT OF COMMENCEMENT DATE to be effective on the date first above written. TENANT: NANOSYS, INC, a Delaware corporation By:___________________________ Its:__________________________ LANDLORD: ARE-2625/2627/2631 HANOVER, LLC, a Delaware limited liability company By: ALEXANDRIA REAL ESTATE EQUITIES, L.P., a Delaware limited partnership, managing member By: ARE-QRS CORP., a Maryland corporation, general partner By:_________________________ Its:________________________ [2627 HANOVER/NANOSYS] (c) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY EXHIBIT C-1 FLOOR PLANS (1ST FLOOR) [Attached] [2627 HANOVER/NANOSYS] (c) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY [FLOOR PLANS] EXHIBIT C-2 FLOOR PLANS (2ND FLOOR) [Attached] [2627 HANOVER/NANOSYS] (c) ALL RIGHTS RESERVED 2001 ALEXANDRIA REAL ESTATE EQUITIES, INC. CONFIDENTIAL - DO NOT COPY [FLOOR PLAN] EX-10.7 20 f97636orexv10w7.txt EXHIBIT 10.7 EXHIBIT 10.7 LOAN AND SECURITY AGREEMENT This LOAN AND SECURITY AGREEMENT (This "Agreement") dated as of May 17, 2002, between SILICON VALLEY BANK, a California chartered bank, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at One Newton Executive Park, Suite 200,2221 Washington Street, Newton, Massachusetts 02462, doing business under the name "Silicon Valley East" ("Bank") and NANOSYS, INC., a Delaware corporation ("Borrower"), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows: 1. ACCOUNTING AND OTHER TERMS Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. The term "financial statements" includes the terms "including" and "includes" always mean "including (or includes) without limitation," in this or any Loan Document. Capitalized terms in this Agreement shall have the meanings set forth in Section 13. 2 LOAN AND TERMS OF PAYMENT 2.1 PROMISE TO PAY. Borrower hereby unconditionally promises to pay Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid principal amount of the Credit Extensions as and when due in accordance with this Agreement. 2.1.1 VENTURE EQUIPMENT FACILITY. (a) Subject to the terms and conditions of this Agreement, Bank agrees to lend to Borrower, from time to time prior to the Commitment Termination Date, equipment advances (each an "Equipment Advance" and collectively the "Equipment Advances") in an aggregate amount not to exceed the Committed Equipment Line. When repaid, the Equipment Advances may not be re-borrowed. The proceeds of the Equipment Advances shall be used solely to reimburse Borrower for the purchase of Eligible Equipment purchased within ninety (90) days (determined based upon the applicable invoice date of such Eligible Equipment) of the Equipment Advance and to purchase new Eligible Equipment. Bank's obligation to lend hereunder shall terminate, at Bank's option, on the earlier of (i) the occurrence and continuance of an Event of Default, or (ii) the Commitment Termination Date. For purposes of this Section, the minimum amount of each Equipment Advance is Fifty Thousand Dollars ($50,000.00). Subject to the foregoing conditions, the initial Equipment Advance hereunder may include invoices dated on or after November 1, 2001, provided such initial Equipment Advance is requested on the Closing Date (the "Initial Advance"). The Borrower may only request, in the aggregate, six (6) Equipment Advances provided that Borrower may borrow less than Fifty Thousand Dollars ($50,000.00) if the available amount remaining under the Committed Equipment Line is less than Fifty Thousand Dollars ($50,000.00). (b) To obtain an Equipment Advance, Borrower shall deliver to Bank a completed supplement in substantially the form attached as EXHIBIT B ("Loan Supplement"), together with a UCC Financing Statement covering the Financed Equipment described on Annex A to the applicable Loan Supplement and such additional information as Bank may reasonably request at least five (5) Business Days before the proposed funding date (the "Funding Date"). On each Funding Date, Bank shall specify in the Loan Supplement for each Equipment Advance, the Basic Rate, and the Payment Dates. If Borrower satisfies the conditions of each Equipment Advance, Bank shall disburse such Equipment Advance by internal transfer to Borrower's deposit account with Bank. Each Equipment Advance may not exceed 100% of the Original Stated Cost of the Financed Equipment. 2.1.2 UNDISBURSED CREDIT EXTENSIONS. The Bank's obligation to lend the undisbursed portion of the Credit Extensions shall terminate if there has been a material adverse change in the general affairs, management, results of operation, financial condition or the prospects of Borrower, whether or not arising from transactions in the ordinary course of business, or there has been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank prior to the execution of this Agreement. 2.2 INTEREST RATE; PAYMENTS. (a) Principal and Interest Payments On Payment Dates. Borrower shall repay each Equipment Advance pursuant to the terms set forth in the corresponding Loan Supplement. For each Equipment Advance, Borrower shall make equal monthly payments of principal and interest, in advance, calculated by the Bank based upon: (1) the amount of the Equipment Advance, (2) the Basic Rate, and (3) an amortization schedule equal to the Repayment Period (individually, the "Scheduled Payment", and collectively, "Scheduled Payments"), on the first Business Day of the month following the month in which the Funding Date occurs (or commencing on the Funding Date if the Funding Date is the first Business Day of the month) with respect to such Equipment Advance and continuing thereafter during the Repayment Period on the first Business Day of each successive calendar month (each a "Payment Date"). All unpaid principal and accrued interest is due and payable in full on the last Payment Date with respect to such Equipment Advance. Payments received after 12:00 noon Eastern time are considered received at the opening of business on the next Business Day. An Equipment Advance may only be prepaid in accordance with Sections 2.2(e) and 2.2(g). (b) Interest Rate. Borrower shall pay interest on the unpaid principal amount of each Equipment Advance until the Equipment Advance has been paid in full, fixed at the per annum rate of interest equal to the Basic Rate determined by Bank as of the Funding Date for each Equipment Advance in accordance with the definition of the Basic Rate. Any amounts outstanding during the continuance of an Event of Default shall bear interest at a per annum rate equal to the Basic Rate plus five percent (5%)(the "Default Rate"). (c) Interim Payment. In addition to the Scheduled Payments, on the Funding Date for each Equipment Advance (unless the Funding Date is the first Business Day of the month) Borrower shall pay to the Bank, interest on the amount of the Equipment Advance at the applicable Basic Rate calculated for the number of days from the actual Funding Date of the Equipment Advance until the first day of the month following such Equipment Advance. (d) Final Payment. On the Maturity Date with respect to each Equipment Advance, Borrower shall pay, in addition to the unpaid principal and accrued interest end all other amounts due on such date with respect to such Equipment Advance, an amount equal to the Final Payment. (e) Prepayment Upon an Event of Loss. If any Financed Equipment is subject to an Event of Loss and Borrower is required to or elects to prepay the Equipment Advance with respect to such Financed Equipment pursuant to Section 6.8, then such Equipment Advance shall be prepaid to the extent and in the manner provided in such section. (f) Mandatory Prepayment Upon an Acceleration. If the Equipment Advances are accelerated following the occurrence and continuance of an Event of Default, Borrower shall immediately pay to Bank an amount equal to the sum of; (i) all outstanding principal plus accrued interest, (ii) the Final Payment plus (iii) all other sums, if any, that shall have become due and payable, including interest at the Default Rate from the date of such Event of Default with respect to any past due amounts. (g) Permitted Prepayment of Loans. Borrower shall have the option to prepay all, but not less then all, of the Equipment Advances advanced by Bank under this Agreement, provided Borrower (i) provides written notice to Bank of its election to prepay the Equipment Advances at least five (5) days prior to such prepayment, and (ii) pays, on the date of such prepayment (A) all outstanding principal plus accrued interest, (B) the Final Payment plus (C) all other sums, if any, that shall have become due and payable with respect to such Equipment Advances, including interest at the Default Rate from the date of such Event of Default with respect to any past due amounts. 2 2.3 FEES. Borrower shall pay 10 Bank: (a) Final Payment. Each Final Payment as and when due in accordance with the terms of this Agreement; and (b) Bank Expenses. All Bank Expenses (including reasonable attorneys' fees and expenses incurred through and after the Closing Date) when due. 2.4 ADDITIONAL COSTS. If any new law or regulation increases Bank's costs or reduces its income for any loan, Borrower shall pay the increase in cost or reduction in income or additional expense; provided, however, that Borrower shall not be liable for any amount attributable to any period before 180 days prior to the date Bank notifies Borrower of such increased costs. Bank agrees that it shall allocate any increased costs among its customers similarly affected in good faith and in a manner consistent with Bank's customary practice. 3 CONDITIONS OF LOANS 3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. The obligation of Bank to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance reasonably satisfactory to Bank, the following; (a) this Agreement; (b) a certificate of the Secretary of Borrower with respect to articles, bylaws, incumbency and resolutions authorizing the execution and delivery of this Agreement; (c) Negative Pledge Agreement covering Intellectual Property; (d) a legal opinion of Borrower's counsel, in form end substance reasonably acceptable to Bank; (e) Warrant to Purchase Stock; (f) Investors' Rights Agreement; (g) financing statements (Forms UCC-1); (h) insurance certificate; (i) payment of the fees and Bank Expenses then due specified in Section 2.3 hereof; (j) Certificate of Foreign Qualification (if applicable); (k) Certificate of Good Standing/Legal Existence; and (l) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate. 3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Bank's obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following: 3 (a) timely receipt of a completed Loan Supplement and UCC financing statement covering the Financed Equipment described on Annex A to the Loan Supplement; and (b) the representations and warranties in Section 5 must be materially true when taken as a whole on the date of the Loan Supplement and on the effective date of each Credit Extension and no Event of Default shall have occurred and be continuing as of such effective date, or result from the Credit Extension. Each Credit Extension is Borrower's representation warranty on that date that the representations and warranties in Section 5 remain true in all material respects, except that any representation or warranties made as of a specified earlier date shall be true as of such earlier date. (c) the Bank shall have the opportunity to confirm that upon filing the UCC-1 financing statement covering the Equipment described on the Loan Supplement, that the Bank shall have first perfected security interest in such Equipment. 4 CREATION OF SECURITY INTEREST 4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations and the performance of each of Borrower's duties under the Loan Documents, a continuing security interest in, and pledges and assigns to the Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof. Borrower warrants and represents that the security interest granted herein shall be a first priority security interest in the Collateral. Borrower agrees that any disposition of the Collateral in violation of this Agreement, by either the Borrower or any other Person, shall be deemed to violate the rights of the Bank under the Code. If the Agreement is terminated, Bank's lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations. If Borrower shall at any time, acquire a commercial fort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the brief details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank. 5 REPRESENTATIONS AND WARRANTIES Borrower represents and warrants as follows: 5.1 DUE ORGANIZATION AND AUTHORIZATION. Borrower and each Subsidiary is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not resonably be expected to cause a Material Adverse Change. In connection with this Agreement, the Borrower delivered to the Bank a certificate signed by the Borrower and entitled "Perfection Certificate". The Borrower represents and warrants to the Bank that, as of the Closing Date and as of the date of each Credit Extension: (a) the Borrower's exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; and (b) the Borrower is an organization of the type, and is organized in the jurisdiction, set forth in the Perfection Certificate; and (c) the Perfection Certificate accurately sets forth the Borrower's organizational identification number or accurately states that the Borrower has none; and (d) the Perfection Certificate accurately sets forth the Borrower's place of business, or if more than one, its chief executive office as well as the Borrower's mailing address if different, and (e) all other information set forth on the Perfection Certificate pertaining to the Borrower is accurate and complete. If the Borrower does not now have an organizational identification number, but later obtains one, Borrower shall forthwith notify the Bank of such organizational identification number. The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower's organizational documents, nor constitute an event of default under any material agreement by 4 which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound in which the default could reasonably be expected to cause a Material Adverse Change. 5.2 COLLATERAL. Borrower has good title to the Collateral, free of Liens except Permitted Liens. As of the Closing Date, Borrower has no deposit account, other than the deposit accounts with Bank and deposit accounts described in the Perfection Certificate delivered to the Bank in connection herewith. As of the Closing Date, the Collateral is not in the possession of any third party bailee (such as a warehouse). In the event that Borrower, after the date hereof, intends to store or otherwise deliver any portion of the Collateral to a bailee, then Borrower will first receive the written consent of Bank and such bailee must acknowledge in writing that the bailee is holding such Collateral for the benefit of Bank. 5.3 LITIGATION. Except as shown in the Schedule, as of the Closing Date there are no actions or proceedings pending or, to the knowledge of Borrower's Responsible Officers, threatened by or against Borrower or any Subsidiary in which a likely adverse decision could reasonably be expected to cause a Material Adverse Change. 5.4 NO MATERIAL DEVIATION IN FINANCIAL STATEMENTS. All consolidated financial statements for Borrower and any Subsidiary delivered to Bank fairly present in all material respects Borrower's consolidated financial condition and Borrower's consolidated results of operations. There has not been any material deterioration in Borrower's consolidated financial condition since the date of the most recent financial statements submitted to Bank. 5.5 SOLVENCY. As of the Closing Date, Borrower is able to pay its debts (including trade debts) as they mature. 5.6 REGULATORY COMPLIANCE. Borrower is not an "investment company" or a company "controlled" by an "investment company" under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change. None of Borrower's or any Subsidiary's properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally, Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP. Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue its business as currently conducted except where the failure to make such declarations, notices or filings would not reasonably be expected to cause a Material Adverse Change. 5.7 SUBSIDIARIES. As of the Closing Date, Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments. 5.8 FULL DISCLOSURE. As of the Closing Date, to Borrower's knowledge, no written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank taken together with all such written certificates and written statements given to Bank contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results). 5 6 AFFIRMATIVE COVENANTS Borrower shall do all of the following: 6.1 GOVERNMENT COMPLIANCE. Borrower shall maintain its and all Subsidiaries, legal existence and good standing in its jurisdiction of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower's business or operations. Borrower shall comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on Borrower's business or operations or be expected to cause a Material Adverse Change. 6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. (a) Borrower shall deliver to Bank: (i)as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Borrower's consolidated operations during the period certified by a Responsible Officer and in a form reasonably acceptable to Bank; (ii) as soon as available, but no later than one hundred twenty (120) days after the last day of Borrower's fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank; (iii) in the event that the Borrower's stock becomes publicly held, within five (5) days of filing, copies of all statements, reports and notices made available to Borrower's security holders or to any holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of Two Hundred Thousand Dollars ($200,000.00) or more; and (v) other financial information reasonably requested by Bank. (b) Within thirty (30) days after the last day of each month, Borrower shall deliver to Bank with the monthly financial statements a Compliance Certificate signed by a Responsible Officer in the form of EXHIBIT C. 6.3 INVENTORY; RETURNS. Borrower shall keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its account debtors shall follow Borrower's customary practices as they exist at the Closing Date. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims that involve more than One Hundred Thousand Dollars ($100,000.00). 6.4 TAXES. Borrower shall make, and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting in good faith, with adequate reserves maintained in accordance with GAAP) and will deliver to Bank, on demand, appropriate certificates attesting to such payments. 6.5 INSURANCE. Borrower shall keep its business and the Collateral insured for risks and in amounts, standard for Borrower's industry, and as Bank may reasonably request in Bank's reasonable discretion., Insurance policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to Bank. All property policies shall have a lender's loss payable endorsement showing Bank as an additional loss payee and all liability policies shall show the Bank as an additional insured and all policies shall provide that the insurer must give Bank at least twenty (20) days notice before canceling its policy. At Bank's request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy shall, at Bank's option, be payable to Bank on account of the Obligations. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy up to $25,000.00, in the aggregate, toward the replacement or repair of destroyed or damaged property; provided that (i) any such replaced or repaired property (a) shall be of equal or like value as the replaced or repaired Collateral and (b) Shall be deemed 6 Collateral in which Bank has been granted a first priority security interest and (ii) after the occurrence and during the continuation of an Event of Default all proceeds payable under such casualty policy shall, at the option of the Bank, be payable to Bank on account of the Obligations. If Borrower fails to obtain insurance as required under Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and the Bank, Bank may make all or part of such payment or obtain such insurance policies required in Section 6.5, and take any action under the policies Bank deems reasonably prudent in connection with the foregoing. 6.6 PRIMARY ACCOUNTS. In order to permit the Bank to monitor the Borrower's financial performance and condition, Borrower shall (i) maintain its primary depository, operating, and securities accounts with Bank, and (ii) maintain or administer through the Bank at all times cash or securities in an amount not less than 100% of the amount of cash or securities held by Borrower as of the Closing Date, less any amounts used for the Borrower's operations on a going forward basis. The provisions of this paragraph shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Borrower's employees. 6.7 FURTHER ASSURANCES. Borrower shall execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank's security interest in the Collateral or to effect the purposes of this Agreement. 6.8 LOSS; DESTRUCTION; OR DAMAGE. Borrower shall bear the risk of the Financed Equipment being lost, stolen, destroyed, or damaged. If during the term of this Agreement any item of Financed Equipment becomes obsolete or is lost, stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or seized by a governmental authority for any reason for a period equal to at least the remainder of the term of this Agreement (an "Event of Loss"), then in each case, Borrower: (a) prior to the occurrence and continuance of an Event of Default, at Borrower's option, shall (i) pay to Bank on account of the Obligations (with respect to such Equipment Advance related to an Event of Loss) all accrued interest to the date of the prepayment, plus all outstanding principal, plus the Final Payment; or (ii) repair or replace any Financed Equipment subject to an Event of Loss provided the repaired or replaced Financed Equipment is of equal or like value to the Financed Equipment subject to an Event of Loss and provided further that Bank has a firm priority perfected security interest in such repaired or replaced Financed Equipment (b) during the continuance of an Event of Default, on or before the next Payment Date following such Event of Loss, for each such item of Financed Equipment subject to such Event of Loss, Borrower shall, at Bank's option, pay to Bank an amount equal to the sum of: (i) all outstanding principal plus accrued interest, (ii) the Final Payment plus (iii) all other sums, if any, that shall have become due and payable, including interest at the Default Rate from the date of an Event of Default with respect to any past due amounts. 7 NEGATIVE COVENANTS Borrower shall not do any of the following without the Bank's prior written consent which shall not be unreasonably withheld. 7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose of (collectively a "Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (i) of Inventory in the ordinary course of business; (ii) of non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; (iii) of worn-out or obsolete Equipment; (iv) other Transfers which in the aggregate do not exceed Two Hundred Fifty Thousand Dollars ($250,000.00) in any fiscal year, or (v) other Transfers expressly permitted under Section 7 hereof. 7.2 CHANGE IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATION. Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower of have a 7 material change in its ownership (other than by the sale of Borrower's equity securities in a public offering or to venture capital investors so long as Borrower identifies to Bank the venture capital investors prior to the closing of the investment), or management. Borrower shall not, without at least thirty (30) days prior written notice to Bank: (i) relocate its chief executive office, or add any new offices or business locations (unless such new offices or business locations contain less than Twenty-Five Thousand Dollars ($25,000.00) in Borrower's assets property), or (ii) change its jurisdiction of organization, or (iii) change its organizational structure or type, or (iv) change its legal name, or (v) change any organizational number (if any) assigned by its jurisdiction of organization. 7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, except where: (i) such transactions do not in the aggregate result in a decrease of more than 25% of Borrower's Tangible Net Worth from that which existed as of (A) the Closing Date or (B) the date prior to such transaction, whichever is greater; (ii) no Event of Default has occurred and is continuing or would exist after giving effect to the transactions; and (iii) the Borrower is the surviving legal entity. A Subsidiary of Borrower may merge or consolidate into another Subsidiary of Borrower or into Borrower. 7.4 (INTENTIONALLY DELETED) 7.5 ENCUMBRANCE. Create, incur, or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted herein. The Collateral may also be subject to Permitted Liens. 7.6 DISTRIBUTION; INVESTMENT. (i) Directly or indirectly acquire or own any Person, or make any Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so; or (ii) pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock, except for (A) repurchases of stock from former employees, consultants, or directors of Borrower under the terms of applicable repurchase agreements in an aggregate amount not to exceed ($100,000.00) in the aggregate in any fiscal year, provided that no Event of Default has occurred, is continuing or would exist after giving effect to the repurchases, (B) distributions payable solely in Borrower's capital stock, and (C) Borrower may convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange therefor. 7.7 TRANSACTIONS WITH AFFILIATES. Directly Or indirectly enter or permit any material transaction with any Affiliate, except transactions that are in the ordinary course of Borrower's business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm's length transaction with a non-affiliated Person. 7.8 (INTENTIONALLY DELETED) 7.9 COMPLIANCE. Become an "investment company" or a company controlled by an "investment company", under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower's business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so. 8 EVENTS OF DEFAULT Any one of the following is an Event of Default: 8 8.1 PAYMENT DEFAULT. Borrower fails to pay any of the Obligations within three (3) Business Days after their due date. During the additional period the failure to cure the default is not an Event of Default (but no Credit Extension shall be made during the cure period); 8.2 COVENANT DEFAULT. Borrower does not perform any obligation in Section 6 or violates any covenant in Section 7 or does not perform or observe any other material term, condition or covenant in this Agreement, any Loan Documents, or in any agreement between Borrower and Bank and as to any default under a term, condition or covenant that can be cured, has not cured the default within ten (10) Business Days after it occurs, or if the default. cannot be cured within ten (10) Business Days or cannot be cured after Borrower's attempts in the ten (10) Business Day period, and the default may be cured within a reasonable time, then Borrower shall have additional time, (of not more than thirty (30) days) to attempt to cure the default. Grace periods provided under this section shall not apply, among other things, to financial covenants or any other covenants that are required to be satisfied, completed or tested by a date certain. During the additional period the failure to cure the default is not an Event of Default (but no Credit Extensions shall be made during the cure period); 8.3 MATERIAL ADVERSE CHANGE. A Material Adverse Change occurs; 8.4 ATTACHMENT. (i) Any material portion of Borrower's assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in ten (10) days; (ii) the service of process upon the Borrower seeking to attach, by trustee or similar process any funds of the Borrower on deposit with the Bank; (iii) Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business; (iv) a judgment or other claim becomes a Lien on a material portion of Borrower's assets; or (v) a notice of lien, levy, or assessment is filed against any of Borrower's assets by any government agency and not paid within ten (10) days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions shall be made during the cure period); 8.5 INSOLVENCY. (i) Borrower becomes insolvent; (ii) Borrower begins an Insolvency Proceeding or (iii) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within forty-five (45) days (but no Credit Extensions shall be made before any Insolvency Proceeding is dismissed); 8.6 OTHER AGREEMENTS. If there is a default in any agreement to which Borrower is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) or that could result in a Material Adverse Change; 8.7 JUDGMENTS. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Three Hundred Thousand Dollars ($300,000) shall be rendered against Borrower and is not covered by insurance and shall remain unsatisfied and unstayed for a period of fifteen (15) days (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment); 8.8 MISREPRESENTATIONS. If Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement now or later in any warranty or representation in this Agreement or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document. 8.9 GUARANTY. (i) Any guaranty of any Obligations terminates or ceases for any reason to be in full force; or (ii) any Guarantor does not perform any obligation under any guaranty of the Obligations; or (iii) any material misrepresentation or material misstatement exists now or later in any warranty or representation in any guaranty of the Obligations or in any certificate delivered to Bank in connection with the guaranty; or (iv) any circumstance described in Section 7, or Sections 8.4, 8.5 or 8.7 occurs to any Guarantor, or (v) the death, liquidation, winding up, termination of existence, or insolvency of any Guarantor. 9 9 BANK'S RIGHTS AND REMEDIES 9.1 RIGHTS AND REMEDIES. When an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following: (a) Declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank); (b) Stop advancing money or extending credit for Borrower's benefit under this Agreement or under any other agreement between Borrower and Bank; (c) Make any payments and do any acts it considers necessary and reasonable to protect its security interest in the Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank's rights or remedies; (d) Apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or the account of Borrower; (e) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral Bank is granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower's labels, patents, copyrights, mask works, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank's exercise of its rights under this Section, Borrower's rights under all licenses and all franchise agreements inure to Bank's benefit; and (f) Dispose of the Collateral according to the Code. 9.2 POWER OF ATTORNEY. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, to be effective upon the occurrence and during the continuance of an Event of Default, to: (i) sign Borrower's name on any invoice or bill of lading for any Account or drafts against account debtors; (ii) make, settle, and adjust all claims under Borrower's insurance policies; and (iii) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower's name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to make Credit Extensions hereunder. Bank's foregoing appointment as Borrower's attorney in fact, and all of Bank's rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank's obligation to provide Credit Extensions terminates. Notwithstanding the foregoing, this Section 9.2 and clauses (i) to (iii) shall only apply as it relates to the Collateral. 9.3 [INTENTIONALLY DELETED] 9.4 BANK EXPENSES. Any amounts paid by Bank as provided herein are Bank Expenses and are immediately due and payable, and shall bear interest at the then applicable rate and be secured by the Collateral. No payments by Bank shall be deemed an agreement to make similar payments in the future or Bank's waiver of any Event of Default. 10 9.5 BANK'S LIABILITY FOR COLLATERAL. So long as the Bank complies with reasonable banking practices regarding the safekeeping of collateral, the Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other person. Borrower bears all risk of loss, damage or destruction of the Collateral. 9.6 REMEDIES CUMULATIVE: Bank's rights and remedies under this Agreement, the Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank's exercise of one right or remedy is not an election, and Bank's waiver of any Event of Default is not a continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver hereunder shall be effective unless signed by Bank and then is only effective for the specific instance and purpose for which it was given. 9.7 DEMAND WAIVER. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable. 10 NOTICES All notices or demands by any party to this Agreement or any other related agreement must be in writing and be personally delivered or sent by an overnight delivery service, by certified mail, postage prepaid, return receipt requested, or by telefacsimile at the addresses listed below. Either Bank or Borrower may change its notice address by giving the other written notice. If to Borrower: Nanosys, Inc. _________________________ _________________________ Attn: ___________________ FAX: ____________________ If to Bank: Silicon Valley Bank One Newton Executive Park, Suite 200 2221 Washington Street Newton, Massachusetts 02462 Attn: Ms. Jane Braun Fax: (617) 969-4395 with a copy to: Riemer & Braunstein LLP Three Center Plaza Boston, Massachusetts 02108 Attn: David A. Ephraim, Esquire FAX: (617) 880-3456 11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER Massachusetts law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Massachusetts: provided, however, that if for any reason Bank cannot avail itself of such courts in the Commonwealth of Massachusetts, Borrower accepts jurisdiction of the courts and venue in Santa Clara County, California. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE 11 BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK'S RIGHTS AGAINST THE BORROWER OR ITS PROPERTY. BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 12 GENERAL PROVISIONS 12.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or Obligations under it without Bank's prior written consent which may be granted or withheld in Bank's discretion. Bank has the right, without the consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank's obligations, rights and benefits under this Agreement, the Loan Documents or any related agreement. 12.2 INDEMNIFICATION. Borrower hereby indemnifies, defends end holds the Bank and its officers, employees and agents harmless against: (a) all obligations, demands, claims, and liabilities asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank and Borrower (including reasonable attorneys' fees and expenses), except for losses caused by Bank's gross negligence or willful misconduct 12.3 TIME OF ESSENCE. Time is of the essence for the performance of all Obligations in this Agreement 12.4 SEVERABILITY OF PROVISION. Each provision of this Agreement severable from every other provision in determining the enforecability of any provision. 12.5 AMENDMENTS IN WRITING; INTEGRATION. All amendments to this Agreement must be writing signed by both Bank and Borrower. This Agreement and the Loan Documents represent the entire agreement about this subject matter, and supersede prior negotiations or agreements. All prior agreements, understanding), representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents. 12.6 COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement. 12.7 SURVIVAL. All covenants, representations and warranties made in this Agreement continue in full force while any Obligations remain outstanding. The obligation of Borrower in Section 12.2 to indemnify Bank shall survive until the statute of limitations with respect to such claim or cause of action shall have run. 12.8 CONFIDENTIALITY. In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (i) to Bank's subsidiaries or affiliates in connection with their present or prospective business relations with Borrower; (ii) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall use commercially reasonable efforts in obtaining such prospective transferee's or purchaser's agreement to the terms of this provision); (iii) as required by law, regulation, subpoena, or other order, (iv) as required in connection with Bank's examination or audit; and (v) as Bank considers appropriate in exercising remedies under this Agreement. Confidential information does not include information that either: (a) is in the public domain or in Bank's possession when disclosed 12 to Bank, or becomes part of the public domain after disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information. 13 DEFINITIONS 13.1 DEFINITIONS. "ACCOUNTS" are all existing and later arising accounts, contact rights, and other obligations owed Borrower in connection with its sale or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by Borrower and Borrower's Books relating to any of the foregoing, as such definition may be amended from time to time according to the Code. "AFFILIATE" of a Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person's senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person's managers and members, "BANK EXPENSES" are all audit fees and expenses and reasonable costs or expenses (including reasonable attorneys' fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including appeals or Insolvency Proceedings). "BASIC RATE" is, as of the Funding Date the per annum rate of interest (based on a year of 360 days) equal to the greater of: (i) the Bank's Prime Rate plus one-quarter of one percent (0.25%), and (ii) five percent (5.00%). "BORROWER'S BOOKS" are all Borrower's books and records including ledgers, records regarding Borrower's assets or liabilities, the Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the information. "BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which the Bank is closed. "Closing Date" is the date of this Agreement "CODE" is the Uniform Commercial Code as adopted in Massachusetts, as amended and as may be amended and in effect from time to time. "COLLATERAL" is all equipment set forth on Exhibit A and in the Loan Supplements delivered from time to time under the terms of this Agreement and financed by the Bank, together with all present and future additions, parts, accessories, attachments, substitutions, repairs, improvements, embedded computer programs and supporting information and replacements thereof or thereto, and any and all proceeds thereof. "COMMITTED EQUIPMENT LINE" is an Equipment Advance or Equipment Advances of up to Two Million Five Hundred Thousand Dollars ($2,500,000.00). "COMMITMENT TERMINATION DATE" is March 1, 2003. "CONTINGENT OBLIGATION" is, for any Person, any direct or indirect liability, contingent or not, of that Person for (i) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but "Contingent Obligation" does not include endorsements in the ordinary course of business. 13 The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under the guarantee or other support arrangement. "CREDIT EXTENSION" is each Equipment Advance or any other extension of credit by Bank for Borrower's benefit. "ELIGIBLE EQUIPMENT" is (a) general purpose computer equipment, office equipment, test and laboratory equipment, furnishings, subject to the limitations set forth herein, and (b) Other Equipment that complies with all of Borrower's representations and warranties to Bank and which is reasonably acceptable to Bank in all respects. "EQUIPMENT" is all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachment in which Borrower has any interest. "EQUIPMENT ADVANCE" is defined in Section 2.1.1(a). "ERISA" is the Employment Retirement Income Security Act of 1974, and its regulations. "EVENT OF LOSS" is defined in Section 6.8. "FINAL PAYMENT" is a payment (in addition to and not a substitution for the regular monthly payments of principal plus accrued interest) due on the Maturity Date for such Equipment Advance equal to the Loan Amount for-such Equipment Advance multiplied by the Final Payment Percentage. "FINAL PAYMENT PERCENTAGE" is, for each Equipment Advance, eight and one-half of one percent (8.50%). "FINANCED EQUIPMENT" is all present and future Eligible Equipment in which Borrower has any interest, the purchase of which is financed by an Equipment Advance. "FUNDING DATE" is any date on which an Equipment Advance is made to or on account of Borrower. "GAAP" is generally accepted accounting principles. "GUARANTOR" is any present or future guarantor of the Obligations. "INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and (d) Contingent Obligations. "INITIAL ADVANCE" is defined in Section 2.1.1. "INSOLVENCY PROCEEDING" is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its Creditors, or proceedings seeking reorganization, arrangement, or other relief. "INTELLECTUAL PROPERTY" is any copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative work, whether published or unpublished, now owned or later acquired; any patents, trademarks, service marks and applications therefor; any trade secret rights, including any rights to unpatented inventions, now owned or hereafter acquired. 14 "INVENTORY" is present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products intended for sale or lease or to be famished under a contract of service, of every kind and description now or later owned by or in the custody or possession, actual or constructive, of Borrower, including inventory temporarily out of its custody or possession or in transit and including returns on any accounts or other proceeds (including insurance proceeds) from the sale or disposition of any of the foregoing and any documents of title. "INVESTMENT" is any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person. "LIEN" is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. "LOAN AMOUNT" in respect of each Equipment Advance is the original principal amount of such Equipment Advance. "LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes or guaranties executed by Borrower or Guarantor, and any other present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated. "LOAN SUPPLEMENT" is defined in Section 2.1.1 (b) and attached as EXHIBIT B. "MATERIAL ADVERSE CHANGE" is: (i) A material impairment in the perfection or priority of Bank's security interest in the Collateral or in the value of such Collateral; (ii) a material adverse change in the business, operations, or financial condition of the Borrower, or(iii) a material impairment of the prospect of repayment of any portion of the Obligations. "MATURITY DATE" is, with respect to each Equipment Advance, the last day of the Repayment Period for such Equipment Advance, or if earlier, the date of prepayment or the date of acceleration of such Equipment Advance by Bank following an Event of Default. "OBLIGATIONS" are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including letters of credit, cash management services, and foreign exchange contracts, if any, end including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank. "ORIGINAL STATED COST" is (i), the Original cost to the Borrower of the item of new Equipment net of any and all freight, installation, tax, or (ii) the fair market value assigned to such item of used Equipment by mutual agreement of Borrower and Bank at the time of making of the Equipment Advance. "OTHER EQUIPMENT" is leasehold improvements, transferable software licenses, and soft costs approved by the Bank, including sales tax, freight and installation expenses. Unless otherwise agreed to by Bank, not more than 25% of the proceeds of the Committed Equipment Line shall be used to finance Other Equipment. "PAYMENT DATE" is defined in Section 2.2(a). "PERMITTED INVESTMENTS" ARE: (a) Investments shown on the Investments Schedule and existing on the Closing Date; and (b) (i) marketable direct obligations issued or unconditionally guaranteed by the United States or its agency or any state maturing within 1 year from its acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the highest rating from either Standard & Poor's Corporation or 15 Moody's Investors Service, Inc., (iii) Bank's certificates of deposit issued maturing no more than 1 year after issue, (iv) any other investments administered through the Bank, and (v) Investment permitted by Borrower's investment policy, as amended from time to time, provided such investment policy (and any such amendment thereto) has been approved by Bank; (c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower's business; (d) Investments accepted in connection with Transfers permitted by Section 7.1; (e) Investments of Borrower's Subsidiaries in or to other Subsidiaries of Borrower or in or to Borrower and Investments by Borrower in Borrower's Subsidiaries not to exceed $50,000 in the aggregate in any fiscal year; (f) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; (g) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business; provided that this paragraph (g) shall not apply to Investments of Borrower in any Subsidiary of Borrower; (h) Joint ventures or strategic alliances (in the ordinary course of Borrower's business) consisting of the non-exclusive licencing of technology, the development of technology or the providing of technical support, provided that any cash investments by Borrower do not exceed $50,000 in the aggregate in any fiscal year; and (i) Other Investments permitted pursuant to Section 7.3 and Transfers permitted by Section 7.1. "PERMITTED LIENS" ARE: (a) Liens existing on the Closing Date and shown on the Schedule or arising under this Agreement or other Loan Documents; (b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank's security interests; (c) Purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment, or (ii) existing on equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the equipment; (d) Leases or subleases and non-exclusive licenses or sublicenses granted in the ordinary course of Borrower's business, if the leases, subleases, licenses and sublicenses permit granting Bank a security interest; (e) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (d), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase; 16 (f) Liens arising from judgments, decrees, or attachments in circumstances not constituting an Event of Default under Section 8.4 or 8.7; and (g) other Liens pot described above arising in the ordinary course of business and not having or not reasonably likely to have a material adverse effect on Borrower and its Subsidiaries taken as a whole including Liens of customs and revenue authorities arising as a matter of law to secure payments of customs duties in connection with the importations of goods. "PERSON" is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency. "PRIME RATE" is Bank's most recently announced "prime rate," even if it is not Bank's lowest rate. "REPAYMENT PERIOD" as to each Equipment Advance, is a period of time equal to thirty-six (36) consecutive months commencing on the first Business Day of the month following the month in which the Funding Date occurs (or commencing on the Funding Date if the Funding Date is the first Business Day of the month). "RESPONSIBLE OFFICER" is each of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower. "SCHEDULE" is any attached schedule of exceptions. "SCHEDULED PAYMENT" is defined in Section 2.2(a). "SUBORDINATED DEBT" is debt incurred by Borrower subordinated to Borrower's indebtedness owed to Bank (pursuant to a subordination agreement entered into between the Bank, the Borrower and (he subordinated creditor), on terms acceptable to Bank. "SUBSIDIARY" of any Person, corporation, partnership, limited liability company, joint venture, or any other business entity of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person. "TOTAL LIABILITIES" is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower's consolidated balance sheet, including all Indebtedness, and current portion of Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all other Subordinated Debt. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed instrument under the laws of the Commonwealth of Massachusetts as of the date first above written. 17 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed instrument under laws of the Commonwealth of Massachusetts as of the day first written above. BORROWER: By: /s/ Karen L. Vergura ------------------------- Name: KAREN L. VERGURA ------------------------- Title: VP, Finance ------------------------- BANK: By: /s/ Michael J. Harevich ------------------------- Name: MICHAEL J. HAREVICH ------------------------- Title: SF VP ------------------------- SILICON VALLEY BANK: By: /s/ Michelle Giannini ------------------------- Name: MICHELLE GIANNINI ------------------------- Title: AVP ------------------------- 17 EXHIBIT A The Financed Equipment being financed with the Equipment Advance as listed below from time to time. Upon the funding of such Equipment Advance, this schedule automatically shall be deemed to be a part of the Collateral. ~~Description of Equipment Make Model Serial # Invoice#~~

19 EXHIBIT B FORM OF LOAN AGREEMENT SUPPLEMENT LOAN AGREEMENT SUPPLEMENT NO. [ ] LOAN AGREEMENT SUPPLEMENT No, [ ], dated _______________________, 2002 ("Supplement"), to the Loan and Security Agreement dated as of ______________________, 2002 (the "Loan Agreement) by and between the undersigned NANOSYS, INC. ("Borrower"), and Silicon Valley Bank ("Bank"). Capitalized terms used herein but not otherwise defined herein are used with the respective meanings given to such terms in the Loan Agreement. To secure the prompt payment by Borrower of all amounts from time to time outstanding under the Loan Agreement, and the performance by Borrower of all the terms contained in the Loan Agreement, Borrower grants Bank, a first priority security interest in each item of equipment and other property described in Exhibit A hereto, which equipment and other property shall be deemed to be additional Financed Equipment and Collateral. The Loan Agreement is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. Exhibit A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached hereto. The proceeds of the Loan should be transferred to Borrower's account with Bank set forth below: Bank Name: Silicon Valley Bank Account No.: ____________________________ Borrower hereby certifies that (a) the foregoing information is true and correct in all material respects and authorizes Bank to endorse in its respective books and records, the Basic Rate applicable to the Funding Date of the Loan contemplated in this Loan) Agreement Supplement and the principal amount set forth in the Loan Terms Schedule; (b) the representations and warranties made by Borrower in the Loan Agreement are true and correct in all material respects on the date hereof and shall be true and correct in all material respects on such Funding Date except that any representation or warranties made as of a specified earlier date shall be true as of such earlier date. No Event of Default has occurred and is continuing under the Loan Agreement. This Supplement may be executed by Borrower and Bank in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. This Supplement is delivered as of this day and year first above written. SILICON VALLEY BANK NANOSYS, INC. By:_________________________________ By:_________________________________ Name:____________________________ Name:____________________________ Title:___________________________ Title:___________________________ Exhibit A - Description of Financed Equipment Annex B - Loan Terms Schedule 20 ANNEX A TO EXHIBIT B The Financed Equipment being financed with the Equipment Advance which this Loan Agreement Supplement is being executed is listed below. Upon the funding of such Equipment Advance, this schedule automatically shall be deemed to be a part of the Collateral. ~~Description of Equipment Make Model Serial # Invoice#~~

21 ANNEX B TO EXHIBIT B LOAN TERMS SCHEDULE #____________ Loan Funding Date: ___________________, 2002 Original Loan Amount: $2,500,000.00 Basic Rate: The Greater of (i) Prime Rate, and one-quarter of one percent (.25%) and (ii) five percent (5.00%) Scheduled Payment Dates and Amounts : One (1) payment of $_______ due_________________________ _______ payment of $_______ due monthly in advance from_____through___. One (1) payment of $_______ due _______________________ Final Payment: An additional amount equal to the Final Payment Percentage multiplied by the Loan Amount, shall be paid on the Maturity Date with respect to such Loan.
Payment No. Payment Date ~~1 2 3 4 - --- 35 [36] - ---~~
*/ The amount of each Scheduled Payment shall change as the Loan Amount changes. 22 EXHIBIT C COMPLIANCE CERTIFICATE TO: SILICON VALLEY BANK FROM: NANOSYS, INC. The undersigned authorized officer of Nanosys, Inc. certifies that under the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for the period ending___________________________ with all required covenants except as noted below and (ii) all representations and warranties in the Agreement art true and correct in all material respects on this date. Attached are the required documents supporting the certification. The Officer certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The Officer acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES ------------------ -------- -------- ~~Monthly financial statements with CC Monthly within 30 days Yes No Annual (CPA Audited) FYE within 120 days Yes No~~
COMMENTS REGARDING EXCEPTIONS: See Attached. BANK USE ONLY Sincerely, Received by: _________________ AUTHORIZED SIGNER ___________________________ SIGNATURE Date: ________________________ ___________________________ Verified: ____________________ TITLE AUTHORIZED SIGNER ___________________________ Date: ________________________ DATE 23 EX-10.8 21 f97636orexv10w8.txt EXHIBIT 10.8 EXHIBIT 10.8 LICENSE AGREEMENT FOR NANOCRYSTAL TECHNOLOGY BETWEEN NANOSYS, INC. AND THE REGENTS OF THE UNIVERSITY OF CALIFORNIA THROUGH THE ERNEST ORLANDO LAWRENCE BERKELEY NATIONAL LABORATORY TABLE OF CONTENTS 1. Background............................................................. 1 2. Definitions............................................................ 1 3. License Grant.......................................................... 3 4. License Issue Fee...................................................... 4 5. Milestone Fee.......................................................... 4 6. Royalties and Payments................................................. 4 7. Performance Requirements............................................... 6 8. Progress and Royalty Reports........................................... 7 9. Books and Records...................................................... 8 10. Life of the Agreement.................................................. 8 11. Termination by Berkeley Lab............................................ 9 12. Termination by Licensee................................................ 9 13. Disposition of Licensed Products upon Termination...................... 9 14. Use Of Names and Nondisclosure of Agreement............................ 9 15. Limited Warranty....................................................... 10 16. Patenting and foreign rights........................................... 11 17. Patent Infringement.................................................... 12 18. Waiver................................................................. 12 19. Assignment............................................................. 13 20. Indemnification........................................................ 13 21. Late Payments.......................................................... 14 22. Notices................................................................ 14 23. U.S. Manufacture....................................................... 15 24. Patent Marking......................................................... 15 25. Government Approval or Registration.................................... 15 26. Export Control Laws.................................................... 15 27. Force Majeure.......................................................... 15 28. Miscellaneous.......................................................... 15 Exhibit 1 Licensed (Exclusive) Patents....................................... 17 Exhibit 2 Licensed (FOU Exclusive) Patents................................... 18

LICENSE AGREEMENT FOR NANOCRYSTAL TECHNOLOGY This license agreement (the "Agreement") is entered into by The Regents of the University of California, Department of Energy contract-operators of the Ernest Orlando Lawrence Berkeley National Laboratory, 1 Cyclotron Road, Berkeley, CA 94720, ("Berkeley Lab"), and Nanosys, Inc., a Delaware corporation ("Licensee") having its principal place of business at 2625 Hanover St., Palo Alto, CA 94304. 1. BACKGROUND 1.1. Certain inventions, generally characterized as nanocrystals and related technology and covered by the Berkeley Lab cases listed herein, (the "Invention"), were made in the course of research at Berkeley Lab by Dr. Paul Alivisatos and colleagues under Berkeley Lab's contract with the United States Department of Energy ("DOE"). 1.2. As DOE sponsored development of the Invention, this Agreement and the resulting license are subject to overriding obligations to the federal government pursuant to the provisions of the applicable law or regulations. 1.3. Berkeley Lab wants the Invention developed and used to the fullest extent so that the general public enjoys the benefits of the government-sponsored research. 1.4. Licensee wants to obtain certain rights from Berkeley Lab for the commercial development, manufacture, use, and sale of the Invention. 1.5. Licensee is a "small business concern" as defined at Section 2 of Public Law 85-536 (15 U.S.C. 632). Therefore the parties agree as follows: 2. DEFINITIONS 2.1. "Effective Date" means November 9, 2002. 2.2. "Field of Use" [*** Redacted] 2.3. "Highly Inflationary Currency" means the currency of any economy with a cumulative inflation rate of 100% or more over the most recent three calendar years, as measured by consumer price indices published by the International Monetary Fund (International Financial Statistics), Washington, D.C. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 1 of 19 2.4. "Licensed (Exclusive) Patents" means Berkeley Lab's interest in any subject matter claimed in or covered by any of the patents or patent applications listed in Exhibit 1. 2.5. "Licensed (FOU Exclusive) Patents" means Berkeley Lab's interest in any subject matter claimed in or covered by any of the patents or patent applications listed in Exhibit 2. 2.6. "Licensed Patents" means Berkeley Lab's interest in any subject matter claimed in or covered by any of the patents or patent applications listed in Exhibits 1 or Exhibit 2, and any additional corresponding foreign patent application or patent for which Licensee has met the requirements of paragraph 16.4; any division, reexamination, continuation, continuation-in-part (excluding new matter contained and claimed in that continuation-in-part), or other application that is a successor to any of the foregoing applications; any patents issuing on any of the foregoing; and all renewals, reissues and extensions thereof. 2.7. "Licensed Product" means any product, service or process that employs or is produced by the practice of any invention claimed in any of Licensed Patents or whose manufacture, use, practice, sale, offer for sale, or importation would constitute, but for the license Berkeley Lab grants to Licensee under this Agreement, an infringement of any Valid Claim in Licensed Patents. 2.8. "Selling Price" [*** Redacted] 2.9. "Sublicensing Income" means amounts received by Licensee from a non-affiliate third party in consideration for the right to make, use, offer for sale, sell, or import Licensed Products, including without limitation amounts received by way of license issue fees, milestone payments, minimum annual royalties and royalties on the sale or distribution of such Licensed Products. Notwithstanding the foregoing, Sublicensing Income shall not include the following: 2.9.1. [*** Redacted] 2.9.2. [*** Redacted] 2.9.3. [*** Redacted] 2.9.4. [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2 of 19 2.10. "Valid Claim" means a claim within (a) an issued, unexpired patent that Berkeley Lab has not disclaimed or otherwise admitted to the relevant patent office or court to be invalid or otherwise unenforceable, and has not been held invalid by a court of competent jurisdiction from which no appeal has been or can be taken or (b) a patent application that has not been pending more than 5 years, provided that Berkeley Lab is pursuing such claim in a good faith belief in its patentability and enforceability upon issuance of a patent containing such claim. 3. LICENSE GRANT 3.1. Subject to the limitations set forth in this Agreement, Berkeley Lab grants to Licensee nontransferable, royalty-bearing licenses, under Licensed Patents to make, have made, use, offer for sale, sell, and import Licensed Products as follows: 3.1.1. limited exclusive for Licensed (Exclusive) Patents; and 3.1.2. limited exclusive and solely within the Field of Use for Licensed (FOU Exclusive) Patents. 3.2. Any license under this Agreement is subject to the following: (a) DOE's royalty-free license for federal government purposes only, and (b) DOE's option to grant licenses either if reasonable steps to commercialize the Invention are not carried out or in order to meet federal regulations. 3.3. Berkeley Lab also grants to Licensee the right to issue, royalty- bearing sublicenses only in the Field of Use to make, have made, use, offer for sale, sell, and import Licensed Products, so long as Licensee has current exclusive rights in the Field of Use for all Licensed Patents covered by the sublicense. 3.4. Any sublicense Licensee grants must be consistent with all the rights and obligations due Berkeley Lab and the United States Government under this Agreement, including, without limitation, the license back to the United States Government. 3.5. Licensee shall provide Berkeley Lab with a copy of each sublicense issued under this Agreement; collect payment of all royalties and payments due Berkeley Lab from sublicenses; and summarize and deliver all reports due Berkeley Lab from sublicenses under Article 8 (PROGRESS AND ROYALTY REPORTS). Sublicenses provided to Berkeley Lab under this section may be provided in redacted form, provided that such redacted sublicenses contain all terms necessary for Berkeley Lab to determine Licensee's compliance with the obligations of this Agreement; and provided further that upon request, Berkeley Lab's representatives can review the sublicenses in their entirety at Licensee's facility. 3.6. If this Agreement terminates for any reason, Licensee will assign to Berkeley Lab, and Berkeley Lab will honor any sublicenses granted hereunder, to the extent that Berkeley Lab's duties under such sublicenses are no greater than those arising under this Agreement. 3.7. Berkeley Lab expressly reserves the right to use the Invention and associated technology for educational and research purposes. 3 of 19 4. LICENSE ISSUE FEE 4.1. Licensee shall pay Berkeley Lab a license issue fee of [*** Redacted]. This license issue fee accrues on the Effective Date, and Licensee shall pay [*** Redacted] of this fee within 30 days of the Effective Date and [*** Redacted] within twelve months of the Effective Date. 4.2. This fee is [*** Redacted] and is [*** Redacted]. 5. MILESTONE FEE 5.1. Following an initial public offering or series of public offerings of Licensee securities which raises in the aggregate at least $5 million or sale of all or substantially all of the assets or equity of Licensee in a transaction(s) worth at least $5 million ("Offering"), Licensee shall pay to Berkeley Lab the equivalent of the price at the Offering of 60,000 shares of Licensee's common stock. Such payments shall be made in installments with one-third payable 9 months from the Offering, one-third payable 18 months from the Offering and one-third payable 26 months from the Offering. Such payments shall include interest from the date of the Offering to the date such payment is made. Interest shall be compounded on the date such payment is made, and shall be charged at the prime lending rate as published in the Wall Street Journal on the date such payment is made. Licensee shall adjust the 60,000 shares to take into account any stock splits or reverse stock splits since the Effective Date. 6. ROYALTIES AND PAYMENTS 6.1. Licensee shall pay to Berkeley Lab an earned royalty of [*** Redacted] % of the Selling Price of each Licensed Product. In no event shall more than one royalty apply to the sale of any given Licensed Product, regardless of the number of Licensed Patents embodied therein. 6.2. [*** Redacted] 6.3. [*** Redacted] 6.4. If Licensee obtains a license from a third party(s) to a patent that must otherwise be infringed by Licensee in order to make the Licensed Products (" Third Party Patent") then Licensee may reduce the [*** Redacted] royalty rate specified in paragraph 6.1 by an amount equal to [*** Redacted] of the royalty Licensee pays the licensor of such Third Party Patent, provided, however, in no case shall the royalty rate paid to Berkeley Lab for Licensed Products be less than [*** Redacted]. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 4 of 19 6.5. For each sublicense, Licensee shall pay Berkeley Lab [*** Redacted]% of Sublicensing Income. If Sublicensing Income arises under an agreement in which both a Licensed Patent and one or more other patent, patent application or copyrighted software program are licensed to a third party by the Licensee, then the Licensee shall in good faith allocate its total compensation under such agreement to either the Licensed Patents or the other patent, patent application or copyrighted software, and such portion allocated to the Licensed Patent(s) shall constitute the Sublicensing Income; provided, however, that Licensee shall (i) promptly notify Berkeley Lab of any such agreement for which it intends to apportion the income; (ii) provide Berkeley Lab with a copy of that agreement (if it has not already done so pursuant to paragraph 3.5) together with a written report explaining its apportionment for the Sublicensing Income; (iii) consider and respond in good faith to Berkeley Lab's comments on the apportionment; and (iv) pay Berkeley Lab no less than [*** Redacted]% of the total amounts received by Licensee from the third party in consideration for a sublicense for Licensed Patents. 6.6. Licensee shall pay to Berkeley Lab by [*** Redacted] of each year the difference between the earned royalties for that calendar year Licensee has already paid to Berkeley Lab and the minimum annual royalty set forth in the following schedule. Berkeley Lab shall credit that minimum annual royalty paid against the earned royalty due and owing for the calendar year in which Licensee made the minimum payment.
Calendar Year Minimum Annual Royalty - ------------- ---------------------- 2002 $ [*** Redacted] 2003 $ [*** Redacted] 2004 $ [*** Redacted] 2005 $ [*** Redacted] 2006 $ [*** Redacted] 2007 $ [*** Redacted] 2008 $ [*** Redacted] 2009 and each year thereafter $ [*** Redacted]
6.7. Licensee shall send payment for royalties accruing to Berkeley Lab [*** Redacted] together with its royalty report under paragraph 8.3. 6.8. Licensee shall make checks payable to "The Regents of the University of California (Berkeley Lab/L-02-1364)." Licensee shall pay Berkeley Lab only in United States dollars. If a Licensed Product is sold for currency other than United States dollars (not including Highly Inflationary Currency), Licensee shall first determine the earned royalties in the foreign currency of the country in which the Licensed Product was sold and then convert them into equivalent United States dollars at the closing exchange rate published by The Wall Street Journal on the last business day of the reporting period. If a Licensed Product is sold for a Highly Inflationary Currency, Licensee shall convert the sales subject to royalties into equivalent United States funds using the closing exchange rates in effect on the date of invoicing (or if no invoicing, of delivery) as published by The Wall Street Journal. Licensee shall quote the exchange rate in the Continental method (local currency per U.S. dollar). 6.9. Licensee may not reduce royalties payable by any taxes, fees, other charges imposed on the remittance of royalty income. Licensee is also responsible for all bank transfer charges. 6.10. If Licensee cannot promptly remit any royalties for sales in any country where a Licensed Product is sold because of legal restrictions, upon notice to Berkeley Lab, Licensee may deposit in United States funds royalties due Berkeley Lab to Berkely Lab's account in a bank or other depository in that country. If Licensee is not permitted to deposit those payments *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 5 of 19 in U.S. funds under the laws of that country, Licensee may deposit those payments in the local currency to Berkeley Lab's account in a bank or other depository in that country. 6.11. If a court of competent jurisdiction and last resort holds invalid any patent or any of the patent claims within Licensed Patent in a final decision from which no appeal has or can be taken, Licensee's obligation to pay royalties based on that patent or claim will cease as of the date of that final decision. Licensee, however, shall pay any royalties that accrued before that decision or that are based on another patent or claim not involved in that decision. 6.12. Licensee has no duty to pay Berkeley Lab royalties under this Agreement on a Licensed Product Licensee sells to the United States Government including any United States Government agency. Licensee shall reduce the amount charged for a Licensed Product sold to the United States Government by an amount equal to the royalty otherwise due Berkeley Lab. 7. PERFORMANCE REQUIREMENTS 7.1. Licensee shall diligently proceed with the development, manufacture and sale of Licensed Products and shall diligently endeavor to market them within a reasonable time after the Effective Date in quantities sufficient to meet the market demand. 7.2. Licensee shall make best efforts to obtain all necessary governmental approvals for the manufacture, use and sale of Licensed Products. 7.3. Licensee is entitled to exercise prudent and reasonable business judgment in meeting its performance requirements under this Agreement. 7.4. If Licensee is unable to perform any of the following, then Berkeley Lab may either terminate this Agreement or reduce a limited exclusive license to a nonexclusive license. 7.4.1. by [*** Redacted] from the Effective Date, develop a process for the [*** Redacted] of [*** Redacted] and/or [*** Redacted] for prototype development; such [*** Redacted] must be at research quantities sufficient for prototype development of the Licensed Product(s) specified in the Licensee's progress reports submitted pursuant to paragraph 8.1, with [*** Redacted], yielding material with [*** Redacted] and [*** Redacted] of [*** Redacted]; 7.4.2. by [*** Redacted] from the Effective Date, develop application specific [*** Redacted] procedures for these materials, including [*** Redacted] with [*** Redacted], [*** Redacted], and [*** Redacted] and [*** Redacted]; 7.4.3. by [*** Redacted] from the Effective Date, develop [*** Redacted], which includes at least [*** Redacted], or equivalent, e.g., [*** Redacted], [*** Redacted] etc., of [*** Redacted] containing [*** Redacted] and/or [*** Redacted] with [*** Redacted] and [*** Redacted] and [*** Redacted]; 7.4.4. by [*** Redacted] from the Effective Date, perform and deliver to Berkeley Lab a market assessment of major benefits of Licensed Product materials versus existing commercial approaches; 7.4.5. by [*** Redacted] from the Effective Date, develop a [*** Redacted] for either [*** Redacted] or [*** Redacted] of amounts of [*** Redacted] and/or [*** Redacted] that are consistent with the Licensed Products identified as initial products by the market assessment provided under paragraph 7.4.4; *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 6 of 19 7.4.6. by [*** Redacted] from the Effective Date, develop initial prototypes demonstrating [*** Redacted] functionality of [*** Redacted] and/or [*** Redacted] in Licensed Products, for example, [*** Redacted] and [*** Redacted] and related devices; for [*** Redacted], prototype devices with [*** Redacted] with [*** Redacted]; for [*** Redacted], [*** Redacted]; 7.4.7. by [*** Redacted] from the Effective Date, develop and provide to Berkeley Lab a technical and commercialization plan for applications in [*** Redacted], for example, [*** Redacted] and [*** Redacted]; 7.4.8. by [*** Redacted] from the Effective Date, enter into a letter of intent or other contract with an appropriate commercialization partner for Licensed Products; 7.4.9. by [*** Redacted] from the Effective Date, make commercial sales of Licensed Product; or 7.4.10. [*** Redacted], reasonably fill the market demand for Licensed Products following commencement of commercial sales 7.5. Prior to termination of this Agreement or reduction of a limited exclusive license to a nonexclusive license for failure to meet any of the performance requirements set forth in paragraphs 7.4.1-7.4.10, or as mutually agreed upon, Licensee and Berkeley Lab shall meet within [*** Redacted] of Licensee's request to discuss Licensee's past and planned efforts to meet such performance requirements. That meeting shall take place at Berkeley Lab or other mutually agreed location, and shall only be required if Licensee makes that request within [*** Redacted] of Berkeley Lab's notice of termination or reduction to nonexclusive license. To the extent that Licensee demonstrates it has made reasonable efforts to meet such performance requirements, and by mutual written consent, the parties shall amend or extend the requirements of paragraphs 7.4.1 -7.4.10 at the written request of Licensee in response to legitimate business or technical reasons. 8. PROGRESS AND ROYALTY REPORTS 8.1. Beginning [*** Redacted] and [*** Redacted] thereafter, Licensee shall submit to Berkley Lab a progress report covering Licensee's activities related to the development and testing of all Licensed Products and the obtaining of the governmental approvals necessary for marketing. Licensee shall make these progress reports until commercial sales of the Licensed Product start. 8.2. The progress reports Licensee submits under paragraph 8.1 must include, but not be limited to, the following topics: 8.2.1. summary of work completed related to the requirements of paragraph 7.4; 8.2.2. key scientific discoveries; 8.2.3. summary of work in progress; 8.2.4. current schedule of anticipated milestones; and 8.2.5. market plans for introduction of Licensed Products; and 8.2.6. number of full-time equivalent employees or agents (FTEs) working on the development of Licensed Products and overall number of FTEs employed by Licensee. 8.3. Upon the earlier of [*** Redacted] after the Effective Date or after the first commercial sale of a Licensed Product anywhere in the world, Licensee shall make [*** Redacted] royalty reports to Berkeley Lab on or before [*** Redacted] of each [*** Redacted]. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 7 of 19 Each royalty report must cover the most recently completed [*** Redacted] and must show for all sales (or other transfer in accordance with paragraph 2.8): 8.3.1. the Selling Price of each type of Licensed Product sold by Licensee; 8.3.2. the number of each type of Licensed Product sold; 8.3.3. the royalties, in U.S. dollars, payable under this Agreement on those sales; 8.3.4. the exchange rates used in calculating the royalty due; 8.3.5. the royalties on government sales that otherwise would have been due under paragraph 6.12; and 8.3.5. for each sublicense, if any: (1) the sublicensee; (2) the information set forth in paragraphs 8.3.1 to 8.3.5 for that sublicensee's sales or other disposition of Licensed Product. 8.4. If no sales of Licensed Products have been made during any required reporting period, Licensee shall make a statement to this effect. 9. BOOKS AND RECORDS 9.1. Licensee shall keep books and records accurately showing all Licensed Products manufactured, used, sold, imported or otherwise disposed of under the terms of this Agreement. Licensee shall preserve those books and records for at least [*** Redacted] years, from the date of the royalty payment to which they pertain and shall open them to inspection by representatives or agents of Berkeley Lab at reasonable times. 9.2. Berkeley Lab shall bear the fees and expenses of Berkeley Lab's representatives performing the examination of the books and records. But if the representatives discover an error in underpaying royalties to Berkeley Lab of more than [*** Redacted]% of the total royalties due for any year, then Licensee shall bear the fees and expenses of these representatives and the difference between the earned royalties and the reported royalties (which shall be subject to the provisions of Article 21 (LATE PAYMENTS)). 10. LIFE OF THE AGREEMENT 10.1. Unless otherwise terminated by operation of law or by acts of the parties in accordance with the terms of this Agreement, this Agreement is in force from the Effective Date and expires concurrently with the last-to-expire issued Licensed Patent. 10.2. Any termination of this Agreement shall not affect the rights and obligations set forth in the following Articles: Article 9 Books and Records Article 13 Disposition of Licensed Products on Hand upon Termination Article 14 Use of Names and Trademarks and Confidentiality Article 15 Limited Warranty Article 20 Indemnification Article 26 Export Control Laws *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 8 of 19 10.3. Termination does not affect in any manner any rights of Berkeley Lab arising under this Agreement before the termination. 11. TERMINATION BY BERKELEY LAB 11.1. Subject to paragraph 7.5, if Licensee violates or fails to perform any material term of this Agreement, then Berkeley Lab may give written notice of such default ("Default Notice") to Licensee. If Licensee fails to cure that default and provide Berkeley Lab with reasonable evidence of the cure within [*** Redacted] of the Default Notice, Berkeley Lab may terminate this Agreement and the licenses granted by a second written notice ("Termination Notice") to Licensee. If Berkeley Lab sends a Termination Notice to Licensee, this Agreement automatically terminates on the effective date of the Termination Notice. 12. TERMINATION BY LICENSEE 12.1. Licensee at any time may terminate this Agreement in whole or as to any portion of Licensed Patents by giving written notice to Berkeley Lab. Licensee's termination notice must indicate whether Licensee has any inventory of Licensed Products. Licensee's termination of this Agreement will be effective [*** Redacted] after its notice. 13. DISPOSITION OF LICENSED PRODUCTS UPON TERMINATION 13.1. Within [*** Redacted] of termination of this Agreement for any reason, Licensee shall provide Berkeley Lab with a written inventory of all Licensed Products in process of manufacture or in stock. Licensee shall dispose of those Licensed Products within [*** Redacted] of termination. The sale of any Licensed Product within the [*** Redacted] is subject to the terms of this Agreement. 14. USE OF NAMES AND CONFIDENTIALITY 14.1. In accordance with California Education Code Section 92000, Licensee shall not use in advertising, publicity or other promotional activities any name, trade name, trademark, or other designation of the University of California, nor shall Licensee so use "Ernest Orlando Lawrence Berkeley National Laboratory" or "Department of Energy" (including any contraction, abbreviation, or simulation of any of the foregoing) without Berkeley Lab's prior written consent. 14.2. Neither party may disclose the terms of this Agreement to a third party without express written permission of the other party, except when required under either the California Public Records Act or other applicable law or court order. Notwithstanding the foregoing, disclosures of the terms of this Agreement are permitted as follows: 14.2.1. as necessary for Licensee to secure financing through private markets, engage in corporate partnership discussions, or comply with applicable accounting requirements, or securities laws or regulations, Licensee may disclose the terms of this Agreement under a written confidentiality agreement with terms as protective as those of this Article 14; 14.2.2. as necessary for Licensee to publicly disclose terms of this Agreement in conjunction with a public financing or to comply with applicable securities laws or regula- *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 9 of 19 tions, after Licensee has provided Berkeley Lab with notice of such disclosure with sufficient opportunity to seek redaction of certain terms of the Agreement; and 14.2.3. Berkeley Lab may disclose the existence of this Agreement and the extent of the grant in Article 3 (License Grant), but shall not otherwise disclose the terms of this Agreement, except to the DOE. 14.3 All information provided to Berkeley Lab by Licensee under this agreement, including but not limited to information listed in Section 7.4 of this Agreement, e.g., sublicense agreements, technical reports, development plans, marketing evaluations and reports, and royalty reports, is deemed to be Confidential Information. 14.3.1 Berkeley Lab will maintain the confidentiality of the Confidential Information and will not disclose the Confidential Information to any third party, and will not use the Confidential Information for any purpose other than as necessary to administer this Agreement. 14.3.2 The obligations of Berkeley Lab with respect to Confidential Information will not apply to information disclosed under this agreement to the extent such information: (a) is generally known to the public at the time of disclosure or becomes generally known through no wrongful act on the part of Berkeley Lab; (b) is in Berkeley Lab's possession at the time of disclosure other than as a result of prior disclosure by Licensee or a breach of any legal obligation by Berkeley Lab or a third party; (c) becomes known to Berkeley Lab through disclosure by sources other than Licensee having no duty of confidentiality to Licensee, whether direct or indirect, with respect to such information and having the legal right to disclose such information; (d) is independently developed by Berkeley Lab without reference to or reliance upon the information as can be documented by written records; or (e) is required to be disclosed by Berkeley Lab to comply with applicable laws or governmental regulations, provided that the Berkeley Lab provides prior written notice of such disclosure to the Licensee and takes reasonable and lawful actions to avoid and/or minimize the extent of such disclosure. 14.3.3 The provisions of this Article 14 relating to confidentiality shall be in force and effect until at least [*** Redacted] following the termination of this Agreement. 15. LIMITED WARRANTY 15.1. Berkeley Lab warrants to Licensee that it has the lawful right to grant this license. 15.2. This license and the associated Invention are provided WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. BERKELEY LAB MAKES NO REPRESENTATION OR WARRANTY THAT LICENSED PRODUCTS WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT. 15.3. IN NO EVENT WILL BERKELEY LAB BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF THE INVENTION OR LICENSED PRODUCTS. 15.4. Nothing in this Agreement may be construed as: *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 10 of 19 15.4.1. a warranty or representation by Berkeley Lab as to the validity of Licensed Patents or scope of any of Berkeley Lab's rights in Licensed Patents; 15.4.2. a warranty or representation that anything made, used, sold or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of any patents other than Licensed Patents; 15.4.3. an obligation to bring or prosecute actions or suits against third parties for patent infringement, except as specifically provided for in Article 17 (Patent Infringement); or 15.4.4. a grant by implication, estoppel or otherwise of any license or rights under any patents of Berkeley Lab other than Licensed Patents, regardless of whether such patents are dominant or subordinate to Licensed Patents; 15.4.5. an obligation to furnish any know-how not provided in Licensed Patents. 16. PATENTING AND FOREIGN RIGHTS 16.1. Berkeley Lab shall prepare, file, prosecute and maintain patent applications and patents relating to inventions included in the Licensed Patents using patent counsel of its choice, and shall consult and cooperate with Licensee in connection therewith. Berkeley Lab shall copy Licensee promptly on all U.S.P.T.O. and foreign patent office actions, final drafts of proposed submissions and copies of actual submissions, to the extent reasonably practicable, so that Licensee shall be informed of the continuing prosecution, and have an opportunity to review and comment on such office actions and draft submissions. Notwithstanding the foregoing, Berkeley Lab may take any action useful or necessary to obtain and preserve its patent rights in Licensed Patents. Berkeley Lab shall use all reasonable efforts to amend any patent application to include claims and/or legal arguments reasonably requested by Licensee to protect the Licensed Products Licensee contemplates selling. Licensee shall keep confidential documents from patent offices and patent related filings and associated drafts. 16.2. licensee agrees to reimburse Berkeley Lab for Berkeley Lab's out-of-pocket patent preparation, filing, prosecution and maintenance costs as follows: 16.2.1. [*** Redacted]% of all such costs for Licensed (Exclusive) Patents; and 16.2.2. [*** Redacted]% of all such costs for Licensed (FOU Exclusive) Patents. 16.3. Berkeley Lab shall provide Licensee with documentation of patenting costs incurred when invoicing Licensee for those costs. Licensee shall pay Berkeley Lab within [*** Redacted] of receiving the invoice. Licensee shall also pay Berkeley Lab for reimbursement of such patent costs incurred prior to the Effective Date within [*** Redacted] of invoicing; such costs are estimated to be approximately [*** Redacted]. Licensee's obligation to reimburse patent costs continues for so long as this Agreement remains in effect, provided, however, that Licensee may terminate its obligations under this Agreement with respect to any given patent application or patent upon [*** Redacted] written notice to Berkeley Lab. Berkeley Lab shall use reasonable efforts to curtail patent costs when such a notice is received from Licensee. After such notice or when this Agreement terminates, Berkeley Lab may continue prosecution and/or maintenance of those application(s) or patent(s) at its sole discretion and expense; provided, however, that Licensee will have no further license or other right to them. 16.4. Licensee may request that Berkeley Lab seek patent protection on the Licensed Patents in foreign countries if available. Berkeley Lab has no obligation to take action to file foreign patent applications unless Licensee provides written notice to Berkeley Lab at least [*** Redacted] before any applicable bar and that notice states which countries, regions or Patent *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 11 of 19 Cooperation Treaty filing Licensee desires. If Licensee timely provides such notice, then Berkeley Lab shall timely make such foreign filings. The absence of the required notice from Licensee to Berkeley Lab acts as an election not to secure foreign rights. 16.5. Berkeley Lab may file patent applications at its own expense in any country in which Licensee has not elected to secure patent rights. Those applications and resultant patents shall not be subject to this Agreement. 16.6. Licensee shall promptly notify Berkeley Lab of any change in its status as a small business concern and of the first sublicense granted to an entity that does not qualify as a small business concern. A "small business concern" as used in this paragraph is as defined by the U.S. Patent and Trademark Office; currently, that is a company whose number of employees, including affiliates, does not exceed 500 persons (13 C.F.R. 121.802). 17. PATENT INFRINGEMENT 17.1. If Licensee learns of the substantial infringement of any of Licensed Patents, Licensee shall so inform Berkeley Lab in writing and shall provide Berkeley Lab with reasonable evidence of the infringement. During the period and in a jurisdiction where Licensee has exclusive rights under this Agreement, neither party may notify a third party of the infringement of any of Licensed Patents without first obtaining written consent of the other party, which consent shall not be unreasonably denied. Both parties shall use their best efforts in cooperation with each other to terminate such infringement without litigation. 17.2. Licensee may request that Berkeley Lab take legal action against the infringement of Licensed (Exclusive) Patents or Licensed (FOU Exclusive) Patents in the Field of Use in which Licensee has current exclusive rights under this Agreement. Licensee shall make that request in writing and include reasonable evidence of the infringement and damages to Licensee. If the infringing activity has not been abated within [*** Redacted] of that request, Berkeley Lab may elect to: (a) commence suit on its own account; or (b) refuse to participate in the suit. Berkeley Lab shall give written notice of its election to Licensee by the end of the [*** Redacted] after receiving notice of the request from Licensee. Licensee may thereafter bring suit for patent infringement only if Berkeley Lab elects not to commence suit and if the infringement occurred during the period and in a jurisdiction where Licensee has exclusive rights under this Agreement. If, however, Licensee elects to bring suit in accordance with this paragraph, Berkeley Lab may thereafter join such suit at its own expense. 17.3. Such legal action as is decided upon must be at the expense of the party on account of whom suit is brought and all consequent recoveries belong to that party. But if Berkeley Lab and Licensee jointly bring legal action and fully participate in it, the parties must jointly share both the expense and all recoveries in proportion to the share of expense each party pays. 17.4. Each party shall cooperate with the other in litigation proceedings instituted under this Agreement but at the expense of the party on account of whom suit is brought. The party bringing the suit will control that litigation, except that Berkeley Lab may elect to be represented by counsel of its choice in any suit brought by Licensee. 18. WAIVER 18.1. The waiver of any breach of any term of this Agreement does not waive any other breach of that or any other term. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 12 of 19 19. ASSIGNMENT 19.1. This Agreement is binding upon and shall inure to the benefit of Berkeley Lab, its successors and assigns. Upon written notice to Berkeley Lab, Licensee may assign this Agreement to a Licensee wholly owned subsidiary, or in conjunction with a sale of all or substantially all of the assets of Licensee. Any other attempt by Licensee to assign this Agreement is void unless Licensee obtains the prior written consent of Berkeley Lab; Berkeley Lab shall not unreasonably withhold that consent. 20. INDEMNIFICATION 20.1. Licensee agrees to indemnify, hold harmless and defend Berkeley Lab and the U.S. Government and their officers, employees, and agents; the sponsors of the research that led to the Invention; and the inventors of the patents and patent applications in Licensed Patents and their employers against any and all claims, suits, losses, damage, costs, fees, and expenses resulting from or arising out of exercise of this license or any sublicense, except to the extent indemnification of Berkeley Lab is due to the gross negligence of Berkeley Lab. Licensee shall pay all costs incurred by Berkeley Lab in enforcing this indemnification, including reasonable attorney fees. The indemnity set forth herein shall apply only if Licensee shall have been given an opportunity, to the maximum extent afforded by applicable laws, rules, or regulations, to participate in and control its defense. No settlement for which Licensee would be responsible shall be made without Licensee's consent unless required by final decree of a court of competent jurisdiction. 20.2. Licensee, at its sole expense, shall insure its activities in connection with the work under this Agreement and obtain and keep in force Comprehensive or Commercial Form General Liability Insurance (contractual liability and products liability included) with limits as follows: 20.2.1. Each Occurrence $[*** Redacted] 20.2.2. Products/Completed Operations Aggregate $[*** Redacted] 20.2.3. Personal and Advertising Injury $[*** Redacted] 20.2.4. General Aggregate (commercial form only) $[*** Redacted] 20.3. The coverages and limits referred to in this Article 20 do not in any way limit the liability of Licensee. Licensee shall furnish Berkeley Lab with certificates of insurance, including renewals, evidencing compliance with all requirements at least [*** Redacted] prior to the first commercial sale, use, practice or distribution of a Licensed Product. 20.3.1. If such insurance is written on a claims-made form, coverage shall provide for a retroactive date of placement on or before the Effective Date. 20.3.2. Licensee shall maintain the general liability insurance specified during: (a) the period that the Licensed Product is being commercially distributed or sold by Licensee or by a sublicensee or agent of Licensee, and (b) a reasonable period thereafter, but in no event less than [*** Redacted]. 20.4. The insurance coverage of paragraph 20.2 must: 20.4.1. Provide for [*** Redacted] advance written notice to Berkeley Lab of cancellation or of any modification. 20.4.2. Indicate that DOE, "The Regents of the University of California" and its officers, employees, students, agents, are endorsed as additional insureds. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 13 of 19 20.4.3. Include a provision that the coverages are primary and do not participate with, nor are excess over, any valid and collectible insurance or program of self-insurance carried or maintained by Berkeley Lab. 21. LATE PAYMENTS 21.1 If Licensee does not make a payment to Berkeley Lab when due, Licensee shall pay to Berkeley Lab such reasonable administrative fees and interest as Berkeley Lab generally charges third parties on overdue accounts. 22. NOTICES 22.1. Any payment, notice or other communication this Agreement requires or permits either party to give must be in writing to the appropriate address given below, or to such other address as one party designates by written notice to the other party. The parties deem payment, notice or other communication to have been properly given and to be effective (a) on the date of delivery if delivered in person; (b) on the fourth day after mailing if mailed by first-class mail, postage paid; (c) on the second day after delivery to an overnight courier service such as Federal Express, if sent by such a service; or (d) upon confirmed transmission by telecopier. The parties' addresses are as follows: For Berkeley Lab: Lawrence Berkeley National Laboratory Technology Transfer Department Mailstop 90-1070 One Cyclotron Road Berkeley, California 94720 Attention: Licensing Manager Fax: 510/486-6457 Telephone: 510/486-6467 e-mail: viwolinsky@lbl.gov For Licensee: Nanosys, Inc. 2625 Hanover St. Palo Alto, Ca 94304 Attention: Larry Bock, CEO Fax: 650/ 846-2501 Telephone: 650/ 846-2500 e-mail: lbock@nanosysinc.com With a copy to: Michael O' Donnell, Esq. Wilson, Sonsini, Goodrich and Rosati 650 Page Mill Road Palo Alto, CA 94304 14 of 19 23. U.S. MANUFACTURE 23.1. Licensee shall have Licensed Products produced for sale in the United States manufactured substantially in the United States so long as Licensee has current exclusive rights in the Field of Use. 24. PATENT MARKING 24.1. Licensee shall mark all Licensed Products made, used or sold under this Agreement, or their containers, in accordance with the applicable patent marking laws and to the extent reasonably practicable. 25. GOVERNMENT APPROVAL OR REGISTRATION 25.1. If the law of any nation requires that any governmental agency either approve or register this Agreement or any associated transaction, Licensee shall assume all legal obligation to do so. Licensee shall notify Berkeley Lab if it becomes aware that this Agreement is subject to a U.S. or foreign government reporting or approval requirement. Licensee shall make all necessary filings and pay all costs, including fees, penalties, and all other costs associated with such reporting or approval process. 26. EXPORT CONTROL LAWS 26.1. Licensee shall observe all applicable United States and foreign laws and regulations with respect to the transfer of Licensed Products and related technical data, including, without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations. 27. FORCE MAJEURE 27.1. If a party's performance required under this Agreement is rendered impossible or unfeasible due to any catastrophes or other major events beyond its reasonable control, including, without limitation, the following, the parties are excused from performance: war, riot, and insurrection; laws, proclamations, edicts, ordinances or regulations; strikes, lockouts or other serious labor disputes; and floods, fires, explosions, or other natural disasters. When such events abate, the parties' respective obligations under this Agreement must resume. 28. MISCELLANEOUS 28.1. The headings of the several sections are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 28.2. This Agreement is not binding upon the parties until it is signed below on behalf of each party. 28.3. No amendment or modification hereof shall be valid or binding upon the parties unless made in writing and signed on behalf of each party. 15 of 19 28.4. This Agreement embodies the entire and final understanding of the parties on this subject. It supersedes any previous representations, agreements, or understandings, whether oral or written. 28.5. If a court of competent jurisdiction holds any provision of this Agreement invalid, illegal or unenforceable in any respect, this Agreement must be construed as if that invalid or illegal or unenforceable provision is severed from the Agreement, provided, however, that the parties shall negotiate in good faith substitute enforceable provisions that most nearly effect the parties' intent in entering into this Agreement. 28.6. This Agreement must be interpreted under California law, without giving effect to any choice of law rules that would result in the application of laws of any jurisdiction other than California. Berkeley Lab and Licensee execute this Agreement in duplicate originals through their duly authorized respective officers in one or more counterparts, that taken together, are but one instrument. THE REGENTS OF THE UNIVERSITY OF NANOSYS, INC. CALIFORNIA, THROUGH THE ERNEST ORLANDO LAWRENCE BERKELEY NATIONAL LABORATORY By /s/ Piermaria Oddone By /s/ Lawrence Bock --------------------------------- ----------------------------- (Signature) (Signature) By Piermaria Oddone By Lawrence Bock (Please Print) Title Deputy Laboratory Director Title President Date 10/11/02 Date 10/15/02 Approved as to form /s/ Glenn R. Woods --------------------------- GLENN R. WOODS LAWRENCE BERKELEY NATIONAL LABORATORY 16 of 19 EXHIBIT 1 LICENSED (EXCLUSIVE) PATENTS BERKELEY LAB CASE NUMBER PATENT APPLICATION/ PATENT ~~[*** Redacted]~~
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 17 of 19 EXHIBIT 2 LICENSED (FOU EXCLUSIVE) PATENTS BERKELEY LAB CASE NUMBER PATENT APPLICATION/ PATENT ~~[*** Redacted]~~
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 18 of 19 ~~[*** Redacted]~~

- ------------------------ * If Berkeley Lab within [*** Redacted] from the Effective Date has not licensed to any third party the exclusions to the Field of Use for these Berkeley Lab case numbers [*** Redacted] and [*** Redacted] nor provided written notice to Licensee that Berkeley Lab is in the process of doing so, then such cases shall automatically become Licensed (Exclusive) Patents. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 19 of 19 EX-10.8.1 22 f97636orexv10w8w1.txt EXHIBIT 10.8.1 EXHIBIT 10.8.1 AMENDMENT A TO LICENSE AGREEMENT This amendment agreement (the "Amendment A") is entered into by the parties to the existing license agreement effective November 9, 2002 (the "Prior Agreement") between The Regents of the University of California, Department of Energy contract-operators of the Ernest Orlando Lawrence Berkeley National Laboratory, 1 Cyclotron Road, Berkeley, CA 94720, ("Berkeley Lab"), and Nanosys, Inc., a Delaware corporation ("Licensee") having its principal place of business at 2625 Hanover St., Palo Alto, CA 94304. For good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, the Berkeley Lab and Licensee agree as follows: I. BACKGROUND The Berkeley Lab and Licensee are parties to the Prior Agreement (Berkeley Lab reference L-03-1364) relating generally to certain inventions characterized as nanocrystals and related technology. The Berkeley Lab and Licensee would like to amend the Prior Agreement by way of this Amendment A to include license rights to certain new inventions made in the course of research at Berkeley Lab by [*** Redacted] [*** Redacted] under Berkeley Lab's contract with the United States Department of Energy ("DOE"), relating generally to [*** Redacted] applications of [*** Redacted] and related technology. II. AMENDMENT FEE Licensee shall pay to the Berkeley Lab an Amendment Fee in the amount of [*** Redacted], which accrues upon execution of this Amendment, with [*** Redacted] being payable within [*** Redacted] of the execution of this Amendment, and the remaining [*** Redacted] being payable within [*** Redacted] of the execution date of this Amendment. III. AMENDMENTS TO THE PRIOR AGREEMENT A. Paragraph 5.1 of the Prior Agreement is hereby deleted in its entirety and replaced with the following amended paragraph 5.1: 5.1 Following an initial public offering or series of public offerings of Licensee securities which raises in the aggregate at least $5 million or sale of all or substantially all of the assets or equity of Licensee in a *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. transaction(s) worth at least $5 million ("Offering"), Licensee shall pay to Berkeley Lab the equivalent of the price at the Offering of 70,000 shares of Licensee's common stock. Such payments shall be made in installments with one-third payable 9 months from the Offering, one-third payable 18 months from the Offering and one-third payable 26 months from the Offering. Such payments shall include interest from the date of the Offering to the date such payment is made. Interest shall be compounded on the date such payment is made, and shall be charged at the prime lending rate as published in the Wall Street Journal on the date such payment is made. Licensee shall adjust the 70,000 shares to take into account any stock splits or reverse stock splits since the Effective Date. B. Paragraph 7.4 of the Prior Agreement is hereby amended to insert after paragraph 7.4.l0. the following additional paragraphs: 7.4.11 by [*** Redacted] from the Effective Date, have expended at least [*** Redacted] in the aggregate for direct costs in research and development for technology directly related to [*** Redacted] applications that use Licensed Patents; 7.4.12 by [*** Redacted] from the Effective Date, provide Berkeley Lab with a commercialization plan for [*** Redacted] devices based upon the Licensed Patents; 7.4.13 by [*** Redacted] from the Effective Date, produce in Licensee's facility, a working prototype [*** Redacted] device with at least [*** Redacted]; 7.4.14 by [*** Redacted] from the Effective Date, make commercial sales of Licensed Products that are [*** Redacted] devices C. Paragraph 9.1 of the Prior Agreement is hereby deleted in its entirety and replaced with the following amended paragraph 9.1: 9.1 Licensee shall keep books and records accurately showing all work performed in satisfaction of Article 7 and all Licensed Products manufactured, used, sold or imported under the terms of this Agreement, including without limitation books and records related to licenses for Third Party Patents under paragraph 6.4. Licensee shall preserve those *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2 books and records for at least [*** Redacted] years from the date of the work performed or the royalty payment to which they pertain and shall open them to inspection by representatives or agents of Berkeley Lab at reasonable times. Licensee shall render all assistance reasonably requested by Berkeley Lab for the purposes of carrying out such inspections and examination of Licensee's royalty payments and performance under Article 7. D. Exhibit 1 and Exhibit 2 of the Prior Agreement are hereby deleted in their entirety and replaced with the attached amended Exhibit 1 and Exhibit 2. IV. NO OTHER AMENDMENTS Unless expressly amended herein or by subsequent amendments agreed to by the parties in a signed written amendment, all other terms of the Prior Agreement, including but not limited to terms related to interpretation and enforcement of the Prior Agreement, shall remain in full force and effect as originally agreed to in the Prior Agreement, and shall apply equally to the terms of this Amendment A. Berkeley Lab and Licensee execute this Agreement in duplicate originals through their duly authorized respective officers in one or more counterparts, that taken together, are but one instrument. THE RECENTS OF THE UNIVERSITY NANOSYS, INC. OF CALIFORNIA, THROUGH THE ERNEST ORLANDO LAWRENCE BERKELEY NATIONAL LABORATORY By /s/ Piermaria Oddone By /s/ Lawrence Bock ------------------------------- -------------------------- (Signature) (Signature) By Piermaria Oddone By Lawrence Bock Title Deputy Laboratory Director Title President Date 3/18/03 Date 3/20/03 Approved as to form /s/ Glenn R. Woods --------------------- GLENN R. WOODS LAWRENCE BERKELEY NATIONAL LABORATORY *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 3 EXHIBIT 1 LICENSED (EXCLUSIVE) PATENTS BERKELEY LAB CASE NUMBER PATENT APPLICATION/PATENT [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. EXHIBIT 2 LICENSED (FOU EXCLUSIVE) PATENTS BERKELEY LAB PATENT APPLICATION/PATENT CASE NUMBER [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. EX-10.9 23 f97636orexv10w9.txt EXHIBIT 10.9 EXHIBIT 10.9 DEVELOPMENT AGREEMENT This DEVELOPMENT AGREEMENT ("Agreement") dated and effective as of November 18, 2002 ("Effective Date"), is entered into between Nanosys, Inc. ("Nanosys"), a Delaware corporation having offices at 2625 Hanover St., Palo Alto, CA 94304, and Matsushita Electric Works, Ltd. ("MEW"), a Japanese corporation having offices at 1048, Kadoma, Osaka 571-8686, Japan. WITNESSETH: WHEREAS, Nanosys possesses certain proprietary technology, know how and experience relating to the design, prototype development, development and manufacture of nanotechnology enabled systems in the field of solar cells; WHEREAS, MEW possesses certain proprietary technology, know how and experience relating to the development, manufacture and commercialization of Building Materials (as defined below) in Asia; WHEREAS, both parties desire to collaborate to investigate developing OPVs for use in Building Materials in Asia, as set forth herein; NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereby agree as follows: ARTICLE 1 -- DEFINITIONS For purposes of the Agreement, the terms defined in this Article I shall have the respective meanings set forth below: 1.1 "Asia" shall mean the countries of: [*** Redacted]. 1.2 "Background Technology" shall mean each party's technology, know-how, information and intellectual property rights disclosed, embodied or incorporated in the items provided by one party to the other party hereunder, which had existed prior to the Effective Date or were conceived, developed or otherwise made during the term of this Agreement outside of the Development Project and independent of the other party's Background Technology. 1.3 "Building Materials" shall mean materials primarily directed for use in the construction or fabrication of commercial, residential or other buildings or similar outdoor structures. Notwithstanding the foregoing, Building Materials shall exclude without limitation materials primarily directed for use in consumer products, portable and/or mobile power sources or structures, commercial power generation or supply, or for extraterrestrial applications. 1.4 "Development Goals" shall mean the development goals for each party under Development Project as set forth in Appendix A attached hereto. 1.5 "Development Period" shall mean the period commencing upon Nanosys' receipt of the Two Million United States Dollars (U.S. $2,000,000) payment set forth in Section 3.1, and unless terminated earlier upon termination of this Agreement pursuant to Article 6 or extended by the mutual written agreement of the parties, expiring fifteen (15) months after the Effective Date. Nanosys/MEW Confidential *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 1 1.6 "Development Project" shall mean the activities undertaken by each party during the Development Period that it reasonably determines, in consultation with the other party, are necessary and/or appropriate for achieving its Development Goals. 1.7 "FTE" shall mean a full-time employee, or in the case of less than a full-time dedicated person, a full-time equivalent person-year, based upon the total of one thousand eight hundred thirty two (1,832) hours per year. 1.8 "OPV" shall mean any photovoltaic device which incorporates Nanostructures or Nanocomposites as part of an active component. It is understood that OPVs shall include the primary encapsulation around such photovoltaic device. 1.9 "Phase I Technology" shall mean all materials, technology, know-how and information conceived, developed or otherwise made by either party during the term of this Agreement (i) in the course of performing the Development Project, or (ii) using the confidential or proprietary Background Technology of the other party. It Is understood that Phase I Technology shall include all patent, copyright, trade secret, confidential information and other intellectual property or proprietary rights therein and thereto. 1.10 "Nanocomposite" [*** Redacted] 1.11 "Nanostructure" shall mean any material, structure or composition with any single dimension less than [*** Redacted]. Nanostructures include, but are not limited to semiconductors, metals, semimetals and insulators, and include, but are not limited to [*** Redacted], [*** Redacted], [*** Redacted] and [*** Redacted]. 1.12 "Nannotechnology" shall mean all materials, technology, know-how and information relating to, or useful for the exploitation of Nanostructures, Nanocomposites or properties thereof, or standalone functional devices incorporating or based on such Nanostructures, Nanocomposites or properties thereof, or components of such devices, including without limitation the properties, design and architecture (including without limitation [*** Redacted]), development (including without limitation methods and tools tor modeling and prototyping), manufacturing, synthesis, packaging, applications and commercialization thereof and interfaces therewith (including without limitation [*** Redacted], electrical and/or optical and/or magnetic contacts and integration components, methodologies). Nanotechnology shall exclude technology for integrating OPVs into surrounding Building Materials. For the avoidance of doubt, in no event shall Nanotechnology include inventions conceived after the end of the Development Period. 1.13 "Option Period" shall mean a period commencing upon the conclusion of the Election Period, and ending [*** Redacted] thereafter, unless terminated earlier by MEW upon written notice. ARTICLE 2 -- DEVELOPMENT PROJECT 2.1 Conduct Of the Development Project. Subject to the terms and conditions of this Agreement, Nanosys and MEW each shall use commercially reasonable efforts to conduct its activities under the Development Project. Nanosys and MEW each shall conduct its activities under the Development Project in good scientific manner and in compliance in all material respects with requirements of any applicable laws and regulations. It is understood that consistent with the Nanosys/MEW Confidential *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 2 requirements of this Agreement, each party shall determine in its sole discretion the manner and means by which it performs its activities under the Development Project. 2.2 Contemplated Allocation of Responsibilities and Level of Efforts. It is contemplated that Nanosys' activities under the Development Project will be primarily directed to the development of OPVs, which will ultimately meet the specifications of the Development Goals for such use in Building Materials and MEW's activities under the Development Project will be primarily directed to developing technology and manufacturing strategies for incorporating into Building Materials the OPVs developed by Nanosys hereunder, and performing market research relating thereto. Details in this connection shall be described in Appendix A attached hereto. During the Development Period, Nanosys will dedicate, the equivalent of [*** Redacted] FTEs on activities under the Development Project, and at least another [*** Redacted] FTEs on programs outside of the Development Project relating to core nanotechnologies which would be available to the development of OPVs under the Development Project if applicable. It is presently contemplated that MEW will expend Two Million United States Dollars (U.S. $2,000,000) on performing its activities under the Development Project. 2.3 Communications; Coordination. Nanosys and MEW each shall keep the other generally informed from time to time during the Development Period of any results from the Development Project. Without limiting the generality of the foregoing the parties shall hold during the Development Period a technical meeting every [*** Redacted], and a managerial meeting every [*** Redacted]. Unless otherwise agreed such meeting shall be held at Nanosys' facilities. Each party shall appoint a "Project Manager," who shall oversee such party's efforts on the Development Project and any meetings, exchanges, visits and collaboration between the parties hereunder. The initial Project Manager for Nanosys is [*** Redacted]; the initial Project Manager for MEW is [*** Redacted]. The parties may from time to time change the identity of its Project Manager upon written notice. At any time upon the request of MEW, but in no event more frequent than once per [*** Redacted], Nanosys will prepare a written report summarking the work done to-date and the results meeting the specifications of the Development Goals. 2.4 Visiting and Collaborating Personnel. During the Development Period, each party shall make its personnel available to visit with and collaborate with the other party's personnel in carrying out the Development Project, for the benefit of the collaboration upon a mutually agreeable schedule. Such activities may Include prototyping, testing and evaluation of devices developed under the Development Project, but shall not include any synthesis of Nanostructures or associated [*** Redacted] interface [*** Redacted]. In the event one party's personnel is performing or observing the performance of the Development Project at the other party's facilities, such visiting personnel shall agree to be bound by all reasonable orders, rules and regulations pertaining to the hosting party's facilities while at such facilities, including reasonable confidentiality obligations, In case of any direct conflict between the terms of the Agreement and such facilities' orders, rules, and regulations, the terms of this Agreement shall prevail. 2.5 Records. Nanosys and MEW each shall maintain records in English, in sufficient detail and in good scientific manner, which shall reflect work done and results achieved in the performance of the Development Project. Each party shall provide the other party with written disclosure describing each invention developed during the Development Project in which such other party has an ownership interest hereunder, upon the receipt of an invention disclosure from its personnel. 2.6 Formal Review Meeting. On or about [*** Redacted] after the Effective Date, the parties shall hold a meeting in person at Nanosys' facilities to formally review the results of the Development Project as of the date of such meeting. At such meeting each party shall have at least one representative who is at the director level or higher, and the parties shall make a joint formal presentation describing the outcomes and results of its activities to date. Additionally if MEW has not previously exercised its option pursuant to Section 3.2 below, at such meeting the parties Nanosys/MEW Confidential *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 3 shall discuss MEW's desire to exercise such option, provided such early discussion shall not shorten MEW's Election Period as defined in Section 3.2 below. It is understood that the meeting described in this Section 2.6 shall be in lieu of any meeting to be held pursuant to Section 2.3 above for such [*** Redacted]. 2.7 Final Report. Promptly upon expiration of the Development Period, each party shall provide the other party with a final report describing the results of its activities under the Development Project, including the extent to which it has met its Development Goals (each, the "Final Report"). 2.8 Testing of Deliverables. Promptly upon the conclusion of the Development Period, Nanosys shall make available to MEW for testing a reasonable number of sample units of the OPVs created by Nanosys meeting or most closely meeting the Development Goals(or components if a complete OPV has not been created). Such testing shall take place at Nanosys' facilities, or may be conducted jointly by the parties at MEW's facilities. ARTICLE 3 -- PAYMENTS/EXCLUSIVITY 3.1 Payments. In consideration of Nanosys' performance of its activities under the Development Project, MEW shall pay Nanosys Two Million United States Dollars (U.S. $2,000,000) within [*** Redacted] of execution of this Agreement. It is contemplated that such amount shall be in consideration for the efforts undertaken and be partial reimbursement for the costs and expenses incurred by Nanosys in performing its activities hereunder. As additional consideration, within [*** Redacted] of the conclusion of the Development Period, provided that Nanosys has met its Development Goals or MEW provides or has provided Nanosys with an Exercise Notice pursuant to Section 3.2 or MEW elects in its discretion to make such payment, MEW shall pay Nanosys an additional Five Hundred Thousand United States Dollars (U.S. $500,000). MEW shall make all payments hereunder by check or wire transfer in immediately available funds to an account designated by Nanosys. All amounts payable hereunder shall be paid in United States Dollars, and shall be net of any sales, use, withholding or other taxes. Except as set forth in this Section 3.1, each party shall be responsible for and bear its own costs for carrying out its activities under the Development Project. 3.2 Option to Negotiate Additional Development. At any time after the commencement of the Development Period and prior to a lapse of thirty (30) days after Nanosys provides its Final Report under Section 2.7 (the "Election Period"), MEW may provide Nanosys with written notice (the "Exercise Notice"), stating that MEW desires to negotiate the terms and conditions under which the parties would continue the development of OPVs for use in Building Materials ("Phase II") and would commercialize such OPVs and Building Materials in Asia, including Nanosys supplying certain components thereof ("Phase III") (collectively, the Phase II/III Projects"). Promptly after Nanosys' receipt of the Exercise Notice as set forth above, the parties shall meet to negotiate in good faith the terms and conditions of the Phase II and/or Phase III Projects for a period of [*** Redacted] (the "Negotiation Period"). The Negotiation Period shall be extended to the extent mutually agreed between the parties. Such terms and conditions may include: (i) Nanosys having a nonexclusive, worldwide license under subject matter developed by MEW relating to Nanotechnology under mutually agreeable terms and conditions, and (ii) other customary and reasonable terms and conditions standard for development, supply and commercialization arrangements of the type contemplated above. If the parties have not mutually agreed on the terms and conditions for the Phase II/III Projects for any reason by the expiration of the Negotiation Period, neither party shall have any further obligation to the other party under this Section 3.2 thereafter. It is understood that Phase II/III Projects may include additional Asian countries as mutually agreed between the parties. 3.3 Exclusivity. During the period ("Exclusive Period") beginning upon the commencement of the Development Period and ending (i) upon the expiration of the Negotiation Period, if MEW provides the Exercise Notice in accordance with Section 3.2, or (ii) upon expiration of the Election Period, if MEW fails to provide the Exercise Notice in accordance with Section 3.2, each party Nanosys/MEW Confidential *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 4 agrees not to enter into any written agreement with any third party with respect to the development, commercialization or other exploitation of OPVs containing [*** Redacted] Nanostructures for use in Building Materials in Asia. Each party remains free to enter into collaborations with third parties relating to OPVs containing Nanostructures other than [*** Redacted] Nanostuctures. 3.4 Other Opportunities. Nanosys and MEW may discuss the possibility of and terms and conditions for the parties collaborating together with respect to the development and commercialization in Asia of the OPVs developed hereunder, other than for use in Building Materials. 3.5 Option to License Phase I Technology. Provided that MEW has made the Five Hundred Thousand Dollars ($500,000) payment to Nanosys pursuant to Section 3.1, if thereafter during the Option Period Nanosys enters into a written agreement ("Third Party Agreement") with a third party ("Third Party") with respect to the Field (as defined below) granting such Third Party license rights which includes a material portion of Phase I Technology, Nanosys shall notify MEW and disclose the scope of such license rights in the Field and the terms and conditions agreed to by such Third Party for such license rights ("Notice of Third Party Agreement"). Upon written request of MEW received by Nanosys within [*** Redacted] after the Notice of Third Party Agreement, Nanosys shall enter into a written agreement with MEW ("Written License) granting to MEW the same license rights in the Field as set forth in such Notice of Third Party License, on the same terms and conditions as agreed to by the respective Third Party. The license rights offered to MEW in the Notice of Third Party Agreement shall include all intellectual property rights that Nanosys grants to the Third Party that relate directly to the Field; provided however, that the Written License is not required to grant MEW any rights with respect to any intellectual property (i) which has been funded by or in conjunction with such Third Party to the Third Party Agreement or created during the course of such Third Party Agreement, or (ii) for any use outside the Field. During the Option Period, MEW agrees not to enter into any written agreement with any third party with respect to the Field. As used herein, the "Field" shall mean commercialization in Asia of OPVs containing [*** Redacted] Nanostructures specifically for use in Building Materials. Each party remains free to enter into collaborations with third parties relating to OPVs containing Nanostructures other than [*** Redacted] Nanostuctures. ARTICLE 4- CONFIDENTIALITY/HANDLING OF MATERIALS 4.1 Confidential Information. Except as provided herein, each party shall maintain in confidence, and shall not use for any purpose or disclose to any third party, information that is disclosed by the other party in writing and marked "Confidential," or that is disclosed orally and identified as or should reasonably be considered confidential, or that is obtained through inspection of tangible items marked or located in a area designated as confidential (collectively, "Confidential Information"). Confidential Information shall not include any information that the receiving party can demonstrate was: (i) already known to the receiving party at the time of disclosure hereunder, or (ii) now or hereafter becomes publicly known other than through acts or omissions of the receiving party, or (iii) is rightfully disclosed without restriction to the receiving party by a third party or (iv) independently developed by the receiving party without use of or reference to the Confidential Information of the disclosing party. The obligations of this Section 4 shall survive for [*** Redacted] after any termination or expiration of this Agreement. 4.2 Permitted Usage. Notwithstanding the provisions of Section 4.1 above, the receiving party may use or disclose Confidential Information of the disclosing party solely to the extent necessary to exercise the rights granted to it or perform its obligations hereunder (provided it uses commercially reasonable efforts to protect such information commensurate with the efforts used to protect its own information of a similar nature) or in prosecuting or defending litigation, filing for patent rights with respect to Phase I Technology, complying with applicable governmental regulations and/or submitting information to tax or other governmental authorities; provided that if the receiving party is required by law to make any public disclosures of Confidential Information of the disclosing party, to the extent it may legally do so, it will give reasonable advance notice to Nanosys/MEW Confidential *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities Exchange Commission. Omitted portions have been filed separately with the Commission. Page 5 the disclosing party of such disclosure and will use its reasonable efforts to secure confidential treatment of Confidential Information prior to its disclosure (whether through protective orders or otherwise). 4.3 Materials. Each party may in the course of performance of the Development Project transfer Materials that are necessary for the other party's performance of its duties under the Development Project. As used herein, a party's "Materials" shall refer to such materials and any other proprietary materials, compositions or software, provided by such party to the other party hereunder. Notwithstanding, Nanosys' Materials shall include any and all OPVs, Nanostructures, Nanocomposites and components or parts thereof created during the course of the Development Project. Each party shall retain all of its right, title and interest in and to its Materials. a. Use. A party shall use the other party's Materials for the sole purpose of conducting the Development Project, and not for any other study or purpose without the prior written consent of providing party. Each party shall only allow its employees who are working on activities under the Development Project, who have agreed to be bound by obligations of confidentiality and non-use restrictions as materially protective as this Agreement, to have access to the other party's Materials. b. Restrictions. Each party agrees to retain control over the Materials of the other party and not to transfer such Materials to any third party without the prior written consent of the other party. Except as expressly provided, neither party shall reverse engineer, disassemble or decompile any of the Materials of the other party. c. Markings. Each party agrees not to remove any markings on any Materials of the other party. d. Unknown Characteristics. Each party acknowledges that the Materials are experimental in nature and may have unknown characteristics and therefore agrees to use prudence and reasonable care in the use, handling, storage, transportation and disposition and containment of the Materials. e. Limitations. Notwithstanding the foregoing, nothing in this Article 4 shall be construed (1) to impose any obligations on MEW with respect to MEW's Materials, and on Nanosys with respect to Nanosys' Materials, (ii) as a grant by either party to the other party of any license or other rights in or to the Materials, (iii) to require either party to transfer any Materials to the other party. ARTICLE 5 -- INTELLECTUAL PROPERTY 5.1 Phase I Technology. Nanosys shall solely own all Phase I Technology created by either party constituting Nanotechnology. MEW hereby irrevocably assigns, and agrees to assign, to Nanosys Phase I Technology created by MEW constituting Nanotechnology, and agrees to assist Nanosys, upon Nanosys' reasonable request, to secure or perfect any or all such rights without MEW assuming any financial obligation. Except as set forth in this Article 5, the ownership of any Phase I Technology shall be determined by inventorship under the intellectual property laws of the country where the technology is created. It is understood that neither party shall have any obligation to account to the other party for profits, or to obtain any approval of the other party to license or exploit any jointly owned Phase I Technology, by reason of their joint ownership thereof, and each party hereby waives any right it may have under the laws of any country to require such accounting or approval. During the term of this Agreement and [*** Redacted] thereafter, Nanosys shall inform MEW reasonably promptly following the filing of any patent applications regarding Phase I Technology. In the event that Nanosys files a patent application for Phase I Technology in the United State, Nanosys shall file a counterpart application for the same technology in each country in Asia in a timely fashion in accordance with international conventions or treaties at Nanosys/MEW Confidential *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 6 Nanosys' expense, but only provided that the Option Period has not expired or the parties proceed with a Phase II/III Project. ARTICLE 6 -- TERMINATION 6.1 Expiration. Unless terminated earlier or extended by the mutual written agreement of the parties, this Agreement shall expire upon the later of (i) the expiration of the Development Period, or (ii) the expiration of the Exclusive Period (as defined in Section 3.3). 6.2 Termination. Either party may terminate this Agreement upon written notice in the event of material breach of this Agreement by the other party, which breach is not cured within [*** Redacted] days after written notice specifying such breach and the notifying party's intention to terminate. 6.3 Obligations Surviving Expiration or Termination. Expiration or earlier termination of this Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination, and the provisions of Articles and Sections 2.5, 2.7, 3.1, 4, 5, 6 and 7 shall survive any expiration or termination of this Agreement. Upon termination or expiration of this Agreement (or earlier request of the other party), each party shall promptly return any and all Confidential Information and Materials of the other party. Section 3.5 shall survive the termination or expiration of this Agreement with respect to Nanosys' obligations, except in the case of termination due to MEW's breach. Section 3.5 shall survive the termination or expiration of this Agreement with respect to MEW's obligations, except in the case of termination due to Nanosys' breach. ARTICLE 7 -- ADDITIONAL PROVISIONS 7.1 Notices. Any consent, notice, or report required or permitted to be given or made under this Agreement by one party to the other party shall be in writing, delivered personally or by facsimile (receipt confirmed), first class mall postage prepaid, or internationally recognized courier or delivery service, and addressed to.the other party at its address indicated below, or to other such address as the addressee shall have last furnished in writing to the addressor. Except as otherwise provided in the Agreement, such consent, notice, or report shall be effective upon receipt by the addressee. If to Nanosys: If to MEW: Attn: Calvin Y.H. Chow Attn: [*** Redacted] Nanosys, Inc. Matsushita Electric Works, Ltd. 2625 Hanover Street, [*** Redacted] Palo Alto, CA 94304 [*** Redacted] United States of America Japan 7.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, United States of America, without regard to the conflicts of law principles thereof. The parties disclaim any application of the U.N. Convention on Contracts for the International Sale of Goods to this Agreement. 7.3 Arbitration. Any dispute or claim arising out of or in connection with this Agreement or the performance, breach or termination thereof, shall be finally settled by binding arbitration in Santa Clara County, California. U.S.A., in accordance with the rules then obtaining of the International Chamber of Commerce by [*** Redacted] arbitrators appointed in accordance with said rules, unless the parties have agreed on [*** Redacted] arbitrator. The decision and/or award rendered by the arbitrator(s) shall be written, final and non-appealable and may be entered in any court of competent jurisdiction. The arbitral proceedings and all pleadings and evidence shall be in the English language. Any evidence originally in a language other than English shall be submitted Nanosys/MEW Confidential *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 7 with an English translation accompanied by an original or true copy thereof. The costs of any arbitration, including administrative fees and fees of the arbitrator(s), shall be shared equally by the parties, unless otherwise determined by the arbitrator(s). Each party shall bear the cost of its own attorneys' and expert fees. The parties agree that, any provision of applicable law notwithstanding, they will not request, and the arbitrator shall have no authority to award, punitive or exemplary damages against any party. 7.4 Independent Contractors. The relationship of MEW and Nanosys established by this Agreement is that of independent contractors. This Agreement shall not constitute, create, or otherwise imply a joint venture, pooling arrangement, partnership, or formal business organization of any kind. The parties agree that the obligations and duties of each party arising under this Agreement regardless of whether shared, identical, or otherwise similar, are separate and distinct from the obligations and duties of the other party. Actions or failures to act by one party shall not confer joint and several liability to the other party. 7.5 Language. This Agreement is in the English language only, which language shall be controlling in all respects, and all versions hereof in any other language shall not be binding on the parties hereto. All communications and notices to be made or given pursuant to this Agreement shall be in the English language. 7.6 U.S. Export Laws and Regulations. Each party hereby acknowledges that the rights and obligations of this Agreement are subject to the laws and regulations of the United States relating to the export of products and technical information. Each party shall comply with all such laws and regulations. 7.7 Force Majeure. Except with respect to payment of amounts due hereunder, neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of the Agreement to the extent, and for so long as, such failure or delay is caused by or results from causes beyond the reasonable control of the affected party including but not limited to fires, earthquakes, floods, embargoes, wars, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions, or delays in acting by any governmental authority or other person. The term of the Development Period shall be extended by the number of days of any delay or interruption. 7.8 Representations and Warranties. Each party represents, warrants and covenants to the other party that (i) it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and (ii) the execution, delivery and performance of this Agreement by such party has been duly authorized by all requisite corporate action, and this Agreement constitutes such party's legal, valid and binding obligation enforceable against it in accordance with its term, (iii) to the knowledge of such party, it is the owner or licensee of all its Background Technology relied upon in its performance of this Agreement, (iv) to the knowledge of such party, its performance of this Agreement will not Infringe the intellectual property rights of any third party, and (v) such party shall not use any government funds for performance of the Development Project which would preclude or impair the ability to grant the other party commercialization rights to the Phase I Technology as contemplated under Section 3.2. 7.9 Disclaimer. Neither party makes any representation or warranty or guaranty that the Development Project will be successful, in whole or part, or that the parties will successfully meet their Development Goals or develop any OPV (or any other products or intellectual property) under the Development Project. EXCEPT AS SET FORTH HEREIN, MEW AND NANOSYS EXPRESSLY DISCLAIM ANY AND ALL WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE CONFIDENTIAL INFORMATION, MATERIALS, PHASE I TECHNOLOGY AND ANY OTHER MATERIALS, TECHNOLOGY OR INFORMATION PROVIDED HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY, Nanosys/MEWConfidential Page 8 USEFULNESS OR RELIABILITY OF ANY SUCH INFORMATION AND TECHNOLOGY, PATENTED OR UNPATENTED, OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. 7.10 Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR PUNITIVE DAMAGES INCURRED BY SUCH PARTY ARISING UNDER OR AS A RESULT OF THIS AGREEMENT (OR THE PERFORMANCE, BREACH OR TERMINATION HEREOF) INCLUDING, BUT NOT LIMITED TO, THE LOSS OF PROSPECTIVE PROFITS OR ANTICIPATED SALES, OR ON ACCOUNT OF EXPENSES, INVESTMENTS, OR COMMITMENTS IN CONNECTION WITH THE BUSINESS OR GOODWILL OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF SAME. 7.11 Assignment. Except as set forth in this Section 7.11, neither party shall assign Its rights or obligations under this Agreement, in whole or in part, by operation of law or otherwise, without the prior written consent of the nonassigning party. Either party may assign this Agreement, and all of its rights hereunder, to a person or entity that acquires all or substantially all of the business or assets of that party (or that portion thereof to which this Agreement pertains) in each case whether by merger, acquisition, operation of law or otherwise, provided that such assignee agrees in writing to be bound by the terms and conditions of this Agreement. Any purported assignment in violation of this provision shall be null and void. Subject to the foregoing, this Assignment shall bind and inure to the benefit of each party's permitted successors or assigns. 7.12 Entire Agreement. This Agreement, including Appendix A and Appendix B attached hereto, embodies the entire understanding between the parties and supersedes any prior understandings and agreements between and among them respecting the subject matter hereof. There are no representations, agreements, arrangements or understandings, oral or written, between the parties hereto relating to the subject matter of the Agreement which are not fully expressed herein. No change, modification, extension, termination, or waiver of the Agreement, or any of the provisions herein contained, shall be valid unless made in writing and signed by duly authorized representatives of the parties hereto. 7.13 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties through their duly authorized representatives have executed the Agreement as of the date first set forth above. NANOSYS, INC. MATSUSHITA ELECTRIC WORKS, LTD. By /s/ Calvin Chow By /s/ Hiroshi Kikuchi --------------------- ----------------------------- Name CALVIN CHOW Name Hiroshi Kikuchi Title CHIEF OPERATING OFFICER Title Senior Managing Director Nanosys/MEWConfidential Page 9 APPENDIX A Development Goals Nanosys A proof of concept of an OPV meeting the following specifications: -Device Size: [*** Redacted]. -Raw Device [*** Redacted]: At least [*** Redacted] and [*** Redacted] and not including [*** Redacted]. -Device Material: [*** Redacted], or other [*** Redacted] materials MEW 1. Developing technology and strategies for manufacturing OPVs for use in Building Materials. 2. Performing market research relating to OPVs for use in Building Materials in Asia. Nanosys Confidential *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. EX-10.9.1 24 f97636orexv10w9w1.txt EXHIBIT 10.9.1 EXHIBIT 10.9.1 FIRST AMENDMENT TO DEVELOPMENT AGREEMENT Nanosys Inc. ("Nanosys"), and Matsushita Electric Works, Ltd. ("MEW") are parties to a certain Development Agreement ("the Agreement") dated and effective as of November 18th, 2002 ("the Effective Date"). This First Amendment to the Agreement is entered into and effective as of February 8, 2004 ("the First Amendment Date"). WHEREAS, MEW and Nanosys wish to extend the Development Period of the Agreement; NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereby agree to amend the Agreement as follows: A. Section 1.5 of the Agreement is hereby deleted and replaced with the following: 1.5 "Development Period" shall mean the period commencing upon Nanosys' receipt of the Two Million United States Dollars ($2,000,000) payment set forth in Section 3.1, and unless' terminated earlier upon termination of this Agreement pursuant to Article 6 or extended by mutual written agreement of the parties, expiring twenty one (21) months after the Effective Date. B. In Section 3.1 of the Agreement, the third sentence which states in its entirety "As additional consideration, within [*** Redacted] of the conclusion of the Development Period, provided that Nanosys has met its Development Goals or MEW provides or has provided Nanosys with an Exercise Notice pursuant to Section 3.2 or MEW elects in its discretion to make such payment, MEW shall pay Nanosys an additional Five Hundred Thousand United States Dollars (U.S. $500,000)." is hereby deleted. C. In Section 3.5 of the Agreement, the opening clause that states in its entirety: "Option to License Phase I Technology. Provided that MEW has made the Five Hundred Thousand Dollars ($500,000) payment to Nanosys pursuant to Section 3.1," is hereby deleted and replaced with the following: "Option to License Phase I Technology. Provided that MEW has provided Nanosys with the Exercise Notice pursuant to Section 3.2," D. In consideration of the foregoing amendments, MEW shall pay to Nanosys the amount of Five Hundred Thousand United States Dollars ($500,000) ("Amendment Fee") within [*** Redacted] of the First Amendment Date. Such payment shall be made in accordance with the terms respecting payment as set forth in the Article 3 of the Agreement. E. Unless expressly amended herein or by subsequent amendments agreed to by the parties in a signed written amendment, all other terms of the Agreement, including but not limited to terms related to interpretation and enforcement of the Agreement, shall remain in full force and effect as originally agreed to in the Agreement, and shall apply equally to the terms of this First Amendment. The parties hereby expressly reaffirm their obligations under the Agreement, including their obligation to prepare and provide a Final Report upon expiration of the Development Period (as amended), and the parties acknowledge that any delay in the delivery of such Final Report will result in a corresponding extension of the time periods measured by reference to the Final Report, including the Election Period. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 1 of 2 IN WITNESS WHEREOF, the parties through their duly authorized representatives have executed this First Amendment as of the date last set forth below NANOSYS, INC. MATSUSHITA ELECTRIC WORKS, LTD. By: /s/ Calvin Chow By: /s/ Hiroshi Kikuchi ---------------------------- -------------------------------- Name: Calvin Chow Name: Hiroshi Kikuchi Title: Chief Executive Officer Title: Executive Vice President Date: 2-17-04 Date: February 17, 2004 Page 2 of 2 EX-10.10 25 f97636orexv10w10.txt EXHIBIT 10.10 EXHIBIT 10.10 MASSACHUSETTS INSTITUTE OF TECHNOLOGY EXCLUSIVE PATENT LICENSE AGREEMENT WITH NANOSYS, INC. TABLE OF CONTENTS RECITALS .................................................................... 1 1. Definitions .............................................................. 2 2. Grant of Rights .......................................................... 6 3. COMPANY Diligence Obligations ............................................ 7 4. Royalties and Payment Terms .............................................. 9 5. Reports and Records ...................................................... 13 6. Patent Prosecution ....................................................... 15 7. Infringement ............................................................. 16 8. Indemnification and Insurance ............................................ 17 9. No Representations or Warranties ........................................ 19 10. Assignment .............................................................. 19 11. General Compliance with Laws ............................................ 20 12. Termination ............................................................. 21 13. Dispute Resolution ...................................................... 22 14. Miscellaneous ........................................................... 23 APPENDIX A .................................................................. 28 APPENDIX B .................................................................. 29 EXHIBIT A ................................................................... 31 EXHIBIT B ................................................................... 32 EXHIBIT C ................................................................... 33

ii MASSACHUSETTS INSTITUTE OF TECHNOLOGY EXCLUSIVE PATENT LICENSE AGREEMENT This Agreement, effective as of the date set forth above the signatures of the parties below (the "EFFECTIVE DATE"), is between the Massachusetts Institute of Technology ("M.I.T."), a Massachusetts corporation, with a principal office at 77 Massachusetts Avenue, Cambridge, MA 02139-4307 and Nanosys, Inc. ("COMPANY"), a Delaware corporation, with a principal place of business at 2625 Hanover Street, Palo Alto, CA 94304. RECITALS WHEREAS, M.I.T. is the owner of certain PATENT RIGHTS (as later defined herein) and has the right to grant licenses under said PATENT RIGHTS; WHEREAS, Moungi Bawendi, an inventor of the PATENT RIGHITS and current employee of M.I.T., has or will shortly acquire equity in COMPANY, the Conflict Avoidance Statement of Moungi Bawendi is attached as Exhibit A hereto; WHEREAS, Moungi Bawendi, an inventor of the PATENT RIGHTS, has or will shortly acquire equity in COMPANY not resulting from this Agreement, the Inventor/Author Acknowledgment of No Equity Distribution in M.I.T.'s institutional equity share is attached as Exhibit B hereto; WHEREAS, M.I.T.'s Vice President for Research has approved that Moungi Bawendi, an inventor of the PATENT RIGHTS, now holds or shall shortly acquire equity in COMPANY and that M.I.T. is accepting equity as partial consideration for the rights and licenses granted under this Agreement; WHEREAS, M.I.T. desires to have the PATENT RIGHTS developed and commercialized to benefit the public and is willing to grant a license thereunder; WHEREAS, COMPANY has represented to M.I.T., to induce M.I.T. to enter into this Agreement, that COMPANY shall commit itself to a thorough, vigorous and diligent program of exploiting the PATENT RIGHTS so that public utilization shall result therefrom; and WHEREAS, COMPANY desires to obtain a license under the PATENT RIGHTS upon the terms and conditions hereinafter set forth. NOW, THEREFORE, M.I.T. and COMPANY hereby agree as fellows: 1. DEFINITIONS. 1.1 "AFFILIATE" shall mean any legal entity (such as a corporation, partnership, or limited liability company) that is controlled by COMPANY. For the purposes of this definition, the term "control" means (i) beneficial ownership of at least fifty percent (50%) of the voting securities of a corporation or other business organization with voting securities or (ii) a fifty percent (50%) or greater interest in the net assets or profits of a partnership or other business organization without voting securities. 1.2 "COMBINATION PRODUCT" shall mean a LICENSED PRODUCT sold in combination with one or more other components which are themselves not LICENSED PRODUCTS and where such other components could reasonably be deemed to be separate product(s). 1.3 "FIELDS" shall mean FIELD A and FIELD B. 1.4 "FIELD A" shall mean all fields. 1.5 "FIELD B" shall mean all fields excluding the field of [*** Redacted] and the field of [*** Redacted]. 1.6 "LICENSED PRODUCT" shall mean any product or part thereof that: (a)absent the license granted hereunder, would infringe one or more claims of the PATENT RIGHTS; or (b) is manufactured by using a LICENSED PROCESS or that, when used, practices a LICENSED PROCESS. 1.7 "LICENSED PROCESS" shall mean any process that, absent the license granted hereunder, would infringe one or more claims of the PATENT RIGHTS or which uses a LICENSED PRODUCT. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 2 1.8 "NET SALES" [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 3 [*** Redacted] 1.9 "PATENT RIGHTS" shall mean PATENT RIGHTS A and PATENT RIGHTS B. 1.10 "PATENT RIGHTS A" shall mean: (a) the United States and international patents listed on Appendix A: (b) the United States and international patent applications and/or provisional applications listed on Appendix A and the resulting patents; (c) any patent applications resulting from the provisional applications listed on Appendix A, and any divisionals, continuations, continuation-in-part applications, and continued prosecution applications (and their relevant international equivalents) of the patent applications listed on Appendix A and of such patent applications that result from the provisional applications listed on Appendix A, to the extent the claims are directed to subject matter in or supported by the patent applications listed on Appendix A, and the resulting patents; (d) any patents resulting from reissues, reexaminations, or extensions (and their relevant international equivalents) of the patents described in (a), (b), and (c) above; and (e) international (non-United States) patent applications and provisional applications filed after the EFFECTIVE DATE and the relevant international equivalents to divisionals, continuations, continuation-in-part applications and continued prosecution applications of the patent applications to the extent the claims are directed to subject matter in or supported by the patents or patent applications referred to in (a), (b), (c), and (d) above, and the resulting patents. 1.11 "PATENT RIGHTS B" shall mean: (a) the United States and international patents listed on Appendix B; (b) the United States and international patent applications and/or provisional applications listed on Appendix B and the resulting patents; (c) any patent applications resulting from the provisional applications listed on Appendix B, and any divisional, continuations, continuation-in-part applications, and continued prosecution applications (and their relevant international equivalents) of the patent applications listed on Appendix B and of such patent applications that result from the provisional applications listed on Appendix B, to the extent the claims are directed to subject matter in or supported by the patent applications listed on Appendix B, and the resulting patents; *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 4 (d) any patents resulting from reissues, reexaminations, or extensions (and their relevant international equivalents) of the patents described in (a), (b), and (c) above; and (e) international (non-United States) patent applications and provisional applications filed after the EFFECTIVE DATE and the relevant International equivalents to divisisntinuations, continuation-in-part applications and continued prosecution applications of the patent applications to the extent the claims are directed to subject matter in or supported by the patents or patent applications referred to in (a), (b), (c), and (d) above, and the resulting parents. 1.12 "REPORTING PERIOD" shall begin on the first day of each calendar [*** Redacted] and end on the last day of such calendar [*** Redacted]. 1.13 "SUBLICENSE INCOME" shall mean any payments that COMPANY receives from a SUBLICENSEE, including any sublicense entered into in settlement of any claim of infringement in consideration of the sublicense of the rights granted COMPANY under Section 2.1, including without limitation [*** Redacted] on NET SALES, and other payments, but specifically excluding, [*** Redacted] or for COMPANY associated with [*** Redacted] used in performance of research and development; [*** Redacted] expenses; [*** Redacted] amounts received for [*** Redacted]; and amounts in consideration of any other rights or licenses under any [*** Redacted] the COMPANY other then the [*** Redacted]. 1.14 "SUBLICENSEE" shall mean any non-AFFILIATE sublicensee of the rights granted COMPANY under Section 2.1. 1.15 "TERM" shall mean the term of this Agreement, which shall commence on the EFFECTIVE DATE and shall remain in effect until the expiration, abandonment, or written express disclaimer of the validity or enforceability by M.I.T, of all issued patents and filed patent applications within the PATENT RIGHTS, unless earlier terminated in accordance with the provisions of this Agreement. 1.16 "TERRITORY" shall mean worldwide. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 5 2. GRANT OF RIGHTS. 2.1 License Grants. (a) Subject to the terms of this Agreement, M.I.T. hereby grants to COMPANY and its AFFILIATES for the TERM a royalty-bearing license under the PATENT RIGHTS A to develop, make, have made, use, sell, offer to sell, lease, or import LICENSED PRODUCTS in FIELD A in the TERRITORY and to develop and perform LICENSED PROCESSES in FIELD A in the TERRITORY for the TERM. (b) Subject to the terms of this Agreement, M.I.T. hereby grants to COMPANY and its AFFILIATES for the TERM a royalty-bearing license under the PATENT RIGHTS B to develop, make, have made, use, sell, offer to sell, lease, or import LICENSED PRODUCTS in FIELD B in the TERRITORY and to develop and perform LICENSED PROCESSES in FIELD B in the TERRITORY for the TERM. 2.2 Exclusivity. (a) In order to establish exclusivity for COMPANY for PATENT RIGHTS A, M.I.T. agrees that it shall not grant any other license to develop, make, have made, use, sell, offer to sell, lease or import LICENSED PRODUCTS in FIELD A in the TERRITORY or to perform LICENSED PROCESSES in FIELD A in the TERRITORY for the TERM. (b) In order to establish exclusivity for COMPANY for PATENT RIGHTS B in FIELD B, M.I.T. agrees that it shall not grant any other license to develop, make, have made, use, sell, offer to sell, lease or import LICENSED PRODUCTS or to perform LICENSED PROCESSES in FIELD B in the TERRITORY for the TERM, subject to a pre-existing nonexclusive license to [*** Redacted] dated [*** Redacted] which grants rights to [*** Redacted] in the field of [*** Redacted] (c) M.I.T. hereby warrants that, to the best of its knowledge without due inquiry, it has the right to grant the licenses and establish exclusivity as set forth in Sections 2.1 and 2.2, subject to Article 9 of this Agreement. 2.3 Sublicenses. COMPANY shall have the right to grant sublicenses of its rights under Section 2.1. COMPANY shall incorporate terms and conditions into its sublicenses agreements sufficient to enable COMPANY to comply with this Agreement. COMPANY shall promptly furnish M.I.T. with a fully, signed photocopy of any sublicense agreement. Sublicense *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 6 agreements provided to M.I.T. under this section may be provided in redacted form, provided that such redacted sublicense agreements contain all terms necessary for M.I.T. to determine COMPANY'S compliance with the obligations of this Agreement; and provided further that upon request, M.I.T's representatives can review the sublicenses in their entirety at COMPANY'S facility. Upon termination of this Agreement for any reason, any SUBLICENSEE not then in default shall maintain their license under the then existing terms and conditions, provided that such terms and conditions are at least as favorable to M.I.T. as the terms of this Agreement, and provided that such SUBLICENSEE assume all unsatisfied and unwaived, past, current, and future obligations of COMPANY under this Agreement. 2.4 U.S. Manufacturing. COMPANY agrees that any LICENSED PRODUCTS used or sold in the United States will be manufactured substantially in the United States, to the extent required by law. 2.5 Retained Rights. (a) M.I.T. M.I.T. retains the right to practice under the PATENT RIGHTS for research, teaching, and educational purposes. (b) Federal Government. COMPANY acknowledges that the U.S. federal government retains a royalty-free, non-exclusive, non-transferable license to practice any government-funded invention claimed in any PATENT RIGHTS as set forth in 35 U.S.C. Sections 201-211, and the regulations promulgated thereunder, as amended, or any successor statutes or regulations. 2.6 No Additional Rights. Nothing in this Agreement shall be construed to confer any rights upon COMPANY by implication, estoppel, or otherwise as to any technology or patent rights of M.I.T. or any other entity other than the PATENT RIGHTS, regardless of whether such technology or patent rights shall be dominant or subordinate to any PATENT RIGHTS. 3. COMPANY DILIGENCE OBLIGATIONS. 3.1 Diligence Requirements. COMPANY shall use diligent efforts, or shall cause its AFFILIATES and SUBLICENSEES to use diligent efforts, to develop LICENSED PRODUCTS or LICENSED PROCESSES and to introduce LICENSED PRODUCTS or LICENSED PROCESSES into the commercial market; thereafter, COMPANY or its AFFILIATES or SUBLICENSEES shall make LICENSED PRODUCTS or LICENSED PROCESSES reasonably 7 available to the public. Specifically, COMPANY or AFFILIATE or SUBLICENSEE shall fulfill the following obligations: (a) Within [*** Redacted] after the EFFECTIVE DATE, COMPANY shall furnish M.I.T. with a written research and development plan describing the major tasks to be achieved in order to bring to market a LICENSED PRODUCT or a LICENSED PROCESS, specifying the number of staff and other resources to be devoted to such commercialization effort. (b) Within [*** Redacted] after the end of each [*** Redacted], COMPANY shall furnish M.I.T. with a written report (consistent with Section 5.1 (a)) on the progress of its efforts during the immediately preceding [*** Redacted] to develop and commercialize LICENSED PRODUCTS or LICENSED PROCESSES. The report shall also contain a discussion of intended efforts and sales projections for the year in which the report is submitted. (c) COMPANY shall develop a working model on or before the date [*** Redacted] from the EFFECTIVE DATE, and permit an in-plant inspection by M.I.T. on or before the date [*** Redacted] months from the EFFECTIVE DATE, and thereafter permit in-plant inspections by M.I.T. at regular intervals with at least [*** Redacted] months between each such inspection. (d) COMPANY, its AFFILIATES or SUBLICENSEES, shall fund research toward the development of LICENSED PRODUCTS and/or LICENSED PROCESSES in each calendar year (pro-rated for partial years) beginning in 2003, and as provided below, and ending with the first commercial sale of a LICENSED PRODUCT or a first commercial performance of a LICENSED PROCESS. Such funding shall include funding of research and/or development of technology reasonably necessary for commercial or technical viability of the LICENSED PRODUCTS.
Year Funding ~~2003 [*** Redacted] 2004 [*** Redacted] 2005 and thereafter [*** Redacted]~~
(e) COMPANY shall make a first commercial sale of a LICENSED PRODUCT and/or a first commercial performance of a LICENSED PROCESS on or before [*** Redacted]. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 8 (f) COMPANY shall make annual NET SALES according to the following schedule: 2009 [*** Redacted]; 2010 [*** Redacted]; 2011 and each year through and including 2014 [*** Redacted]; 2015, and each year thereafter [*** Redacted].

In the event that M.I.T. determines that COMPANY (or an AFFILIATE or SUBLICENSEE) has failed to fulfill any of its obligations under this Section 3.1, then M.I.T. may treat such failure as a material breach in accordance with Section 12.3(b). To the extent that COMPANY has made commercially reasonable efforts to meet its obligations, then M.I.T. may, in its discretion, amend or extend the schedule of such obligations. 4. ROYALTIES AND PAYMENT TERMS. 4.1 Consideration for Grant of Rights. In consideration for the rights granted herein, COMPANY agrees to the following: (a) License Issue Fee and Patent Cost Reimbursement. COMPANY shall pay to M.I.T. within [*** Redacted] days of the EFFECTIVE DATE a license issue fee of [*** Redacted], and, in accordance with Section 6.3, shall reimburse M.I.T. for its actual expenses incurred as of the EFFECTIVE DATE in connection with obtaining the PATENT RIGHTS, less any expenses that have already been reimbursed by another party or for which another party is obligated to reimburse M.I.T. These payments are nonrefundable. (b) License Maintenance Fees. COMPANY shall pay to M.I.T. the following license maintenance fees on the dates set forth below: June 1, 2004 [*** Redacted] June 1, 2005 [*** Redacted] June 1, 2006 [*** Redacted] June 1, 2007 [*** Redacted] June 1, 2008 and every June 1 thereafter [*** Redacted]

*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 9 This annual license maintenance fee is nonrefundable, however, the license maintenance fee may be credited to running royalties subsequently due on NET SALES earned during the same calendar year, if any. License maintenance fees paid in excess of running royalties due in such calendar year shall not be creditable to amounts due for future years. (c) Running Royalties. COMPANY shall pay to M.I.T. a running royalty of [*** Redacted] of NET SALES by COMPANY and AFFILIATES. Running royalties shall be payable for each REPORTING PERIOD and shall be due to M.I.T. within [*** Redacted] days of the end of each REPORTING PERIOD. (d) Sharing of SUBLICENSE INCOME. COMPANY shall pay M.I.T. a total of [*** Redacted] of all SUBLICENSE INCOME received by COMPANY. Such amount shall be payable for each REPORTING PERIOD and shall be due to M.I.T. within [*** Redacted] days of the end of each REPORTING PERIOD. This [*** Redacted] may be reduced by one percentage point per each [*** Redacted] of research directed by COMPANY specifically toward the development of LICENSED PRODUCTS and/or LICENSED PROCESSES, with the percentage of shared SUBLICENSE INCOME to be no less than [*** Redacted] of SUBLICENSE INCOME or [*** Redacted] of NET SALES by SUBLICENSEE, whichever is greater. (e) No Multiple Royalties. If the manufacture, use, lease, or sale of any LICENSED PRODUCT or the performance of any LICENSED PROCESS is covered by more than one of the PATENT RIGHTS, multiple royalties shall not be due. (f) Equity. (i) Initial Grant. Within thirty (30) days of the EFFECTIVE DATE, COMPANY shall sell and issue a total of Fifty Thousand (50,000) shares of Common Stock of COMPANY, $.001 par value per share, (the "Shares") to M.I.T. at a price of $0.12 per share for a total of $6,000.00. M.I.T. shall have the right to assign and transfer such shares to such persons as M.I.T. shall direct ("M.I.T. Holder"), and each M.I.T. Holder shall receive such a number of shares as M.I.T. shall direct provided that such M.I.T. Holder is an accredited investor as defined by Rule 50l(a) of Regulation D under the Securities Act of 1933, or provides COMPANY with an executed Investor Representation Statement in substantially the form attached hereto as Exhibit C. Upon issuance of shares hereunder, M.I.T. will, at COMPANY'S direction, execute a shareholder agreement, co-sale agreement and voting agreement in a mutually agreeable form. (ii) Participation in Future Private Equity Offerings. M.I.T. (specifically not including M.I.T. Holders) shall have the right of first offer to purchase an *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 10 amount of securities of COMPANY of any class or kind which COMPANY proposes to sell in a non-registered private placement ("Preemptive Securities") sufficient to maintain M.I.T.'s proportionate beneficial ownership interest in COMPANY (on an as-converted, fully diluted basis) (M.I.T's "Pro Rata Portion" as defined below). Notwithstanding the foregoing, Preemptive Securities will not include and, M.I.T. will not have a right of first offer as provided in this Agreement to purchase (i) securities issued upon the closing of a public offering of COMPANY's common stock resulting in gross proceeds to COMPANY of at least $10 million (a "Qualified Public Offering"), (ii) securities issued upon conversion of Preferred Stock or other warrants or other convertible or exercisable securities of COMPANY outstanding as of the date hereof, (iii) securities issued in connection with any stock split or stock dividend of COMPANY, recapitalizations or the like, (iv) Common Stock issued to employees, officers, or directors of, or contractors, consultants or advisors to, COMPANY pursuant to stock purchase or stock option plans, stock bonuses or awards, contracts or other arrangements approved by COMPANY's Board of Directors, (v) shares of capital stock issued to a financial institution which has loaned funds to COMPANY, the terms of which are approved by COMPANY's Board of Directors, (vi) shares of capital stock issued to equipment or real property lessors, the terms of which are approved by COMPANY's Board of Directors, (vii) shares of capital stock issued in connection with the acquisition of technology or licenses, the terms of which are approved by COMPANY's Board of Directors, or (viii) securities issued to non-financial corporations in connection with a license, distribution, development, foundry or similar "corporate partner" agreement, the terms of which are approved by COMPANY's Board of Directors. If COMPANY wishes to make any such sale of Preemptive Securities, it shall give M.I.T. prior written notice ("Prior Written Notice") of the proposed sale. The notice shall set forth (i) COMPANY's bona fide intention to offer Preemptive Securities and (ii) the material terms and conditions of the proposed sale (including the number of shares to be offered and the price, if any, for which COMPANY proposes to offer such share), and the date by which the Acceptance Notice (as defined below) is due, and shall constitute an offer to sell Preemptive Securities to M.I.T. on such terms and conditions. M.I.T. may accept such offer by delivering a written notice of acceptance (an "Acceptance Notice") to COMPANY within fifteen (15) days after receipt of the Prior Written Notice. Notwithstanding the foregoing, COMPANY shall provide M.I.T. with up to thirty (30) days after M.I.T.'s receipt of the Prior Written Notice before M.I.T.'s required delivery of the Acceptance Notice, if such additional time will not unduly delay or jeopardize the closing of the COMPANY's proposed sale of such Preemptive Securities. M.I.T. in exercising their rights of first offer shall be entitled at their option to participate in the purchase of Preemptive Securities on a pro rata basis to the extent necessary to maintain M.I.T.'s proportionate beneficial ownership interest in COMPANY (M.I.T.'s "Pro Rata Portion") (for purposes of determining M.I.T.'s Pro Rata Portion with respect to any issuance of Preemptive Securities, other security holders shall be 11 treated as owning that number of shares of Common Stock into which any outstanding Preferred Stock may be converted, while the total COMPANY interest will be calculated on an as-converted to Common Stock basis, assuming full conversion and exercise of all outstanding convertible or exercisable securities). If M.I.T. elects to exercise its right of first offer and does not complete the purchase of such Preemptive Securities within ten (10] days after delivery of its Acceptance Notice to COMPANY, COMPANY may complete the sale of Preemptive Securities on the terms and conditions specified in COMPANY's notice within the one hundred and twenty (120) day period following the expiration of such ten (10) day period. If COMPANY does not enter into an agreement for the sale of Preemptive Securities to M.I.T. pursuant to a delivered Acceptance Notice within such ten (10) day period, or if COMPANY does not otherwise consummate an agreement for the sale of Preemptive Securities within such one hundred and twenty (120) day period, the right provided hereunder shall be deemed to be revived and all future shares of Preemptive Securities shall not be offered unless first re-offered to M.I.T. in accordance with this Agreement. (iii) Waiver and Expiration of Right of First Offer. The right of first offer granted under this Agreement shall terminate upon the closing of a firm commitment for a Qualified Public Offering. The right of first offer granted to M.I.T. under this Agreement may not be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely) by written consent from a majority of COMPANY'S Preferred Stock having a right of first offer to purchase COMPANY securities, unless M.I.T. also consents in writing to such waiver of the right granted to M.I.T. hereunder, which consent shall not be unreasonably withheld. 4.2 Payments. (a) Method of Payment. All payments under this Agreement should be made payable to "Massachusetts Institute of Technology" and sent to the address identified in Section 14.1. Each payment should reference this Agreement and identify the obligation under this Agreement that the payment satisfies. (b) Payments in U.S. Dollars. All payments due under this Agreement shall be drawn on a United States bank and shall be payable in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the Wall Street Journal) on the last working day of the calendar quarter of the applicable REPORTING PERIOD. Such payments shall be without deduction of exchange, collection, or other charges, and, specifically, without deduction of withholding or similar taxes or other government imposed fees or taxes, except as permitted in the definition of NET SALES. 12 (c) Late Payments. Any payments by COMPANY that are not paid on or before the date such payments are due under this Agreement shall bear interest, to the extent permitted by law, at [*** Redacted] the Prime Rate of interest as reported in the Wall Street Journal on the date payment is due. 5. REPORTS AND RECORDS. 5.1 Frequency of Reports- (a) Before First Commercial Sale. Prior to the first commercial sale of any LICENSED PRODUCT or first commercial performance of any LICENSED PROCESS, COMPANY shall deliver reports to M.I.T. annually, within [*** Redacted] days of the end of each calendar year, containing information concerning the immediately preceding calendar year, as further described in Section 5.2. (b) Upon First Commercial Sale of a LICENSED PRODUCT or Commercial Performance of a LICENSED PROCESS. COMPANY shall report to M.I.T. the date of first commercial sale of a LICENSED PRODUCT and the date of first commercial performance of a LICENSED PROCESS within [*** Redacted] days of occurrence in each country. (c) After First Commercial Sale. After the first commercial sale of a LICENSED PRODUCT or first commercial performance of a LICENSED PROCESS, COMPANY shall deliver reports to M.I.T. within [*** Redacted] days of the end of each REPORTING PERIOD, containing information concerning the immediately preceding REPORTING PERIOD, as further described in Section 5.2. 5.2 Content of Reports and Payments. Each report delivered by COMPANY to M.I.T. shall contain at least the following information for the immediately preceding REPORTING PERIOD: (a) the number of LICENSED PRODUCTS sold, leased or distributed by COMPANY, its AFFILIATES and SUBLICENSEES to independent third parties in each country, and, if applicable, the number of LICENSED PRODUCTS used by COMPANY, its AFFILIATES and SUBLICENSEES in the provision of services in each country; *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 13 (b) a description of LICENSED PROCESSES performed by COMPANY its AFFILIATES and SUBLICENSEES in each country as may be pertinent to a royalty accounting hereunder; (c) the gross price charged by COMPANY, its AFFILIATES and SUBLICENSEES for each LICENSED PRODUCT and, if applicable, the gross price charged for each LICENSED PRODUCT used to provide services in each country; and the gross price charged for each LICENSED PROCESS performed by COMPANY, its AFFILIATES and SUBLICENSEES in each country; (d) calculation of NET SALES for the applicable REPORTING PERIOD in each country, including a listing of applicable deductions; (e) total royalty payable on NET SALES in U.S. dollars, together with the exchange rates used for conversion; (f) the amount of SUBLICENSE INCOME received by COMPANY from each SUBLICENSEE and the amount due to M.I.T. from such SUBLICENSE INCOME, including an itemized breakdown of the sources of income comprising the SUBLICENSE INCOME; and (g) the number of sublicenses entered into for the PATENT RIGHTS, LICENSED PRODUCTS and/or LICENSED PROCESSES. (h) the dollar amount funded by COMPANY, AFFILIATES and SUBLICENSEES toward research and development pursuant to Section 4.1 (d) of this Agreement. If no amounts are due to M.I.T. for any REPORTING PERIOD, the report shall so state. 5.3 Financial Statements. On or before the [*** Redacted] day following the close of COMPANY'S fiscal year, COMPANY shall provide M.I.T. with COMPANY'S financial statements for the preceding fiscal year including, at a minimum, a balance sheet and an income statement, certified by COMPANY's treasurer, chief financial officer, or vice president of finance, or by an independent auditor. All financial statements provided by COMPANY shall be treated as confidential in accordance with the requirements of Section 14.1. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 14 5.4 Records. COMPANY shall maintain, and shall cause its AFFILIATES and SUBLICENSEES to maintain, complete and accurate records relating to the rights and obligations under this Agreement and any amounts payable to M.I.T. in relation to this Agreement, which records shall contain sufficient information to permit M.I.T. to confirm the accuracy of any reports delivered to M.I.T. and compliance in other respects with this Agreement. The relevant party shall retain such records for at least [*** Redacted] years following the end of the calendar year to which they pertain, during which time M.I.T., or M.I.T.'s appointed agents, shall have the right, at M.I.T.'s expense, to inspect such records during normal business hours to verify any reports and payments made or compliance in other respects under this Agreement. In the event that any audit performed under this Section reveals an underpayment in excess of [*** Redacted], COMPANY shall bear the full cost of such audit and shall remit any amounts due to M.I.T. within [*** Redacted] days of receiving notice thereof from M.I.T. 6. PATENT PROSECUTION. 6.1 Responsibility for PATENT RIGHTS. M.I.T. shall prepare, file, prosecute, and maintain all of the PATENT RIGHTS. COMPANY shall have reasonable opportunities to advise M.I.T. and shall cooperate with M.I.T. in such filing, prosecution and maintenance. While both Parties accept the current counsel for the preparation, maintenance and prosecution of PATENT RIGHTS (PATENT COUNSEL), M.I.T. and COMPANY shall each have the right to notify the other Party of a desire to designate new or different PATENT COUNSEL. In the event of such notification, M.I.T. and COMPANY shall meet and mutually agree upon new or different PATENT COUNSEL. In the event the parties fail to agree, M.I.T., shall choose a new PATENT COUNSEL. 6.2 International (non-United States) Filings. Appendix A and Appendix B include a list of countries in which patent applications corresponding to the United States patent applications have been filed, prosecuted, and maintained. Each Appendix may be amended by mutual agreement of COMPANY and M.I.T. to add additional countries in which foreign applications shall be filed after the EFFECTIVE DATE. Notwithstanding the foregoing, failure to amend the Appendices to reflect international or foreign filings that are otherwise subject to this Agreement shall not limit the PATENT RIGHTS hereunder. 6.3 Payment of Expenses. Payment of all fees and costs, including attorneys fees, relating to the filing, prosecution and maintenance of the PATENT RIGHTS not reimbursed by other licensees shall be the responsibility of COMPANY, whether such amount were incurred before or after the EFFECTIVE DATE. As of [*** Redacted], M.I.T. has incurred *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 15 approximately [*** Redacted] for such patent-related fees and costs in FIELD A. As of [*** Redacted], COMPANY'S portion of patent related fees and costs in FIELD B equals approximately [*** Redacted]. COMPANY shall reimburse all amounts due pursuant to this Section within [*** Redacted] days of invoicing, which invoicing shall include reasonable documentation of amounts due, including copies of relevant portions of invoices to M.I.T.; late payments shall accrue interest pursuant to Section 4.2(c). In all instances, M.I.T. shall pay the fees prescribed for large entities to the United States Patent and Trademark Office. 7. INFRINGEMENT. 7.1 Notification of Infringement. Each party agrees to provide written notice to the other party promptly after becoming aware of any infringement of the PATENT RIGHTS. 7.2 Right to Prosecute Infringements. (a) COMPANY Right to Prosecute. So long as COMPANY remains the exclusive licensee of the PATENT RIGHTS in the relevant FIELD in the TERRITORY, COMPANY, to the extent permitted by law, shall have the right, under its own control and at its own expense, to prosecute any third party infringement of the PATENT RIGHTS in such FIELD in the TERRITORY, subject to Sections 7.4 and 7.5. If required by law, M.I.T. shall permit any action under this Section to be brought in its name, including being joined as a party-plaintiff, provided that COMPANY shall hold M.I.T. harmless from, and indemnify M.I.T. against, any costs, expenses, or liability that M.I.T. incurs in connection with such action. Prior to commencing any such action, COMPANY shall consult with M.I.T. and shall consider the views of M.I.T. regarding the advisability of the proposed action and its effect on the public interest. COMPANY shall not enter into any settlement, consent judgment, or other voluntary final disposition of any infringement action under this Section without the prior written consent of M.I.T. which consent shall not be unreasonably withheld. (b) M.I.T. Right to Prosecute. In the event that COMPANY is unsuccessful in persuading the alleged infringer to desist or fails to have initiated an infringement action within a reasonable time after COMPANY first becomes aware of the basis for such action, M.I.T. shall have the right, at its sole discretion, to prosecute such infringement under its sole control and at its sole expense, and any recovery obtained shall belong to M.I.T. 7.3 Declaratory Judgment Actions. In the event that a declaratory judgment action is brought against M.I.T. or COMPANY by a third party alleging invalidity, unenforceability, or *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 16 non-infringement of the PATENT RIGHTS, M.I.T., at its option, shall have the right within [*** Redacted] after commencement of such action to take over the sole defense of the action at its own expense. If M.I.T. does not exercise this right, COMPANY may take over the sole defense of the action at COMPANY's sole expense, subject to Sections 7.4 and 7.5. 7.4 Offsets. COMPANY may offset a total of [*** Redacted] of any expenses incurred under Sections 7.2 and 7.3 against any payments due to M.I.T. under Article 4, provided that in no event shall such payments under Article 4, when aggregated with any other offsets and credits allowed under this Agreement, be reduced by more than [*** Redacted] in any REPORTING PERIOD. 7.5 Recovery. Any recovery obtained in an action brought by COMPANY under Sections 7.2 or 7.3 shall be distributed as follows: (i) each party shall be reimbursed for any expenses incurred in the action (including the amount of any royalty or other payments withheld from M.I.T. as described in Section 7.4), (ii) as to ordinary damages, COMPANY shall receive an amount equal to [*** Redacted], or whichever measure of damages the court shall have applied, and COMPANY shall pay to M.I.T. based upon such amount a [*** Redacted] that COMPANY [*** Redacted], and (iii) as to special or punitive damages, the COMPANY shall pay M.I.T. [*** Redacted] of any such award. 7.6 Cooperation. Each party agrees to cooperate in any action under this Article which is controlled by the other party, provided that the controlling party reimburses the cooperating party promptly for any costs and expenses incurred by the cooperating party in connection with providing such assistance. 8. INDEMNIFICATION AND INSURANCE 8.1 Indemnification. (a) Indemnity. Except in the case of a final determination of M.I.T.'s gross negligence, COMPANY shall indemnify, defend, and hold harmless M.I.T. and its trustees, officers, faculty, students, employees, and agents and their respective successors, heirs and assigns (the "Indemnitees"), against any liability, damage, loss, or expense (including reasonable attorneys fees and expenses) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, actions, demands or judgments arising out of any theory of liability *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 17 (including without limitation actions in the form of tort, warranty, or strict liability and regardless of whether such action has any factual basis) concerning any product, process, or service that is made, used, sold, imported, or performed pursuant to any right or license granted to COMPANY or AFFILIATES under this Agreement. (b) Procedures. The Indemnitees agree to provide COMPANY with [*** Redacted] written notice of any claim, suit, action, demand, or judgment for which indemnification is sought under this Agreement. COMPANY agrees, at its own expense, to provide attorneys reasonably acceptable to M.I.T. to defend against any such claim. The Indemnitees shall cooperate fully with COMPANY in such defense and will permit COMPANY to conduct and control such defense and the disposition of such claim, suit, or action (including all decisions relative to litigation, appeal, and settlement); provided, however, that any Indemnitee shall have the right to retain its own counsel, at the expense of COMPANY, if representation of such Indemnitee by the counsel retained by COMPANY would be inappropriate because of actual or potential differences in the interests of such Indemnitee and any other party represented by such counsel. COMPANY agrees to keep M.I.T. informed of the progress in the defense and disposition of such claim and to consult with M.I.T. with regard to any proposed settlement. 8.2 Insurance. Prior to the first commercial sale of a LICENSED PRODUCT or LICENSED PROCESS, and thereafter, COMPANY shall obtain and carry in full force and effect commercial general liability insurance, including product liability and errors and omissions insurance which shall protect COMPANY and Indemnitees with respect to events covered by Section 8.1 (a) above. Such insurance (i) shall be issued by an insurer licensed to practice in the Commonwealth of Massachusetts or an insurer pre-approved by M.I.T., such approval not to be unreasonably withheld, (ii) shall list M.I.T. as an additional insured thereunder, (iii) shall be endorsed to include product liability coverage, and (iv) shall require [*** Redacted] written notice to be given to M.I.T. prior to any cancellation or material change thereof. The limits of such insurance shall not be less than [*** Redacted] per occurrence with an aggregate of [*** Redacted] for bodily injury including death; [*** Redacted] per occurrence with an aggregate of [*** Redacted] for property damage; and [*** Redacted] per occurrence with an aggregate of [*** Redacted] for errors and omissions. In the alternative, COMPANY may self-insure subject to prior approval of M.I.T. COMPANY shall provide M.I.T. with Certificates of Insurance evidencing compliance with this Section. COMPANY shall continue to maintain such insurance or self-insurance after the expiration or termination of this Agreement during any period in which COMPANY or any AFFILIATE or SUBLICENSEE continues (i) to make, use, or sell a product that was a LICENSED PRODUCT under this Agreement or (ii) to *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 18 perform a service that was a LICENSED PROCESS under this Agreement, and thereafter for a period of [*** Redacted] years. 9. NO REPRESENTATIONS OR WARRANTIES EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET FORTH IN THIS AGREEMENT, M.I.T. MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE PATENT RIGHTS, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY OF PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. Specifically, and not to limit the foregoing, M.I.T. makes no warranty or representation (i) regarding the validity or scope of the PATENT RIGHTS, and (ii) that the exploitation of the PATENT RIGHTS or any LICENSED PRODUCT or LICENSED PROCESS will not infringe any patents or other intellectual property rights of M.I.T. or of a third party. In no event shall M.I.T.'s liability for breaching any representation or warranty set forth herein exceed the cash amount actually received by M.I.T. from COMPANY under Article 4. IN NO EVENT SHALL M.I.T., ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER M.I.T. SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING. 10. ASSIGNMENT. This Agreement is personal to COMPANY and no rights or obligations may be assigned by COMPANY without the prior written consent of M.I.T., except in conjunction with a sale of all or substantially all of the assets of the COMPANY, provided that the Assignee agree in writing to accept all obligations of the COMPANY under this Agreement. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 19 11. GENERAL COMPLIANCE WITH LAWS 11.1 Compliance with Laws. COMPANY shall use reasonable commercial efforts to comply with all commercially material local, state, federal, and international laws and regulations relating to the development, manufacture, use, and sale of LICENSED PRODUCT and LICENSED PROCESSES. 11.2 Export Control. COMPANY and its AFFILIATES and SUBLICENSEES shall comply with all United States laws and regulations controlling the export of certain commodities and technical data, including without limitation all Export Administration Regulations of the United States Department of Commerce. Among other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and technical data to specified countries. COMPANY hereby gives written assurance that it will comply with, and will cause its AFFILIATES and SUBLICENSEES to comply with, all United States export control laws and regulations, that it bears sole responsibility for any violation of such laws and regulations by itself or its AFFILIATES or SUBLICENSEES, and that it will indemnify, defend, and hold M.I.T. harmless (in accordance with Section 8.1) for the consequences of any such violation. 11.3 Non-Use of M.I.T. Name. COMPANY and its AFFILIATES and SUBLICENSEES shall not use the name of "Massachusetts Institute of Technology," [*** Redacted] or any variation, adaptation, or abbreviation thereof, or of any of its trustees, officers, faculty, students, employees, or agents, or any trademark owned by M.I.T., or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of M.I.T. The foregoing notwithstanding, without the consent of M.I.T., COMPANY may state that it is licensed by M.I.T. under one or more of the patents and/or patent applications comprising the PATENT RIGHTS. 11.4 Marking of LICENSED PRODUCTS. To the extent commercially feasible and consistent with prevailing business practices, COMPANY shall mark, and shall cause its AFFILIATES and SUBLICENSEES to mark, all LICENSED PRODUCTS that are manufactured or sold under this Agreement with the number of each issued patent under the PATENT RIGHTS that applies to such LICENSED PRODUCT. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 20 12. TERMINATION 12.1 Voluntary Termination by COMPANY. COMPANY shall have the right to terminate this Agreement, for any reason, (i) upon at least [*** Redacted] prior written notice to M.I.T., such notice to state the date at least [*** Redacted] in the future upon which termination is to be effective, and (ii) upon payment of all amounts due to M.I.T. through such termination effective date. 12.2 Cessation of Business. If COMPANY ceases to carry on its business related to this Agreement as indicated by, inter alia, the COMPANY's failure to meet its diligence obligations as set forth in Article 3 of this Agreement, as originally executed, M.I.T. shall have the right to terminate this Agreement [*** Redacted] upon written notice to COMPANY. Notwithstanding the foregoing, it is agreed that COMPANY'S failure to meet the diligence obligations set forth in Article 3 of this Agreement alone, either as originally executed or as amended from time to time, shall not be a cessation of business related to this Agreement, as contemplated by this section. 12.3 Termination for Default. (a) Nonpayment. In the event COMPANY fails to pay any amounts due and payable to M.I.T. hereunder, and fails to make such payments within [*** Redacted] days after receiving written notice of such failure, M.I.T. may terminate this Agreement [*** Redacted] upon written notice to COMPANY. (b) Material Breach. In the event COMPANY commits a material breach of its obligations under this Agreement, except for breach as described in Section 12.3(a), and fails to cure that breach within [*** Redacted] after receiving written notice thereof, M.I.T. may terminate this Agreement [*** Redacted] upon written notice to COMPANY. If COMPANY objects to the basis for such termination in writing within [*** Redacted] days of such written notice, then any such termination shall be stayed pending final resolution as provided under Section 13 of this Agreement. 12.4 Effect of Termination. (a) Survival. The following provisions shall survive the expiration or termination of this Agreement: Articles 1, 8, 9, 13 and 14, and Sections 4.1 (f), 5.2 (obligation to provide final report and payment), 5.4, 11.1, 11.2, 12.4 and 14.1 (Confidentiality). *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 21 (b) Inventory. Upon the early termination of this Agreement. COMPANY and its AFFILIATES and SUBLICENSEES may complete and sell any work-in-progress and inventory of LICENSED PRODUCTS that exist as of the effective date of termination, provided that (j) COMPANY pays M.I.T. the applicable running royalty or other amounts due on such sales of LICENSED PRODUCTS in accordance with the terms and conditions of this Agreement, and (ii) COMPANY and its AFFILIATES and SUBLICENSEES shall complete and sell all work-in-progress and inventory of LICENSED PRODUCTS within [*** Redacted] after the effective date of termination. (c) Pre-termination Obligations. In no event shall termination of this Agreement release COMPANY, AFFILIATES, or SUBLICENSEES from the obligation to pay any amounts that became due on or before the effective date of termination. 13. DISPUTE RESOLUTION. 13.1 Mandatory Procedures. The parties agree that any dispute arising out of or relating to this Agreement shall be resolved solely by means of the procedures set forth in this Article, and that such procedures constitute legally binding obligations that are an essential provision of this Agreement. If either party fails to observe the procedures of this Article, as may be modified by their written agreement, the other party may bring an action for specific performance of these procedures in any court of competent jurisdiction. 13.2 Equitable Remedies. Although the procedures specified in his Article are the sole and exclusive procedures for the resolution of disputes arising out of or relating to this Agreement, either party may seek a preliminary injunction or other provisional equitable relief if, in its reasonable judgment, such action is necessary to avoid irreparable harm to itself or to preserve its rights under this Agreement. 13.3 Dispute Resolution Procedures. (a) Mediation. In the event any dispute arising out of or relating to this Agreement remains unresolved within [*** Redacted] from the date the affected party informed the other party of such dispute, either party may initiate mediation upon written notice to the other party ("Notice Date"), whereupon both parties shall be obligated to engage in a mediation proceeding under the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes (http://www.cpradr.org), except that specific provisions of this Article shall override inconsistent provisions of the CPR Model Procedure, The mediator will be *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 22 selected from the CPR Panels of Neutrals. If the parties cannot agree upon the selection of a mediator within [*** Redacted] after the Notice Date, then upon the request of either party, the CPR shall appoint the mediator. The parties shall attempt to resolve the dispute through mediation until the first of the following occurs: (i) the parties reach a written settlement; (ii) the mediator notifies the parties in writing that they have reached an impasse; (iii) the parties agree in writing that they have reached an impasse; or (iv) the parties have not reached a settlement within [*** Redacted] after the Notice Date. (b) Trial Without Jury. If the parties fail to resolve the dispute through mediation, or if neither party ejects to initiate mediation, each party shall have the right to pursue any other remedies legally available to resolve the dispute, provided, however, that the parties expressly waive any right to a jury trial in any legal proceeding under this Article. 13.4 Performance to Continue. Each party shall continue to perform its undisputed obligations under this Agreement pending final resolution of any dispute arising out of or relating to this Agreement; provided, however, that a party may suspend performance of its undisputed obligations during any period in which the other party fails or refuses to perform its undisputed obligations. Nothing in this Article is intended to relieve COMPANY from its obligation to make undisputed payments pursuant to Articles 4 and 6 of this Agreement, not to permit M.I.T. to bring suit against COMPANY, its AFFILIATES and/or SUBLICENSEES for infringement of any of the PATENT RIGHTS, pending final resolution. 13.5 Statute of Limitations. The parties agree that all applicable statutes of limitation and time-based defenses (such as estoppel and laches) shall be tolled while the procedures set forth in Sections 13.3(a) are pending. The parties shall cooperate in taking any actions necessary to achieve this result. 14. MISCELLANEOUS. 14.1 Confidentiality. All information provided to M.I.T. by COMPANY under this agreement, including but not limited to relevant portions of sublicense agreements, technical reports, development plans, marketing evaluations and reports, information obtained from plant inspections, and royalty reports, shall be deemed to be Confidential Information if such information is marked "Confidential." (a) M.I.T. will maintain the confidentiality of the Confidential Information and will not disclose the Confidential Information to any third party, and will not use the Confidential Information for any purpose other than as necessary to administer this Agreement. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 23 In maintaining the confidentiality of the Confidential Information, M.I.T. will use the same degree of care it uses in protecting its own information of like import, and in no event, less than reasonable care. (b) The obligations of M.I.T. with respect to Confidential Information will not apply to information disclosed under this agreement to the extent such information: (i) is generally known to the public at the time of disclosure or becomes generally known through no wrongful act on the part of M.I.T; (ii) is in M.I.T.'s possession at the time of disclosure other than as a result of prior disclosure by COMPANY or a breach of any legal obligation by M.I.T. or a third party; (iii) becomes known to M.I.T. through disclosure by sources other than COMPANY having no duty of confidentiality to COMPANY, whether direct or indirect, with respect to such information and having the legal right to disclose such information; (iv) is independently developed by M.I.T. without reference to or reliance upon the Confidential Information; or (v) is required to be disclosed by M.I.T. to comply with applicable laws or governmental regulations, provided that the M.I.T. provides prior written notice of such disclosure to the COMPANY and takes reasonable and lawful actions to avoid and/or minimize the extent of such disclosure. (c) The provisions of this section relating to Confidentiality of research and development reports provided pursuant to Article 3 and Sections 5.1 and 5.2 shall be in force and effect until [*** Redacted] following the termination of this Agreement. The provisions of this section relating to other disclosures of Confidential Information shall be in force and effect for [*** Redacted], as to each specific disclosure, from the date of each such disclosure. 14.2 Notice. Any notices required or permitted under this Agreement shall be in writing, shall specifically refer to this Agreement, and shall be sent by hand, recognized national overnight courier, confirmed facsimile transmission, confirmed electronic mail, or registered or certified mail, postage prepaid, return receipt requested, to the following addresses or facsimile numbers of the parties: *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 24 If to M.I.T., all matters relating to the license: Technology Licensing Office, Room NE25-230 Massachusetts Institute of Technology 77 Massachusetts Avenue Cambridge, MA 02139-4307 Attention: Director Tel: 617-253-6966 Fax: 617-258-6790 If to M.I.T., relating to any equity action after the initial issuance of shares: Massachusetts Institute of Technology Treasurer's Office 238 Main Street Cambridge, MA 02142 Attention: Phillips B. Moore Tel: 617-253-5422 Fax: 617-258-6676 If to COMPANY: Nanosys, Inc. 2625 Hanover Street Palo Alto, CA 94304 Attention: Vice President, Intellectual Property Tel: (650) 846-2500 Fax: (650) 846-2501 All notices under this Agreement shall be deemed effective upon receipt. A party may change its contact information immediately upon written notice to the other party in the manner provided in this Section. 14.3 Governing Law. This Agreement and all disputes arising out of or related to this Agreement, of the performance, enforcement, breach or termination hereof, and any remedies relating thereto, shall be construed, governed, interpreted and applied in accordance with the laws of the Commonwealth of Massachusetts, U.S.A., without regard to conflict of laws principles, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted. 14.4 Force Majeure. Neither party will be responsible for delays resulting from causes beyond the reasonable control of such party, including without limitation fire, explosion, flood, war, strike, or not, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes are removed. 25 14.5 Amendment and Waiver. This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties. Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar. 14.6 Severability. In the event that any provision of this Agreement shall be held invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect any other provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent. If the parties fail to reach a modified agreement within [*** Redacted] days after the relevant provision is held invalid or unenforceable, then the dispute shall be resolved in accordance with the procedures set forth in Article 13. While the dispute is pending resolution, this Agreement shall be construed as if such provision we re deleted by agreement of the parties. 14.7 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns. 14.8 Headings. All headings are for convenience only and shall not affect the meaning of any provision of this Agreement. 14.9 Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements or understandings between the parties relating to its subject matter. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 26 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. THE EFFECTIVE DATE OF THIS AGREEMENT IS Sept 5, 2002. MASSACHUSETTS INSTITUTE OF TECHNOLOGY NANOSYS, INC. By: /s/ Lita L. Nelsen By: /s/ Lawrence A. Bock --------------------------------- --------------------------------- Name: LITA L. NELSEN, DIRECTOR Name: LAWRENCE BOCK TECHNOLOGY LICENSING OFFICE Title: President Title: MASSACHUSETTS INSTITUTE OF TECHNOLOGY By: /s/ Alice P. Gast ---------------------------------- Name: Alice P. Gast, Ph.D. Title: Robert T. Haslam Professor, Vice President for Research, and Associate Provost 27 APPENDIX A List of Patent Applications and Patents I. United States Patents and Applications [*** Redacted] II. International (non-U.S.) Patents and Applications [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 28 APPENDIX B List of Patent Applications and Patents I. United States Patents and Applications [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 29 [*** Redacted] II. International (non-US.) Patents and Europe Applications [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 30 EXHIBIT A CONFLICT AVOIDANCE STATEMENT Name: Moungi Bawendi Dept. or Lab.: Chemistry Company: Nanosys Address: _________________________________ __________________________________________ Licensed Technology: _____________________ __________________________________________ __________________________________________ Because of the M.I.T. license granted to the above company and my equity* position and continuing relationship with this company, I acknowledge the potential for a possible conflict of interest between the performance of research at M.I.T. and my contractual or other obligations to this company. Therefore, I will not: 1) use students at M.I.T. for research and development projects for the company; 2) restrict or delay access to information from my M.I.T. research; 3) take direct or indirect research support from the company in order to support my activities at M.I.T.; or 4) employ students at the company, except in accordance with Section 4.5.2, "Faculty and Students," in the Policies and Procedures Guide. In addition, in order to avoid the appearance of a conflict, I will attempt to differentiate clearly between the intellectual directions of my M.I.T. research and my contributions to the company. To that end, I will expressly inform my department head/laboratory director annually of the general nature of my activities on behalf of the company. Signed: Moungi Bawendi ---------------------- Date: 8/12/02 Approved by: /s/ Stephen J. Lippard Name (print): STEPHEN J. LIPPARD (Dept. Head or Lab Dir) * "Equity" includes stock, options, warrants or other financial instruments convertible into stock, which are directly or indirectly controlled by the inventor. 31 EXHIBIT B INVENTOR/AUTHOR ACKNOWLEDGMENT OF NO EQUITY DISTRIBUTION FORM VERSION 8/22/01 In partial reliance on the undersigned's execution of this Acknowledgment, M.I.T. has entered into the license agreement to which this Acknowledgment is attached (the "LICENSE") in which COMPANY received certain licenses to the technology listed below, on some or all of which the undersigned is a listed inventor or author. The undersigned, independently of the LICENSE, has received or will soon acquire equity in Nanosys ("COMPANY"), and, in accordance with M.I.T.'s licensing policies contained in M.I.T.'s Guide to the Ownership, Distribution and Commercial Development of M.I.T. Technology as that policy may be amended from time to time (specifically Section 4.2.5 as of this Form Version date), the undersigned, on his/her own behalf and on behalf of his/her heirs and assigns, acknowledges and agrees that he/she has no right to receive any share of equity income received by M.I.T. in consideration for the LICENSE. Technology Licensed as of the EFFECTIVE DATE of the LICENSE: _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ Witness: /s/(ILLEGIBLE) Signed: /s/ Moungi Bawendi ------------------------- -------------------------- Print Name: Moungi Bawendi Date: 8/12/02 32 EXHIBIT C INVESTOR REPRESENTATION STATEMENT (attached) 33 INVESTOR REPRESENTATION STATEMENT _______________, 2002 In connection with the purchase of _______________shares of Common Stock (the "SHARES")of Nanosys, Inc. (the "COMPANY"), the undersigned M.I.T. Holder, as defined in the [AGREEMENT] dated as_______, does hereby represent to the Company as follows: (a) Preexisting Relationship with Company; Business and Financial Experience; Accredited Investor. I either (i) have a preexisting business and/or personal relationship with the Company and/or its officers, directors or controlling persons, or (ii) by reason of my business or financial experience or the business or financial experience of my professional advisors who are unaffiliated with the Company and who are not compensated by the Company, have the capacity to protect my own interests in connection with the receipt of the Shares. (b) Investment Intent; Blue Sky. I am acquiring the Shares for investment for my own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof. I understand that the issuance of the Shares has not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of my investment intent and the accuracy of my representations as expressed herein. My address set forth below represents my true and correct state of domicile, upon which the Company may rely for the purpose of complying with applicable "Blue Sky" laws. (c) Rule 144. I acknowledge that the Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. I am aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares received in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being effected through a "broker's transaction" or in a transaction directly with a "market maker" and the number of shares being sold during any three-month period not exceeding specified limitations. (d) No Public Market. I understand that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company's securities. (e) Restrictions on Transfer; Restrictive Legends. I understand that the transfer of the Shares is restricted by applicable state and Federal securities laws, and that the certificates representing the Shares will be imprinted with legends restricting transfer except in compliance therewith. (f) Access to Data. I have had an opportunity to discuss the Company's business, management and financial affairs with the Company's management. I have also had an opportunity to ask questions of officers of the Company. I understand that such discussions, as well as any written information issued by the Company, are intended to describe certain aspects of the Company's business and prospects but are not a thorough or exhaustive description. (g) Tax Liability. I have reviewed with my own tax advisors the tax consequences of the transactions contemplated by this Agreement. I will rely solely on such advisors and not on any statements or representations of the Company or any of the Company's agents with respect to such tax consequences. I understand that I, and not the Company, shall be responsible for my own tax liability that may arise as a result of my receipt of the Shares. (h) Limited Operating History. I acknowledge that the Company was incorporated on July 12, 2001 as a new business and has a limited operating history. (i) Risks. I am aware that the Securities are highly speculative and that there can be no assurance as to what return, if any, there may be. I am aware that the Company may issue additional securities in the future which could result in the dilution of my ownership interest in the Company. (j) Additional Undertaking. I hereby agree to take whatever additional action and execute whatever additional documents the Company 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 myself or the Shares pursuant to the express provisions described herein. M.I.T. HOLDER _______________________________ SIGNATURE _______________________________ PRINT NAME ADDRESS: _______________________________ _______________________________ _______________________________ -2- EX-10.10.1 26 f97636orexv10w10w1.txt EXHIBIT 10.10.1 EXHIBIT 10.10.1 December 13, 2002 Matthew Murphy Nanosys Incorporated 2625 Hanover Street Palo Alto, CA 94304 Re: Exclusive Patent License Agreement - Amendment One Dear Matthew: This Amendment adds the following M.I.T. Cases to the indicated Appendices of the M.I.T. - Nanosys Inc. Exclusive Patent License Agreement effective September 5, 2002 (Agreement): (1) Add to Appendix A: [*** Redacted] (2) Add to Appendix B: [*** Redacted] Except as specifically modified or amended hereby, the Agreement shall remain in full force and effect and, as modified or amended, is hereby ratified, confirmed and approved. No provision of this Amendment may be modified or amended except expressly in a writing signed by both parties nor shall any terms be waived except expressly in a writing signed by the party charged therewith. This Amendment shall be governed in accordance with the laws of the Commonwealth of Massachusetts. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. The Effective Date of this Amendment is Dec 13, 2002 ________________. Please indicate your acceptance of this First Amendment by countersigning this letter and returning it to M.I.T. Massachusetts Institute of Technology Nanosys Incorporated By: /s/ Lita Nelson By: /s/ Matthew Murphy _________________________________ ________________________________ Name: Lita Nelson Name: Matthew Murphy _________________________________ _______________________________ Title: Director, Title: Vice President, I.P. Technology Licensing Office ______________________________ _______________________________ Date: 12/31/02 Date: 12/19/02 _________________________________ _______________________________ EX-10.10.2 27 f97636orexv10w10w2.txt EXHIBIT 10.10.2 EXHIBIT 10.10.2 March 10, 2003 Matthew Murphy Nanosys Incorporated 2625 Hanover Street Palo Alto, CA 94304 Re: Exclusive Patent License Agreement - Amendment Two Dear Matthew: This Amendment removes the following M.I.T. Case from Appendix A of the M.I.T. - Nanosys Inc. Exclusive License Agreement effective September 5, 2002 (Agreement): [*** Redacted] Except as specifically modified or amended hereby, the Agreement shall remain in full force and effect and, as modified or amended, is hereby ratified, confirmed, and approved. No provision of this Amendment may be modified or amended except expressly in a writing signed by both parties nor shall any terms be waived except expressly in a writing signed by the party charged therewith. This Amendment shall be governed in accordance with the laws of the Commonwealth of Massachusetts. The Effective Date of this Amendment is March 12, 2003. Please indicate your acceptance of this Second Amendment by countersigning this letter and returning it to M.I.T. Massachusetts Institute of Technology Nanosys Incorporated By: /s/ John H. Turner, Jr. By: /s/ Matthew Murphy --------------------------------- -------------------------------- Name: John H. Turner, Jr. Name: Matthew Murphy ------------------------------- ------------------------------ Title: Associate Director Title: V.P. Intellectual Property Technology Licensing Office ----------------------------- ------------------------------ Date: 10 March 2003 Date: 3/12/03 ------------------------------- ------------------------------ *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. EX-10.11 28 f97636orexv10w11.txt EXHIBIT 10.11 EXHIBIT 10.11 PATENT LICENSE AGREEMENT BETWEEN THE TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK AND NANOSYS, INC. This Agreement is entered into this 20th day of May, 2003 (the "Effective Date") by and between Nanosys, Inc. ("Licensee"), a Delaware Corporation having its principal place of business at 2625 Hanover Street, Palo Alto, California, 94304, and The Trustees of Columbia University in the City of New York, ("Licensor"). Licensee and Licensor are hereafter referred to herein individually as "Party" and collectively as "Parties." WHEREAS, Licensor is the owner by assignment of the right title and interest to certain U.S. and foreign patents and/or patent applications related to nanocrystal based photoelectric devices; WHEREAS, Licensor desires to have the technology described and claimed in such certain patents and applications developed for commercial and other useful applications; and WHEREAS, Licensee desires to obtain exclusive rights to practice the inventions described and claimed in such certain U.S. and foreign patents and applications, and to develop and commercialize nanocrystal based photoelectric devices; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Parties, the Parties agree as follows: 1.0 DEFINITIONS 1.1 "Affiliate" means any entity which controls or is controlled by a party to this Agreement. An entity shall be regarded as in control of another entity for purposes of this Agreement if it owns or controls at least fifty percent (50%) of the shares entitled to vote in the election of directors of such entity (or in the case of an entity that is not a corporation, for the election of a corresponding managing authority). 1.2 "Combination Product" means a product sold by Licensee, where a Licensed Product is sold, in combination with another product that can reasonably be deemed to be a separate product, and which is not itself a Licensed Product. 1.3 "Licensed Patents" means U.S. Patent No. [*** Redacted], entitled [*** Redacted], all reissues (including the Reissue Patent), reexaminations, or other related U.S. patent filings directed to the same subject matter, and any foreign counterparts that claim priority to U.S. Patent No. [*** Redacted] or other related U.S. filings directed to the same subject matter. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 1.4 "Licensed Process" means any process, procedure or method, the practicing of which in a given country, practices any Valid Claim of the Licensed Patents existing in such country. 1.5 "Licensed Product" means any device, apparatus, composition of matter, or article of manufacture the existence, production or use of which in a given country practices any Valid Claim of the Licensed Patents existing in such country. 1.6 "Licensee" means Nanosys and its Affiliates. 1.7 "Net Sales" means amounts, and/or all other consideration (including any debt or equity securities or instruments), received by Licensee for the sale of Licensed Products in any country in which Patent Rights are granted or being prosecuted in good faith, less (i) customary trade, quantity, or cash discounts to the extent actually allowed and taken; (ii) amounts repaid or credited by reason of rejection or return; (iii) an allowance for actual bad debt having occurred during the reporting period, said allowance being no greater than [*** Redacted]%; (iv) [*** Redacted], any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a Licensed Product or Licensed Process which is paid by or on behalf of Licensee; and (v) outbound transportation costs prepaid or allowed and costs of insurance in transit. [*** Redacted] 1.8 "Reissue Patent" a reissue of U.S. Patent No. [*** Redacted], entitled "[*** Redacted]," under 35 U.S.C. Section 251 by the United States Patent and Trademark Office, in which at least the broadest reissue claim has [*** Redacted]. 1.9 "Sublicense Revenue" means all amounts and/or all other consideration (including any debt and/or equity securities or instruments) received by Licensee from its Sublicensee's in consideration for the granting of a sublicense to the Licensed Patents. In the case where the Licensed Patents are sublicensed by Licensee, Sublicense Revenue specifically excludes payments made to Licensee by its Sublicensees for bona fide research *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 2 - and/or development funding, or those specified payments made in consideration for the licensing or sublicensing of Licensee's own intellectual property or third party intellectual property for which Licensee has rights to sublicenses (but not including any intellectual property rights granted to Licensee hereunder). 1.10 "Valid Claim" means any issued claim of the Licensed Patents that has not expired, or been finally held as invalid or unenforceable by a court or administrative body of competent jurisdiction, as well as any pending claim of the Licensed Patents that is being prosecuted in good faith, and that has not been finally and conclusively rejected. 2.0 LICENSE GRANT 2.1 Except as expressly provided in sections 2.2, 2.3 and 2.4 Licensor hereby grants to Licensee an exclusive worldwide license, with a right to grant sublicenses, in all fields under the Licensed Patents, to make, have made, use, sell, offer for sale and import Licensed Products and to use Licensed Processes. 2.2 Notwithstanding the foregoing, Licensor shall retain a right to practice the Licensed Patents solely for noncommercial, academic research purposes. 2.3 Licensor grants to Licensee the right to grant sublicenses to third parties, provided that: (i) the Sublicensee agrees to abide by all the terms and provisions of this Agreement; (ii) the Licensee remains fully liable for the performance of its and its Sublicensee's obligations hereunder; (iii) each such sublicense is royalty-bearing at [*** Redacted], or [*** Redacted]; (iv) the Licensee notifies Licensor of any grant of a sublicense and provides to Licensor, upon request, a copy of any sublicense agreement; and (v) no such sublicense or attempt to obtain a sublicensee shall relieve the Licensee of its obligations under section 6 hereof to exercise its own best efforts, directly or through a sublicense, to discover, develop and market Licensed Product, nor relieve Licensee of its obligations to pay Licensor any and all license fees, royalties and other payments due under this Agreement. 2.4 All rights and licenses granted by Licensor to Licensee under this Agreement are subject to: (i) any limitations imposed by the terms of any government grant, government contract or government cooperative agreement applicable to the technology that is the subject of this Agreement, and/or (ii) applicable requirements of 35 U.S.C. Sections 200 et seq., as amended, and implementing regulations and policies. Without limitation of the foregoing, the Licensee agrees that, to the extent required under 35 U.S.C. Section 204, any Licensed Product used, sold, distributed, rented or leased by the Licensee, an Affiliate or a Sublicensee in the United States will be manufactured substantially in the United States. 3.0 LICENSE FEE *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 3 - 3.1 Within thirty (30) days of the effective date of this Agreement, Licensee shall pay to Licensor a non-refundable License Issue Fee in the amount of [*** Redacted]. 3.2 Licensee also hereby grants to Licensor an option (the "Initial Option") to purchase 10,000 shares of Licensee's common stock at the price of $0.19 per share (the "Exercise Price"), which is the current fair market value of the common stock. The Initial Option shall become exercisable upon the Effective Date of this Agreement. 3.3 Licensee also hereby grants to Licensor a contingent option (the "Contingent Option"; the Contingent Option and the Initial Option are sometimes hereinafter referred to singly as an "Option" and collectively as the "Options") to purchase an additional 15,000 shares of Licensee's common stock at the Exercise Price. The Contingent Option shall become exercisable upon the earliest of: (i) the issuance of a Reissue Patent based upon the Patent Rights; or (ii) Licensee's written notification to Licensee prior to May 29, 2003 that it does not wish to seek a Reissue Patent; or (iii) the business day immediately prior to the consummation of a merger, consolidation, other business combination or other transaction constituting an acquisition of the securities, assets or business of Licensee (or, if earlier, on the business day immediately prior to any applicable record date with respect thereto) as a result of which the shares of the class for which the Contingent Option is exercisable immediately prior to such event are to be changed or converted into or exchanged for any securities of another entity or other property (including cash) (an "Acquisition Transaction"). 3.4 Either Option may be exercised for a period of six months following the date that it first becomes exercisable in accordance with Section 3.2 or 3.3 (other than pursuant to clause (iii) of Section 3.3), as the case may be (the "Exercise Period"), by (i) Licensor's payment of an amount equal to the aggregate Exercise Price for the shares subject to such Option (A) by check payable to the order of the Licensee or by wire transfer to an account of Licensee, (B) at Licensor's election by offsetting against such payment, any Milestone Fee due pursuant to Section 4.0 or (C) in accordance with Section 3.6(d); and (ii) Licensor's furnishing to Licensee (in the manner provided for the giving of notice hereunder) a counterpart, executed on behalf of Licensor, of each of (1) the Common Stock Purchase Agreement (substantially in the form of the agreement attached hereto as Appendix A) (the "Purchase Agreement"); and (2) in the case of the Initial Option only, a Voting Agreement by and among Licensee and Licensor and certain other holders of common stock as of the Effective Date (substantially in the form of the agreement attached hereto as Appendix B) (the "Voting Agreement"); provided, however, that in the event of any exercise of an Option pursuant to Section 3.6(d), the Purchase Agreement shall be executed by the parties within 30 days following the consummation of an Acquisition Transaction. 3.5 Upon the exercise of either Option, Licensor shall be deemed to be the holder of record of the shares subject to such Option, notwithstanding that the transfer books of Licensee shall then be closed or certificates representing such shares shall not then have *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 4 - been actually delivered to Licensor. Subject to the proviso contained in the last sentence of Section 3.4, as soon as practicable (and in any event within 10 days) after each such exercise of an Option, Licensee shall issue and deliver to Licensor (in the manner provided for the giving of notice hereunder) a certificate or certificates representing the shares issuable upon such exercise, registered in the name of Licensor, together with a counterpart, executed on behalf of each of the signatories thereto (other than Licensor) of each of the Purchase Agreement and, in the case of the Initial Option only, the Voting Agreement. 3.6 The Exercise Price and the number of shares issuable upon exercise of each of the Options, shall be subject to adjustment, as follows: (a) In the event that Licensee shall, at any time after the date hereof, declare a dividend or distribution on the outstanding shares of the class issuable upon exercise of an Option, payable in such shares, or subdivide or combine such shares or issue any such shares by reclassification of such shares (including any such reclassification in connection with a consolidation or merger in which Licensee is the continuing corporation), then, in each case, the Exercise Price per share in effect at the time of the record date for the determination of stockholders entitled to receive such dividend or distribution or upon the effective date of such subdivision, combination, or reclassification shall be adjusted so that it shall equal the price determined by multiplying such Exercise Price by a fraction, the numerator of which shall be the number of shares of such class outstanding immediately prior to such action, and the denominator of which shall be the number of shares of such class outstanding after giving effect to such action. The number of shares issuable upon exercise of each of the Options shall simultaneously be adjusted by multiplying the number of shares theretofore issuable upon exercise of each such Option by the Exercise Price in effect on the date hereof and dividing the product so obtained by the Exercise Price, as adjusted. (b) In the event of any transaction, including, without limitation, any conversion of Licensee or a recapitalization or reorganization of the class of shares issuable upon exercise of an Option, in which the previously outstanding shares of such class shall be changed or converted into or exchanged for different securities of Licensee, or if any dividend or distribution shall be declared in respect of the class of shares issuable upon exercise of an Option or any combination of any of the foregoing (but excluding any Acquisition Transaction and any transaction covered by Section 3.6(a)) (each such transaction being herein referred to as a "Non-Acquisition Transaction" and the date of consummation of the Non-Acquisition Transaction being herein referred to as the "Consummation Date"), then, lawful and adequate provision shall be made so that Licensor, upon the exercise of either or both of the Options at any time on or after the Consummation Date, shall be entitled to receive, in lieu of the shares issuable upon such exercise prior to the Consummation Date, the amount of securities or other property to which Licensor would actually have been entitled as a stockholder upon the consummation of the Non-Acquisition - 5 - Transaction if Licensor had exercised such Option immediately prior thereto (or, if earlier, immediately prior to any applicable record date with respect thereto) and (if applicable) had carried out the terms for the receipt of securities and/or property in connection with such Non-Acquisition Transaction. In each such case, appropriate adjustment shall be made in the application of the provisions herein set forth herein with respect to the Exercise Price and the number of shares or other securities or property issuable upon the exercise of an Option. (c) The provisions of this Section 3.6 shall similarly apply to successive events of the type described in subsection (a) or (b) above. (d) On the business day immediately prior to the consummation of an Acquisition Transaction, (or, if earlier, on the business day immediately prior to any applicable record date with respect thereto), Licensor shall be deemed to have exercised the Contingent Option and shall receive the amount of securities other property to which it was entitled as a stockholder holding the class of shares for which the Contingent Option was exercisable upon such date and as if it had carried out the terms for the receipt of such securities and/or property in connection with such Acquisition Transaction. Upon exercise of the Contingent Option in accordance with this Section 6(d), Licensor shall be deemed to have paid the aggregate Exercise Price for such exercise to Licensee by offsetting against such payment Licensee's obligation to pay the milestone fee due pursuant to Section 4.0; provided, that if such milestone fee has been paid prior to such date, Licensor shall be indebted to Licensee in the amount of such Exercise Price, shall receive the securities and other property in accordance with the preceding sentence and shall pay such Exercise Price to Licensee within 30 days following the consummation of any Non-Acquisition Transaction. 3.7 Promptly after any adjustment in accordance with Section 3.6, Licensee shall give written notice thereof to the Licensor setting forth in reasonable detail the adjustment, the method of calculation thereof and the facts upon which such adjustment and calculation are based. 4.0 MILESTONE FEE Upon the issuance of a Reissue Patent, Licensee shall pay to Licensor a Milestone Fee in the amount of [*** Redacted]. Such Milestone Fee shall be payable within [*** Redacted] of Licensee's written notification to Licensee of such Reissue Patent. Prior to May 29, 2003, if Licensee notifies Licensor that it does not wish to cause Licensor to seek a Reissue Patent, then such notification shall trigger the milestone fee, requiring Licensee to pay to Licensor the Milestone Fee. In addition, [*** Redacted] of such Milestone Fee shall be payable to Licensor (if not previously paid) in the event that the Contingent Option is exercised pursuant to Section 3.6(d) of this Agreement, and any such payment shall reduce any Milestone Fee payable to Licensor under the preceding sentence of this Section 4.0; provided, however, in no event shall Licensee make any such payment to Licensor if the *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 6 - Licensee has previously paid Licensor the Milestone Fee in full asset forth in said preceding sentence. Notwithstanding the foregoing, Licensor shall have the sole discretion and right regarding the decision as to whether to submit U.S. Patent Office No. [*** Redacted] for reissuance pursuant to 37 C.F.R. Section 1.178. 5.0 ROYALTIES 5.1 Licensee shall pay to Licensor a running royalty of [*** Redacted]% of Net Sales by Licensee. In the event that Licensee's making, use, sale, offer for sale or importation of Licensed Products requires Licensee to pay any amount to secure any necessary third party intellectual property rights to engage in such activity in view of such third party's intellectual property, including without limitation payment of royalties to such third parties, costs associated with establishing that such rights are not necessary or that such third party intellectual property is invalid or unenforceable, then Licensee shall be entitled to credit such amounts against royalties due hereunder up to [*** Redacted]% of the royalties due for any reporting period, but in no event shall the royalty rate paid to Licensor be less than [*** Redacted]% of Net Sales by Licensee. 5.2 Licensee shall pay to Licensor a royalty of [*** Redacted]% of Sublicense Revenue (hereafter termed a "Sublicense Royalty") where the Patent Rights are sublicensed to a third party ("Sublicensee") in conjunction with the granting of substantial intellectual property rights other than under the Licensed Patents, which other intellectual property rights are licensable by Licensee, including but not limited to patents, copyrights, trade marks, trade secrets and know-how. In the event that no other substantial intellectual property rights are included in a sublicense of the Patent Rights ("a Naked Sublicense"), then the Sublicense Royalty payable by Licensee to Licensor shall be [*** Redacted]% of Sublicense Revenues. 5.3 Royalty payments shall be made [*** Redacted] in accordance with and concurrent with the royalty reporting obligations set forth in sections 7.2 and 7.3, below. 6.0 DILIGENCE 6.1 Licensee shall use commercially reasonable efforts, or shall cause its Affiliates and/or Sublicensees to use commercially reasonable efforts to develop Licensed Products or Licensed Processes and to introduce Licensed Products or Licensed Processes into the commercial market. Specifically, Licensee, its Affiliates or Sublicensees shall: 6.1.1 apply funding to development of nanocomposite photovoltaic devices at least the following levels: *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 7 - ~~2003: [*** Redacted] 2004: [*** Redacted] 2005: [*** Redacted] 2006 and after: [*** Redacted]; and~~

6.1.2 make a first commercial sale of a Licensed Product by [*** Redacted]. 6.2 In the event that Licensor determines that Licensee has failed to meet its obligations under section 6.1(a) of this Agreement, then Licensor shall notify Licensee of such determination and provide Licensee [*** Redacted] to refute such determination. In the event Licensee is unable to refute such determination, then Licensor may request an updated funding plan from Licensee, which funding plan shall include [*** Redacted] the amounts set forth herein, to be funded in the years following such determination. Failure by Licensee to meet such updated funding plan may be treated by Licensor as a material breach of this Agreement. 6.3 In the event that Licensee fails to make a first commercial sale by the date provided in Section 6.1(b), Licensee shall be obligated to pay to Licensor a minimum royalty in the amount specified below, for each year subsequent to 2007, until such time as Licensee makes a first commercial sale.
Year Minimum Royalty ~~2008 [*** Redacted] 2009 [*** Redacted] 2010 and thereafter [*** Redacted]~~
Minimum royalty payments shall be due within [*** Redacted] of the last day of the calendar year in which they are due. 7.0 REPORTING 7.1 Prior to the first commercial sale of a Licensed Product, and within [*** Redacted] after the end of each calendar year, Licensee shall provide Licensor with a written report of progress in the development and commercialization of Licensed Products or Licensed Processes, in accordance with the obligations set forth in Section 6.1, above. 7.2 Within [*** Redacted] of the end of each calendar [*** Redacted] following the first commercial sale of a Licensed Product, Licensee shall provide Licensor with a royalty report that provides, in reasonable detail: (i) the selling price of each type of Licensed Product sold by Licensee; (ii) the number of each type of Licensed Product sold; (iii) the royalties, in U.S. dollars, payable under this Agreement on those sales *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 8 - 7.3 Within [*** Redacted] of the end of each calendar [*** Redacted] following the granting of any sublicenses hereunder, Licensee shall provide Licensor with a Sublicense Royalty report (such Sublicense Royalty report may be combined with the royalty report identified in Section 7.2) which provides, in reasonable detail: (i) the identity of any such Sublicensee; (ii) amount of Sublicense Revenue received from each such Sublicensee; and (iii) the amount of Sublicense Royalty due to Licensor under this Agreement. 8.0 RECORD KEEPING Licensee shall keep books and records accurately showing all Licensed Products manufactured, used, sold, imported or otherwise disposed of under the terms of this Agreement. Licensee shall preserve those books and records for at least [*** Redacted] years from the date of the royalty payment to which they pertain and shall open them to inspection by representatives or agents of Licensor at reasonable times at Licensee's facilities. In the event that such inspection shows that Licensee has underpaid royalties by [*** Redacted] or more with respect to any calendar [*** Redacted], the Licensee shall pay, within [*** Redacted] days after demand by Licensor, the costs and expenses of such review. If such underpayment is in excess of [*** Redacted] for any calendar [*** Redacted], or an aggregate of [*** Redacted] during the inspection period, Licensee shall also reimburse Licensor for the costs of such inspection. In the event of a licensing inspection, Licensee is required to provide auditors with detailed information including detailed sales, inventory, manufacturing, purchasing, transfer records, customer lists, access to invoices, purchase orders, sales orders, shipping documentation, cost information, pricing policies, etc. 9.0 PATENT FILING AND MAINTENANCE 9.1 Licensee shall pay to Licensor all of Licensors actual past and future out of pocket expenses for the preparation, filing and maintenance of the Licensed Patents. As of the Effective Date of this Agreement, such past out of pocket expenses were approximately [*** Redacted]. All payments by Licensee for Licensor's actual out of pocket expenses in accordance with this section shall be due within [*** Redacted] days of Licensee's receipt of an invoice reasonably detailing such expenses. 9.2 Licensor shall bear responsibility for filing, maintenance and prosecution of the Licensed Patents. Notwithstanding the foregoing, in consideration of Licensee's payment of prosecution and maintenance costs, Licensee shall have the right to review and comment upon all material communications to and/or from any patent offices, which Licensor shall use reasonable efforts, subject to its reasonable discretion, to incorporate Licensee's comments into any such communications. 9.3 In the event that Licensee notifies Licensor that it does not wish to support the filing, continued prosecution or maintenance of Licensed Patents in any individual country, then Licensee's obligations to reimburse costs for such filing, prosecution or maintenance *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 9 - shall terminate upon such notification. In the event that Licensor chooses to continue such filing, prosecution and/or maintenance in such country, then any patent issuing thereon shall not be included in Licensed Patents. Notwithstanding the foregoing, Columbia shall have the sole discretion and right regarding the decision as to whether to submit U.S. Patent Office No. [*** Redacted] for reissuance pursuant to 37 C.F.R. Section 1.178. 10.0 INFRINGEMENT 10.1 Licensor will protect its Patents from infringement and prosecute infringers at its own expense when in its sole judgment such action maybe reasonably necessary, proper, and justified. 10.2 If Licensee shall have supplied Licensor with written evidence demonstrating prima facie infringement of a claim of the Patent Rights by a third party selling products in competition with the Licensee or any of its Affiliates or Sublicensees, Licensee may by notice request that Licensor take steps to assert the Patent Rights against such third party. Unless Licensor shall within [*** Redacted] of receipt of such notice either (i) cause such infringement to terminate or (ii) initiate legal proceedings against the infringer, Licensee, upon written notice to Licensor, may initiate legal proceedings against the infringer at the Licensee's expense. Any settlement of a legal proceeding to enforce any Patent Rights against an alleged infringer shall be subject to Licensor's prior written approval. 10.3 Any recovery by a party that initiates and/or bears the [*** Redacted] of legal proceedings to enforce any Patent Rights against an alleged infringer shall first be used to reimburse such party for its reasonable costs and legal fees incurred to conduct such proceedings. The balance shall be divided [*** Redacted] to the party that initiates legal proceedings and [*** Redacted] to the other party. 10.4 In the event one party shall initiate or carry on legal proceedings to enforce any Patent Rights against an alleged infringer, the other party shall use its best efforts to reasonably cooperate fully with and shall supply all assistance (including legally joining the action) reasonably requested by the party initiating or carrying on such proceedings. The party that institutes any proceeding to protect or enforce Patent Rights shall have sole control of that proceeding and shall be responsible for the reasonable expenses incurred by said other party in providing such assistance and cooperation as is requested pursuant to this paragraph. 11.0 TERMINATION OF AGREEMENT 11.1 Unless terminated earlier in accordance with this Section 11.0, this Agreement shall expire on a country-by-country basis in each country where the Patent Rights exist, upon the expiration of the last to expire patent in such country, or in the event *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 10 - the patent in such country is held to be invalid and/or unenforceable (by a court or government body of competent jurisdiction) or admitted to be invalid and/or unenforceable. 11.2 Licensee may terminate this license upon [*** Redacted] days written notice to Licensor, and shall pay to Licensor any and all royalties and costs that have accrued under Sections 5, 6 and 9 of this Agreement, up to the date of actual termination. 11.3 Subject to the dispute resolution provisions provided in Section 15.2, in the event Licensee fails to pay any amounts due and payable to Licensor hereunder, and fails to make such payments within [*** Redacted] days after receiving written notice of such failure, Licensor may terminate this Agreement immediately upon written notice to Licensee. 11.4 Subject to the dispute resolution provisions provided in Section 15.2, in the event Licensee commits a material breach of this Agreement, and fails to cure that breach within [*** Redacted] days after receiving written notice thereof, Licensor may terminate this Agreement immediately upon written notice to Licensee. 11.5 Upon early termination of this Agreement for any reason, Licensee shall provide Licensor with a written inventory of Licensed Products still owned by Licensee. Licensee shall be permitted to dispose of such inventory by sale, within [*** Redacted] days following such early termination. Notwithstanding the termination of this Agreement, any disposal by sale of such inventory shall be subject to the terms of this Agreement relating, inter alia, to royalties and reporting. 11.6 Upon any termination of this Agreement pursuant to Section 11.2, 11.3 or 11.4, any Sublicensees of Licensee under this Agreement shall become a direct licensee of Licensor, provided as a condition precedent, that Licensors obligations to any such Sublicensees are no greater than Licensor's obligations to Licensee under this Agreement. Licensee shall provide written notice of such to each Sublicensee with a copy of such notice provided to Licensor. 12.0 REPRESENTATIONS AND WARRANTIES 12.1 Licensor represents and warrants that it has the right to enter into this Agreement. 12.2 EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, INCLUDING BUT NOT LIMITED TO THE PATENT RIGHTS, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY OF PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. Specifically, and not to limit the *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 11 - foregoing, Licensor makes no warranty or representation (i) regarding the validity or scope of the Licensed Patents, and (ii) that the exploitation of the Licensed Patents or any Licensed Product or Licensed Process will not infringe any patents or other intellectual property of any third party. 12.3 IN NO EVENT SHALL LICENSOR, ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PERSON OR PROPERTY AND LOST PROFITS, RESULTING FROM LICENSEE'S PRACTICE OF THE LICENSED PATENTS. 12.4 IN NO EVENT SHALL LICENSER'S LIABILITY TO THE LICENSEE EXCEED THE PAYMENTS MADE TO LICENSOR BY LICENSEE UNDER THIS AGREEMENT. 12.5 The parties hereto acknowledge that the limitations and exclusions of liability and disclaimers of warranty set forth in this Agreement form an essential basis of the bargain between the parties. 13.0 INDEMNIFICATION AND INSURANCE 13.1 The Licensee will indemnify, defend and hold Licensor harmless from and against any and all actions, suits, claims, demands, prosecutions, liabilities, costs, expenses, damages, deficiencies, losses or obligations (including attorneys fees) based on or arising out of this Agreement, including, without limitation, (i) the discovery, development, manufacture, packaging, use, sale, rental or lease of Licensed Products, even if altered for use for a purpose not intended, (ii) the use of Licensed Patents, by the Licensee, its Affiliates, its Sublicensees or its (or their) customers, (iii) any representation made or warranty given by the Licensee, its Affiliates or Sublicensees with respect to Licensed Products or Licensed Patents, (iv) any infringement claims relating to Licensed Products or Licensed Patents, and (v) any asserted violation of the Export Laws (as defined in Section 15.5 hereof) by the Licensee, its Affiliates or Sublicensees. The Licensee will reimburse Licensor for the cost of enforcing this provision. 13.2 The Licensee shall maintain, during the term of this Agreement, commercial general liability insurance (including product liability and contractual liability insurance) with reputable and financially secure insurance carriers acceptable to Licensor to cover the activities of the Licensee, its Affiliates and its Sublicensees, for minimum limits of [*** Redacted] combined single limit for bodily injury and property damage per occurrence and in the aggregate; provided further that before administration of any Licensed Product to any humans, for clinical, research, or any other use, Licensee, its Affiliates and its Sublicensees will increase such minimum limits to no less than [*** Redacted]. Such insurance shall include Licensor, its trustees, faculty, officers, employees and agents as additional insureds. The Licensee shall furnish a certificate of insurance evidencing such coverage, with [*** Redacted] days *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 12 - written notice to Licensor of cancellation or material change in coverage. The minimum amounts of insurance coverage required herein shall not be construed as creating any limitation on the Licensee's indemnity obligation under Section 12(a) of this Agreement. 13.3 The Licensee's insurance shall be primary coverage; any insurance Licensor may purchase shall be excess and noncontributory. The Licensee's insurance shall be written to cover claims incurred, discovered, manifested, or made during or after the expiration of this Agreement. 14.0 NOTICES Any payment, notice or other communication this Agreement requires or permits either party to give must be in writing to the appropriate address given below, or to such other address as one party designates by written notice to the other party. The parties deem payment, notice or other communication to have been properly given and to be effective (a) on the date of delivery if delivered in person; (b) on the fourth day after mailing if mailed by first-class mail, postage paid; (c) on the second day after delivery to an overnight courier service such as Federal Express, if sent by such a service; or (d) upon confirmed transmission by telecopier. The parties' addresses are as follows: For Licensor: Executive Director Science & Technology Ventures Columbia Innovation Enterprises Columbia University Engineering Terrace, Suite 363 500 West 120th Street, Mail Code 2206 New York, New York 10027 with a copy to: Office of General Counsel Columbia University 412 Low Memorial Library 535 West 116th Street New York, New York 10027 For Licensee: Nanosys, Inc. 2625 Hanover St. Palo Alto, Ca 94304 Attention: Vice President, Intellectual Property - 13 - Fax: 650/ 846-2501 Telephone: 650/ 331-2100 15.0 PATENT MARKING Licensee shall include appropriate patent marking on all Licensed Products made, sold, or otherwise disposed of by Licensee, which patent marking shall be in accordance with appropriate patent marking laws of the country in which such products are made, sold or otherwise disposed of. Licensee shall cause its Affiliates and/or Sublicensees to similarly mark any Licensed Products made, sold or otherwise disposed of by such Affiliates or Sublicensees. 16.0 GENERAL 16.1 Confidentiality. All information provided to Licensor by Licensee under this agreement, including but not limited to progress and royalty reports, and other financial, business and/or technical information, is deemed to be Confidential Information. 16.1.1 Licensor will maintain the confidentiality of the Confidential Information and will not disclose the Confidential Information to any third party, and will not use the Confidential Information for any purpose other than as necessary to administer this Agreement. 16.1.2 The obligations of Licensor with respect to Confidential Information will not apply to information disclosed under this agreement to the extent such information: (a) is generally known to the public at the time of disclosure or becomes generally known through no wrongful act on the part of Licensor; (b) is in Licensor's possession at the time of disclosure other than as a result of prior disclosure by Licensee or a breach of any legal obligation by Licensor or a third party; (c) becomes known to Licensor through disclosure by sources other than Licensee having no duty of confidentiality to Licensee, whether direct or indirect, with respect to such information and having the legal right to disclose such information; (d) is independently developed by Licensor without reference to or reliance upon the information as can be documented by written records; or - 14 - (e) is required to be disclosed by Licensor to comply with applicable laws or governmental regulations, provided that the Licensor provides prior written notice of such disclosure to the Licensee and takes reasonable and lawful actions to avoid and/or minimize the extent of such disclosure. 16.1.3 The provisions of this Article 16 relating to confidentiality shall be in force and effect until at least [*** Redacted] years following the termination of this Agreement. 16.2 Dispute Resolution. Any dispute arising between the Parties shall be first addressed by a meeting between the Parties to discuss, and in good faith, attempt to negotiate a settlement of such dispute. Pending the outcome of such discussions, which discussions shall not exceed [*** Redacted] unless mutually agreed to by the Parties, and attempts at settlement of such dispute, the Parties shall continue to perform in accordance with all provisions of this Agreement to the extent such terms are not in dispute, including but not limited to the maintenance of Licensee's rights to practice the Licensed Patents, and obligations to pay royalties under this Agreement. 16.3 Assignment. This Agreement and all rights and obligations hereunder may not be assigned by either party without the written consent of the other party, except in conjunction with a sale of all or substantially all of one Party's assets. 16.4 Waiver. The failure of either Party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that Party thereafter of the right to insist upon strict adherence to that term or any other term of this Agreement. All waivers must be in writing and signed by an authorized representative of the Party against which such waiver is being sought. 16.5 Compliance with Laws and Government Regulations. 16.5.1 Licensee shall observe all applicable United States and foreign laws and regulations with respect to the research, development, manufacture, marketing and transfer of Licensed Products and related technical data, including, without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration("Export Laws"). To this end, the Licensee shall cooperate with Licensor as reasonably necessary to permit Licensor to comply with the Export Laws. The Licensee hereby represents and covenants that the Licensee: (a) is neither a national of nor controlled by a national of any country to which the United States prohibits the export or re-export of goods, services, or technology; (b) is not a person specifically designated as ineligible to export from the United States or deal in U.S.-origin goods, services, or technologies; (c) will not export or re-export, directly or indirectly, any goods, services, or technology, to any country or person (including juridical persons) to which the United States prohibits the export of goods, technology, or services; and (d) in the event that a U.S. government license or authorization is required for an export or re-export of goods, services, or technology (including technical information *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 15 - acquired from Licensor under this Agreement and/or any products created by using such technical information or any part thereof), the Licensee shall obtain any necessary U.S. government license or other authorization prior to undertaking the export or re-export. 16.5.2 Notwithstanding any provision in this Agreement, Licensor disclaims any obligation or liability arising under the license provisions of this Agreement if the Licensee is charged in a governmental action for not complying with or fails to comply with governmental regulations in the course of taking steps to bring any Product to a point of practical application. The Licensee shall comply upon reasonable notice from Licensor with all governmental requests directed to either Licensor or the Licensee and provide all information and assistance necessary to comply with the governmental requests. 16.6 Governing Law. This Agreement and all disputes arising out of or related to this Agreement, or the performance, enforcement, breach or termination hereof, and any remedies relating thereto, shall be construed, governed, interpreted and applied in accordance with the laws of the State of New York, U.S.A., without regard to conflict of laws principles, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted. 16.7 Force Majeure. Neither party will be responsible for delays resulting from causes beyond the reasonable control of such party, including without limitation fire, explosion, flood, war, strike, or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes are removed. 16.8 Amendment. This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties. 16.9 Severability. In the event that any provision of this Agreement shall be held invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect any other provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent. If the parties fail to reach a modified agreement within [*** Redacted] days after the relevant provision is held invalid or unenforceable, then the dispute shall be resolved in accordance with the procedures set forth in Article 13. While the dispute is pending resolution, this Agreement shall be construed as if such provision were deleted by agreement of the parties. 16.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns. 16.11 Headings. All headings are for convenience only and shall not affect the meaning of any provision of this Agreement. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. - 16 - 16.12 Non-use of Licensor's Name. Licensee will not use the name, insignia, or symbols of Licensor, its faculties or departments, or any variation or combination thereof, or the name of any trustee, faculty member, other employee, or student of Licensor for any purpose without Licensor's prior written consent. Notwithstanding the foregoing, Licensee may use Licensor's name in a factual context only referring to the existence of this Agreement, and the Licensed Patents in conjunction with Licensee's disclosure obligations in any private or public equity financing, or in seeking corporate collaborations for the development and commercialization of the Licensed Patents, but for no promotional, publicity or endorsement purposes whatsoever. 16.13 Entire Agreement. This Agreement, which may be executed in one or more counterparts, constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements or understandings between the parties relating to its subject matter. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. THE TRUSTEES OF COLUMBIA NANOSYS, INC. UNIVERSITY IN THE CITY OF NEW YORK By: /s/ Michael J. Cleare, PhD. By: /s/ J.W. Parce ---------------------------------- ------------------------ Name: Michael J. Cleare, PhD. Name: J.W. Parce Title: Executive Director Title: CTO Science and Technology Ventures - 17 - APPENDIX A NANOSYS, INC. COMMON STOCK PURCHASE AGREEMENT THIS AGREEMENT is made as of __________ (the "Effective Date") between Nanosys, Inc., a Delaware corporation (the "Company"), and ______________________ ("Purchaser"). WHEREAS in order to provide Purchaser an opportunity to acquire an equity interest in the Company, the Company is willing to sell to Purchaser and Purchaser desires to purchase shares of Common Stock according to the terms and conditions hereof. THEREFORE, the parties agree as follows: 1. PURCHASE AND SALE OF STOCK. Subject to the terms and conditions of this Agreement, the Company hereby agrees to issue to Purchaser _________shares of the Company's Common Stock (the "Stock") valued at a price of $0.19 per share, for an aggregate value of $_____, as part of the consideration to be paid by the Company pursuant to the License Agreement between the Company and the Purchaser dated as of the date here with (the "License Agreement"). Upon execution of this Agreement, the Company shall issue a duly executed certificate evidencing the Stock in the name of the Purchaser. 2. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS. a) LEGENDS. The share certificate evidencing the Stock issued hereunder shall be endorsed with the following legend (in addition to any legends required under applicable state securities laws): "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES. THESE TRANSFER RESTRICTIONS ARE BINDING UPON ALL TRANSFEREES OF THE SHARES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED FOR A PERIOD OF 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT FILED BY THE COMPANY FOR ITS INITIAL PUBLIC OFFERING." b) STOP-TRANSFER NOTICES. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer" instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records. 3. PURCHASER'S REPRESENTATIONS AND COVENANTS. In connection with the purchase of the Stock, Purchaser hereby represents and warrants to the Company as follows: a) INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS. Purchaser is purchasing the Stock solely for Purchaser's own account for investment and not with a view to or for sale in connection with any distribution of the Stock or any portion thereof and not with any present intention of selling, offering to sell or otherwise disposing of or distributing the Stock or any portion thereof. Purchaser also represents that the entire legal and beneficial interest of the Stock is being purchased, and will be held, for Purchaser's account only, and neither in whole or in part for any other person. Purchaser either (i) has a pre-existing business or personal relationship with the Company or at least one of its officers, directors or controlling persons, or (ii) by reason of Purchaser's business or financial experience (or the business or financial experience of Purchaser's professional advisors who are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent of the Company, directly or indirectly), can be reasonably assumed to have the capacity to evaluate the merits and risks of an investment in the Company and to protect Purchaser's own interests in connection with this transaction. b) ADDRESS. Purchaser's place of business address is located at the address indicated beneath the signature of Purchaser's authorized representative, below. c) INFORMATION CONCERNING COMPANY. Purchaser has discussed the Company and its plans, operations and financial condition with the Company's officers and has received all such information as Purchaser has deemed necessary and appropriate to enable Purchaser to evaluate the financial risk inherent in making an investment in the Stock. Purchaser has received satisfactory and complete information concerning the business and financial condition of the Company in response to all inquiries in respect thereof. d) ECONOMIC RISK. Purchaser realizes that the purchase of the Stock will be a highly speculative investment and involves a high degree of risk. Purchaser is able, without impairing Purchaser's financial condition, to hold the Stock for an indefinite period of time and to suffer a complete loss on Purchaser's investment. e) RESTRICTED SECURITIES. Purchaser understands and acknowledges that: i) The Stock has not been registered under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser's investment intent as expressed herein. In this connection, Purchaser understands that, in the view of the Securities and Exchange Commission ("SEC"), the statutory basis for such exemption may be unavailable if Purchaser's representation was predicated solely upon a present intention to hold the Stock for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Stock, or for a period of one year or any other fixed period in the future. ii) The Stock must be held indefinitely unless it is subsequently registered under the Securities Act or unless an exemption from such registration is otherwise available. Purchaser further acknowledges and understands that the Company is under no obligation to register the Stock. In addition, Purchaser understands that the certificate evidencing the Stock will be imprinted with a legend which prohibits the transfer of the Stock unless it is registered or such registration is not required in the opinion of counsel satisfactory to the Company. f) FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting Purchaser's representations set forth above, Purchaser further agrees that Purchaser shall in no event make any disposition of all or any portion of the Stock unless and until: i) Either: (A) There is then in effect a Registration Statement under the Securities Act covering such proposed disposition, and such disposition is made in accordance with said Registration Statement; or (B) (1) Purchaser shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition; (2) Purchaser shall have furnished the Company with an opinion of Purchaser's counsel to the effect that such disposition will not require registration of such shares under the Securities Act; and (3) such opinion of Purchaser's counsel shall have been concurred in by counsel for the Company, and the Company shall have advised Purchaser of such concurrence; and, ii) Purchaser shall have complied with the Standoff Agreement set forth in Section 5 hereof, and The proposed transferee executes an agreement with the Company to be bound by the restrictions on transfer contained herein, and in specific the Standoff Agreement contained in Section 5 hereof. g) VALUATION OF COMMON STOCK. Purchaser understands that the Stock has been valued by the Company's Board of Directors and that the Company believes this valuation represents a fair attempt at reaching an accurate appraisal of its worth. Purchaser understands, however, that the Company can give no assurances that such price is in fact the fair market value of the Stock, and that it is possible that, with the benefit of hindsight, the Internal Revenue Service would successfully assert that the value of the Stock on the date of purchase is substantially greater than so determined. If the Internal Revenue Service were to succeed in a tax determination that the Stock had a value greater than that upon which this transaction is based, the additional value would constitute ordinary income to Purchaser as of the date of its receipt. The additional taxes (and interest) due would be payable by Purchaser. There is no provision for the Company to reimburse Purchaser for that tax liability, and Purchaser assumes all responsibility therefor. h) ACCREDITED INVESTOR. The Purchaser is an accredited investor as defined in Rule 501 (a) of Regulation D promulgated under the Securities Act. 4. COMPANY'S REPRESENTATIONS AND COVENANTS. Company hereby represents and warrants to the Purchaser as follows: a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business, to execute and deliver this Agreement, to issue and sell the Stock, and to carry out the provisions of this Agreement. b) AUTHORIZATION. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and the authorization, issuance and delivery of the Stock has been taken, and this Agreement, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with its terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of general application affecting enforcement of creditors' rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. c) VALID ISSUANCE OF SECURITIES. The Stock that is being issued to the Purchaser hereunder, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under this Agreement and applicable state and federal securities laws. Based in part upon the representations of the Purchasers in this Agreement and subject to the provisions of subsection (d) below, the Stock will be issued in compliance with all applicable federal and state securities laws. d) GOVERNMENTAL CONSENTS. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except for applicable state securities laws. 5. STANDOFF AGREEMENT. Purchaser agrees, in connection with an initial public offering of the Company's equity securities, upon request of the Company or the underwriters managing such offering, (i) not to sell, make any short sale of, loan, grant any option for the purchase of or otherwise dispose of any shares of Stock (other than those included in the registration, if any) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration) as may be requested by the Company or such underwriters, and (ii) to execute any agreement regarding (i) above as may be requested by the Company or underwriters at the time of the public offering; provided, that the officers and directors of the Company who own stock of the Company also agree to such restrictions. 6. MISCELLANEOUS a) GOVERNING LAW. This Agreement shall be governed and construed by the laws of the Commonwealth of Massachusetts. b) NOTICES. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery (including by express courier) or upon deposit in the United States Post Office, by First Class mail with postage and fees prepaid, addressed to Purchaser and to the Company at the addresses provided below or at such other address as such party may designate by ten (10) days' advance written notice to the other party. For Purchaser: Executive Director Science and Technology Ventures Columbia Innovation Enterprises Columbia University Engineering Terrace, Suite 363 500 West 120th Street, Mail Code 2206 New York, New York 10027 For Company: Nanosys, Inc. 2625 Hanover Street Palo Alto, California 94304 Attn: President and CEO c) ASSIGNMENT. The Company may assign its rights and delegate its duties under this Agreement. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer herein set forth, be binding upon Purchaser, his/her heirs, executors, administrators, successors and assigns. The rights of Purchaser under this Agreement may be assigned only with the prior written consent of the Company. d) WAIVER. Either party's failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party's right to assert all other legal remedies available to it under the circumstances. e) ENTIRE AGREEMENT. This Agreement and the License Agreement represent the entire agreement between the parties with respect to the purchase of Common Stock by Purchaser, may be modified or amended only in writing signed by both parties, and satisfy all of the Company's obligations to Purchaser with regard to the issuance or sale of securities. f) COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute one instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. THE COMPANY: PURCHASER: NANOSYS, INC. a Delaware corporation By: __________________________ By: ________________________ Name: ________________________ Name: ______________________ Title: _______________________ Title: _____________________ Address: _____________________ Address: ___________________ ______________________________ ____________________________ APPENDIX B NANOSYS, INC. VOTING AGREEMENT This Voting Agreement (the "Agreement") is made as of the ___ day of ________, by and among Nanosys, Inc. (the "Company"), _________________ ("________") and the holders of the Company's Common Stock listed on Exhibit A attached hereto (the "Investors"). RECITALS WHEREAS, the Company and _______ have entered into a certain License Agreement, each dated as of even date hereof (the "License Agreement") which calls for the execution and delivery of this Agreement by Company and _______ for the purpose of setting forth the terms and conditions pursuant to which _______ will vote shares of the Company's securities now or in the future held by _______ (the "Shares"); NOW THEREFORE, in consideration of the mutual promises and covenants set forth herein and in the License Agreements, the Company, _________ and the Investors each desire to facilitate the arrangements set forth in this Agreement, and the sale and the transactions and obligations set forth in the License Agreement, by agreeing to the terms and conditions set forth below: AGREEMENT The parties agree as follows: 1. VOTING OF THE SHARES. The Shares shall be voted (including in any stockholder action by written consent) in a manner determined by the Board of Directors in the Board of Directors' sole discretion. 2. ADDITIONAL REPRESENTATIONS AND COVENANTS. 2.1 NO REVOCATION. The voting agreements contained herein are coupled with an interest and may not be revoked during the term of this Agreement. 2.2 LEGENDS. Each certificate representing shares of the Company's capital stock held by ________ or any assignee of ________ shall bear the following legend: "THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY (A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT." 2.3 TRANSFER OF SHARES. If ________ transfers any of the Shares in accordance with the provisions of the applicable Common Stock Purchase Agreement by and among the Company and ________ (each a "Stock Purchase Agreement"), each transferee must, as a condition precedent to the validity of such transfer under the Common Stock Purchase Agreement, acknowledge in writing to the Company that such transferee is bound by the provisions of this Agreement. 3. TERMINATION. 3.1 TERMINATION EVENTS. This Agreement shall terminate upon the earlier of: (a) A firm commitment underwritten public offering by the Company of shares of its Common Stock pursuant to a registration statement on Form S-1 under the Securities Act of 1933, as amended; or (b) The sale, conveyance, disposal, or encumbrance of all or substantially all of the Company's property or business or the Company's merger into or consolidation with any other corporation (other than a wholly-owned subsidiary corporation) or if the Company effects any other transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of, provided that this Section 3.1 (b) shall not apply to a merger effected exclusively for the purpose of changing the domicile of the Company or to a preferred stock financing of the Company in which a majority of the preferred stock issued by the Company is purchased by venture capital investors. 3.2 REMOVAL OF LEGEND. At any time after the termination of this Agreement in accordance with Section 3.1, any holder of a stock certificate legended pursuant to Section 2.2 may surrender such certificate to the Company for removal of the legend, and the Company will duly reissue a new certificate without the legend. 4. MISCELLANEOUS. 4.1 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 4.2 AMENDMENTS AND WAIVERS. Any term hereof may be amended or waived only with the written consent of the Company, ________ and the Investors holding a majority of the shares of Common Stock held by such Investors. Any amendment or waiver effected in accordance with this Section 4.2 shall be binding upon the Company, ________, the Investors and each of their respective successors and assigns. 4.3 NOTICES. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient on the date of delivery, when delivered personally or by overnight courier or sent by telegram or fax, or seventy-two (72) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such patty's address or fax number as set forth on the signature page, or as subsequently modified by written notice. 4.4 SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall. be enforceable in accordance with its terms. 4.5 GOVERNING LAW. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts, without giving effect to principles of conflicts of law. 4.6 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. 4.7 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. [Signature Page Follows] The parties hereto have executed this ________ Voting Agreement as of the date first written above. COMPANY: Nanosys, Inc. By:______________________________ Title: Lawence A. Bock, President Address:__________________ __________________ ________ VOTING AGREEMENT _____________: By:___________________________ Title:________________________ Address:______________________ ______________________ ______________________ Fax Number:___________________ ________ VOTING AGREEMENT INVESTORS: ______________________________ ________ VOTING AGREEMENT EX-10.12 29 f97636orexv10w12.txt EXHIBIT 10.12 EXHIBIT 10.12 SAIC/ NANOSYS MASTER MARKETING AND BUSINESS DEVELOPMENT AGREEMENT This Master Marketing Agreement ("Agreement"), is entered into as of the later of the dates set forth at the end of this Agreement (the "Effective Date"), by and between Nanosys, Incorporated, a corporation duly organized under the laws of the State of Delaware and having its principal place of business at 2625 Hanover Street, Palo Alto, California ("Nanosys"), and Science Applications International Corporation, a corporation duly organized under the laws of the State of Delaware and having its principal place of business at 10260 Campus Point Drive, San Diego, California 92121, through its Advanced Systems Group ("SAIC"). Nanosys and SAIC may hereinafter be referred to individually as a "Party" or collectively as the "Parties". WHEREAS, SAIC is recognized as a leader in the information technology and systems integration field with technologies and expertise that includes, but is not limited to, systems design and engineering, database architecture, software development, and large project management; WHEREAS, Nanosys is recognized as a leader in the development of nanotechnology materials and nanotechnology enabled modules, systems and processes; WHEREAS, the Parties, from time to time, have collaborated in order to bid for and to perform under contracts and grants awarded by various agencies of the United States government; and WHEREAS, Nanosys and SAIC mutually desire to establish a preferred marketing relationship with each other in order to identify and pursue additional contracts and awards with the United States government ("Opportunities") relating to nanoscience and nanotechnology as a team, to further both their businesses; NOW THEREFORE, in consideration of the mutual terms and conditions set forth herein, the Parties hereby agree as follows: 1. Scope of the Agreement. This Agreement is a master agreement that commits the Parties to work together for their mutual benefit to identify and advise each other as to specific Opportunities to market and advertise their respective services and products in accordance with the following terms, and as provided by Attachment A. SAIC will perform activities in the following areas: systems integration; joint prototype development; and marketing. Nanosys will perform activities in the following areas: nanotechnology materials and nanotechnology-enabled module development; joint prototype development; and marketing support. Each Opportunity that is to be jointly pursued by the Parties shall be defined and described in written, mutually agreed-upon exhibits attached hereto (each a "Marketing Exhibit"). Each Marketing Exhibit shall specify the particular Opportunity, the complementary products and/or services to be marketed, the prospective customer base, and the scope of effort required of each Party. Each Marketing Exhibit shall, when executed, become an addendum to this Agreement. The first Marketing Exhibit shall be titled "Marketing Exhibit No. 1," and additional Marketing Exhibits shall be numbered sequentially. (a) The obligations of the Parties under this Agreement are non-exclusive. `Either Party may, at any time and for any reason, enter into similar arrangements with any other entity with respect to the same or similar areas or Opportunities set forth in the Marketing Exhibits or for any other business purposes. However, notwithstanding the foregoing, for any given Opportunity for which: (1) the Parties have complementary technology and/or intellectual property for addressing such Opportunity; (2) a Party chooses not to pursue such Opportunity on its own, or with a partner entity or organization that is already a Strategic Commercial Partner of such Party at the time the Party chooses to pursue such opportunity; (3) a Party does not already have a proposal submitted for such Opportunity; (4) a Party has not had such Opportunity presented to such Party by a third party; and (5) resources for pursuing such Opportunity are supported Resources pursuant to Section 2 of this Agreement; then each Party agrees to offer to the other Party the first opportunity to enter into a Marketing Page 1 of 14 7/7/2003 Exhibit for such Opportunities contemplated to be pursued by such Party. In the event that a Party desires to pursue an Opportunity on its own, it shall notify the other Party to allow the other Party an opportunity to present information supporting the JOINT pursuit of such Opportunity by the Parties hereto. The Party being offered the first opportunity to enter into a Marketing Exhibit or to present information supporting the joint pursuit of an Opportunity, shall communicate any acceptance of such offer to the other Party within a reasonable time, which time is not to exceed [*** Redacted], unless otherwise agreed to by the Parties in writing. If the offer of first opportunity or to present information for joint pursuit is rejected, or not accepted within such reasonable time, either Party is then free to pursue the Opportunity on its own or with any other person or entity. Further, commencing upon the execution of a Marketing Exhibit and continuing during the effectiveness of any definitive agreement relating thereto, the Parties agree that they shall not participate in any effort to prepare or submit a separate proposal relating to the specific technology, application and customer of the Opportunity identified in the Marketing Exhibit. Strategic Commercial Partner shall mean a partner entity or organization with which the Party has a fully executed commercial development agreement. (b) Except as set forth in this Agreement or a Marketing Exhibit executed hereunder, each Party will bear all costs, risks and liabilities incurred by it arising out of its obligations and efforts under this Agreement and any such Marketing Exhibit. Unless otherwise specified in this Agreement or a Marketing Exhibit, neither Party shall have any right to any reimbursement, payment or compensation of any kind from the other Party for activities pursuant to this Agreement or a Marketing Exhibit. (c) This Agreement, including all Marketing Exhibits, sets forth the provisions and conditions pursuant to which the Parties may identify and advise each other of a mutually beneficial Opportunity. (d) Each Party shall designate one or more duly authorized representatives to interact with the other for purposes of this Agreement. Initially, [*** Redacted] and [*** Redacted] shall be the representatives of Nanosys and [*** Redacted] and [*** Redacted] shall be the representatives of SAIC. Each Party's representative(s) may select and submit to the other for its consideration such Opportunities that the Party believes may be of mutual interest and the representatives shall jointly determine whether to pursue such Opportunity together. If the Parties determine to pursue an Opportunity jointly, the representatives shall determine jointly the appropriate marketing strategy; including planning for directing the timing and use of the Resources described in Section 2 which efforts shall be reflected in a Marketing Exhibit hereto. At least one representative of each Party shall meet and confer periodically with at least one representative of the other as necessary, either in person or by telephone, to discuss prospective Opportunities and performance with respect to existing Marketing Exhibits (including, but not limited to the Parties obligations under Section 2 below). The Parties agree that the representatives shall meet at agreed-upon intervals but not less than once in any calendar [*** Redacted]. Subject to the provisions of section 1(a) above relating to the Parties' actions commencing upon execution of a Marketing Exhibit and continuing during the effectiveness of any definitive agreement relating thereto, if either Party's representative determines that it is not in that Party's best interest to initiate or continue an Opportunity jointly, either Party is free to pursue such Opportunity, using its sole efforts or in conjunction with any other person or entity. (e) In those circumstances where the Parties' marketing efforts identify a specific Opportunity, and the Parties decide to pursue the Opportunity jointly as set forth in a Marketing Exhibit, then the Parties agree to enter into good faith negotiations to execute an appropriate definitive agreement for the particular Opportunity. Generally, it is anticipated that Nanosys would primarily apply its nanoscience and nanotechnology development expertise and be the *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 2 of 14 7/7/2003 preferred provider of any nanotechnology-based modules to the Opportunity, and SAIC would primarily apply its system integration expertise to the Opportunity. Each such definitive agreement shall contain terms and conditions that are customary for a teaming agreement, including, but not limited to, allocating responsibility for preparation of proposals and determining the structure of the proposal effort. Each such definitive agreement shall set forth additional mutually agreed-upon terms and conditions with respect to the rights and obligations of the Parties with regard to that specific Opportunity. 2. Mutual Commitment to Fund the Initiative. (a) The Parties agree that, in order to initially support the marketing activities associated with the Opportunities anticipated to be identified in Marketing Exhibits, the work of approximately [*** Redacted] full time employee equivalents ("FTEs", the FTEs and associated costs are collectively referred to as the "Resources") will be necessary to specifically support the marketing activities associated with the Opportunities. The effort of each individual supporting an Opportunity will be dedicated at a percentage agreed upon by the representatives of each party authorized by this Agreement. The Resources needed will include technical and marketing resources. The Parties agree that Nanosys shall be responsible for providing Resources equivalent to [*** Redacted] FTEs and SAIC shall be responsible for providing Resources equivalent to [*** Redacted] FTEs. (b) SAIC agrees, during the Initial Term, as defined in Section 3(a), to fund the cost of the Resources of both Parties set forth in Section 2(a). Such costs are expected to be burdened actual expenses, not including any fees or profit, and are invoiced [*** Redacted] in accordance with 2f, below. The funding support will be subject to [*** Redacted] reviews, as stated in 1(d) above. The maximum Resources funded by SAIC under this section during the Initial Term of this Agreement, and that have not been reimbursed under section 2(c)(iii), are not to exceed $2.2 M, (It is currently estimated that $1.6 M will be allocated to Nanosys and $0.6 M to SAIC), unless otherwise agreed to by the Parties. Resources reimbursed under section 2(c)(iii) may, during the Initial Term, be reused to fund additional Resources if mutually agreed by the Parties. Unless specifically agreed upon by the Parties in writing, the work performed by the representatives of the Parties in carrying out their periodic review responsibilities under Section 1(d), shall not be included in the amounts funded by SAIC. Among the tasks to be performed by the Parties' FTEs are support for preparation of proposals for contracts and awards, demonstrations, and marketing presentations. (c) In consideration of SAIC's agreement to fund the Resources (including SAIC Resources) described in paragraph (b) above, the Parties agree that all United States government contract revenue, including the subcontract(s) from one Party to the other Party, ("Contracts") arising out of or resulting from work performed under this Agreement shall be allocated in accordance with the following priority schedule, with funds received under any Contract first being applied to the highest priority category until all costs thereunder are reimbursed, before applying any remaining funds to the next level of priority, etc.: i. [*** Redacted] ii. [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 3 of 14 7/7/2003 iii. [*** Redacted] Unless otherwise agreed by the Parties in writing, Nanosys shall reimburse SAIC [*** Redacted] after receipt of payment from its prime customer under the applicable Contract. (d) With the exception of income taxes imposed on the Parties, each Party agrees to pay all sales, use, value added, personal property or other taxes of any type that are imposed by any governmental authority on the payments due by such Party to the other Party under this Section 2. Any payment or part of a payment due under this Agreement that is not paid when due shall bear interest at the rate of [*** Redacted]% per month, or at the highest rate allowed by law, whichever is less, from its due date until paid. (e) Each Party shall have the right, at its sole expense, to inspect the books and records of the other Party for the purpose of verifying the amounts funded by SAIC and that Nanosys has complied with the payment obligations of this Section 2. Such inspections may be made not more than semi-annually, on not less than [*** Redacted] prior written notice to the other Party, during regular business hours. (f) To fund the Nanosys Resources, SAIC ASG will implement a purchase order with Nanosys which will be incrementally funded, against which Nanosys will submit [*** Redacted] invoices in accordance with the terms of the purchase order. Invoices will be paid [*** Redacted]. A proper invoice may be in Nanosys standard commercial format but must include, at a minimum, detailed costs for the period covered by the invoice and accumulated costs. Detailed costs are defined as hours by individual labor categories, fully burdened labor and other fully burdened expenses such as are described in general in 2a above and not including any fee or profit. To provide participation insight to Nanosys, SAIC ASG will prepare financial statements on an SAIC "financial-period" basis , to be made available to Nanosys, by the [*** Redacted] after the close of the [*** Redacted] for which the financial statement is prepared.. Financial statements will identify current and cumulative total costs for Labor and ODC's as defined in paragraphs 2(a) and 2(b) above. 3. Term and Termination. (a) This Agreement shall have an initial term of twenty-four (24) months commencing on the Effective Date (the "Initial Term"). Following the Initial Term, this Agreement may be extended only by the written, signed, mutual agreement of both Parties for an additional period of twelve (12) months (each, a "Renewal Term"), which such written mutual commitment shall be executed at least ninety (90) days prior to the end of the Term immediately preceding such Renewal Term. For purposes of this Agreement, the Initial Term and any Renewal Terms shall be known as the Term. (b) Either Party may terminate this Agreement as of the last day of [*** Redacted] including and after the [*** Redacted] of the Effective Date, provided that such termination must be communicated to the other party in writing at least [*** Redacted] days prior to such termination date. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 4 of 14 7/7/2003 (c) Upon the termination or expiration of this Agreement, each Party will destroy or return to the other Party all drawings, specifications, manuals and other printed or reproduced material (including information stored on machine readable media) provided by the disclosing Party to the receiving Party and shall use commercially reasonable efforts to destroy all backup copies of such information made by the receiving Party or its employees, wherever located. The obligations of this section do not apply to any materials and/or information of the disclosing Party that is necessary for the perfection and/or enforcement of any rights to Intellectual Property developed under this Agreement that is owned in whole or in part by the receiving Party. Any Confidential Information retained by the receiving Party hereunder shall remain subject to the provisions of the Non-Disclosure Agreement attached a Exhibit A. (d) The Parties acknowledge that termination or expiration of this Agreement shall terminate each Marketing Exhibit executed hereunder, unless the Parties expressly agree to the contrary in writing. However, any definitive agreements entered into between the Parties as a result of their efforts hereunder shall not be terminated upon the termination or expiration of this Agreement and shall survive according to their terms. Additionally, the obligations of paragraph 2(c) shall survive any termination. 4. Intellectual Property. (a) The Parties shall each retain ownership of and all right, title and interest in and to their respective pre-existing Intellectual Property (as that term is defined in Article 4(c) below), and no license or right to use therein, whether express or implied, is granted by this Agreement or as a result of the work performed by either Party hereunder or in pursuit hereof. To the extent the Parties wish to grant to the other rights or interests in pre-existing Intellectual Property, separate license agreements on mutually acceptable terms will be executed. (b) For all Intellectual Property developed under this Agreement by the Parties (hereinafter referred to as "Collaboration Intellectual Property"), all Nanotechnology Related Collaboration Intellectual Property shall be solely owned by Nanosys, regardless of inventorship. For purposes of this Agreement, "Nanotechnology Related Collaboration Intellectual Property" is Intellectual Property in [*** Redacted] nanomaterials having at least [*** Redacted] of [*** Redacted], including [*** Redacted] of such materials, composites including such materials, nano to macro world interface technology for such materials, and the fabrication and processing of such materials. All non-Nanotechnology Related Collaboration Intellectual Property such as systems, use, and applications shall be owned according to U.S. laws of intellectual property inventorship and ownership with Collaboration Intellectual Property that is solely conceived by the employees, agents or contractors of one Party being solely owned by that Party with all rights appurtenant thereto, and with non-Nanotechnology related Collaboration Intellectual Property that is jointly conceived by the employees, agents or contractors of both Parties being jointly owned, with all joint rights appurtenant thereto and without obligation to obtain consent or account to the other Party to exploit, license or transfer jointly owned Intellectual Property. (c) As used herein the term "Intellectual Property" shall mean patents, copyrights, trade marks, trade names, inventions (whether or not patentable), works of authorship, trade secrets, techniques, know-how, ideas, concepts, algorithms and all other forms of intellectual property rights. As used herein the term "pre-existing Intellectual Property" means any Intellectual Property previously conceived, developed or reduced to tangible medium as demonstrated by written documentation. 5. Warranty Disclaimer and Limitation of Liability. Neither Party makes any warranties whatsoever to the other Party, express or implied, with regard to the products or services of that Party or any matter relating to this Agreement and any Marketing Exhibits, and each Party specifically disclaims all such *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 5 of 14 7/7/2003 warranties and conditions, including any warranty of title, merchantability, and fitness for a particular purpose. In no event shall either Party be liable to the other for any punitive, exemplary, special, indirect, incidental or consequential damages (including, but not limited to, lost profits, lost revenues, lost business opportunities, loss of use or equipment down time, and loss of or corruption to data) arising out of or relating to this Agreement or any Marketing Exhibit, regardless of the legal theory under which such damages are sought, and even if the Parties have been advised of the possibility of such damages or loss. The liability of either Party to the other for any claims, liabilities, actions or damages arising out of or relating to this Agreement or any Marketing Exhibit, howsoever caused and regardless of the legal theory asserted, including breach of contract or warranty, tort, strict liability, statutory liability or otherwise, shall not, in the aggregate, exceed the amount of out-of-pocket costs incurred by the other Party in connection with the specific Marketing Exhibit or opportunity under which such claim arose. 6. Confidentiality. In the performance of this Agreement and any Marketing Exhibits executed hereunder, certain information may be exchanged between the Parties that is proprietary and confidential in nature. This proprietary and confidential information is exchanged solely for the purposes set forth in this Agreement and any such Marketing Agreement. This proprietary and confidential information shall remain the property of the disclosing Party and shall be subject to the terms and conditions of the Non-Disclosure Agreement attached hereto as Exhibit A. Prior to any transfer of materials under this Agreement, the Parties agree that they will execute a Materials Transfer Agreement that will be separately agreed to by the Parties. 7. Export Control. The Parties to this Agreement shall comply with all applicable United States export and foreign import laws, rules, and regulations in the performance of the Parties' responsibilities and obligations under this Agreement. Without limiting the generality of the foregoing, the Parties shall not disclose any U.S.-origin products, know-how, technical data, documentation, or other products or materials furnished to it pursuant to this Agreement, to any person or in any manner which would constitute a violation of the export control regulations of the United States then in effect. 8. Disputes. Any controversy, claim or dispute ("Dispute") arising out of or relating to this Agreement shall be resolved by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. Before commencing any such arbitration, the Parties agree to enter into negotiations to resolve the Dispute. If the Parties are unable to resolve the Dispute by good faith negotiation within [*** Redacted] days of entering into such negotiations, then either Party may refer the matter to arbitration. The arbitration shall take place in the County of San Diego, State of California. The arbitrator(s) shall be bound to follow the provisions of this Agreement in resolving the dispute, and may not award any damages which are excluded by this Agreement. The decision of the arbitrator(s) shall be final and binding on the Parties, and any award of the arbitrator(s) may be entered or enforced in any court of competent jurisdiction. Any request for arbitration of a claim by either Party against the other relating to this Agreement must be filed no later than [*** Redacted] after the date on which this Agreement expires or terminates, or such claim shall be time barred. 9. Notices. All notices, certificates, acknowledgments or other written communications (hereinafter referred to as "Notices") required to be given under this Agreement shall be in writing and shall be deemed to have been given and properly delivered if duly mailed by certified or registered mail to the other Party at its address as follows, or to such other address as either Party may, by written notice, designate to the other. Additionally, Notices sent by any other means (i.e., facsimile, overnight delivery, courier, and the like) are acceptable subject to written confirmation of both the transmission and receipt of the Notice. Page 6 of 14 7/7/2003 *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Larry Bock [*** Redacted] President and CEO [*** Redacted] Nanosys, Incorporated Science Applications 2625 Hanover Street International Corporation Palo Alto, CA 94304 [*** Redacted] Telephone (650) 331-2105 McLean, VA 22102 Fax (650) 331-2101 Telephone [*** Redacted] e-mail lbock@nanosysinc.com Fax [*** Redacted] e-mail [*** Redacted] 10. Assignment. This Agreement may not be assigned, novated or otherwise transferred by operation of law or otherwise by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Any change of control of a Party shall be deemed an assignment of this Agreement that does not require the prior written consent of the other Party. For purposes of this Agreement, "change of control" means any merger, consolidation, sale of all or substantially all of the assets or sale of a substantial block of stock, of a Party. Any such assignment, novation or transfer by one Party not in accordance with this provision shall be a material breach of this Agreement and shall be grounds for immediate termination thereof by the non-breaching Party, in addition to any other remedies that may be available at law or in equity to the non-breaching Party. 11. Waiver or Modification. This Agreement may be modified, or part(s) hereof waived, only by an instrument in writing specifically referencing this Agreement and signed by an authorized representative of the Party against whom enforcement of the purported modification or waiver is sought. 12. Relationship of Parties. The Parties are acting as independent contractors in all respects with regard to this Agreement. Nothing contained in this Agreement shall be deemed or construed to create a partnership, joint venture, agency, or otherwise as participants in a joint or common undertaking. Nothing in this Agreement shall be deemed to give either Party any power to direct or control any activities of the other, including marketing activities, or any power to bind or obligate the other. No employee of one Party shall be deemed an employee of the other. 13. Publicity. Neither Party may issue a press release or make any disclosure to any other person or entity regarding the existence of or the subject matter of this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, either Party may reasonably disclose the terms of this Agreement to the extent necessary to comply with any laws or government regulations, provided that the Party that is required to disclose the Agreement gives the other Party notice of such required disclosure and takes reasonable steps to minimize the extent of such disclosure. 14. Applicable Law. This Agreement shall be governed by and construed under the laws of the State of California, without regard to its laws relating to conflict or choice of laws. 15. Entire Agreement. This Agreement, including any and all Exhibits attached hereto, which are hereby incorporated by reference, constitutes the entire agreement and understanding between the Parties and supersedes and replaces any and all prior or contemporaneous proposals, agreements, understandings, commitments or representations of any kind, whether written or oral, relating to the subject matter hereof. 16. Multiple Copies or Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the Page 7 of 14 7/7/2003 *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. same instrument. This Agreement shall not be effective until the execution and delivery between each of the parties of at least one (1) set of the counterparts. 17. Headings. The headings and titles of the various sections of this Agreement are intended solely for convenience of reference and are not intended to define, limit, explain, expand, modify or place any construction on any of the provisions of this Agreement. IN WITNESS WHEREOF, the Parties represent and warrant that this Agreement is executed by duly authorized representatives of each Party as set forth on the date indicated below. SCIENCE APPLICATIONS NANOSYS, INCORPORATED INTERNATIONAL CORPORATION /s/ Larry Bock /s/ [*** Redacted] ________________________________ ________________________________________ Larry Bock [*** Redacted] ________________________________ ________________________________________ Name Name President and CEO [*** Redacted] ________________________________ ________________________________________ Title Title 9 July 03 ________________________________ ________________________________________ Date Date *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 8 of 14 7/7/2003 ATTACHMENT A AREAS OF RESPONSIBILITY 1. SAIC is anticipated to perform activities in the area of systems integration. 2. Nanosys is anticipated to perform activities in the areas of nanotechnology and module development. 3. SAIC and Nanosys are anticipated to jointly perform activities in the areas of prototype development and marketing support. 4. Nanosys agrees to make its facilities, equipment, materials, etc., available at no additional cost above Nanosys' fully burdened FTE rate, as reasonably needed to support the joint prototype development and marketing support activities. 5. SAIC agrees to make its procurement and contract preparation and administration infrastructure, and its facilities, equipment materials, etc., available at no additional cost above SAIC's fully burdened FTE rate, as reasonably needed to support the joint prototype development and marketing support activities. 6. The Advanced Systems Group will promote its relationship with Nanosys within SAIC and act as a liaison to encourage and facilitate the development of additional Marketing Exhibits among Nanosys and other organizations within SAIC. Nanosys will reasonably support such additional efforts. Page 9 of 14 7/7/2003 MARKETING EXHIBIT NO. 1 Page 10 of 14 7/7/2003 EXHIBIT A NON-DISCLOSURE AGREEMENT Page 11 of 14 7/7/2003 NOTE: Each Party has a hardcopy of the signed NDA. SAIC STANDARD NON-DISCLOSURE (CONFIDENTIALITY) AGREEMENT (PAGE 1 OF 3) NON-DISCLOSURE AGREEMENT PROPRIETARY INFORMATION This is an Agreement, effective 4 June 2003 between Science Applications International Corporation, a Delaware Corporation (hereinafter referred to as "SAIC") and Nanosys Inc., a Delaware Corporation (hereinafter referred to as "Nanosys"). It is recognized that it may be necessary or desirable to exchange information between SAIC and Nanosys regarding [*** Redacted] nanomaterials and their applications for the purpose of using the information to discuss potential marketing areas and for marketing the opportunities identified under the SAIC/Nanosys Master Marketing Agreement. With respect to the information exchanged between the parties subsequent to this date, the parties agree as follows: (1) "Proprietary Information" shall include, but not be limited to, performance, sales, financial, contractual and special marketing information, ideas, technical data and concepts originated by the disclosing party, not previously published or otherwise disclosed to the general public, not previously available without restriction to the receiving party or others, nor normally furnished to others without compensation, and which the disclosing party desires to protect against unrestricted disclosure or competitive use, and which is furnished pursuant to this Non-Disclosure Agreement and appropriately identified as being proprietary when furnished. (2) In order for proprietary information disclosed by one party to the other to be protected in accordance with this Non-Disclosure Agreement, it must be: (a) in writing; (b) clearly identified as proprietary information at the time of its disclosure by each page thereof being marked with an appropriate legend indicating that the information is deemed proprietary by the disclosing party; and (c) delivered by letter of transmittal to the individual designated in Paragraph 3 below, or his designee. Where the proprietary information has not been or cannot be reduced to written form at the time of disclosure and such disclosure is made orally and with prior assertion of proprietary rights therein, such orally disclosed proprietary information shall only be protected in accordance with this Non-Disclosure Agreement provided that complete written summaries of all proprietary aspects of any such oral disclosures shall have been delivered to the individual identified in Paragraph 3 below, within 20 calendar days of said oral disclosures. Neither party shall identify information as proprietary which is not in good faith believed to be confidential, privileged, a trade secret, or otherwise entitled to such markings or proprietary claims. (3) In order for either party's proprietary information to be protected as described herein, it must be submitted in written form as set forth in Paragraph 2 above to the individuals identified below: SCIENCE APPLICATIONS NANOSYS INC. INTERNATIONAL CORPORATION Name: [*** Redacted] Name: Stephen Empedocles, Ph.D. Title: [*** Redacted] Title: Director of Business Development Address [*** Redacted] Address: Corporate Headquarters [*** Redacted] 2625 Hanover Street [*** Redacted] Palo Alto, CA 94304 Telephone No: [*** Redacted] Telephone No: 650-776-8530 FAX No: [*** Redacted] FAX No: 650-745-1273

*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 12 of 14 7/7/2003 SAIC STANDARD NON-DISCLOSURE (CONFIDENTIALITY) AGREEMENT (PAGE 2 OF 3) (4) Each party covenants and agrees that it will, notwithstanding that this Non-Disclosure Agreement may have terminated or expired, keep in confidence, and prevent the disclosure to any person or persons outside its organization or to any unauthorized person or persons, any and all information which is received from the other under this Non-Disclosure Agreement and has been protected in accordance with paragraphs 2 and 3 hereof; provided however, that a receiving party shall not be liable for disclosure of any such information if the same: A. Was in the public domain at the time it was disclosed, or ____________ B. Becomes part of the public domain without breach of this Agreement, or C. Is disclosed with the written approval of the other party, or D. Is disclosed after three years from receipt of the information, or E. Was independently developed by the receiving party, or F. Is or was disclosed by the disclosing party to a third party without restriction, or G. Is disclosed pursuant to the provisions of a court order. As between the parties hereto, the provisions of this Paragraph 4 shall supersede the provisions of any inconsistent legend that may be affixed to said data by the disclosing party, and the inconsistent provisions of any such legend shall be without any force or effect. Any protected information provided by one party to the other shall be used only in furtherance of the purposes described in this Agreement, and shall be, upon request at any time, returned to the disclosing party. If either party loses or makes unauthorized disclosure of the other party's protected information, it shall notify such other party immediately and take all steps reasonable and necessary to retrieve the lost or improperly disclosed information. (5) The standard of care for protecting Proprietary Information imposed on the party receiving such information, will be that degree of care the receiving party uses to prevent disclosure, publication or dissemination of its own proprietary information. (6) Neither party shall be liable for the inadvertent or accidental disclosure of Proprietary Information if such disclosure occurs despite the exercise of the same degree of care as such party normally takes to preserve its own such data or information. (7) In providing any information hereunder, each disclosing party makes no representations, either express or implied, as to the information's adequacy, sufficiency, or freedom from defect of any kind, including freedom from any patent infringement that may result from the use of such information, nor shall either party incur any liability or obligation whatsoever by reason of such information, except as provided under Paragraph 4, hereof. (8) Notwithstanding the termination or expiration of any Teaming Agreement executed in conjunction with this Agreement, the obligations of the parties with respect to proprietary information shall continue to be governed by this Non-Disclosure Agreement. Page 13 of 14 7/7/2003 SAIC STANDARD NON-DISCLOSURE (CONFIDENTIALITY) AGREEMENT (PAGE 3 OF 3) (9) This Non-Disclosure Agreement contains the entire agreement relative to the protection of information to be exchanged hereunder, and supersedes all prior or contemporaneous oral or written understandings or agreements regarding this issue. This Non-Disclosure Agreement shall not be modified or amended, except in a written instrument executed by the parties. (10) Nothing contained in this Non-Disclosure Agreement shall, by express grant, implication, estoppel or otherwise, create in either party any right, title, interest, or license in or to the inventions, patents, technical data, computer software, or software documentation of the other party. (11) Nothing contained in this Non-Disclosure Agreement shall grant to either party the right to make commitments of any kind for or on behalf of any other party without the prior written consent of that other party. (12) The effective date of this Non-Disclosure Agreement shall be the date stipulated at the beginning of this Agreement. (13) This Non-Disclosure Agreement shall be governed and construed in accordance with the laws of the State of California. SCIENCE APPLICATIONS NANOSYS INC. INTERNATIONAL CORPORATION Signature: _____________________________ Name: Name: [*** Redacted] Title: [*** Redacted] Title: Address: [*** Redacted] Address: 2625 Hanover Street [*** Redacted] Palo Alto, CA 94304 Telephone No: [*** Redacted] Telephone No: FAX No: [*** Redacted] FAX No.

*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. Page 14 of 14 7/7/2003 EX-10.14 30 f97636orexv10w14.txt EXHIBIT 10.14 EXHIBIT 10.14 COOPERATIVE DEVELOPMENT AGREEMENT This Cooperative Development Agreement (the "Agreement") is entered into as of December 15, 2003 (the "Effective Date") by and between Nanosys Inc. ("Nanosys"), a Delaware corporation with a place of business at 2625 Hanover Street, Palo Alto, California 94304 and Intel Corporation ("Intel"), a Delaware corporation with a place of business at 2200 Mission College Boulevard, Santa Clara, California 95052. RECITALS Whereas: A. Intel has expertise with respect to memory devices and the development, design, and manufacture thereof, and Nanosys has expertise with respect to the design and synthesis of nanomaterials and the development of nanotechnology-enabled systems. B. Intel and Nanosys desire to enter into an agreement to cooperate to investigate the feasibility of using [*** Redacted] in memory devices. AGREEMENT NOW, THEREFORE, the parties agree as follows: 1. DEFINITIONS. In this Agreement, the following words and expressions shall have the following meanings: 1.1 "Background IP" of a party means any and all intellectual property rights that such party either (i) owned, controlled, or had rights with respect to prior to the Effective Date; or (ii) develops, or acquires ownership, control, or rights with respect to, during the term of this Agreement but which is not Collaboration IP. 1.2 "CNDA" means the parties' October 11, 2002 Corporate Non-Disclosure Agreement #5085138. 1.3 "Collaboration" means the research and development work set forth in Exhibit A hereto. 1.4 "Collaboration Commencement Date" means the date of commencement of the Collaboration under Section 2.1 below. 1.5 "Collaboration IP" shall mean (i) all Intellectual Property rights in Collaboration Technology, which Intellectual Property rights were created by the parties' Listed Representatives (solely or jointly) in the course of working on the Collaboration and (ii) all Intellectual Property of either party conceived or created by or for either party ("Party") prior to the termination or *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. expiration of the Collaboration based on the other party's Confidential Information disclosed to such Party in connection with the Collaboration. 1.6 "Collaboration Right" means any patent, patent right (or similar right under foreign law), utility model, copyright or mask work right issued or registered as a result of a Filing. 1.7 "Collaboration Technology" means (i) any and all Technology that either party's Listed Representatives conceive (solely or jointly) in the course of working on the Collaboration, and (ii) any and all Technology conceived (solely or jointly) prior to the termination or expiration of the Collaboration by or for either party ("Party") based on Confidential Information of the other party disclosed to such Party in connection with the Collaboration, but, in each case, excluding Technology resulting from University/Government Activities. 1.8 "Confidential Information" is defined in the CNDA, as set forth in Section 6 below. 1.9 "Conventional Processes" means standard semiconductor manufacturing processes (where "standard" semiconductor manufacturing processes may include Intel proprietary semiconductor manufacturing processes) and reasonable incremental improvements (e.g. standard [*** Redacted] processes) thereof, including those resulting in one or more features of [*** Redacted] of [*** Redacted], and the resultant devices fabricated using such standard semiconductor manufacturing processes (but excluding such resultant devices incorporating Deposited Nanomaterials). 1.10 "Deposited Nanomaterials" means shape or size controlled [*** Redacted], such as [*** Redacted], and [*** Redacted], having at least one cross sectional dimension of less than 500 nanometers and such that the size related properties of the nanomaterials are advantageous to their function, that are subsequently [*** Redacted] as such nanomaterials [*** Redacted]. 1.11 "Exclusivity Date" means the earlier of (i) the Collaboration Commencement Date or (ii) [*** Redacted]. 1.12 "Exclusivity Period" means the period from the Effective Date until the earlier of (i) [*** Redacted], (ii) the Exclusivity Expiration (as defined in Section 3.3 below), or (iii) any termination of this Agreement. 1.13 "Field of Interest" means memory devices based on [*** Redacted] used primarily as [*** Redacted] (e.g. this would not include [*** Redacted] devices, [*** Redacted], or [*** Redacted]). 1.14 "Filing" means any application for or registration of a patent, patent right (or similar right under foreign law), utility model, copyright or mask work right with respect to Collaboration Technology. 1.15 "Intel's Exclusive Field" means (i) compositions, devices, articles and methods involving or involved in memory and logic devices, but only if such compositions, devices, *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -2- articles or methods are outside of Nanosys' Exclusive Field, and in each case excluding Conventional Processes, and (ii) all Conventional Processes other than Conventional Processes used in conjunction with Deposited Nanomaterials. For the avoidance of doubt, (i) Conventional Processes used in conjunction with Deposited Nanomaterials are not in Intel's Exclusive Field nor in Nanosys' Exclusive Field and (ii) devices incorporating Deposited Nanomaterials are in Nanosys' Exclusive Field. 1.16 "Intellectual Property" shall mean patents (and similar rights under foreign law, and applications therefor), trade secrets, copyrights and mask works. 1.17 "Listed Representatives" of a party means, at any time, that party's employees, agents, and contractors then working on the Collaboration on behalf of that party, as such individuals are identified by that party by written notice to the other party. A party's notice of Listed Representatives shall be in effect until a subsequent such notice by that party modifying the list. Each party shall at all times in good faith maintain an accurate list of Listed Representatives. At commencement, Intel's Listed Representatives shall include [*** Redacted], and Nanosys' Listed Representatives shall include [*** Redacted]. 1.18 "Nanosys' Exclusive Field" means compositions, devices, articles and methods involving or involved in Deposited Nanomaterials, but excluding Conventional Processes. 1.19 "Nanosys Facility" means and includes Nanosys' operations at 2625 Hanover Street in Palo Alto, CA, any ancillary engineering facilities owned or controlled by Nanosys, and any successor facilities owned or controlled by Nanosys during the term of this Agreement.. 1.20 "Nanosys IP" shall mean Nanosys' Intellectual Property Rights including Background IP and Collaboration IP. 1.21 "Technology" means any and all developments, ideas, designs, inventions, information, know-how, and technology. 1.22 "University/Government Activities" means any and all research, development, and other activities performed either (i) with any university (or other educational institution) funding or any government or government agency (U.S. or otherwise) funding, (ii) in collaboration with any university (or other educational institution) or with any government or government agency (U.S. or otherwise), or (iii) with a primary purpose of obtaining government funding. 2. COLLABORATION WORK. 2.1 Each party shall use its commercially reasonable efforts to perform its Collaboration obligations as set forth in Exhibit A. It is understood and agreed that the Collaboration is in the nature of research, that successful completion of the research is not assured, and that, so long as a party uses its commercially reasonable efforts as set forth in the preceding sentence, that party will not be in default for any failure to achieve any particular result or to complete any particular deliverable. The parties shall commence the Collaboration December 15, 2003, provided that on one or more written notices to Nanosys received by Nanosys at least [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -3- [*** Redacted] prior to the date when the Collaboration is then scheduled to commence (provided that if this Agreement is signed by Intel after November 30, 2003, Intel shall be entitled to provide the initial such notice on the date of such signature, but only if such signature date is on or before December 10, 2003), Intel shall be entitled to delay commencement of the Collaboration to any date on or before March 31, 2004. Delays resulting in commencement of the Collaboration after December 31, 2003 shall be subject to the payments in Section 3.2 below. It is understood and agreed that commencement of the Collaboration may not be delayed past March 31, 2004. 2.2 Nanosys agrees to allocate to the Collaboration at least [*** Redacted] full-time equivalent individuals during the first quarter of the Collaboration, at least [*** Redacted] full-time equivalent individuals during the second quarter of the Collaboration, at least [*** Redacted] full-time equivalent individuals during the third quarter of the Collaboration, and at least "X" full-time equivalent individuals (FTEs) during the fourth quarter of the Collaboration, where "X" is a number between [*** Redacted] and [*** Redacted], inclusive, chosen by Intel by written notice to Nanosys at least [*** Redacted] days prior to the beginning of such fourth quarter. If Intel fails to provide such notice, "X" will be deemed to equal [*** Redacted]. 2.3 It is the parties' mutual intent that most of the work and deliverable creation under this Agreement to investigate [*** Redacted] memory feasibility shall occur at the Nanosys Facility. Nanosys shall host Intel's Listed Representatives on a mutually agreed upon basis, such agreement not to be unreasonably withheld, on site at the Nanosys Facility to work on this project and get deeply involved in complementary collaborative activities (e.g., device integration and characterization, but not the synthesis of Deposited Nanomaterials). Information on the design and modeling of Deposited Nanomaterials, as well as [*** Redacted], [*** Redacted], and [*** Redacted] related to Deposited Nanomaterials, shall be provided to Intel's Listed Representatives, but in each case only as reasonably required for device integration and characterization for the purpose of the Collaboration, including but not limited to, making an informed decision about the complexity of integrating Deposited Nanomaterials with Conventional Processes. Nanosys' Listed Representatives may also be invited to work at Intel's facilities, for circumstances including but not limited to, using a metrology tool that may not be available at the Nanosys Facility. The parties shall adhere to the following guidelines in connection with Listed Representatives working at the site of the other party: (a) all employees of one party visiting the other party's facility shall comply with the rules and regulations applicable at that facility as communicated to such employees, and each party retains the right to reasonably refuse admittance for violation of these rules; (b) the hosting party shall maintain reasonable firewall procedures so that employees of a visiting party are not exposed to the confidential information of a third party; (c) each party shall maintain reasonable firewall procedures so that third parties at a party's site are not exposed to the confidential information of the other party or non-public information about the status of this Collaboration; and (d) in the case of Nanosys only, cubicle space, secure Internet access, and badge access shall be made available for use by Intel's Listed Representatives when such a person or persons are working on site at the Nanosys Facility. 2.4 Except as set forth in Section 5, any and all materials supplied by one party to the other party shall be used by the recipient only to perform its Collaboration obligations. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -4- 2.5 Except as set forth in Section 3 below, each party shall bear its own costs and expenses in carrying out the Collaboration. 2.6 Except for University/Government Activities, each party agrees to work exclusively with the other party in the Field of Interest during the Exclusivity Period. 2.7 The following persons ("Collaboration Managers") shall be appointed to direct the conduct of the parties with respect to the Collaboration: (a) For Intel: [*** Redacted] [*** Redacted] Intel Corporation 2200 Mission College Blvd. Mail Stop RN6-661 Santa Clara, CA 95052 Phone: [*** Redacted] Fax: [*** Redacted] E-mail: [*** Redacted] (b) For Nanosys: Calvin Y.H. Chow Chief Executive Officer Nanosys Inc. 2625 Hanover Street Palo Alto, CA 94304 Phone: (650) 331-2102 Fax: (650) 331-2101 E-mail: cchow@nanosysinc.com The Collaboration Managers shall have the authority to approve in writing changes to Exhibit A, including, as applicable, specifications, scope of work, and milestones. The Collaboration Managers shall have no other authority to amend this Agreement. Each party may change its Collaboration Manager on written notice to the other party, provided that the replacement Collaboration Manager is at a similar level of authority at the party making the replacement, or as otherwise agreed by the parties. 2.8 If either party desires to propose changes to the Collaboration, it shall notify the other party in writing of such proposal and the reasons for such proposal. The other party will give each such proposal its prompt attention. If Intel and Nanosys agree to any such change, the change shall be evidenced by a written confirmation signed by the Collaboration Managers of both parties. Such a written confirmation shall amend the terms of Exhibit A. 2.9 If the Collaboration is completed successfully (i.e., neither party has terminated this Agreement under Section 10, and the parties agree that the subject technology is promising and warrants pursuing further), then it is the parties' intent that, at Intel's request, the parties will negotiate, in good faith, during the Exclusivity Period to enter into a follow-on development agreement (the "Development Agreement") to further develop and commercialize the technology *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -5- which is the subject of this Agreement If Intel requests such a negotiation, then, for the duration of the Exclusivity Period, Nanosys agrees that Nanosys will not enter into any discussions regarding the subject of the Collaboration with any third party. The parties further intend that any such Development Agreement would reflect that, if the development and commercialization of this technology are successful, and Intel has a good-faith intent to use the Collaboration Materials in anticipation of a high-volume manufacturing ramp, then: (a) It is the parties' mutual intent that the parties would negotiate in good faith a supply agreement that reasonably assures the supply of Deposited Nanomaterials and any related Nanosys enabling technology or rights to Intel (for use in the Field of Interest, the "Collaboration Materials"). Upon Intel's request to commence such negotiations, the parties would negotiate diligently and in good faith to reach agreement. Further, if at the expiration of the Development Agreement the parties have not reached agreement, notwithstanding their diligent and good faith efforts, then Nanosys would not enter into any supply agreement, within [*** Redacted] after the expiration of the Development Agreement, to supply Collaboration Materials to any third party, in the Field of Interest, on terms which are more favorable to that third party than the terms last offered by Nanosys to Intel during this negotiation. In the first instance, the parties would use reasonable efforts to qualify Nanosys as a supplier to Intel of the Collaboration Materials. Nanosys acknowledges that, in order to be selected as an Intel qualified supplier, Nanosys must demonstrate supply capability (in areas including, but not limited to, cost, quality, and availability). Nanosys further acknowledges that the supply agreement would include a [*** Redacted] provision which guarantees that, [*** Redacted], Nanosys' price to Intel for Collaboration Materials is [*** Redacted] the price charged by Nanosys to [*** Redacted] for Collaboration Materials, in the Field of Interest, on similar terms and conditions. Further, if the parties enter into a supply agreement, the supply agreement will include provisions to help ensure a reliable supply of Collaboration Materials to Intel, which may include (i) safety stock and (ii) if Nanosys is unable to reasonably provide Intel with the Collaboration Materials, then upon notice from Intel, Nanosys' would take prompt action to arrange for such supply, which may include designating a subcontractor, subject to Intel's consent of such subcontractor (which shall not be unreasonably withheld), to manufacture such quantity of Collaboration Materials that cannot be obtained from Nanosys, providing such subcontractor agrees to pay Nanosys a reasonable royalty and agrees to reasonable confidentiality, intellectual property protection, and commercial provisions. Nanosys agrees to fully reasonably cooperate with Intel and the chosen subcontractor in the transfer of technology and sufficient collaborative engineering resources necessary to allow the subcontractor to produce Collaboration Materials for Intel's intended use as soon as practicable after Intel's request. Nanosys reserves the right to seek any and all legal recourse against the subcontractor if confidentiality or other provisions of the agreement between Nanosys and the subcontractor are violated. (b) It is the parties' mutual intent that, if the parties have not entered into a supply agreement as set forth in Section 2.9(a), notwithstanding their diligent and good faith efforts, then upon Intel's request within [*** Redacted] after the expiration of the Development Agreement, Nanosys would designate a contract manufacturer, subject to Intel's consent of such contract manufacturer (which would not be unreasonably withheld), to manufacture Collaboration Materials, licensing such contract manufacturer to applicable Nanosys intellectual property on reasonable and non-discriminatory terms, provided that such contract manufacturer agrees to pay Nanosys a reasonable royalty and agrees to reasonable confidentiality, intellectual property *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -6- protection, and commercial provisions. Nanosys shall fully and reasonably cooperate with Intel and the chosen contract manufacturer in the transfer of technology and sufficient collaborative engineering resources necessary to allow the contract manufacturer to produce Collaboration Materials for Intel's intended use as soon as practicable after Intel's request. Nanosys reserves the right to seek all legal recourse against the contract manufacturer if confidentiality or other provisions of the license between Nanosys and the contract manufacturer are violated. If Nanosys fails to enter into a license with a contract manufacturer as contemplated in this Section 2.9(b) within [*** Redacted] after Intel's request to Nanosys, then Nanosys would be deemed not to be entering the business of high-volume supply of Collaboration Materials. (c) The parties further intend that if Nanosys chooses not to enter into the business of supply of Collaboration Materials, and Nanosys does not license the necessary enabling technology to a third party manufacturer as provided in Section 2.9(b) above, then Nanosys would provide to Intel a royalty-bearing, capped fee, worldwide, perpetual, non-exclusive license under Nanosys IP, to have made Collaboration Materials and to make, have made, use, sell, offer to sell and import, products using or incorporating Collaboration Materials. 3. PAYMENTS TO NANOSYS. 3.1 Intel shall pay to Nanosys the following payments at the following times:
TIME OF PAYMENT AMOUNT OF PAYMENT - ---------------------------------------- ------------------------ Collaboration Commencement Date $ [*** Redacted]. [*** Redacted] months after the Collaboration $ [*** Redacted]. Commencement Date [*** Redacted] after the Collaboration $ [*** Redacted]. Commencement Date [*** Redacted] after the Collaboration $ [*** Redacted]*. Commencement Date
* $[*** Redacted] per FTE, according to the number of FTEs chosen by Intel, pursuant to Section 2.2 above, for the fourth quarter of the Collaboration. For the avoidance of doubt, the latter two payments (of $[*** Redacted] and ([*** Redacted])) will not be due if Intel terminates this Agreement under Section 10.2 below. 3.2 For each month (or portion thereof) that Intel delays the Collaboration Commencement Date, pursuant to Section 2.1 above, to a date after December 31,2003, Intel shall pay to Nanosys [*** Redacted] dollars ($[*** Redacted]) (prorated on a day for day basis for partial months). Such payment shall be due and payable within [*** Redacted] after Intel's notice of delay. (By way of example only, if upon execution of this Agreement Intel notified Nanosys of a Collaboration Commencement Date delay to [*** Redacted], 2004, Intel would pay Nanosys $[*** Redacted] within [*** Redacted] after such notice date. If on December 15,2003 Intel then notified Nanosys of a further delay *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -7- in the Collaboration Commencement Date, until [*** Redacted], 2004, Intel would pay to Nanosys an additional $[*** Redacted] by [*** Redacted], 2004 (i.e., in this example, a total of $[*** Redacted]).) 3.3 As of the Effective Date, the "Exclusivity Expiration" shall be [*** Redacted] after the Exclusivity Date. (i) Intel shall be entitled to extend the Exclusivity Expiration by [*** Redacted], to [*** Redacted] after the Exclusivity Date, by written notice to Nanosys no later than [*** Redacted] after the Exclusivity Date, and payment to Nanosys of [*** Redacted] dollars ($[*** Redacted]). This payment shall be due and payable no later than [*** Redacted] after the Exclusivity Date. (ii) If Intel has extended the Exclusivity Expiration pursuant to paragraph (i) hereinabove, then Intel shall be entitled to further extend the Exclusivity Expiration by an additional [*** Redacted], to [*** Redacted] after the Exclusivity Date, by written notice to Nanosys no later than [*** Redacted] after the Exclusivity Date, and payment to Nanosys of [*** Redacted] dollars ($[*** Redacted]). This payment will be due and payable no later than [*** Redacted] after the Exclusivity Date. (iii) If Intel has extended the Exclusivity Expiration pursuant to paragraph (ii) hereinabove, then Intel shall be entitled to further extend the Exclusivity Expiration by an additional [*** Redacted], to [*** Redacted] after the Exclusivity Date, by written notice to Nanosys no later than [*** Redacted] after the Exclusivity Date, and payment to Nanosys of [*** Redacted] dollars ($[*** Redacted]). This payment will be due and payable no later than [*** Redacted] after the Exclusivity Date. [*** Redacted] paid by Intel pursuant to this Section 3.3 may, at Intel's option, be credited to [*** Redacted] of Intel to Nanosys under [*** Redacted] by the parties, in the Field of Interest, entered into prior to termination of the Exclusivity Period. 4. OWNERSHIP. 4.1 Each party shall retain its ownership of its Background IP. No rights are granted pursuant to this Agreement with respect to any Background IP. 4.2 Subject to the licenses set forth in Section 5 below, Nanosys shall own all Collaboration IP. Subject to the licenses set forth in Section 5 below, Intel irrevocably hereby agrees to, and hereby does, transfer, convey and assign to Nanosys all of Intel's right, title, and interest in the Collaboration IP, including without limitation all Intellectual Property rights with respect thereto. Intel agrees to execute such documents, render such assistance, and take such other action as Nanosys may reasonably request to apply for, register, perfect, confirm, and protect Nanosys' rights in the Collaboration IP. Subject to Sections 5, 6, and 7 below, ownership of Collaboration Technology shall vest in Nanosys the exclusive right to determine whether and how the Collaboration IP is to be protected and exercised throughout the world. 5. LICENSES. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -8- 5.1 Subject to the terms and conditions of this Agreement, Nanosys agrees to grant, and hereby grants, to Intel a worldwide, nonexclusive (except as set forth in Section 5.1(i) hereinbelow), nontransferable (except as set forth in Section 11.7 below), royalty free license, only under Collaboration IP, to design, develop, make, have made, use, import, offer to sell, and sell or distribute any product or item and to practice any method or process, provided that: (i) this license shall be exclusive (including as to Nanosys) for use of the Collaboration IP in Intel's Exclusive Field, and (ii) no license is granted by Nanosys for use of any Collaboration IP in Nanosys' Exclusive Field. 5.2 Intel shall have the right to grant sublicenses (and authorize the granting of further sublicenses) under the license granted to it in Section 5.1 above. 5.3 No party shall be obligated to provide any Technology or deliverable in connection with the licenses granted in this Section 5; all deliverables under this Agreement are specified exclusively in Exhibit A. 5.4 Notwithstanding this Section 5 or Section 2.4, nothing in this Agreement shall be construed as preventing Intel or Nanosys employees from using [*** Redacted] of the Confidential Information of the other party, provided that such use of [*** Redacted] shall not grant to Intel or Nanosys any implied license to any of the other party's [*** Redacted]. [*** Redacted] means information in [*** Redacted] which is [*** Redacted]. An [*** Redacted] if the [*** Redacted] the information for the purpose of [*** Redacted]. 5.5 For purposes of this Section 5.5, the following definitions apply: "Applicable Intel Patents" means those claims of Intel patents which claim inventions conceived by Intel during the [*** Redacted] following the termination or expiration of the Collaboration, which inventions were based on Nanosys' Confidential Information. "Applicable Nanosys Patents" means those claims of Nanosys patents which claim inventions conceived by Nanosys during the [*** Redacted] following the termination or expiration of the Collaboration, which inventions were based on Intel's Confidential Information. "Applicable Intel Sublicensable Patents" means those claims of Intel patents which claim inventions conceived by Intel during the [*** Redacted] following the termination or expiration of the Collaboration, which inventions were based on Nanosys' Confidential Information. "Applicable Nanosys Sublicensable Patents" those claims of Nanosys patents which claim inventions conceived by Nanosys during the [*** Redacted] following the termination or expiration of the Collaboration, which inventions were based on Intel's Confidential Information. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -9- (a) Subject to the terms and conditions of this Agreement, Nanosys agrees to grant, and hereby grants, to Intel a worldwide, nonexclusive, nontransferable (except as set forth in Section 11.7 below), [*** Redacted] license, only under the Applicable Nanosys Patents, to design, develop, make, have made, use, import, offer to sell, and sell or distribute any product or item and to practice any method or process, provided that this license shall be limited to use within Intel's Exclusive Field and the Field of Interest. Intel shall have the right to grant sublicenses (and authorize the granting of further sublicenses) under the license granted to it in this Section 5.5(a), as provided in Section 5.5(b) below. (b) Under the licenses granted under Section 5.5(a) above, but only under Applicable Nanosys Sublicensable Patents, and only outside of the Field of Interest, Intel shall have the right to grant sublicenses (and authorize the granting of further sublicenses). (c) Subject to the terms and conditions of this Agreement, Intel agrees to grant, and hereby grants, to Nanosys a worldwide, nonexclusive, nontransferable (except as set forth in Section 11.7 below), [*** Redacted] license, only under the Applicable Intel Patents, to design, develop, make, have made, use, import, offer to sell, and sell or distribute any product or item and to practice any method or process, provided that this license shall be limited to use within Nanosys' Exclusive Field and the Field of Interest. Nanosys shall have the right to grant sublicenses (and authorize the granting of further sublicenses) under the license granted to it in this Section 5.5(c), as provided in Section 5.5(d) below. (d) Under the licenses granted under Section 5.5(c) above, but only under Applicable Intel Sublicensable Patents, and only outside of the Field of Interest, Nanosys shall have the right to grant sublicenses (and authorize the granting of further sublicenses). 6. CONFIDENTIAL INFORMATION. 6.1 The CNDA shall apply to this Agreement, provided that, for purposes of this Agreement: (i) "Confidential Information" shall also include information disclosed as a result of access to the other party's premises or property, which information relates to any information in tangible form subject to clause (i) of Section 1 of the CNDA, whether such disclosure or access occurs prior to, concurrent with, or following the disclosure of such information in tangible form. (ii) In Section 2 of the CNDA, "a need to know" means a need to know for the purposes of this Agreement. (iii) The third sentence of Section 6 of the CNDA shall not apply to this Agreement; rather, the Termination and Survival sections of this Agreement shall govern the disposition of Confidential Information. (iv) If the CNDA is terminated, the terms and conditions of the CNDA shall continue to apply to disclosures in connection with this Agreement. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -10- (v) In addition, each party shall be entitled to disclose the other party's Confidential Information to the extent such disclosure is required by the order or requirement of a court, administrative agency, or other governmental body; provided, that the party required to make the disclosure shall provide at least fifteen (15) days (or such lesser period as may apply if the party required to make the disclosure received fewer than fifteen (15) days notice of the disclosure obligation), advance written notice thereof to enable the other party to seek a protective order or otherwise prevent such disclosure. 7. INTELLECTUAL PROPERTY PROTECTION. 7.1 Nanosys IP. Nanosys shall have the sole right at its expense to prepare, file and prosecute Filings related to any Collaboration Technology, subject to Section 7.2 below. 7.2 Protection of Collaboration Technology. The parties shall confer on (i) protection of Collaboration Technology (other than Collaboration Technology developed solely by Nanosys) through Filings and/or through maintenance of the Collaboration IP as a trade secret, and (ii) preparation, filing, prosecution and maintenance of Filings and Collaboration Rights related to Collaboration Technology (other than Collaboration Technology developed solely by Nanosys). Nanosys shall be responsible for all Filing(s) in all jurisdictions for Collaboration IP. Provided however, if only Intel wants to protect a Collaboration development through a Filing on that development, then Intel shall be entitled to do so, at its sole expense, and in such a case shall be deemed sole owner of the affected Collaboration Right and Filing. In such event, Intel shall be deemed to have granted to Nanosys a nonexclusive (except as set forth hereinbelow), irrevocable, perpetual, fully paid, royalty free license, with right to sublicense (and authorize the granting of further sublicenses), only under such Collaboration Right, without restriction, including to practice any process or method, and to design, develop, make, use, have made, offer to sell, and sell or distribute any product or item, provided that (A ) this license shall be exclusive (including as to Intel) for use of the Collaboration Right in Nanosys' Exclusive Field and (B) no license is granted by Intel for use of the Collaboration Right in Intel's Exclusive Field. 7.3 Infringement Prosecution. (i) Nanosys shall have the sole right to prosecute claims of infringement or misappropriation of Collaboration IP, where such infringement or misappropriation is primarily in Nanosys' Exclusive Field. In each such case, Intel shall, at Nanosys' expense, take all actions reasonably requested by Nanosys in such prosecution, subject to indemnification by Nanosys of Intel for any liability to third parties resulting from such participation. (ii) Intel shall have the sole right to prosecute claims of infringement or misappropriation of Collaboration IP where such infringement or misappropriation is primarily in Intel's Exclusive Field. In each such case, Nanosys shall, at Intel's expense, take all actions reasonably requested by Intel in such prosecution (which may include participation as a named plaintiff, subject to indemnification by Intel of Nanosys for any liability to third parties resulting from such participation as a plaintiff). -11- 7.4 Further Assurances. At any time or from time to time on and after the date of this Agreement, each party shall at the request of the other party (i) execute, and deliver or cause to be delivered, all such consents, documents or further instruments of license, assignment, and transfer, and (ii) take or cause to be taken all such other actions, in each case at the other party's expense and as the other party may reasonably deem necessary or desirable in order for the other party to obtain the full benefits of Section 4.2 and this Section 7 and the activities contemplated thereby. 8. WARRANTY DISCLAIMER. NEITHER NANOSYS NOR INTEL MAKES ANY WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THE FOREGOING, ALL DELIVERABLES AND OTHER ITEMS ARE PROVIDED BY EACH PARTY "AS IS," AND ALL LICENSES GRANTED BY EACH PARTY ARE GRANTED "AS IS." 9. LIMITATION OF LIABILITY. NEITHER PARTY SHALL HAVE ANY LIABILITY FOR COSTS OF SUBSTITUTE PRODUCTS OR SERVICES, OR FOR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL OR INDIRECT DAMAGES OR LIABILITIES, INCLUDING WITHOUT LIMITATION SUCH DAMAGES OR LIABILITIES FOR LOSS OF REVENUE, LOSS OF BUSINESS, FRUSTRATION OF ECONOMIC OR BUSINESS EXPECTATIONS, LOSS OF PROFITS, OR COST OF CAPITAL, REGARDLESS OF THE FORM OF THE ACTION, WHETHER IN CONTRACT OR OTHERWISE, EVEN IF ANY REPRESENTATIVE OF A PARTY HERETO HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL EITHER PARTY'S LIABILITY UNDER THIS AGREEMENT EXCEED THE AMOUNTS PAID OR PAYABLE BY INTEL TO NANOSYS UNDER THIS AGREEMENT, provided that, as to Intel, this shall be in addition to Intel's obligation to pay such amounts. These limitations, however, shall not apply to either party's liability, if any, (i) for contribution or indemnity with respect to liability to third parties for personal injury, death, or damage to tangible property, (ii) exceeding the scope of the licenses in Section 5 (Licenses), (iii) breach of Section 6 (Confidential Information), or (iv) infringement of the other party's intellectual property rights. 10. TERM AND TERMINATION. 10.1 Term. This Agreement shall commence as of the Effective Date and shall continue until the expiration of the Exclusivity Period, unless earlier terminated as set forth herein. 10.2 Q2 Checkpoint. Intel shall be entitled to terminate this Agreement, for its convenience, on notice to Nanosys at any time within ten (10) days after completion of the "Q2 Formal Review Meeting" milestone in Exhibit A. 10.3 Termination Due to Bankruptcy, etc. In the event a party: (i) becomes insolvent; (ii) voluntarily files or has filed against it a petition under applicable bankruptcy or insolvency laws which such party fails to have released within thirty (30) days after filing; -12- (iii) proposes any dissolution, composition or financial reorganization with credit ors or if a receiver, trustee, custodian or similar agent is appointed or takes possession with respect to all or substantially all property or business of such party; or (iv) such party makes a general assignment for the benefit of creditors; then the other party may terminate this Agreement by notice to the non-terminating party. 10.4 Termination Due to Breach. Either party shall have the right to terminate this Agreement if the other party is in material breach of any material term or condition of this Agreement and fails to remedy such breach within [*** Redacted] after receipt of written notice of such breach given by the non-breaching party. To terminate this Agreement, the nonbreaching party must provide further written notice of such termination to the breaching party prior to a cure of the breach. 10.5 Survival. Neither the termination nor expiration of this Agreement shall relieve either party from its obligations to pay the other any sums accrued hereunder. Upon the termination or expiration of this Agreement, (i) Intel shall promptly return to Nanosys all Nanosys Confidential Information and (ii) Nanosys shall promptly return to Intel all Intel Confidential Information. The parties agree that their respective rights, obligations and duties under Sections 1, 2.9, 4 (Ownership), 5 (Licenses), 6 (Confidential Information), 7 (Intellectual Property Protection), 8 (Warranty Disclaimer), 9 (Limitation of Liability), 10.5 (Survival), and 11 (Miscellaneous) shall survive any termination or expiration of this Agreement. 11. MISCELLANEOUS. 11.1 Announcement. On or after the Effective Date, Nanosys shall be entitled to issue a press release pertaining to this Agreement, upon written consent from Intel to the content of the press release. 11.2 Notices. All notices, requests, demands and other communications given or made in accordance with the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) three days after mailing when mailed (by registered or certified mail, postage paid, only), (ii) on the date sent when made by facsimile transmission with confirmation of receipt (with hard copy to follow by registered or certified mail, postage paid, only), and (iii) on the date received when delivered in person or by courier, provided that notices and communications with respect to administrative and project matters (e.g., changes in meeting times and dates, program specifications, and specific program development activities) (but not legal matters or matters pertaining to or establishing rights under this Agreement), may be provided by e-mail and will be deemed given when sent. All notices shall be provided to the address set forth below or such other place as such party may from time to time designate in writing. Each party may alter its address set forth below by notice in writing to the other party, and such notice shall be considered to have been given three (3) days after the sending thereof: If to Nanosys: Nanosys Inc. 2625 Hanover Street Palo Alto, California 94304 Fax:(650)331-2101 *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -13- Attn: Calvin Y.H. Chow E-mail: cchow@nanosysinc.com with a copy, for matters pertaining to intellectual property, to: Nanosys Inc. 2625 Hanover Street Palo Alto, California 94304 Fax: (650) 331-2101 Attn: Matt Murphy E-mail: mmurphy@nanosysinc.com If to Intel: Intel Corporation 2200 Mission College Blvd. Santa Clara, CA 95052 ATTN: General Counsel 11.3 Amendment; Waiver. This Agreement may be amended, modified or supplemented only by a writing that is signed by duly authorized representatives of both parties and that specifically identifies the provision or provisions of this Agreement being amended, modified or supplemented. No term or provision hereof will be considered waived by either party, and no breach excused by either party, unless such waiver or consent is in writing signed on behalf of the party against whom the waiver is asserted. Without limiting the foregoing, no consent by either party to, or waiver of, a breach by either party, whether express or implied, will constitute a consent to, waiver of, or excuse of any other, different, or subsequent breach by either party. 11.4 Severability. If any provision hereof should be held invalid, illegal or unenforceable in any jurisdiction, the parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the parties and all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible. Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. 11.5 Governing Law. This Agreement shall be governed by and construed under the laws of the United States and the State of California, not including its conflict of law provisions. 11.6 Force Majeure. Except for the payment of sums accrued, neither party will be liable for any failure or delay in performance under this Agreement due to fire, explosion, earthquake, storm, flood or other weather, unavailability of necessary utilities or raw materials, war, insurrection, riot, act of God or the public enemy, law, act, order, proclamation, decree, regulation, ordinance, or instructions of government or other public authorities, or any other event beyond the reasonable control of the party whose performance is to be excused. If, however, a party's performance is prevented for [*** Redacted], then the other party shall be entitled to terminate this Agreement on written notice to the party suffering the force majeure at any time prior to resumption of performance by the party suffering the force majeure. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -14- 11.7 Assignment. Neither party may transfer or assign this Agreement, whether by operation of law or otherwise, without the prior written consent of the other party and any attempt to do so without such consent will be void. This Agreement will bind and inure to the benefit of the parties and their respective permitted successors and permitted assigns. Notwithstanding anything in this Agreement, however, either party may assign this Agreement without the other party's prior written consent to a successor to all or substantially all of its assets pertaining to the Collaboration (e.g., the surviving entity in a merger or consolidation in which it participates or to a purchaser of all or substantially all of its assets pertaining to the Collaboration), so long as such surviving entity or purchaser shall assume (expressly in writing or by operation of law) the performance of all of the terms of this Agreement. 11.8 No Third Party Beneficiaries. No person or entity other than Intel and Nanosys will have any rights or obligations pursuant to this Agreement. 11.9 Relationship of the Parties. The parties to this Agreement are independent contractors. There is no relationship of agency, partnership, joint venture, employment, or franchise between the parties and this Agreement is negotiated at arm' s length with both sides represented by counsel of their choice. Neither party has the authority to bind the other or to incur any obligation on its behalf. Any such act will create a separate liability in the party so acting to any and all third parties affected thereby. 11.10 Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. If this Agreement is executed in counterparts, no signatory hereto shall be bound until both the parties named below have duly executed or caused to be duly executed a counterpart of this Agreement. 11.11 Confidentiality of Agreement. Subject to Section 6.1(v) and Section 11.1, each party agrees that the existence of and the terms and conditions of this Agreement shall be treated as confidential, provided, however, that each party may disclose the terms and conditions of this Agreement: (i) as required by any court or other governmental body; (ii) as otherwise required by law; (iii) to legal counsel of the parties; (iv) in connection with the requirements of a public offering or securities filing; (v) in confidence, to accountants, banks, and financing sources and their advisors; (vi) in confidence, in connection with the enforcement of this Agreement or rights under this Agreement; or (vii) in confidence, in connection with a merger or acquisition or proposed merger or acquisition, or the like. 11.12 Authority. Each party represents and warrants to the other party at the Effective Date (i) that it has the legal right, power, and authority to enter into this Agreement and to fully perform its obligations under this Agreement, and (ii) that the performance of such obligations will not conflict with any agreements, contracts or other arrangements to which it is a party or by which it is bound. 11.13 Entire Agreement. This Agreement, including all Exhibits to this Agreement, together with the CNDA (as set forth in Section 6 above), constitutes the entire agreement between the parties relating to this subject matter and supersedes all prior or simultaneous representations, -15- discussions, negotiations, letters of intent, and agreements, whether written or oral, with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates set forth below effective as of the Effective Date. NANOSYS INC. INTEL CORPORATION By: /s/ CALVIN CHOW By: /s/ PATRICK P GELSINGER ----------------------------- ----------------------------- Print Name: CALVIN CHOW Print Name: PATRICK P GELSINGER Title: CEO Title: Sr VP / CTO LEGAL OK ---------- p 12/8/03 -16- EXHIBIT A Collaboration Statement of Work (SOW) Summary Construction of [*** Redacted] devices (similar to the concept figure below) to evaluate key technical areas required for a [*** Redacted] memory unit and to project the performance limits of the technology. [*** Redacted] Device will have an [*** Redacted] and will be utilized to evaluate: - [*** Redacted] and [*** Redacted]. - [*** Redacted] characteristics (e.g. [*** Redacted], etc.) - [*** Redacted] - including [*** Redacted] characteristics. - Effects of [*** Redacted], and [*** Redacted] modifications. - Variations of [*** Redacted]. - [*** Redacted] (e.g. [*** Redacted]) - Variations of processing means. and to construct a model for [*** Redacted] of a [*** Redacted] or [*** Redacted] device. In Q1 and Q2, the project would focus on modeling and generating/testing [*** Redacted] in order to reconcile the validity of the model. Q3 and Q4 would focus on a [*** Redacted] to better select [*** Redacted]. The [*** Redacted] work would be done on [*** Redacted] devices in a [*** Redacted]. A more detailed plan of activities will be generated by the Collaboration team upon Commencement of the Collaboration. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. The parties will hold a Q2 Formal Review Meeting no later than [*** Redacted] after the end of Q2. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -2- EX-10.15 31 f97636orexv10w15.txt EXHIBIT 10.15 EXHIBIT 10.15 COOPERATIVE DEVELOPMENT AGREEMENT This Cooperative Development Agreement (the "Agreement") is entered into as of January 22, 2004 (the "Effective Date") by and between Nanosys Inc. ("Nanosys"), a California corporation with a place of business at 2625 Hanover Street, Palo Alto, California 94304 and E.I. du Pont de Nemours and Company ("DuPont"), a Delaware corporation with a place of business at 1007 Market Street, Wilmington, DE 19898. RECITALS Whereas: A. DuPont has expertise with respect to [*** Redacted] using DuPont's [*** Redacted] and the development, design, and manufacture thereof, and Nanosys has expertise with respect to the design and synthesis of nanomaterials and the development of nanotechnology-enabled systems. B. DuPont and Nanosys desire to enter into an agreement to cooperate to investigate the commercial feasibility of combining Nanosys' [*** Redacted] nanomaterials technology with DuPont's [*** Redacted] technology for high-performance [*** Redacted] applications AGREEMENT NOW, THEREFORE, the parties agree as follows: 1. DEFINITIONS. In this Agreement, the following words and expressions shall have the following meanings: 1.1 "Collaboration" means the research and development work set forth in Exhibit A hereto. 1.2 "Statement of Work ("SOW")" means Exhibit A hereto. 1.3 "Collaboration Commencement Date" means the date of commencement of the Collaboration under Section 2.1 below. 1.4 "Technology" means any and all developments, ideas, designs, inventions, information, know-how, and technology. 1.5 "Collaboration Technology" of a party ("Party") means (i) any and all Technology that such Party's employees or contractors conceive or develop (solely or jointly) in the course of working specifically on the Collaboration, and (ii) any and all Technology conceived or developed (solely or jointly) by or for such Party based on Confidential Information of the other party disclosed to such Party in connection with, or generated under, the Collaboration. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. 1.6 "Nanosys Collaboration IP" shall mean (i) Nanosys' intellectual property rights in Collaboration Technology of Nanosys, which intellectual property rights were created by Nanosys' employees or contractors (solely or jointly) in the course of specifically working on the Collaboration and (ii) all intellectual property of Nanosys created by or for Nanosys based on DuPont Confidential Information disclosed to Nanosys in connection with, or DuPont Confidential Information generated under, the Collaboration. 1.7 "DuPont Collaboration IP" shall mean (i) DuPont's intellectual property rights in Collaboration Technology of DuPont, which intellectual property rights were created by DuPont's employees or contractors (solely or jointly) in the course of specifically working on the Collaboration and (ii) all intellectual property of DuPont created by or for DuPont based on Nanosys Confidential Information disclosed to DuPont in connection with, or Nanosys Confidential Information generated under, the Collaboration. 1.8 "Background IP" of a party means any and all intellectual property rights that such party either (i) owned, controlled, or had rights with respect to prior to the Effective Date; or (ii) develops, or acquires ownership, control, or rights with respect to, during the term of this Agreement but which is not that party's Collaboration IP. 1.9 "Nanosys [*** Redacted] Nanomaterials Technology" means (i) [*** Redacted] semiconductors formed as [*** Redacted] (such as [*** Redacted], [*** Redacted], [*** Redacted], and [*** Redacted] etc.), having at least [*** Redacted] that are subsequently [*** Redacted] as such nanomaterials [*** Redacted]; (ii) any [*** Redacted], [*** Redacted], or [*** Redacted] incorporating such [*** Redacted]; and (iii) all applications and products incorporating [*** Redacted] that rely on such materials. 1.10 "DuPont [*** Redacted] Technology" means (i) any method for fabricating [*** Redacted], where such [*** Redacted] is enabled by [*** Redacted]; (ii) any [*** Redacted] used in such methods; and (iii) all applications and products incorporating [*** Redacted] that rely on such methods. 1.11 "Conventional Materials" means traditional semiconducting polymers and semiconducting organic materials such as pentacene; carbon nanotubes; and traditional, continuous [*** Redacted] semiconductor [*** Redacted] such as [*** Redacted] and [*** Redacted], including those having at least [*** Redacted] of [*** Redacted]. 1.12 "Nanosys' Exclusive Field" means compositions, devices, articles, and methods involving or involved in Nanosys [*** Redacted] Nanomaterials Technology, but excluding Conventional Materials, except including [*** Redacted] when used in an architecture such that [*** Redacted] (e.g. substantially similar to replacing [*** Redacted] in the applications described in Nanosys' Nature Paper (Duan et al, Nature, 425, p 274, 2003) with [*** Redacted]). *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -2- 1.13 "DuPont's Exclusive Field" means compositions (including without limitation Conventional Materials), devices, articles, and methods involving or involved in Dupont [*** Redacted] Technology, but excluding Conventional Materials used in conjunction with Nanosys [*** Redacted] Nanomaterials Technology, and excluding [*** Redacted] when used in an architecture such that [*** Redacted] (e.g. substantially similar to replacing the [*** Redacted] in the applications described in Nanosys' Nature Paper (Duan et al, Nature, 425, p 274, 2003) with [*** Redacted]). For the avoidance of doubt, Conventional Processes used in conjunction with Nanosys [*** Redacted] Nanomaterials Technology are not in DuPont's Exclusive Field nor in Nanosys' Exclusive Field. 1.14 "Overlap Field" means the fields which fall within both Nanosys' Exclusive Field and DuPont's Exclusive Field. 1.15 "Confidential Information" is defined in Section 6 below. 1.16 "Joint Developments" is defined in Section 4.4 below. 1.17 "Filing" means any application for or registration of a patent, patent right (or similar right under foreign law), utility model, copyright or mask work right with respect to Collaboration Technology. 1.18 "Collaboration Right" means any patent, patent right (or similar right under foreign law), utility model, copyright or mask work right issued or registered as a result of a Filing. 2. COLLABORATION WORK. 2.1 Each party shall use its commercially reasonable efforts to perform its Collaboration obligations as set forth in Exhibit A. It is understood and agreed that the Collaboration is in the nature of research, that successful completion of the research is not assured, and that, so long as a party uses its commercially reasonable efforts as set forth in the preceding sentence, that party will not be in default for any failure to achieve any particular result or to complete any particular deliverable. The parties shall commence the Collaboration January 22, 2004. 2.2 Nanosys agrees to allocate to the Collaboration the number of full-time equivalent individuals (FTEs) specified in the SOW. 2.3 Where appropriate and agreed in each case, and in accordance with the SOW, either party's employees may work with the other party at the other party's facility. All employees of one party visiting the other party's facility shall comply with the rules and regulations applicable at that facility, as communicated to such employees. 2.4 Any and all materials supplied by one party to the other party shall be used by the recipient only to perform its Collaboration obligations. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -3- 2.5 Except as set forth in Section 3 below, each party shall bear its own costs and expenses in carrying out the Collaboration. 2.6 The following persons ("Collaboration Managers") shall be appointed to direct the conduct of the parties with respect to the Collaboration: (a) For DuPont: [*** Redacted] [*** Redacted], DuPont CR&D Experimental Station, E328/225 Rt. 41 Between Rt. 202 & 52 Wilmington, DE 19880-0356 Phone: [*** Redacted] fax: [*** Redacted] E-mail: [*** Redacted] (b) For Nanosys: Stephen Empedocles Director, Business Development Nanosys Inc. 2625 Hanover Street Palo Alto, CA 94304 Phone: (650) 331-2103 fax: (650) 331-2101 E-mail: sempedocles@nanosysinc.com The Collaboration Managers shall have the authority to approve in writing changes to Exhibit A, including, as applicable, specifications, scope of work, and milestones. The Collaboration Managers shall have no other authority to amend this Agreement. Each party may change its Collaboration Manager on written notice to the other party, provided that the replacement Collaboration Manager is at a similar level of authority at the party making the replacement, or as otherwise agreed to by the parties. 2.7 If either party desires to propose changes to the Collaboration, it shall notify the other party in writing of such proposal and the reasons for such proposal. The other party will give each such proposal its prompt attention. If DuPont and Nanosys agree to any such change, the change shall be evidenced by a written confirmation signed by the Collaboration Managers of both parties. Such a written confirmation shall amend Exhibit A. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -4- 3. PAYMENTS TO NANOSYS. 3.1 DuPont shall pay to Nanosys the following payments at the following times:
Time of Payment Amount of Payment --------------- ----------------- [*** Redacted] $ [*** Redacted] [*** Redacted] after the Collaboration Commencement Date $ [*** Redacted] [*** Redacted] after the Collaboration Commencement Date $ [*** Redacted] [*** Redacted] after the Collaboration Commencement Date $ [*** Redacted]
* These amounts (for the latter [*** Redacted]) are nonbinding estimates of the effort that may be required from Nanosys in these [*** Redacted], based on experience in similar investigations. These estimates may be revised on a [*** Redacted] basis based on the learnings from the previous [*** Redacted]. All amounts are and will be based on a rate of [*** Redacted] per FTE-[*** Redacted]. For the avoidance of doubt, the latter [*** Redacted] payments will not be due if this Agreement terminates under Section 10.2 below. 4. OWNERSHIP. 4.1 Each party shall retain its ownership of its Background IP. No rights are granted pursuant to this Agreement with respect to any Background IP. 4.2 Whether Collaboration Technology is jointly or solely made shall be determined according to United States patent law or, as to original works of authorship, according to United States copyright law. Except as to patent ownership, all other questions concerning the construction or effect of patent applications and patents shall be decided in accordance with the laws of the country in which the particular patent application concerned has been filed or granted. 4.3 Each of Nanosys and DuPont shall own the Collaboration Technology solely made by its respective employees, agents, and contractors. Subject to Sections 4.5, 5, 6, and 7 below, sole ownership of Collaboration Technology shall vest in the owning party the exclusive right to determine whether and how the Collaboration Technology and the associated intellectual property rights are to be protected and exercised throughout the world. 4.4 Nanosys and DuPont shall jointly own jointly made Collaboration Technology ("Joint Developments"), with no duty to account, and, subject to Sections 4.5, 5, 5, 6, and 7 below, each party shall have the right to use and exploit such Joint Developments without consent of the *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portion have been filed separately with the Commission. -5- other party. Each party waives any rights under applicable law that it may have to require consent or an accounting. Subject to Sections 4.5, 5, 6, and 7 below, joint ownership of Collaboration Technology and the associated intellectual property rights shall vest in the parties the joint right to determine whether and how the Collaboration Technology and the associated intellectual property rights are to be protected and exercised throughout the world. 4.5 Each party agrees that it will not use any of its solely owned or jointly owned Collaboration Technology (or any associated solely owned or jointly owned Collaboration IP) in the Overlap Field, except as may be agreed by the parties in writing. If either party desires to use any such Collaboration Technology and/or Collaboration IP in the Overlap Field, it may provide written notice to the other party, in appropriate detail, of the proposed scope of such use. Within [*** Redacted] days after such notice, the other party shall, by written notice to the original notifying party, respond either (i) granting permission for such use, or (ii) offering to negotiate the terms and conditions of such use, it being understood that neither party shall be obligated to enter into any particular agreement or arrangement, nor shall either party be obligated to enter into any agreement or arrangement that is inconsistent with its then current obligations to third parties. Any failure to so respond within this [*** Redacted] day period shall be irrevocably deemed permission for the originally notifying party to use such Collaboration Technology and/or Collaboration IP as proposed in the original party's notice. With respect to Collaboration IP for which permission is so granted, to the extent such Collaboration IP is solely owned by the party granting such permission, such party shall be deemed to have granted to the other party a worldwide, nontransferable (except as set forth in Section 11.7 below), royalty free license, only under such Collaboration IP, to design, develop, make, have made, use, import, offer to sell, and sell or distribute any product or item and to practice any method or process, in each case limited to the scope of use specified in the licensee's notice provided as set forth hereinabove. 5. LICENSES. 5.1 Subject to the terms and conditions of this Agreement, Nanosys agrees to grant, and hereby grants, to DuPont a worldwide, nonexclusive (except as set forth in Section 5.1(i) hereinbelow), nontransferable (except as set forth in Section 11.7 below), royalty free license, only under the Nanosys Collaboration IP, to design, develop, make, have made, use, import, offer to sell, and sell or distribute any product or item and to practice any method or process, provided that: (i) this license shall be exclusive (including as to Nanosys) for use of the Nanosys Collaboration IP in DuPont's Exclusive Field, subject to Section 5.1(ii) below, and (ii) no license is granted by Nanosys for use of any Nanosys Collaboration IP in Nanosys' Exclusive Field (it being understood that Nanosys' Exclusive Field includes, without limitation, the Overlap Field). 5.2 Subject to the terms and conditions of this Agreement, DuPont agrees to grant, and hereby grants, to Nanosys a worldwide, nonexclusive (except as set forth in Section 5.2(i) hereinbelow), nontransferable (except as set forth in Section 11.7 below), royalty free license, only under the DuPont Collaboration IP, to design, develop, make, have made, use, import, offer to sell, and sell or distribute any product or item and to practice any method or process, provided that: *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -6- (i) this license shall be exclusive (including as to DuPont) for use of the DuPont Collaboration IP in Nanosys' Exclusive Field, subject to Section 5.2(ii) below, and (ii) no license is granted by DuPont for use of any DuPont Collaboration IP in DuPont's Exclusive Field (it being understood that DuPont's Exclusive Field includes, without limitation, the Overlap Field). 5.3 Each party shall have the right to grant sublicenses (and authorize the granting of further sublicenses) under the license granted to it in Section 5.1 or 5.2 above, as applicable. 5.4 No party shall be obligated to provide any Technology or deliverable in connection with the licenses granted in this Section 5; all deliverables under this Agreement are specified exclusively in Exhibit A. 6. CONFIDENTIAL INFORMATION. 6.1 The term "Confidential Information" shall mean any information or materials disclosed by one party to the other, pursuant to this Agreement, which is in written, graphic, machine readable or other tangible form and is marked "Confidential", "Proprietary" or in some other manner to indicate its confidential nature. Confidential Information may also include oral information disclosed by one party to the other, provided that such information is designated as confidential at the time of disclosure and reduced to a written summary by the disclosing party, within thirty (30) days after its oral disclosure or disclosure resulting from such access, which written summary is marked in a manner to indicate its confidential nature and delivered to the receiving party. Confidential Information shall also include any information disclosed as a result of access to the other party's premises or property. 6.2 Each party shall treat as confidential all Confidential Information of the other party, shall not use such Confidential Information except for the Collaboration, shall implement reasonable procedures to prohibit the disclosure, unauthorized duplication, misuse or removal of the other party's Confidential Information, and shall not disclose such Confidential Information to any third party except as reasonable and necessary to exercise its rights and perform its obligations pursuant to this Agreement, and under substantially similar restrictions as those set forth in this section. Without limiting the foregoing, each party shall use at least the same procedures and degree of care which it uses to prevent the disclosure or misuse of its own confidential information of like importance to prevent the disclosure or misuse of Confidential Information disclosed to it by the other party under this Agreement, but in no event less than reasonable care. 6.3 Notwithstanding the above, neither party shall have liability to the other with regard to any Confidential Information of the other which: (i) was generally known and available at the time it was disclosed or becomes generally known and available through no fault of the receiving party; (ii) was known to the receiving party, without restriction, at the time of disclosure as shown by the files of the receiving party in existence at the time of disclosure; -7- (iii) is disclosed with the prior written approval of the disclosing party; (iv) was independently developed by the receiving party without any use of the Confidential Information and by employees or other agents of the receiving party who have not been exposed to the Confidential Information, provided that the receiving party can demonstrate such independent development by documented evidence prepared contemporaneously with such independent development; or (v) becomes known to the receiving party, without restriction, from a source other than the disclosing party without breach of this Agreement by the receiving party and otherwise not in violation of the disclosing party's rights. In addition, each party shall be entitled to disclose the other party's Confidential Information to the extent such disclosure is required by the order or requirement of a court, administrative agency, or other governmental body; provided, that the party required to make the disclosure shall provide prompt, advance notice thereof to enable the other party to seek a protective order or otherwise prevent such disclosure. 7. INTELLECTUAL PROPERTY PROTECTION. 7.1 Nanosys and DuPont Collaboration Technology. Nanosys shall have the sole right at its expense to prepare, file and prosecute Filings related to any Collaboration Technology solely owned by Nanosys and to maintain Collaboration Rights issued thereon. DuPont shall have the sole right at its expense to prepare, file and prosecute Filings related to any Collaboration Technology solely owned by DuPont and to maintain Collaboration Rights issued thereon. 7.2 Joint Developments. The parties shall confer on (i) protection of Joint Developments through Filings on the Joint Development and/or through maintenance of the Joint Development as a trade secret, and (ii) preparation, filing, prosecution and maintenance of Filings and Collaboration Rights related to Joint Developments. The parties shall agree by whom Filings will be done in a country for a particular Joint Development. If only one party wants to protect a Joint Development through a Filing on that Joint Development, then that party shall be entitled to do so, at its sole expense and in its own name. If both parties share the expense of such Filing, then the Filing shall be made on behalf of both parties and shall name each party as joint and equal owner in such country of the Joint Development and of the resulting Collaboration Right. If one party does not share the expense of such Filing, then the Filing shall be made on behalf of the party which makes the Filing and shall name such party as the sole owner in such country of the Collaboration Right pertaining to such Joint Development, and the party which makes the Filing shall be deemed to have granted the other party a nonexclusive (except as set forth hereinbelow), irrevocable, perpetual, fully paid, royalty free license, with right to sublicense (and authorize the granting of further sublicenses), only under such Collaboration Right, without restriction, including to practice any process or method, and to design, develop, make, use, have made, offer to sell, and sell or distribute any product or item, provided that (A) in the case of such license from Nanosys to DuPont (I) this license shall be exclusive (including as to Nanosys) for use of the Collaboration Right in DuPont's Exclusive Field, subject to clause (A)(II) hereinbelow, and (II) no license is granted by -8- Nanosys for use of the Collaboration Right in Nanosys' Exclusive Field (it being understood that Nanosys' Exclusive Field includes, without limitation, the Overlap Field); and (B) in the case of such a license from DuPont to Nanosys (I) this license shall be exclusive (including as to DuPont) for use of the Collaboration Right in Nanosys' Exclusive Field, subject to clause (B)(II) hereinbelow, and (II) no license is granted by DuPont for use of the Collaboration Right in DuPont's Exclusive Field (it being understood that DuPont's Exclusive Field includes, without limitation, the Overlap Field). If either party does not pay its one-half share of maintenance expenses with respect to a Collaboration Right, then sole ownership of that Collaboration Right shall be transferred and assigned to the other party, subject to a license to the non-owning party as set forth hereinabove. 7.3 Infringement Prosecution. (a) (i) Nanosys shall have the sole right to prosecute claims of infringement or misappropriation of Collaboration Rights (whether owned by Nanosys, owned by DuPont, or jointly owned by Nanosys and DuPont) or misappropriation of any trade secret with respect to Collaboration Technology (whether of Nanosys, of DuPont, or jointly of Nanosys and DuPont), where such infringement or misappropriation is primarily in Nanosys' Exclusive Field. In each such case, DuPont shall, at Nanosys' expense, take all actions reasonably requested by Nanosys in such prosecution (which may include participation as a named plaintiff, subject to indemnification by Nanosys of DuPont for any liability to third parties resulting from such participation as a plaintiff). (ii) DuPont shall have the sole right to prosecute claims of infringement or misappropriation of Collaboration Rights (whether owned by Nanosys, owned by DuPont, or jointly owned by Nanosys and DuPont) or misappropriation of any trade secret with respect to Collaboration Technology (whether of Nanosys, of DuPont, or jointly of Nanosys and DuPont), where such infringement or misappropriation is primarily in DuPont's Exclusive Field. In each such case, Nanosys shall, at DuPont's expense, take all actions reasonably requested by DuPont in such prosecution (which may include participation as a named plaintiff, subject to indemnification by DuPont of Nanosys for any liability to third parties resulting from such participation as a plaintiff). (iii) For the avoidance of doubt, the determination of whether any infringement or misappropriation is primarily in Nanosys Exclusive Field or Dupont's Exclusive field shall be determined by good-faith discussions between the parties, when such infringement or misappropriation occurs in the Overlap Field. Regardless of this determination, either party shall have the right to prosecute claims of infringement or misappropriation of Collaboration Rights (whether owned by Nanosys, owned by DuPont, or jointly owned by Nanosys and DuPont) or misappropriation of any trade secret with respect to Collaboration Technology (whether of Nanosys, of DuPont, or jointly of Nanosys and DuPont), where such infringement or misappropriation is in the Overlap Field, if the other party chooses not to pursue such prosecution. In each such case, the obligations of Nanosys and DuPont to support a prosecution initiated by the other party shall be as set forth in paragraphs (i) and (ii) of this Section 7.3(a). (b) Except as set forth in Section 7.3(a) above, each party shall have the sole right to prosecute claims of infringement of any Collaboration Right owned solely by such party -9- or infringement or misappropriation of any trade secret with respect to Collaboration Technology owned solely by such party. (c) Except as set forth in Section 7.3(a) above, if either party (the "Notifying Party") wishes to commence an action against a third party for actual or potential infringement or misappropriation ("Infringement") of any jointly owned Joint Development or related jointly owned Collaboration Right, then such party shall promptly so notify the other party (the "Other Party") in writing of such Infringement (the "Infringement Notice"), and the following shall apply: (i) The Notifying Party shall have the sole right to prosecute such Infringement for a period of [*** Redacted] days after the date of the Infringement Notice, provided that the Other Party may, by written notice within [*** Redacted] days after the Infringement Notice, elect to participate in the Infringement action and agree to [*** Redacted] of the costs of such prosecution. In such event, the parties shall jointly control and cooperate in prosecution of such Infringement action and shall share equally in any monetary award resulting from such prosecution. (ii) If the Other Party elects to participate and share costs as set forth in Section 73(c)(i), but the Notifying Party does not take reasonable actions to prosecute the Infringement action before the end of such [*** Redacted] day period, or notifies the Other Party that it does not intend to prosecute such Infringement, then (A) the Other Party shall have the sole right for [*** Redacted] days at its expense to prosecute such Infringement and retain any monetary award resulting therefrom, and (B) the Notifying Party shall, at the Other Party's expense, take all actions reasonably requested by the Other Party in such prosecution (which may include participation as a named plaintiff, subject to indemnification by the Other Party of the Notifying Party for any liability to third parties resulting from such participation as a plaintiff). If the Other Party does not take reasonable actions to prosecute such Infringement action before the end of such [*** Redacted] day period, or notifies the Notifying Party that it does not intend to prosecute such Infringement, then Section 7.3(c) shall become applicable again. (iii) If the Other Party does not elect to participate and share expenses as set forth in Section 7.3(c)(i): (A) If the Notifying Party takes reasonable actions to prosecute the Infringement action during the [*** Redacted] after the date of the Infringement Notice, then (I) the Notifying Party shall have the sole right to prosecute such Infringement and retain any monetary award resulting therefrom, and (II) the Other Party shall, at the Notifying Party's expense, take all actions reasonably requested by the Notifying Party in such prosecution (which may include participation as a named plaintiff, subject to indemnification by the Notifying Party of the Other Party for any liability to third parties resulting from such participation as a plaintiff). (B) If the Notifying Party does not take reasonable actions to prosecute the Infringement action before the end of such [*** Redacted] day period, or notifies the Other Party that it does not intend to prosecute such Infringement, then Section 7.3(c) shall become applicable again. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -10- (iv) If a party prosecutes an Infringement and the other party does not bear [*** Redacted] of such prosecution as set forth above, then the prosecuting party shall [*** Redacted] resulting from such prosecution. (d) If a party prosecuting an Infringement action with respect to any jointly owned Joint Development or jointly owned Collaboration Right on its own abandons the Infringement action, then Section 7.3(c) above shall again apply with respect to that Infringement. 7.4 Further Assurances. At any time or from time to time on and after the date of this Agreement, each party shall at the request of the other party (i) execute, and deliver or cause to be delivered, all such consents, documents or further instruments of license, and (ii) take or cause to be taken all such other actions, in each case as the other party may reasonably deem necessary or desirable in order for the other party to obtain the full benefits of this Section 7 and the activities contemplated hereby. 8. WARRANTY DISCLAIMER. NEITHER NANOSYS NOR DUPONT MAKES ANY WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THE FOREGOING, ALL DELIVERABLES AND OTHER ITEMS ARE PROVIDED BY EACH PARTY "AS IS," AND ALL LICENSES GRANTED BY EACH PARTY ARE GRANTED "AS IS." 9. LIMITATION OF LIABILITY. NEITHER PARTY SHALL HAVE ANY LIABILITY FOR COSTS OF SUBSTITUTE PRODUCTS OR SERVICES, OR FOR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL OR INDIRECT DAMAGES OR LIABILITIES, INCLUDING WITHOUT LIMITATION SUCH DAMAGES OR LIABILITIES FOR LOSS OF REVENUE, LOSS OF BUSINESS, FRUSTRATION OF ECONOMIC OR BUSINESS EXPECTATIONS, LOSS OF PROFITS, OR COST OF CAPITAL, REGARDLESS OF THE FORM OF THE ACTION, WHETHER IN CONTRACT OR OTHERWISE, EVEN IF ANY REPRESENTATIVE OF A PARTY HERETO HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL EITHER PARTY'S LIABILITY UNDER THIS AGREEMENT EXCEED THE AMOUNTS PAID OR PAYABLE BY DUPONT TO NANOSYS UNDER THIS AGREEMENT, provided that, as to DuPont, this shall be in addition to DuPont's obligation to pay such amounts. These limitations, however, shall not apply to either party's liability, if any, (i) for contribution or indemnity with respect to liability to third parties for personal injury, death, or damage to tangible property, (ii) exceeding the scope of the licenses in Section 5 (Licenses), (iii) breach of Section 6 (Confidential Information), or (iv) infringement of the other party's intellectual property rights. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -11- 10. TERM AND TERMINATION. 10.1 Term. This Agreement shall commence as of the Effective Date and, subject to Section 10.2 below, shall continue until January 22, 2005 unless earlier terminated as set forth herein. 10.2 Q1 Checkpoint. This Agreement shall terminate three (3) months after the Collaboration Commencement Date, unless the parties have agreed, in a writing referencing this Section 10.2, to continue the Collaboration under this Agreement. 10.3 Termination Due to Bankruptcy, etc. In the event a party: (i) becomes insolvent; (ii) voluntarily files or has filed against it a petition under applicable bankruptcy or insolvency laws which such party fails to have released within thirty (30) days after filing; (iii) proposes any dissolution, composition or financial reorganization with creditors or if a receiver, trustee, custodian or similar agent is appointed or takes possession with respect to all or substantially all property or business of such party; or (iv) such party makes a general assignment for the benefit of creditors; then the other party may terminate this Agreement by notice to the non-terminating party. 10.4 Termination Due to Breach. Either party shall have the right to terminate this Agreement if the other party is in material breach of any material term or condition of this Agreement and fails to remedy such breach within [*** Redacted] after receipt of written notice of such breach given by the non-breaching party. To terminate this Agreement, the nonbreaching party must provide further written notice of such termination to the breaching party prior to a cure of the breach. 10.5 Survival. Neither the termination nor expiration of this Agreement shall relieve either party from its obligations to pay the other any sums accrued hereunder. Upon the termination or expiration of this Agreement, (i) DuPont shall promptly return, or certify the destruction of, to Nanosys all Nanosys Confidential Information, except for such Nanosys Confidential Information as may be reasonable and necessary for DuPont to exercise its surviving rights and licenses under this Agreement, and (ii) Nanosys shall promptly return, or certify the destruction of, to DuPont all DuPont Confidential Information, except for such DuPont Confidential Information as may be reasonable and necessary for Nanosys to exercise its surviving rights and licenses under this Agreement. The parties agree that their respective rights, obligations and duties under Sections 4 (Ownership), 5 (Licenses), 6 (Confidential Information), 7 (Intellectual Property Protection), 8 (Warranty Disclaimer), 9 (Limitation of Liability), 10.5 (Survival), and 11 (Miscellaneous) shall survive any termination or expiration of this Agreement. 11. MISCELLANEOUS. 11.1 Publicity. Any press release or other public announcement with respect to this Agreement shall be subject to the mutual agreement of the parties, which agreement shall not be unreasonably withheld. *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -12- 11.2 Notices. All notices, requests, demands and other communications given or made in accordance with the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) three days after mailing when mailed (by registered or certified mail, postage paid, only), (ii) on the date sent when made by facsimile transmission with confirmation of receipt (with hard copy to follow by registered or certified mail, postage paid, only), and (iii) on the date received when delivered in person or by courier, provided that notices and communications with respect to administrative and project matters (e.g., changes in meeting times and dates, program specifications, and specific program development activities) (but not legal matters or matters pertaining to or establishing rights under this Agreement), may be provided by e-mail and will be deemed given when sent. All notices shall be provided to the address set forth below or such other place as such party may from time to time designate in writing. Each party may alter its address set forth below by notice in writing to the other party, and such notice shall be considered to have been given three (3) days after the sending thereof If to Nanosys: Nanosys Inc. 2625 Hanover Street Palo Alto, California 94304 Fax: (650) 331-2101 Attn: Calvin Y.H. Chow E-mail: cchow@nanosysinc.com with a copy, for matters pertaining to intellectual property, to: Nanosys Inc. 2625 Hanover Street Palo Alto, California 94304 Fax: (650) 331-2101 Attn: Matt Murphy E-mail: mmurphy@nanosysinc.com If to DuPont: [*** Redacted] [*** Redacted], DuPont CR&D Experimental Station, E328/409 Rt. 41 Between Rt. 202 & 52 Wilmington, DE 19880-0356 Phone: [*** Redacted] Fax: [*** Redacted] E-mail: [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -13- with a copy, for matters pertaining to intellectual property, to: [*** Redacted] DuPont Legal Barley Mill Plaza 25-1218 Wilmington, DE 19880-0025 Fax: 302-992-5374 E-mail: [*** Redacted] 11.3 Amendment; Waiver. This Agreement may be amended, modified or supplemented only by a writing that is signed by duly authorized representatives of both parties and that specifically identifies the provision or provisions of this Agreement being amended, modified or supplemented. No term or provision hereof will be considered waived by either party, and no breach excused by either party, unless such waiver or consent is in writing signed on behalf of the party against whom the waiver is asserted. Without limiting the foregoing, no consent by either party to, or waiver of, a breach by either party, whether express or implied, will constitute a consent to, waiver of, or excuse of any other, different, or subsequent breach by either party. 11.4 Severability. If any provision hereof should be held invalid, illegal or unenforceable in any jurisdiction, the parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the parties and all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the parties hereto as nearly as may be possible. Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. 11.5 Governing Law. This Agreement shall be governed by and construed under the laws of the United States and the State of California, not including its conflict of law provisions. 11.6 Force Majeure. Except for the payment of money, neither party will be liable for any failure or delay in performance under this Agreement due to fire, explosion, earthquake, storm, flood or other weather, unavailability of necessary utilities or raw materials, war, insurrection, riot, act of God or the public enemy, law, act, order, proclamation, decree, regulation, ordinance, or instructions of government or other public authorities, or any other event beyond the reasonable control of the party whose performance is to be excused. If, however, a party's performance is prevented for [*** Redacted] days, then the other party shall be entitled to terminate this Agreement on written notice to the party suffering the force majeure at any time prior to resumption of performance by the party suffering the force majeure. 11.7 Assignment. Neither party may transfer or assign this Agreement, whether by operation of law or otherwise, without the prior written consent of the other party and any attempt to do so without such consent will be void. This Agreement will bind and inure to the benefit of the parties and their respective permitted successors and permitted assigns. Notwithstanding anything in this Agreement, however, either party may assign this Agreement without the other party's prior written consent to a successor to all or substantially all of its assets pertaining to the Collaboration *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -14- (e.g., the surviving entity in a merger or consolidation in which it participates or to a purchaser of all or substantially all of its assets pertaining to the Collaboration), so long as such surviving entity or purchaser shall assume (expressly in writing or by operation of law) the performance of all of the terms of this Agreement. 11.8 No Third Party Beneficiaries. No person or entity other than DuPont and Nanosys will have any rights or obligations pursuant to this Agreement. 11.9 Relationship of the Parties. The parties to this Agreement are independent contractors. There is no relationship of agency, partnership, joint venture, employment, or franchise between the parties and this Agreement is negotiated at arm's length with both sides represented by counsel of their choice. Neither party has the authority to bind the other or to incur any obligation on its behalf. Any such act will create a separate liability in the party so acting to any and all third parties affected thereby. 11.10 Counterparts. This Agreement maybe executed in two counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. If this Agreement is executed in counterparts, no signatory hereto shall be bound until both the parties named below have duly executed or caused to be duly executed a counterpart of this Agreement. 11.11 Confidentiality of Agreement: Each party agrees that the terms and conditions, but not the existence or general nature, of this Agreement shall be treated as confidential, provided, however, that each party may disclose the terms and conditions of this Agreement: (i) as required by any court or other governmental body; (ii) as otherwise required by law; (iii) to legal counsel of the parties; (iv) in connection with the requirements of a public offering or securities filing; (v) in confidence, to accountants, banks, and financing sources and their advisors; (vi) in confidence, in connection with the enforcement of this Agreement or rights under this Agreement; or (vii) in confidence, in connection with a merger or acquisition or proposed merger or acquisition, or the like. 11.12 Authority. Each party represents and warrants to the other party at the Effective Date (i) that it has the legal right, power, and authority to enter into this Agreement and to fully perform its obligations under this Agreement, and (ii) that the performance of such obligations will not conflict with any agreements, contracts or other arrangements to which it is a party or by which it is bound. 11.13 Entire Agreement. This Agreement, including all Exhibits to this Agreement, constitutes the entire agreement between the parties relating to this subject matter and supersedes all prior or simultaneous representations, discussions, negotiations, letters of intent, term sheets, and agreements, whether written or oral, with respect to the subject matter hereof (including, without limitation, any prior non-disclosure agreement entered into by Nanosys and DuPont). -15- IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates set forth below effective as of the Effective Date. NANOSYS INC. E.I. DU PONT DE NEMOURS AND COMPANY By: /s/ Calvin Chow By: [*** Redacted] Print Name: Calvin Chow Print Name: [*** Redacted] Title: Chief Executive Officer Title: [*** Redacted] Date: 1-20-04 Date: Jan. 20, 2004 *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -16- EXHIBIT A Collaboration Statement of Work (SOW) FIRST QUARTER ACTIVITIES: TASK O: PRELIMINARY WORK Milestone: Set-up for Tasks 1 and 2.
SUBTASK DESCRIPTION DELIVERABLES ------- ----------- ------------ Order [*** Redacted] etc [Nanosys] - Order [*** Redacted] Materials required for task 2 - Order required [*** Redacted] tools to [*** Redacted] in the [*** Redacted] of [*** Redacted]. [*** Redacted] [Nanosys] Fabricate [*** Redacted] to Capability of [*** Redacted] [*** Redacted] from samples. [*** Redacted] [*** Redacted] to [*** Redacted]. Examine [*** Redacted] [DuPont] - Measure [*** Redacted] of [*** Redacted] [*** Redacted] conductors. - Establish [*** Redacted] for [*** Redacted] of the [*** Redacted] Prepare [*** Redacted] [DuPont] Prepare [*** Redacted] and [*** Redacted] Nanosys [*** Redacted] on [*** Redacted] of [*** Redacted]
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. TASK 1: TRANSISTOR PERFORMANCE TARGETS Milestone: Specify near-term and long-term performance targets for [*** Redacted].
SUBTASK DESCRIPTION DELIVERABLES ------- ----------- ------------ Define [*** Redacted] performance Near-term and long-term specifications, DuPont provides written requirements for targets [DuPont] including: near-term ([*** Redacted]) and long-term ([*** Redacted]) performance - [*** Redacted] - [*** Redacted] - [*** Redacted] - [*** Redacted] - [*** Redacted] - [*** Redacted]
TASK 2: ASSESS [*** Redacted] for [*** Redacted] for [*** Redacted] to the [*** Redacted] Milestone: Determine appropriate [*** Redacted] for [*** Redacted] to the [*** Redacted], or determine that [*** Redacted] is not a suitable for use with [*** Redacted].
SUBTASK DESCRIPTION DELIVERABLES ------- ----------- ------------ Prepare [*** Redacted] - Use [*** Redacted] None [Nanosys] - Use [*** Redacted] to [*** Redacted] in the [*** Redacted] of [*** Redacted]
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -2-
SUBTASK DESCRIPTION DELIVERABLES ------- ----------- ------------ Determine [*** Redacted] - Allow for [*** Redacted] Evaluation of [*** Redacted] [Nanosys] on the [*** Redacted] and [*** Redacted] and [*** Redacted]. - [*** Redacted] - Measure [*** Redacted] the [*** Redacted] - [*** Redacted] in [*** Redacted]
TASK 3: [*** Redacted] SYNTHESIS, [*** Redacted] AND SUPPLY Milestone: Supply [*** Redacted] for [*** Redacted] testing in Task 4, and electrical testing in Tasks 5 and 6.
SUBTASK DESCRIPTION DELIVERABLES ------- ----------- ------------ Fabricate [*** Redacted] for - Standard [*** Redacted] [*** Redacted] for use in Task 4 [*** Redacted] testing (no Task 4 [*** Redacted] specification) [Nanosys] - [*** Redacted] and [*** Redacted] [*** Redacted] evaluated to [*** Redacted] onto [*** Redacted] Fabricate [*** Redacted] with - [*** Redacted] - [*** Redacted] for Task 5 [*** Redacted] selected based on results of Task 2 [Nanosys] - [*** Redacted] selected based - [*** Redacted] for Task 6 on Task 2 - [*** Redacted] optimization based on results of Task 5
-3- *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. TASK 4: DETERMINE WHETHER [*** Redacted] and [*** Redacted] are compatible Milestone: Determine whether [*** Redacted] can be [*** Redacted] by one or more [*** Redacted] methods. Remarks: We have identified [*** Redacted] potential routes for incorporating the [*** Redacted] into the [*** Redacted]: [*** Redacted], [*** Redacted], and [*** Redacted]. All [*** Redacted] routes will be explored in parallel. In order to expedite testing, the [*** Redacted] used in these experiments will be whatever is on hand in sufficient quantity, since no [*** Redacted] tests are envisioned.
SUBTASK DESCRIPTION DELIVERABLES ------- ----------- ------------ Prepare [*** Redacted] [DuPont] - [*** Redacted] will be prepared: [*** Redacted] for [*** Redacted] [*** Redacted], [*** Redacted], and [*** Redacted]. - There will be at least [*** Redacted] [*** Redacted] of each type, and at least [*** Redacted], so the total number of [*** Redacted] will be in the [*** Redacted] range. - The [*** Redacted] will be [*** Redacted] wide and approximately [*** Redacted]. [*** Redacted] - To effectively assess None. [Nanosys] [*** Redacted], they should have [*** Redacted] commensurate with [*** Redacted] [*** Redacted] - For the maximum of information [*** Redacted] [Nanosys] with the minimum of effort, each [*** Redacted] should have [*** Redacted].
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -4-
SUBTASK DESCRIPTION DELIVERABLES ------- ----------- ------------ - Selecting the [*** Redacted] will require a judgment call. It should be at least [*** Redacted], but probably not [*** Redacted] [*** Redacted] [DuPont] - [*** Redacted] None will be [*** Redacted] to look for [*** Redacted] - [*** Redacted] will be [*** Redacted] - [*** Redacted] will be [*** Redacted] Analysis of [*** Redacted] - A combination of [*** Redacted] [*** Redacted] and a detailed [DuPont] and [*** Redacted] will be report on what worked, what used to assess the results of failed, and how it failed. these [*** Redacted]. Determine whether we have - Joint assessment of results. Go/no go decision on [*** Redacted] a viable path for [*** Redacted] - Joint determination of possible paths forward
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -5- TASK 5: BUILD [*** Redacted] Milestone: Verify that chosen [*** Redacted] in simple test structures made from [*** Redacted] materials.
SUBTASK DESCRIPTION DELIVERABLES ------- ----------- ------------ Build [*** Redacted] structures Build up [*** Redacted] [*** Redacted] test [DuPont] test structures. structures [*** Redacted] Depending on the outcome of our [*** Redacted] test structures test structures or [*** Redacted] our [*** Redacted], either: or [Nanosys] - [*** Redacted] will be [*** Redacted] [*** Redacted] or: - [*** Redacted] will be [*** Redacted] and [*** Redacted] the test structures. Finish [*** Redacted] test Depending on the outcome of our [*** Redacted] structures [DuPont] [*** Redacted], either: - [*** Redacted] are [*** Redacted] test structure, or: - [*** Redacted] and [*** Redacted] will be [*** Redacted] the test structures. Verify [*** Redacted] [*** Redacted] [*** Redacted] [DuPont and Nanoys]
TASK 6: [*** Redacted] Milestone: Functioning [*** Redacted] that meet the [*** Redacted] performance targets. [*** Redacted] At the end of this task, [*** Redacted] *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -6- TASK 7: DEVELOP A PLAN FOR ACHIEVING THE [*** Redacted] PERFORMANCE TARGETS WITHIN THE [*** Redacted] Figure 1. Gantt chart.
~~[*** Redacted]~~
*** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -7- NANOSYS PROJECT TEAM MAKEUP: - [*** Redacted] Engineer ([*** Redacted] effort) - [*** Redacted] Engineer ([*** Redacted] effort) - [*** Redacted] Engineer ([*** Redacted] effort) - [*** Redacted] ([*** Redacted] for [*** Redacted]) ([*** Redacted] effort) Total effort during first quarter: [*** Redacted] FTEs *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. -8- EX-10.15.1 32 f97636orexv10w15w1.txt EXHIBIT 10.15.1 EXHIBIT 10.15.1 [NANOSYS LOGO] 2625 Hanover Street, Palo Alto, CA 84204 850 331 2100, 850 331 2101 fax. www.nanosysinc.com AMENDMENT A TO COOPERATIVE DEVELOPMENT AGREEMENT This Amendment ("Amendment A") to the Cooperative Development Agreement dated January 22, 2004 (the "Agreement"), is entered into this 21st Day of April, 2004, (the "Amendment A Date") by and between Nanosys, Inc. ("Nanosys"), a Delaware Corporation with a place of business at 2625 Hanover Street, Palo Alto, California 94304 and E.I. duPont de Nemours and Company ("DuPont"), a Delaware Corporation with a place of business at 1007 Market Street, Wilmington, Delaware, the parties to the Agreement. RECITALS Whereas: A. Nanosys and DuPont entered into the Agreement on the Effective Date to cooperate to investigate the commercial feasibility of combining Nanosys' nanomaterials technology with DuPont's. B. Nanosys and DuPont acknowledge that actual cooperative work began under the Agreement on February 17th, 2004. C. Nanosys and DuPont wish to amend the Agreement so that the Collaboration Commencement Date is reflective of the date that actual collaborative work began. AGREEMENT NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: A. In Section 2.1 of the Agreement, the last sentence stating in its entirety: "The parties shall commence the Collaboration January 22, 2004" is hereby deleted in its entirety and replaced with the following sentence: "The Parties shall commence the Collaboration on February 17th, 2004" B. Unless expressly amended herein or by subsequent amendments agreed to by the parties in a signed written amendment, all other terms of the Agreement, including but not limited to terms related to definition, interpretation and enforcement of the Agreement, shall remain in full force and effect as originally agreed to in the Agreement, and shall apply equally to the terms of this Amendment A. IN WITNESS WHEREOF, the parties through their duly authorized representatives have executed this First Amendment as of the date last set forth below. NANOSYS, INC. E.I. DU PONT DE NEMOURS and COMPANY. By: /s/ Calvin Chow By: /s/ [*** Redacted] --------------------------- --------------------------- Name: Calvin Chow Name: [*** Redacted] --------------------------- ------------------------- Title: Chief Executive Officer Title: [*** Redacted] ---------------------------- ------------------------- Date: 4/20/04 Date: 4/20/04 ---------------------------- -------------------------- *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission. EX-23.1 33 f97636orexv23w1.txt EXHIBIT 23.1 Exhibit 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 25, 2004 (except for Note 15, as to which the date is April 15, 2004) in the Registration Statement on Form S-1 and related Prospectus of Nanosys, Inc. for the registration of shares of its common stock. /s/ Ernst & Young LLP Palo Alto, California April 21, 2004 GRAPHIC 35 f97636orf9763600.gif GRAPHIC begin 644 f97636orf9763600.gif M1TE&.#EAZ@`M`/?_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#, M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,` MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9 M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_ MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;, MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9 MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P` M,\P`9LP`FBFC50 MD;^!S_9K\ZWVY`\M9O^_:'S[:_'E4?X&[7@J<=TXLRLT+;V^_>B"6EGW*?(M M>9__^6716R*5!]Y[L;WG74*;&<2>;`OVU$IS]U6(GW[[76>>@`<^%%>`N\$7 MHH'R?2>B2B4B5%N##O+FDR`6QOB<(!Y*E>)^!=+6X8=?=29B>`>BI^*&U^3V MDDTU)=B:>[@A!=.-U\`H8XPT,I863!DZUJ&)+:9%9(Y:BBBDCC]:2=1;+&)U MEF8\>B?EE!5B422/2$$Y%IBR!3DFAR+BR2>)PA%IE$U.4857D5L.^A=!$\)I MH7YTIA7AG8)RR:=$`+Y8VMZ*IDGDPVEN==4$-DY6D%O.FI?*T9ZZ626?B+_ MMR%V0QX8JZ8&;OJ=J>\%JM%Q`.I&H:KUR0F7J\A.JN&6F=(ZFJV5QMK?7'NV MEF*BH(DJX+6>M4+L?<8BBJRKH`)VJZ4(BFADF'E!.Z"/:_9J5**;E3JOK@UZ M^VVQYXWK9;EBG9NIB1C9U%:?T0J*+,`N"J220@,K:.@*^NX;7;A-^GNEL@X) M3&2K3;%+;8<@6S6R1`9;%N_(`(>8LLJL#&OQ6"(DPL7XXM/KOG=#VX>5N5I6<$WYG][;OI^A9_>$^AN MC4YZXZK'3NG0LJ>MMN*OPU[[[JOWQ?OJ:D^4NV*_%V\\WFJS]3JOQS?O?+L: M"T]ZW,]7;WVD9W*T^$346^]]\]B71)/;X='^_?G/)^UERB\I5/',SM&(_ORL ML;XP0N_#CS']_(]EO^4%R=_,]M>_`H+E?_]B%/R@0T`#.O`GX0.@`"W6P`=: MD"?JT]A3)K@O#%WP@S$FLUBDJH!>A"$*`2>U#+2J`7.0'XIC"%_(HB7$E)0 MAC@$"D GRAPHIC 36 f97636orf9763601.gif GRAPHIC begin 644 f97636orf9763601.gif M1TE&.#EA@@%*`/?_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#, M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,` MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9 M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_ MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;, MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9 MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P` M,\P`9LP`FE(,M#'AQTQ3AQ)LJ))D!DWMG1Y$F:@ MFRUOUDRH\27$GCL3WF3)T8I.F$B3*EW*5*E,CT1G5K02="&KJ%(M4G68DE76 MHA*]?BU:E2'6K"H1RHS(,NW!JV.GEFU*MZ[=NT*+QN4XUZ#8O7P;`I[9U^#9 MN%8>_@6<.*'%P@8?)SS\%3+>RY@S.WPZ6++5SATM@^[8V.SHJ0T77W0;,BIK M@FT?KD6XV.AKC5$M:][-.S-GT*4GGT:]<+C%UP9_=[8L$WE!N!7S1N?JTK%G MA7^#]][.';-RF@1%MO_\3-HY],`*I1HM*)XTPY;KDQ]^7YWZ1>OW&?[E>9W\ M@>X`!EB7%"'TGF( MGX`$"6+BB2B>V`J)+$Y$DH@AI:009_;5AQ]Z-TXGG58--3ACAK+9Z!>0Q0G) MGI$3ZKA;*R?.X.234$8II9-8G-@B;[_I)^..2J8GH9=@)8GC020YI!J,+G9) MGH/'^?=C?INI61>36$QIYYUXSE"E(%?BQ5F%#W($J$1E@MFFF(>EF$Z)19\#;EEDHG0MJFBC;X(:F:`/887=HTW]55A_R1'_ M)Z")F=9Z:94KNRG@[*%9(QRA@NUFO*IJW?&YMCL=W%]RJJCJ'H;)$<+$=7LN?\A%)NXNC4E"+;T1JDM03TU M>-2V&G8[JK)'&B=NM`$#G*;!L:*[:GG"QGLJ@O]:=I:P-]%5;;T8SW"O0.TA MMJZNO-*'L(7&$1RHPH@^R[&G#(4@"=M@'Q-T<<;T;MPQ<#FS MZ+*AR`Y98T^Q)W9+#U^S,\[58Y-ITR4$' M.+2Y+PM*L;"J$JWTL1RRG/+;+5-\&-4GOP;UKQ1#_]B0M5]?>^^!1Q?-[]@U M&D[0BPV=71"QY!JLVKJ.(_64;I%"BW=$Y]%MT+R!@YUKYX7+O6WE#S.MH$-M M)]VXZ8N7^SK*K8Z<$:OOWF4U0EZ'GNFF*Y=>V>&(]ZHZ[,GN/1#D'R)_,M8W MT]X4I3+#N3M>RH/N>ZWW:BT\C_RB_KCL3U<4+_.Q2Q^YT^XE[KE3RA<,;=GG M(@3X]IB._OU@7.\F?OK'&Q-__`5`DT$+8>A+7LUF5+%^&3!])YF66AI8OX*T M`G^V$AOA]J<>D!$P=8H+GNU(]L'G/7!L#O)1RYQ'PHC,IGH8N=ZG7-BE"V(P M4V*['0?WLI4K_6]YY"O8S/]H,QZWS0YAOX',@1Q$O3B%\"T9:J+((O(H&][P M4CFLV@X!TS\_E;"`;&K?^M0W/C*6[XDF5!GI#"A%D7WL,?%[F,-V9\4KXBF+ M^-HB#UOT0Q.F$#YVR\K`WB=$-)(0D$.12H5H1;FD#".5M*24,&DT369%E7;I MXS58>,CAB'*%IZQE9S:WQ$!V4H$2P8IMA,6X6,H22K1DD"W'TD6FZ)*78_L* M3LSHR3B*$'H"\5Y)?C),FX#/63@3R#/OM+'J35,JU80?-\L(SFR.LWBN`R8K M#03_KF`V3IPQ`XDC?Q67@!+/7>_,2CP/.L&&,10[:UMH"A/PWJ9IY)-(%XU*OW(RE:[[+.M(#&K+R>2UJ+B$JYX90I6\TH7 MN8Z&8W4M*E\'NQNF$K8I?@TE70.+T\,Z]BXQ?:Q`3;I8QJ94LIA52D_6FEEA M[A"PEKUL9T=+6A*!LG"@M>Q=2\O:UL+DM&>]1FA7ZMK:_]I6=S5-;6!OR]O> M:G:+)[EI8*GJV^*6%K9S[6I:B6O3'`R.2%0:LZM< M][O5A>YH(,.2U8+WO(<5+]#\LKJ(,"E%\(VO?.<[7_3:=SOJ/4TB9Y*S^ZWS M2<"[KX`SL\:M.LR__]73@!?LU*V21#<(_F^`&4SANR2V=)")\#HG7.$.0\K! MH4F(AI_)80^;>"GYY6!91BS+$I_XQ4@I<$*#PF)+NAC&.(XKB!]58SNV,\=` M!DF*2U>:'E\QFD%.\D9G3$DC8_#&2HZRF2[,F($X MLICU*;RT]$["61ZSFH\U'+=H+US!,TCSFN=,FW[>TLUPIM*/ZFF9#IPN.JT 8J.MBHD]SC]&C3C5FWAOIGEE)U3P-"``[ ` end -----END PRIVACY-ENHANCED MESSAGE-----





Title of Each Class of Securities to	Proposed Maximum
be Registered	Aggregate Offering Price(1)	Amount of Registration Fee


Common Stock, $0.001 par value	$115,000,000	$14,570.50


	Per Share	Total

Public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to Nanosys, Inc.	$	$


Common stock offered by Nanosys		shares

Shares to be outstanding after this offering		shares

Use of proceeds		To fund the development of core technology and commercialization of our nanotechnology-enabled products, as well as general corporate purposes, including working capital, capital expenditures and potential acquisitions of complementary products, technologies and businesses.

Risk Factors		See “Risk Factors” and other information included in this prospectus for a discussion of factors you should consider carefully before deciding to invest in shares of our common stock.

Proposed Nasdaq National Market symbol		NNSY



	Period from Inception			Years Ended December 31,
	(July 12, 2001) to
	December 31, 2001			2002			2003


	(In thousands)
Statement of Operations Data:
Revenue	$	—		$	283		$	3,039
Operating expenses*		799			7,497			12,502

Loss from operations		(799	)		(7,214	)		(9,463	)
Net loss	$	(792	)	$	(7,088	)	$	(9,169	)



	December 31, 2003

	Actual			Pro Forma

				(unaudited)

	(In thousands)
Balance Sheet Data:
Cash, cash equivalents and available-for-sale investments	$	38,883		$
Working capital		36,679
Total assets		43,040
Long-term liabilities		858			858
Redeemable convertible preferred stock		55,064			—
Total stockholders’ equity (deficit)		(15,882	)


Delaware (State or other jurisdiction of incorporation or organization)		3674 (Primary Standard Industrial Classification Code Number)		13-4182327 (I.R.S. Employer Identification Number)


Michael J. O’Donnell, Esq. Mark L. Reinstra, Esq. Julia Reigel, Esq. Wilson Sonsini Goodrich & Rosati Professional Corporation 650 Page Mill Road Palo Alto, CA 94304 (650) 493-9300		Patrick A. Pohlen, Esq. Mark V. Roeder, Esq. Edward F. Vermeer, Esq. Latham & Watkins LLP 135 Commonwealth Drive Menlo Park, CA 94025 (650) 463-2600


(1)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.


	Page

Prospectus Summary		1
Risk Factors		6
Special Note Regarding Forward-Looking Statements		19
Use of Proceeds		20
Dividend Policy		20
Capitalization		21
Dilution		23
Selected Financial Data		24
Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Business		31
Management		44
Executive Compensation		48
Principal Stockholders		54
Our Relationship and Arrangements with our Stockholders, our Officers and our Directors		56
Description of Capital Stock		62
Shares Eligible for Future Sale		66
Underwriting		68
Legal Matters		71
Experts		71
Where You Can Find Additional Information		71
Financial Statements		F-1
EXHIBIT 3.1
EXHIBIT 3.1.1
EXHIBIT 3.2
EXHIBIT 3.2.1
EXHIBIT 4.2
EXHIBIT 4.2.1
EXHIBIT 4.2.2
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 10.5.1
EXHIBIT 10.5.2
EXHIBIT 10.5.3
EXHIBIT 10.5.4
EXHIBIT 10.6
EXHIBIT 10.6.1
EXHIBIT 10.7
EXHIBIT 10.8
EXHIBIT 10.8.1
EXHIBIT 10.9
EXHIBIT 10.9.1
EXHIBIT 10.10
EXHIBIT 10.10.1
EXHIBIT 10.10.2
EXHIBIT 10.11
EXHIBIT 10.12
EXHIBIT 10.14
EXHIBIT 10.15
EXHIBIT 10.15.1
EXHIBIT 23.1


Assumed initial public offering price per share				$
	Pro forma net tangible book value per share as of December 31, 2003	$	0.91
	Increase per share attributable to new investors

Pro forma net tangible book value per share after this offering

Dilution per share to new investors				$



		Shares Purchased				Total Consideration
										Average Price
		Number		Percent		Amount		Percent		Per Share

Existing stockholders			44,139,356		%	$	54,241,125		%	$
New investors										$

	Total				%				%


				Period from
				Inception
				(July 12, 2001) to			Years Ended December 31,
				December 31,
				2001			2002			2003


				(In thousands, except share and per share
				amounts)
Statement of Operations Data:
Revenue				$	—		$	283		$	3,039
Operating expenses:
	Research and development(1)				237			5,153			9,930
	Selling, general and administrative(1)				562			2,344			2,572

		Total operating expenses			799			7,497			12,502

Loss from operations					(799	)		(7,214	)		(9,463	)
Interest income (expense) and other income, net					7			126			294

Net loss				$	(792	)	$	(7,088	)	$	(9,169	)

Basic and diluted net loss per share				$	(3.87	)	$	(8.94	)	$	(4.72	)

Weighted average shares used to compute basic and diluted net loss per share					204,454			792,707			1,941,341
Pro forma basic and diluted net loss per share(2)										$	(0.27	)

Weighted average shares used to compute pro forma basic and diluted net loss per share(2)											34,078,191

(1) Includes stock-based compensation of the following:
			Research and development	$	—		$	41		$	1,375
			Selling, general and administrative		—			—			33

			Total stock-based compensation	$	—		$	41		$	1,408



	As of

	December 31,			December 31,			December 31,
	2001			2002			2003


	(In thousands)
Balance Sheet Data:
Cash, cash equivalents and available-for-sale investments	$	1,065		$	10,828		$	38,883
Working capital		676			7,335			36,679
Total assets		1,194			13,532			43,040
Long-term liabilities		—			1,115			858
Redeemable convertible preferred stock		1,548			16,610			55,064
Total stockholders’ deficit		(760	)		(7,794	)		(15,882	)


Year ending December 31,

2004	$	2.3
2005		2.4
2006		2.4
2007		2.4
2008		2.4
2009		0.2


				Less than		1 to 3
		Total		1 Year		Years

Operating lease commitments*		$	1,640	$	806	$	834
Notes payable			1,543		837		706
Contractual commitments to scientific advisors			533		178		355

	Total	$	3,716	$	1,821	$	1,895


Merrill Lynch & Co.	Lehman Brothers


CIBC World Markets	Needham & Company, Inc.


	*Stock-Based Compensation*


	*Recognition of Revenue*


	Future
	Minimum
Year ending December 31,	Royalties

2004	$	95
2005		140
2006		293
2007		436
2008		464
2009		605
2010		685
Each year thereafter		735


	*Grants from and Contracts with United States Government Agencies*


Name		Position

A. Paul Alivisatos, Ph.D.		Professor of Chemistry, University of California Berkeley Head of Molecular Design Institute, Lawrence Berkeley Laboratories
Uri Banin, Ph.D.		Associate Professor of Institute of Chemistry and Co-Director, Institute for Nanoscience and Nanotechnology at Hebrew University of Jerusalem
Moungi Bawendi, Ph.D.		Professor of Chemistry, Massachusetts Institute of Technology
Vladimir Bulovic, Ph.D.		Assistant Professor of Electrical Engineering and Computer Science, Massachusetts Institute of Technology
Louis Brus, Ph.D.		Professor of Chemistry, Columbia University
Philippe Guyot-Sionnest, Ph.D.		Professor of Chemistry and Physics, University of Chicago
James R. Heath, Ph.D.		Professor of Chemistry, California Institute of Technology Scientific Director, California Nanosystems Institute
Charles M. Lieber, Ph.D.		Professor of Chemistry, Harvard University
Paul L. McEuen, Ph.D.		Professor of Physics, Cornell University Principal Investigator, Lawrence Berkeley Laboratories
Hongkun Park, Ph.D.		Professor of Chemistry, Harvard University
Peidong Yang, Ph.D.		Assistant Professor of Chemistry, University of California, Berkeley


				Director
				or
				Executive
				Officer
Name	Age		Position	Since

Lawrence A. Bock		44	Executive Chairman of the Board		2001
Calvin Y. H. Chow(3)		49	Chief Executive Officer and Director		2001
J. Wallace Parce, Ph.D.		54	Chief Technical Officer and Vice President of Research		2002
Matthew Murphy, Esq.		39	Vice President, Intellectual Property		2002
Karen L. Vergura		46	Vice President, Finance		2001
Clinton W. Bybee(2)(4)		40	Director		2001
Regis P. McKenna(2)(4)		64	Director		2002
Bryan E. Roberts, Ph.D.(1)		37	Director		2002
Sasson Somekh, Ph.D.(2)		58	Director		2003
John A. Young(1)		71	Director		2004
Gregory J. Yurek, Ph.D.(1)(4)		56	Director		2004


	*Compensation Committee Interlocks and Insider Participation*



											Long-Term
											Compensation Awards
				Annual
				Compensation							Restricted		Securities
								Other Annual			Stock		Underlying
Name and Principal Position		Year		Salary		Bonus		Compensation			Award(s)		Options(1)

Calvin Y.H. Chow			2003	$	299,717		—	$	3,539	(2)		—		—
	Chief Executive Officer
Lawrence A. Bock(3)			2003		—		—		—			—		—
	Executive Chairman of the Board and former Chief Executive Officer and President
J. Wallace Parce, Ph.D.			2003		287,020		—		3,181	(2)		—		—
	Chief Technical Officer and Vice President of Research
Matthew Murphy			2003		217,077		—		2,593	(2)		—		35,000
	Vice President, Intellectual Property
Karen L. Vergura			2003		157,944		—		68,858	(4)		—		—
	Vice President, Finance


(1)	The stock options listed in the table represent options to purchase our common stock. See “— Executive Compensation — Option Grants in 2003” for additional information regarding options to purchase our stock granted during 2003.

(2)	Consisted of payment for group term life insurance premiums.

(3)	Mr. Bock was our chief executive officer and president from July 2001 to October 2003. He was not an employee of our company and we did not pay him any compensation for his services to us.

(4)	Consisted of payment for group term life insurance premiums of $1,859 and $66,999 for payment of relocation expenses.



										Potential
			% of Total							Realizable
			Options							Value at
			Granted to							Assumed
			Employees							Annual Rates
	Number of		and							of Stock Price
	Securities		Executive							Appreciation for
	Underlying		Officers in			Exercise or				Option Term
	Options		Fiscal			Base Price		Expiration
Name	Granted		Year			Per Share		Date		5%		10%

Calvin Y.H. Chow		—		—			—		—		—		—
Lawrence A. Bock		—		—			—		—		—		—
J. Wallace Parce		—		—			—		—		—		—
Matthew Murphy		35,000		20	%	$	0.15		1/09/13
Karen L. Vergura		—		—			—		—		—		—



					Number of Securities
					Underlying
					Unexercised				Value of Unexercised
	Number of				Options at				in-the-Money Options
	Shares		Value		December 31, 2003				at December 31, 2003(1)
	Acquired on		Received
Name	Exercise		($)		Exercisable		Unexercisable		Exercisable		Unexercisable

Calvin Y.H. Chow		—		—		—		—		—		—
Lawrence A. Bock		—		—		—		—		—		—
J. Wallace Parce		—		—		—		—		—		—
Matthew Murphy		—		—		79,750		175,250
Karen L. Vergura		—		—		—		—		—		—



	Common Stock				Convertible Preferred Stock

			Aggregate								Aggregate
Name of Purchaser	Shares (#)		Consideration ($)		Series A (#)		Series B (#)		Series C (#)		Consideration ($)

5% Stockholders
Entities affiliated with ARCH Venture Partners(1)		—		—		1,250,000		2,604,167		3,022,230	$	9,142,504
Entities affiliated with CW Group(2)		—		—		1,250,000		2,604,167		2,486,611		8,142,503
Entities affiliated with Polaris Venture Partners(3)		—		—		1,250,000		2,604,167		2,486,611		8,142,503
Entities affiliated with Venrock Associates(4)		—		—		1,250,000		2,604,167		2,486,611		8,142,503
Executive Officers and Directors
Lawrence A. Bock(5)		1,093,750	$	180,644		1,250,000		2,604,167		2,486,611		8,142,503
Calvin Y. H. Chow(6)		1,735,000		179,100		—		265,833		—		319,000
J. Wallace Parce, Ph.D.		730,000		84,900		—		—		—		—
Matthew Murphy		95,324		12,699		—		—		—		—
Karen L. Vergura		257,500		11,640		—		30,000		—		36,000
Clinton W. Bybee(7)		—		—		1,250,000		2,604,167		3,022,230		9,142,504
Regis P. McKenna(8)		125,000		15,000		—		83,334		53,765		200,380
Bryan E. Roberts, Ph.D.(9)		—		—		1,250,000		2,604,167		2,486,611		8,142,503
Sasson Somekh, Ph.D.		100,000		19,000		—		—		133,905		250,001
John A. Young		100,000		40,000		—		—		—		—
Gregory J. Yurek, Ph.D.		100,000		19,000		—		—		—		—


Date of Availability for Sale	Number of Shares

At various times after the date that is 180 days after the date of this prospectus		46,710,263
At various times thereafter upon the expiration of applicable holding periods


		Number
Underwriter		of Shares

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Lehman Brothers Inc.
CIBC World Markets Corp.
Needham & Company, Inc.

Total


Report of Ernst & Young LLP, Independent Auditors			F-2
Balance Sheets			F-3
Statements of Operations			F-4
Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit			F-5
Statements of Cash Flows			F-6
Notes to Financial Statements			F-7



		December 31,						Pro Forma
								Stockholders’ Equity at
		2002			2003			December 31, 2003

								(Unaudited)

		(In thousands, except share and per share amounts)
Assets
Current assets:
	Cash and cash equivalents	$	10,828		$	5,707
	Available-for-sale investments		—			33,176
	Accounts receivable		77			572
	Prepaid expenses and other current assets		31			224

Total current assets			10,936			39,679
Property and equipment, net			2,111			3,275
Other assets			485			86

Total assets		$	13,532		$	43,040

Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)
Current liabilities:
	Notes payable, current portion	$	571		$	837
	Accounts payable		310			767
	Accrued expenses		808			884
	Deferred revenue		1,912			512

Total current liabilities			3,601			3,000
Liability for early exercise of stock options and restricted stock purchase awards			83			122
Other long-term liabilities			24			30
Notes payable, net of current portion			1,008			706
Commitments
Redeemable convertible preferred stock, $0.001 par value, 18,500,000 and 40,250,000 shares authorized at December 31, 2002 and 2003, respectively; issuable in series; 18,000,001 and 37,948,023 shares issued and outstanding at December 31, 2002 and 2003, respectively; aggregate liquidation preference of $16,650 and $53,893 at December 31, 2002 and 2003, respectively; no shares issued or outstanding pro forma (unaudited)			16,610			55,064		$	—
Stockholders’ equity (deficit):
Common stock, $0.001 par value; 26,500,000 and 53,500,000 shares authorized at December 31, 2002 and 2003, respectively; 5,135,317 and 5,321,325 shares issued and outstanding at December 31, 2002 and 2003, respectively; 43,269,348 shares issued and outstanding pro forma (unaudited)			5			5			43
	Additional paid-in capital		226			2,334			57,360
	Notes receivable from stockholders		(145	)		(145	)		(145	)
	Deferred stock compensation		—			(1,033	)		(1,033	)
	Accumulated other comprehensive income		—			6			6
	Accumulated deficit		(7,880	)		(17,049	)		(17,049	)

Total stockholders’ equity (deficit)			(7,794	)		(15,882	)	$	39,182

Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)		$	13,532		$	43,040



		Redeemable Convertible																		Accumulated
		Preferred Stock				Common Stock					Additional						Deferred			Other					Total
											Paid-In			Notes Receivable			Stock			Comprehensive		Accumulated			Stockholders’
		Shares		Value		Shares			Par Value		Capital			from Stockholders			Compensation			Income		Deficit			Deficit


		(In thousands, except share amounts)
Sale of common stock to founders for cash			—	$	—		190,000		$	—	$	—		$	—		$	—		$	—	$	—		$	—
Sale of restricted stock to nonemployees for cash			—		—		2,100,000			2		—			—			—			—		—			2
Exercise of stock options for restricted stock in exchange for cash			—		—		965,000			1		28			—			—			—		—			29
Issuance of stock for services rendered			—		—		100,000			—		—			—			—			—		—			—
Issuance of stock in connection with technology license agreement			—		—		160,000			1		—			—			—			—		—			1
Sale of Series A redeemable convertible preferred stock, net of issuance costs of $102			5,499,998		1,548		—			—		—			—			—			—		—			—
Net loss and comprehensive loss			—		—		—			—		—			—			—			—		(792	)		(792	)

Balance at December 31, 2001			5,499,998		1,548		3,515,000			4		28			—			—			—		(792	)		(760	)
Sale of Series B redeemable convertible preferred stock, net of issuance costs of $51			12,500,003		14,949		—			—		—			—			—			—		—			—
Issuance of Series B redeemable convertible preferred stock warrants in connection with a line of credit agreement			—		40		—			—		—			—			—			—		—			—
Issuance of Series B convertible preferred stock warrants in connection with a operating lease agreement			—		73		—			—		—			—			—			—		—			—
Sale of stock for cash in connection with technology license agreements			—		—		10,000			—		1			—			—			—		—			1
Exercise of stock options and issuance of restricted stock in exchange for cash and notes receivable			—		—		1,605,000			1		155			(145	)		—			—		—			11
Vesting of common stock from early exercises of stock options			—		—		5,317			—		1			—			—			—		—			1
Compensation related to grant of stock options to non- employees			—		—		—			—		41			—			—			—		—			41
Net loss and comprehensive loss			—		—		—			—		—			—			—			—		(7,088	)		(7,088	)

Balance at December 31, 2002			18,000,001		16,610		5,135,317			5		226			(145	)		—			—		(7,880	)		(7,794	)
Sale of Series C redeemable convertible preferred stock, net of issuance costs of $159			19,948,022		37,084		—			—		—			—			—			—		—			—
Issuance of Series C redeemable convertible preferred stock warrants in connection with a research and development agreement			—		1,370		—			—		—			—			—			—		—			—
Sale of stock in connection with technology license agreements for cash below fair market value			—		—		90,000			—		12			—			—			—		—			12
Exercise of stock options for restricted stock in exchange for cash			—		—		15,000			—		2			—			—			—		—			2
Vesting of common stock from early exercises of stock options			—		—		217,675			—		27			—			—			—		—			27
Repurchase of unvested common stock from terminated employee			—		—		(136,667	)		—		(4	)		—			—			—		—			(4	)
Deferred compensation related to options and restricted stock granted to employees			—		—		—			—		1,107			—			(1,107	)		—		—			—
Amortization of employee deferred stock compensation			—		—		—			—		—			—			74			—		—			74
Compensation related to options and restricted stock issued to non-employees			—		—		—			—		964			—			—			—		—			964
Comprehensive loss:
	Net loss		—		—		—			—		—			—			—			—		(9,169	)		(9,169	)
	Unrealized gain on available-for-sale investments		—		—		—			—		—			—			—			6		—			6

Comprehensive loss																										(9,163	)

Balance at December 31, 2003			37,948,023	$	55,064		5,321,325		$	5	$	2,334		$	(145	)	$	(1,033	)	$	6	$	(17,049	)	$	(15,882	)



						Years Ended
			Period from Inception			December 31,
			(July 12, 2001) to
			December 31, 2001			2002			2003


			(In thousands)
Cash flows from operating activities
Net loss			$	(792	)	$	(7,088	)	$	(9,169	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization			5			537			1,323
	Stock-based compensation expense			—			41			1,408
	Changes in assets and liabilities:
		Accounts receivable		—			(77	)		(495	)
		Prepaid expenses and other assets		(17	)		(386	)		206
		Deferred revenue		—			1,912			(1,400	)
		Accounts payable and other liabilities		406			736			539

Net cash used in operating activities				(398	)		(4,325	)		(7,588	)
Cash flows from investing activities
	Purchases of available-for-sale investments			—			—			(35,370	)
	Maturities of available-for-sale investments			—			—			2,200
	Purchases of property and equipment			(117	)		(2,536	)		(2,487	)

Net cash used in investing activities				(117	)		(2,536	)		(35,657	)
Cash flows from financing activities
	Proceeds from equipment line of credit, net of issuance costs			—			1,774			727
	Payments on equipment line of credit			—			(195	)		(763	)
	Proceeds from sales of redeemable convertible preferred stock, net of issuance costs			1,548			14,949			37,084
	Proceeds attributed to redeemable convertible preferred stock warrant			—			—			1,000
	Proceeds from sales of common stock and exercise of stock options			32			12			14
	Proceeds from the early exercise of stock options and restricted stock			—			84			66
	Payment to repurchase restricted common stock			—			—			(4	)

Net cash provided by financing activities				1,580			16,624			38,124

Net increase (decrease) in cash and cash equivalents				1,065			9,763			(5,121	)
Cash and cash equivalents at beginning of period				—			1,065			10,828

Cash and cash equivalents at end of period			$	1,065		$	10,828		$	5,707

Supplemental disclosure of cash flow information Cash paid for interest			$	—		$	23		$	90



	Period from Inception			Years Ended
	(July 12, 2001)			December 31,
	through
	December 31, 2001			2002			2003

Dividend yield		0	%		0	%		0	%
Risk-free interest rate		5.00	%		3.80	%		4.25	%
Expected volatility		0.75			0.75			0.75
Expected life		5 years			5 years			5 years


			Gross		Gross
			Unrealized		Unrealized			Estimated
	Amortized Cost		Gains		Losses			Fair Value

United States government and agency securities	$	10,526	$	10	$	(1	)	$	10,535
Auction rate securities issued by states of the United States		14,550		—		—			14,550
Money market funds		1,913		—		—			1,913
Corporate debt investments		8,094		3		(6	)		8,091

Total available-for-sale investments	$	35,083	$	13	$	(7	)	$	35,089

Classified as cash and cash equivalents									(1,913	)

Classified as available-for-sale investments								$	33,176


		Operating Lease		Sublease
Year Ending December 31,		Payments		Income

2004		$	806	$	96
2005			834		—

	Total	$	1,640	$	96


Common stock subject to repurchase		2,701,977
Shares of common stock issuable in connection with redeemable convertible preferred stock		37,948,023
Outstanding stock options		917,333
Shares of common stock issuable in connection with warrants for the purchase of redeemable convertible preferred stock		839,335

	Total common stock equivalents outstanding as of December 31, 2003	42,406,668