Exhibit 10.7

 

Execution Version

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made and entered into by and between
Avant Diagnostics, Inc., a Nevada corporation (the “Company”), and Michael I.
Ruxin, M.D. (“Employee”) effective as of May 25, 2018 (the “Effective Date”).

 

1.  Employment. During the Employment Period (as defined in Section 4), the
Company shall employ Employee, and Employee shall serve, as President and Chief
Executive Officer of the Company and in such other position or positions as may
be assigned from time to time by the board of directors of the Company (the
“Board”).

 

2.  Duties and Responsibilities of Employee.

 

(a)  During the Employment Period, Employee shall devote Employee’s full
business time, attention and best efforts to the businesses of the Company and
its direct and indirect subsidiaries (collectively, the Company and its direct
and indirect subsidiaries are referred to as the “Company Group”) as may be
requested by the Board from time to time.  Employee’s duties and
responsibilities shall include those normally incidental to the position(s)
identified in Section 1, as well as such additional duties as may be assigned to
Employee by the Board from time to time, which duties and responsibilities may
include providing services to other members of the Company Group in addition to
the Company. Employee may, without violating this Section 2(a), (i) as a passive
investment, own publicly traded securities in such form or manner as will not
require the performance of any services by Employee in the operation of the
entities in which such securities are owned; (ii) engage in charitable and civic
activities; or (iii) engage in other personal and passive investment activities,
in each case, so long as such interests or activities do not interfere with
Employee’s ability to fulfill Employee’s duties and responsibilities under this
Agreement and are not inconsistent with Employee’s obligations to the Company
Group or competitive with the business of the Company Group.

 

(b)  Employee hereby represents and warrants that Employee is not the subject
of, or a party to, any employment agreement, non-competition, non-solicitation,
restrictive covenant, non-disclosure agreement, or any other agreement,
obligation, restriction or understanding that would prohibit Employee from
executing this Agreement or fully performing each of Employee’s duties and
responsibilities hereunder, or would in any manner, directly or indirectly,
limit or affect any of the duties and responsibilities that may now or in the
future be assigned to Employee hereunder. Employee expressly acknowledges and
agrees that Employee is strictly prohibited from using or disclosing any
confidential information belonging to any prior employer in the course of
performing services for any member of the Company Group, and Employee promises
that Employee shall not do so. Employee shall not introduce documents or other
materials containing confidential information of any such prior employer to the
premises or property (including computers and computer systems) of any member of
the Company Group.

 

(c)  Employee owes each member of the Company Group fiduciary duties (including
duties of loyalty and disclosure), and the obligations described in this
Agreement are in addition to, and not in lieu of, the obligations Employee owes
each member of the Company Group under statutory and common law.

 

 

 

 

3.  Compensation.

 

(a)  Base Salary. During the Employment Period, the Company shall pay to
Employee an annualized base salary of $250,000 (the “Base Salary”) in
consideration for Employee’s services under this Agreement, payable in
substantially equal installments in conformity with the Company’s customary
payroll practices for similarly situated employees as may exist from time to
time, but no less frequently than monthly. The Board shall review the Base
Salary from time to time, but no less frequently than annually, and in its sole
discretion following such review, the Board may increase, but not decrease, the
Base Salary.

 

(b)  Annual Bonus. Employee shall be eligible for discretionary bonus
compensation with a target (if all performance targets are met or exceeded) of
100% of Employee’s Base Salary for each complete calendar year that Employee is
employed by the Company hereunder (the “Annual Bonus”). The performance targets
that must be achieved in order to be eligible for certain bonus levels shall be
established by the Board (or a committee thereof) annually, in its sole
discretion, and communicated to Employee within the first ninety (90) days of
the applicable calendar year (the “Bonus Year”). Each Annual Bonus, if any,
shall be paid as soon as administratively feasible after the Board (or a
committee thereof) certifies whether the applicable performance targets for the
applicable Bonus Year have been achieved, but in no event later than March 15
following the end of such Bonus Year. Notwithstanding anything in this Section
3(b) to the contrary, no Annual Bonus, if any, nor any portion thereof, shall be
payable for any Bonus Year unless Employee remains continuously employed by the
Company from the Effective Date through the last date of the Bonus Year to which
the Annual Bonus relates.

 

(c)  Initial Equity Awards. Following the adoption by the Company of an equity
compensation plan (the “LTIP”) and subject to the approval of the Board or a
committee thereof:

 

(i)  Employee will receive a one-time restricted stock unit award with five
(5)-year ratable vesting, subject to the terms and conditions of the LTIP and
any applicable award agreement between the Company and Employee. The Company
expects this award, if approved by the Board or a committee thereof, to have a
grant date fair value of approximately $100,000 and to allow for, but not
require, net settlement in satisfaction of any tax withholding obligations.

 

(ii)  Employee will be granted an option to purchase ten percent (10%) of the
outstanding shares of the Company (calculated as of the applicable date of
grant), subject to the terms and conditions of the LTIP and any applicable award
agreement between the Company and Employee. The Company expects such option will
(A) have an exercise price equal to the fair market value of a share of the
Company’s common stock on the date of grant, as determined by the Board, (B)
ratably vest over a five (5)-year period following the date of grant, (C) expire
on the tenth (10th) anniversary of the date of grant, and (D) allow for, but not
require, net exercise and/or net settlement to satisfy the payment of the
exercise price and/or any tax withholding obligations.

 

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4.  Term of Employment. The initial term of Employee’s employment under this
Agreement shall be for the period beginning on the Effective Date and ending on
the fifth anniversary of the Effective Date (the “Initial Term”). On the fifth
anniversary of the Effective Date and on each subsequent anniversary thereafter,
the term of Employee’s employment under this Agreement shall automatically renew
and extend for a period of twelve (12) months (each such twelve (12)-month
period being a “Renewal Term”) unless written notice of non-renewal is delivered
by either party to the other not less than sixty (60) days prior to the
expiration of the then-existing Initial Term or Renewal Term, as applicable.
Notwithstanding any other provision of this Agreement, Employee’s employment
pursuant to this Agreement may be terminated at any time in accordance with
Section 7. The period from the Effective Date through the expiration of this
Agreement or, if sooner, the termination of Employee’s employment pursuant to
this Agreement, regardless of the time or reason for such termination, shall be
referred to herein as the “Employment Period.”

 

5.  Business Expenses. Subject to Section 23, the Company shall reimburse
Employee for Employee’s reasonable out-of-pocket business-related expenses
actually incurred in the performance of Employee’s duties under this Agreement
so long as Employee timely submits all documentation for such expenses, as
required by Company policy in effect from time to time. Any such reimbursement
of expenses shall be made by the Company upon or as soon as practicable
following receipt of such documentation (but in any event not later than the
close of Employee’s taxable year following the taxable year in which the expense
is incurred by Employee). In no event shall any reimbursement be made to
Employee for any expenses incurred after the date of Employee’s termination of
employment with the Company.

 

6.  Benefits. During the Employment Period, Employee shall be eligible to
participate in the same benefit plans and programs in which other similarly
situated Company employees are eligible to participate, subject to the terms and
conditions of the applicable plans and programs in effect from time to time.
Employee shall be eligible for up to four (4) weeks of paid vacation each
complete calendar year that he is employed hereunder, subject to the terms and
conditions of the applicable plans and programs in effect from time to time. The
Company shall not, however, by reason of this Section 6, be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
such plan or policy, so long as such changes are similarly applicable to
similarly situated Company employees generally.

 

7.  Termination of Employment.

 

(a)  Company’s Right to Terminate Employee’s Employment for Cause. The Company
shall have the right to terminate Employee’s employment hereunder at any time
for “Cause.” For purposes of this Agreement, “Cause” shall mean:

 

(i)  Employee’s material breach of this Agreement or any other written agreement
between Employee and one or more members of the Company Group, including
Employee’s material breach of any representation, warranty or covenant made
under any such agreement;

 

(ii)  Employee’s material breach of any law applicable to the workplace or
employment relationship, or Employee’s material breach of any policy or code of
conduct established by a member of the Company Group and applicable to Employee;

 

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(iii)  Employee’s gross negligence, willful misconduct, material breach of
fiduciary duty, fraud, theft or embezzlement on the part of Employee;

 

(iv)  the commission by Employee of, or conviction or indictment of Employee
for, or plea of nolo contendere by Employee to, any felony (or state law
equivalent) or any crime involving moral turpitude; or

 

(v)  Employee’s willful failure or refusal, other than due to Disability, to
perform Employee’s obligations pursuant to this Agreement or to follow any
lawful directive from the Board, as determined by the Board (sitting without
Employee, if applicable); provided, however, that if Employee’s actions or
omissions as set forth in this Section 7(a)(v) are of such a nature that the
Board determines that they are curable by Employee, such actions or omissions
must remain uncured thirty (30) days after the Board first provided Employee
written notice of the obligation to cure such actions or omissions.

 

(b)  Company’s Right to Terminate for Convenience. The Company shall have the
right to terminate Employee’s employment for convenience at any time and for any
reason, or no reason at all, upon written notice to Employee.

 

(c)  Employee’s Right to Terminate for Good Reason. Employee shall have the
right to terminate Employee’s employment with the Company at any time for “Good
Reason.” For purposes of this Agreement, “Good Reason” shall mean:

 

(i)  a material diminution in Employee’s Base Salary or authority, duties and
responsibilities with the Company or its subsidiaries;

 

(ii)  a material breach by the Company of any of its obligations under this
Agreement; or

 

(iii)  the relocation of the geographic location of Employee’s principal place
of employment by more than twenty-five (25) miles from the location of
Employee’s principal place of employment as of the Effective Date.

 

Notwithstanding the foregoing provisions of this Section 7(c) or any other
provision of this Agreement to the contrary, any assertion by Employee of a
termination for Good Reason shall not be effective unless all of the following
conditions are satisfied: (A) the condition described in Section 7(c)(i), (ii)
or (iii) giving rise to Employee’s termination of employment must have arisen
without Employee’s consent; (B) Employee must provide written notice to the
Board of the existence of such condition(s) within thirty (30) days after the
initial occurrence of such condition(s); (C) the condition(s) specified in such
notice must remain uncorrected for thirty (30) days following the Board’s
receipt of such written notice; and (D) the date of Employee’s termination of
employment must occur within ninety (90) days after the initial occurrence of
the condition(s) specified in such notice.

 

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(d)  Death or Disability. Upon the death or Disability of Employee, Employee’s
employment with Company shall automatically (and without any further action by
any person or entity) terminate with no further obligation under this Agreement
of either party hereunder. For purposes of this Agreement, a “Disability” shall
exist if Employee is unable to perform the essential functions of Employee’s
position (after accounting for reasonable accommodation, if applicable and
required by applicable law), due to physical or mental impairment or other
incapacity that continues, or can reasonably be expected to continue, for a
period in excess of one hundred-twenty (120) consecutive days or one
hundred-eighty (180) days, whether or not consecutive (or for any longer period
as may be required by applicable law), in any twelve (12)-month period. The
determination of whether Employee has incurred a Disability shall be made in
good faith by the Board.

 

(e)  Employee’s Right to Terminate for Convenience. In addition to Employee’s
right to terminate Employee’s employment for Good Reason, Employee shall have
the right to terminate Employee’s employment with the Company for convenience at
any time and for any other reason, or no reason at all, upon thirty (30) days’
advance written notice to the Company; provided, however, that if Employee has
provided notice to the Company of Employee’s termination of employment, the
Company may determine, in its sole discretion, that such termination shall be
effective on any date prior to the effective date of termination provided in
such notice (and, if such earlier date is so required, then it shall not change
the basis for Employee’s termination of employment nor be construed or
interpreted as a termination of employment pursuant to Section 7(b)).

 

(f)  Effect of Termination.

 

(i)  If Employee’s employment hereunder is terminated by the Company without
Cause pursuant to Section 7(b), is terminated by Employee for Good Reason
pursuant to Section 7(c) or is terminated as a result of a non-renewal of the
term of Employee’s employment under this Agreement by the Company pursuant to
Section 4, then so long as (and only if) Employee: (A) executes on or before the
Release Expiration Date (as defined below), and does not revoke within any time
provided by the Company to do so, a release of all claims in a form acceptable
to the Company (the “Release”), which Release shall release each member of the
Company Group and their respective affiliates, and the foregoing entities’
respective shareholders, members, partners, officers, managers, directors,
fiduciaries, employees, representatives, agents and benefit plans (and
fiduciaries of such plans) from any and all claims, including any and all causes
of action arising out of Employee’s employment with the Company and each other
member of the Company Group or the termination of such employment, but excluding
all claims to severance payments Employee may have under this Section 7 and
claims arising on or after the date the Release is executed with respect to
indemnification or directors’ and officers’ insurance coverage; and (B) abides
by the terms of each of Sections 9, 10 and 11, then the Company shall provide
Employee with the following severance benefits:

 

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(A)  The Company shall make a severance payment to Employee in an amount equal
to the sum of (I) the Severance Multiple (as defined below), multiplied by
Employee’s Base Salary immediately prior to such termination and (II) a pro-rata
portion of the Annual Bonus for the year in which such termination occurs equal
to (a) the Employee’s target Annual Bonus for the Bonus Year in which the
Termination Date occurs, multiplied by (b) a fraction, the numerator of which is
the number of days that have elapsed from the beginning of such calendar year
through the Termination Date and the denominator of which is the total number of
days in such calendar year (such total severance payments being referred to as
the “Severance Payment”). The Severance Payment will be divided into twelve (12)
substantially equal installments. On the Company’s first regularly scheduled pay
date that is on or after the date that is sixty (60) days after the date on
which Employee’s employment terminates (the “Termination Date”), the Company
shall pay to Employee, without interest, a number of such installments equal to
the number of such installments that would have been paid during the period
beginning on the Termination Date and ending on the Company’s first regularly
scheduled pay date that is on or after the date that is sixty (60) days after
the Termination Date had the installments been paid on a monthly basis
commencing on the Company’s first regularly scheduled pay date coincident with
or next following the Termination Date, and each of the remaining installments
shall be paid on a monthly basis thereafter; provided, however, that to the
extent, if any, that the aggregate amount of the installments of the Severance
Payment that would otherwise be paid pursuant to the preceding provisions of
this Section 7(f)(i)(A) after March 15 of the calendar year following the
calendar year in which the Termination Date occurs (the “Applicable March 15”)
exceeds the maximum exemption amount under Treasury Regulation Section
1.409A-1(b)(9)(iii)(A), then such excess shall be paid to Employee in a lump sum
on the Applicable March 15 (or the first Business Day preceding the Applicable
March 15 if the Applicable March 15 is not a Business Day) and the installments
of the Severance Payment payable after the Applicable March 15 shall be reduced
by such excess (beginning with the installment first payable after the
Applicable March 15 and continuing with the next succeeding installment until
the aggregate reduction equals such excess). As used herein (x) “Business Day”
shall mean any day except a Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to be closed and
(y) “Severance Multiple” shall mean 2.0; provided, however, that if the
Termination Date occurs on or at any time during the twelve (12)-month period
following a Change in Control (as defined below), the Severance Multiple shall
mean 3.0.

 

(B)  During the portion, if any, of the eighteen (18)-month period following the
Termination Date (the “Reimbursement Period”) that Employee elects to continue
coverage for Employee and Employee’s spouse and eligible dependents, if any,
under the Company’s group health plans pursuant to Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, or any similar state law (“COBRA”), the
Company shall reimburse Employee on a monthly basis for the amount Employee pays
to effect and continue such coverage (the “COBRA Benefit”). Each payment of the
COBRA Benefit shall be paid to Employee on the Company’s first regularly
scheduled pay date in the calendar month immediately following the calendar
month in which Employee submits to the Company documentation of the applicable
premium payment having been paid by Employee, which documentation shall be
submitted by Employee to the Company within thirty (30) days following the date
on which the applicable premium payment is paid. Employee shall be eligible to
receive such reimbursement payments until the earliest of: (1) the last day of
the Reimbursement Period; (2) the date Employee is no longer eligible to receive
COBRA continuation coverage; and (3) the date on which Employee becomes eligible
to receive coverage under a group health plan sponsored by another employer (and
any such eligibility shall be promptly reported to the Company by Employee);
provided, however, that the election of COBRA continuation coverage and the
payment of any premiums due with respect to such COBRA continuation coverage
shall remain Employee’s sole responsibility, and the Company shall not assume
any obligation for payment of any such premiums relating to such COBRA
continuation coverage. Notwithstanding the foregoing, if the provision of the
benefits described in this paragraph cannot be provided in the manner described
above without penalty, tax or other adverse impact on the Company or any other
member of the Company Group, then the Company and Employee shall negotiate in
good faith to determine an alternative manner in which the Company may provide
substantially equivalent benefits to Employee without such adverse impact on the
Company or such other member of the Company Group.

 

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(C)  The Company shall accelerate the vesting of any outstanding, unvested
equity awards granted to Employee prior to the Termination Date (including
awards granted pursuant to Section 3(c)) (the “Equity Acceleration”).

 

(ii)  For the avoidance of doubt, the Severance Payment (or any portion
thereof), the COBRA Benefit and the Equity Acceleration shall not be payable if
Employee’s employment hereunder terminates upon the expiration of the
then-existing Initial Term or Renewal Term, as applicable, as a result of a
non-renewal of the term of Employee’s employment under this Agreement by
Employee pursuant to Section 4.

 

(iii)  If Employee’s employment hereunder is terminated as a result of the death
or Disability of Employee pursuant to Section 7(d), then so long as (and only
if) Employee (or Employee’s legal guardian or the executor of Employee’s estate,
as applicable): (A) executes the Release on or before the Release Expiration
Date, and does not revoke the acceptance of the Release within any time provided
by the Company to do so; and (B) abides by the terms of Section 9, then the
Company shall provide to Employee the Equity Acceleration as described in
Section 7(f)(i)(C).

 

(iv)  If the Release is not executed and returned to the Company on or before
the Release Expiration Date, and the required revocation period has not fully
expired without revocation of the Release by Employee, then Employee shall not
be entitled to any portion of the Severance Payment, the COBRA Benefit or the
Equity Acceleration. As used herein, the “Release Expiration Date” is that date
that is twenty-one (21) days following the date upon which the Company delivers
the Release to Employee (which shall occur no later than seven (7) days after
the Termination Date) or, in the event that such termination of employment is
“in connection with an exit incentive or other employment termination program”
(as such phrase is defined in the Age Discrimination in Employment Act of 1967),
the date that is forty-five (45) days following such delivery date.

 

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(g)  Effect of Change in Control. If a Change in Control occurs, regardless of
whether or not Employee’s employment terminates in connection with such Change
in Control, then Employee shall be entitled to the Equity Acceleration as
described in Section 7(f)(i)(C) on the date of such Change in Control. As used
herein, “Change in Control” has the meaning given to such term in the LTIP.

 

8.  Disclosures. Promptly (and in any event, within three (3) Business Days)
upon becoming aware of (a) any actual or potential Conflict of Interest or (b)
any lawsuit, claim or arbitration filed against or involving Employee or any
trust or vehicle owned or controlled by Employee, in each case, Employee shall
disclose such actual or potential Conflict of Interest or such lawsuit, claim or
arbitration to the Board. A “Conflict of Interest” shall exist when Employee
engages in, or plans to engage in, any activities, associations, or interests
that conflict with, or create an appearance of a conflict with, Employee’s
duties, responsibilities, authorities, or obligations for and to the Company
Group.

 

9.  Confidentiality. In the course of Employee’s employment with the Company and
the performance of Employee’s duties on behalf of the Company Group hereunder,
Employee will be provided with, and will have access to, Confidential
Information (as defined below). In consideration of Employee’s receipt and
access to such Confidential Information and in exchange for other valuable
consideration provided hereunder, and as a condition of Employee’s employment,
Employee shall comply with this Section 9.

 

(a)  Both during the Employment Period and thereafter, except as expressly
permitted by this Agreement or by directive of the Board, Employee shall not
disclose any Confidential Information to any person or entity and shall not use
any Confidential Information except for the benefit of the Company Group.
Employee acknowledges and agrees that Employee would inevitably use and disclose
Confidential Information in violation of this Section 9 if Employee were to
violate any of the covenants set forth in Section 10. Employee shall follow all
Company policies and protocols regarding the security of all documents and other
materials containing Confidential Information (regardless of the medium on which
Confidential Information is stored). The covenants of this Section 9(a) shall
apply to all Confidential Information, whether now known or later to become
known to Employee during the period that Employee is employed by or affiliated
with the Company or any other member of the Company Group.

 

(b)  Notwithstanding any provision of Section 9(a) to the contrary, Employee may
make the following disclosures and uses of Confidential Information:

 

(i)  disclosures to other employees of the Company Group who have a need to know
the information in connection with the businesses of the Company Group;

 

(ii)  disclosures to customers and suppliers when, in the reasonable and good
faith belief of Employee, such disclosure is in connection with Employee’s
performance of Employee’s duties under this Agreement and is in the best
interests of the Company Group;

 

(iii)  disclosures and uses that are approved in writing by the Board; or

 

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(iv)  disclosures to a person or entity that has (x) been retained by a member
of the Company Group to provide services to one or more members of the Company
Group and (y) agreed in writing to abide by the terms of a confidentiality
agreement.

 

(c)  Upon the expiration of the Employment Period, and at any other time upon
request of the Company, Employee shall promptly surrender and deliver to the
Company all documents (including electronically stored information) and all
copies thereof and all other materials of any nature containing or pertaining to
all Confidential Information and any other Company Group property (including any
Company Group-issued computer, mobile device or other equipment) in Employee’s
possession, custody or control and Employee shall not retain any such documents
or other materials or property of the Company Group. Within [ten] ([10]) days of
any such request, Employee shall certify to the Company in writing that all such
documents, materials and property have been returned to the Company.

 

(d)  All trade secrets, non-public information, designs, ideas, concepts,
improvements, product developments, discoveries and inventions, whether
patentable or not, that are conceived, made, developed or acquired by or
disclosed to Employee, individually or in conjunction with others, during the
period that Employee is employed by the Company or any other member of the
Company Group (whether during business hours or otherwise and whether on the
Company’s premises or otherwise) that relate to any member of the Company
Group’s businesses or properties, products or services (including all such
information relating to corporate opportunities, operations, future plans,
methods of doing business, business plans, strategies for developing business
and market share, research, financial and sales data, pricing terms,
evaluations, opinions, interpretations, acquisition prospects, the identity of
customers or acquisition targets or their requirements, the identity of key
contacts within customers’ organizations or within the organization of
acquisition prospects, or marketing and merchandising techniques, prospective
names and marks) is defined as “Confidential Information.” Moreover, all
documents, videotapes, written presentations, brochures, drawings, memoranda,
notes, records, files, correspondence, manuals, models, specifications, computer
programs, e-mail, voice mail, electronic databases, maps, drawings,
architectural renditions, models and all other writings or materials of any type
including or embodying any of such information, ideas, concepts, improvements,
discoveries, inventions and other similar forms of expression are and shall be
the sole and exclusive property of the Company Group and be subject to the same
restrictions on disclosure applicable to all Confidential Information pursuant
to this Agreement. For purposes of this Agreement, Confidential Information
shall not include any information that (i) is or becomes generally available to
the public other than as a result of a disclosure or wrongful act of Employee or
any of Employee’s agents; (ii) was available to Employee on a non-confidential
basis before its disclosure by a member of the Company Group; or (iii) becomes
available to Employee on a non-confidential basis from a source other than a
member of the Company Group; provided, however, that such source is not bound by
a confidentiality agreement with, or other obligation with respect to
confidentiality to, a member of the Company Group.

 

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(e)  Notwithstanding the foregoing, nothing in this Agreement shall prohibit or
restrict Employee from lawfully (a) initiating communications directly with,
cooperating with, providing information to, causing information to be provided
to, or otherwise assisting in an investigation by, any governmental authority
regarding a possible violation of any law; (b) responding to any inquiry or
legal process directed to Employee from any such governmental authority; (c)
testifying, participating or otherwise assisting in an action or proceeding by
any such governmental authority relating to a possible violation of law or (d)
making any other disclosures that are protected under the whistleblower
provisions of any applicable Law. Additionally, pursuant to the federal Defend
Trade Secrets Act of 2016, Employee shall not be held criminally or civilly
liable under any federal or state trade secret law for the disclosure of a trade
secret that: (i) is made (A) in confidence to a federal, state or local
government official, either directly or indirectly, or to an attorney and (B)
solely for the purpose of reporting or investigating a suspected violation of
Law; (ii) is made to Employee’s attorney in relation to a lawsuit for
retaliation against the Employee for reporting a suspected violation of law or
(iii) is made in a complaint or other document filed in a lawsuit or other
proceeding, if such filing is made under seal. Nothing in this Agreement
requires Employee to obtain prior authorization from the Company before engaging
in any conduct described in this paragraph, or to notify the Company that
Employee has engaged in any such conduct.

 

10.  Non-Competition; Non-Solicitation.

 

(a)  The Company shall provide Employee access to Confidential Information for
use only during the Employment Period, and Employee acknowledges and agrees that
Employee will be an executive of the Company and the Company Group will be
entrusting Employee, in Employee’s unique and special capacity, with developing
the goodwill of the Company Group, and in consideration of the Company providing
Employee with access to Confidential Information and as an express incentive for
the Company to enter into this Agreement and employ Employee, Employee has
voluntarily agreed to the covenants set forth in this Section 10. Employee
agrees and acknowledges that the limitations and restrictions set forth herein,
including geographical and temporal restrictions on certain competitive
activities, are reasonable in all respects, will not cause Employee undue
hardship, and are material and substantial parts of this Agreement intended and
necessary to prevent unfair competition and to protect the Company Group’s trade
secrets and other Confidential Information, goodwill and legitimate business
interests.

 

(b)  During the Prohibited Period, Employee shall not, without the prior written
approval of the Board, directly or indirectly, for Employee or on behalf of or
in conjunction with any other person or entity of any nature:

 

(i)  engage in or participate within the Market Area in competition with any
member of the Company Group in any aspect of the Business, which prohibition
shall prevent Employee from directly or indirectly: (A) owning, managing,
operating, being an officer, director or executive of, or lending to a business
that competes with any member of the Company Group in the Market Area, or (B)
joining, becoming an officer, director, employee or consultant of, or loaning
money to, or selling or leasing equipment or real estate to or otherwise being
affiliated with, any person or entity engaged in, or planning to engage in, the
Business in the Market Area in competition, or anticipated competition, with any
member of the Company Group, in each case (with respect to this clause (B)) in
any capacity in which Employee’s duties are the same or similar to those
performed for any member of the Company Group);

 

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(ii)  appropriate any Business Opportunity of, or relating to, the Company Group
located in the Market Area;

 

(iii)  solicit, canvass, approach, encourage, entice or induce any customer or
supplier of any member of the Company Group to cease or lessen such customer’s
or supplier’s business with the Company Group; or

 

(iv)  solicit, canvass, approach, encourage, entice or induce any employee or
contractor of the Company Group to terminate his, her or its employment or
engagement with any member of the Company Group.

 

(c)  Because of the difficulty of measuring economic losses to the Company Group
as a result of a breach or threatened breach of the covenants set forth in
Section 9 and in this Section 10, and because of the immediate and irreparable
damage that would be caused to the members of the Company Group for which they
would have no other adequate remedy, the Company and each other member of the
Company Group shall be entitled to enforce the foregoing covenants, in the event
of a breach or threatened breach, by injunctions and restraining orders from any
court of competent jurisdiction, without the necessity of showing any actual
damages or that money damages would not afford an adequate remedy, and without
the necessity of posting any bond or other security. The aforementioned
equitable relief shall not be the Company’s or any other member of the Company
Group’s exclusive remedy for a breach but instead shall be in addition to all
other rights and remedies available to the Company and each other member of the
Company Group at law and equity.

 

(d)  The covenants in this Section 10, and each provision and portion hereof,
are severable and separate, and the unenforceability of any specific covenant
(or portion thereof) shall not affect the provisions of any other covenant (or
portion thereof). Moreover, in the event any arbitrator or court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which such arbitrator or court
deems reasonable, and this Agreement shall thereby be reformed.

 

(e)  The following terms shall have the following meanings:

 

(i)  “Business” shall mean the business and operations that are the same or
similar to those performed by the Company and any other member of the Company
Group for which Employee provides services or about which Employee obtains
Confidential Information during the Employment Period, which business and
operations include proteomics.

 

(ii)  “Business Opportunity” shall mean any commercial, investment or other
business opportunity relating to the Business.

 

(iii)  “Market Area” shall mean the United States of America.

 

(iv)  “Prohibited Period” shall mean the period during which Employee is
employed by any member of the Company Group and continuing for a period of
twelve (12) months following the date that Employee is no longer employed by any
member of the Company Group.

 

 11 

 

 

11.  Ownership of Intellectual Property. Employee agrees that the Company shall
own, and Employee shall (and hereby does) assign, all right, title and interest
(including patent rights, copyrights, trade secret rights, mask work rights,
trademark rights, and all other intellectual and industrial property rights of
any sort throughout the world) relating to any and all inventions (whether or
not patentable), works of authorship, mask works, designs, know-how, ideas and
information authored, created, contributed to, made or conceived or reduced to
practice, in whole or in part, by Employee during the period in which Employee
is or has been employed by or affiliated with the Company or any other member of
the Company Group that either (a) relate, at the time of conception, reduction
to practice, creation, derivation or development, to any member of the Company
Group’s businesses or actual or anticipated research or development, or (b) were
developed on any amount of the Company’s or any other member of the Company
Group’s time or with the use of any member of the Company Group’s equipment,
supplies, facilities or trade secret information (all of the foregoing
collectively referred to herein as “Company Intellectual Property”), and
Employee shall promptly disclose all Company Intellectual Property to the
Company. All of Employee’s works of authorship and associated copyrights created
during the period in which Employee is employed by or affiliated with the
Company or any member of the Company Group and in the scope of Employee’s
employment shall be deemed to be “works made for hire” within the meaning of the
Copyright Act. Employee shall perform, during and after the period in which
Employee is or has been employed by or affiliated with the Company or any other
member of the Company Group, all reasonable acts deemed necessary by the Company
to assist the Company Group, at the Company’s expense, in obtaining and
enforcing its rights throughout the world in the Company Intellectual Property.
Such acts may include execution of documents and assistance or cooperation (i)
in the filing, prosecution, registration, and memorialization of assignment of
any applicable patents, copyrights, mask work, or other applications, (ii) in
the enforcement of any applicable patents, copyrights, mask work, moral rights,
trade secrets, or other proprietary rights, and (iii) in other legal proceedings
related to the Company Intellectual Property.

 

12.  Arbitration.

 

(a)  Subject to Section 12(b), any dispute, controversy or claim between
Employee and the Company arising out of or relating to this Agreement or
Employee’s employment with the Company will be finally settled by arbitration in
Denver, Colorado in accordance with the then-existing American Arbitration
Association (“AAA”) Employment Arbitration Rules. The arbitration award shall be
final and binding on both parties. Any arbitration conducted under this Section
12 shall be heard by a single arbitrator (the “Arbitrator”) selected in
accordance with the then-applicable rules of the AAA. The Arbitrator shall
expeditiously hear and decide all matters concerning the dispute. Except as
expressly provided to the contrary in this Agreement, the Arbitrator shall have
the power to (i) gather such materials, information, testimony and evidence as
the Arbitrator deems relevant to the dispute before him or her (and each party
will provide such materials, information, testimony and evidence requested by
the Arbitrator), and (ii) grant injunctive relief and enforce specific
performance. The decision of the Arbitrator shall be reasoned, rendered in
writing, be final and binding upon the disputing parties and the parties agree
that judgment upon the award may be entered by any court of competent
jurisdiction. Each party shall be responsible for its own legal fees and costs
associated with such arbitration and associated judgment.

 

 12 

 

 

(b)  Notwithstanding Section 12(a), either party may make a timely application
for, and obtain, judicial emergency or temporary injunctive relief to enforce
any of the provisions of Sections 9 through 11; provided, however, that the
remainder of any such dispute (beyond the application for emergency or temporary
injunctive relief) shall be subject to arbitration under this Section 12.

 

(c)  By entering into this Agreement and entering into the arbitration
provisions of this Section 12, THE PARTIES EXPRESSLY ACKNOWLEDGE AND AGREE THAT
THEY ARE KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVING THEIR RIGHTS TO A JURY
TRIAL.

 

(d)  Nothing in this Section 12 shall prohibit a party to this Agreement from
(i) instituting litigation to enforce any arbitration award, or (ii) joining the
other party to this Agreement in a litigation initiated by a person or entity
that is not a party to this Agreement.

 

13.  Defense of Claims. During the Employment Period and thereafter, upon
request from the Company, Employee shall cooperate with the Company Group in the
defense of any claims or actions that may be made by or against any member of
the Company Group that relate to Employee’s actual or prior areas of
responsibility.

 

14.  Withholdings; Deductions. The Company may withhold and deduct from any
benefits and payments made or to be made pursuant to this Agreement (a) all
federal, state, local and other taxes as may be required pursuant to any law or
governmental regulation or ruling and (b) any deductions consented to in writing
by Employee.

 

15.  Title and Headings; Construction. Titles and headings to Sections hereof
are for the purpose of reference only and shall in no way limit, define or
otherwise affect the provisions hereof. Any and all Exhibits or Attachments
referred to in this Agreement are, by such reference, incorporated herein and
made a part hereof for all purposes. Unless the context requires otherwise, all
references to laws, regulations, contracts, agreements and instruments refer to
such laws, regulations, contracts, agreements and instruments as they may be
amended from time to time, and references to particular provisions of laws or
regulations include a reference to the corresponding provisions of any
succeeding law or regulation. All references to “dollars” or “$” in this
Agreement refer to United States dollars. The words “herein”, “hereof”,
“hereunder” and other compounds of the word “here” shall refer to the entire
Agreement, including all Exhibits attached hereto, and not to any particular
provision hereof. Wherever the context so requires, the masculine gender
includes the feminine or neuter, and the singular number includes the plural and
conversely. All references to “including” shall be construed as meaning
“including without limitation.” Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party hereto,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by each of the parties hereto and shall be construed
and interpreted according to the ordinary meaning of the words used so as to
fairly accomplish the purposes and intentions of the parties hereto.

 

 13 

 

 

16.  Applicable Law; Submission to Jurisdiction. This Agreement shall in all
respects be construed according to the laws of the State of Colorado without
regard to its conflict of laws principles that would result in the application
of the laws of another jurisdiction. With respect to any claim or dispute
related to or arising under this Agreement, the parties hereby consent to the
arbitration provisions of Section 12 and recognize and agree that should any
resort to a court be necessary and permitted under this Agreement, then they
consent to the exclusive jurisdiction, forum and venue of the state and federal
courts (as applicable) located in Denver, Colorado.

 

17.  Entire Agreement and Amendment. This Agreement contains the entire
agreement of the parties with respect to the matters covered herein and
supersede all prior and contemporaneous agreements and understandings, oral or
written, between the parties hereto concerning the subject matter hereof. This
Agreement may be amended only by a written instrument executed by both parties
hereto.

 

18.  Waiver of Breach. Any waiver of this Agreement must be executed by the
party to be bound by such waiver. No waiver by either party hereto of a breach
of any provision of this Agreement by the other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provision or condition at the same or any
subsequent time. The failure of either party hereto to take any action by reason
of any breach will not deprive such party of the right to take action at any
time.

 

19.  Assignment. This Agreement is personal to Employee, and neither this
Agreement nor any rights or obligations hereunder shall be assignable or
otherwise transferred by Employee. The Company may assign this Agreement without
Employee’s consent, including to any member of the Company Group and to any
successor (whether by merger, purchase or otherwise) to all or substantially all
of the equity, assets or businesses of the Company.

 

20.  Notices. Notices provided for in this Agreement shall be in writing and
shall be deemed to have been duly received (a) when delivered in person, (b)
when sent by facsimile transmission (with confirmation of transmission) on a
Business Day to the number set forth below, if applicable; provided, however,
that if a notice is sent by facsimile transmission after normal business hours
of the recipient or on a non-Business Day, then it shall be deemed to have been
received on the next Business Day after it is sent, (c) on the first Business
Day after such notice is sent by express overnight courier service, or (d) on
the second Business Day following deposit with an internationally-recognized
second-day courier service with proof of receipt maintained, in each case, to
the following address, as applicable:

 

If to the Company, addressed to:

 

Avant Diagnostics, Inc.
1050 30th Street, NW
Suite 107
Washington, DC 20007

 

 14 

 

 

If to Employee, addressed to the last known address for Employee in the
Company’s payroll records.

 

21.  Counterparts. This Agreement may be executed in any number of counterparts,
including by electronic mail or facsimile, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a copy
hereof containing multiple signature pages, each signed by one party, but
together signed by both parties hereto.

 

22.  Deemed Resignations. Except as otherwise determined by the Board or as
otherwise agreed to in writing by Employee and any member of the Company Group
prior to the termination of Employee’s employment with the Company or any member
of the Company Group, any termination of Employee’s employment shall constitute,
as applicable, an automatic resignation of Employee: (a) as an officer of the
Company and each member of the Company Group; (b) from the Board; and (c) from
the board of directors or board of managers (or similar governing body) of any
member of the Company Group and from the board of directors or board of managers
(or similar governing body) of any corporation, limited liability entity,
unlimited liability entity or other entity in which any member of the Company
Group holds an equity interest and with respect to which board of directors or
board of managers (or similar governing body) Employee serves as such Company
Group member’s designee or other representative.

 

23.  Section 409A.

 

(a)  Notwithstanding any provision of this Agreement to the contrary, all
provisions of this Agreement are intended to comply with Section 409A of the
Internal Revenue Code of 1986 (the “Code”), and the applicable Treasury
regulations and administrative guidance issued thereunder (collectively,
“Section 409A”) or an exemption therefrom and shall be construed and
administered in accordance with such intent. Any payments under this Agreement
that may be excluded from Section 409A either as separation pay due to an
involuntary separation from service or as a short-term deferral shall be
excluded from Section 409A to the maximum extent possible. For purposes of
Section 409A, each installment payment provided under this Agreement shall be
treated as a separate payment. Any payments to be made under this Agreement upon
a termination of Employee’s employment shall only be made if such termination of
employment constitutes a “separation from service” under Section 409A.

 

(b)  To the extent that any right to reimbursement of expenses or payment of any
benefit in-kind under this Agreement constitutes nonqualified deferred
compensation (within the meaning of Section 409A), (i) any such expense
reimbursement shall be made by the Company no later than the last day of
Employee’s taxable year following the taxable year in which such expense was
incurred by Employee, (ii) the right to reimbursement or in-kind benefits shall
not be subject to liquidation or exchange for another benefit, and (iii) the
amount of expenses eligible for reimbursement or in-kind benefits provided
during any taxable year shall not affect the expenses eligible for reimbursement
or in-kind benefits to be provided in any other taxable year; provided, that the
foregoing clause shall not be violated with regard to expenses reimbursed under
any arrangement covered by Section 105(b) of the Code solely because such
expenses are subject to a limit related to the period in which the arrangement
is in effect.

 

 15 

 

 

(c)  Notwithstanding any provision in this Agreement to the contrary, if any
payment or benefit provided for herein would be subject to additional taxes and
interest under Section 409A if Employee’s receipt of such payment or benefit is
not delayed until the earlier of (i) the date of Employee’s death or (ii) the
date that is six (6) months after the Termination Date (such date, the “Section
409A Payment Date”), then such payment or benefit shall not be provided to
Employee (or Employee’s estate, if applicable) until the Section 409A Payment
Date. Notwithstanding the foregoing, the Company makes no representations that
the payments and benefits provided under this Agreement are exempt from, or
compliant with, Section 409A and in no event shall any member of the Company
Group be liable for all or any portion of any taxes, penalties, interest or
other expenses that may be incurred by Employee on account of non-compliance
with Section 409A.

 

24.  Certain Excise Taxes. Notwithstanding anything to the contrary in this
Agreement, if Employee is a “disqualified individual” (as defined in Section
280G(c) of the Code), and the payments and benefits provided for in this
Agreement, together with any other payments and benefits which Employee has the
right to receive from the Company or any of its affiliates, would constitute a
“parachute payment” (as defined in Section 280G(b)(2) of the Code), then the
payments and benefits provided for in this Agreement shall be either (a) reduced
(but not below zero) so that the present value of such total amounts and
benefits received by Employee from the Company or any of its affiliates shall be
one dollar ($1.00) less than three (3) times Employee’s “base amount” (as
defined in Section 280G(b)(3) of the Code) and so that no portion of such
amounts and benefits received by Employee shall be subject to the excise tax
imposed by Section 4999 of the Code or (b) paid in full, whichever produces the
better net after-tax position to Employee (taking into account any applicable
excise tax under Section 4999 of the Code and any other applicable taxes).  The
reduction of payments and benefits hereunder, if applicable, shall be made by
reducing, first, payments or benefits to be paid in cash hereunder in the order
in which such payment or benefit would be paid or provided (beginning with such
payment or benefit that would be made last in time and continuing, to the extent
necessary, through to such payment or benefit that would be made first in time)
and, then, reducing any benefit to be provided in-kind hereunder in a similar
order.  The determination as to whether any such reduction in the amount of the
payments and benefits provided hereunder is necessary shall be made by the
Company in good faith.  If a reduced payment or benefit is made or provided and
through error or otherwise that payment or benefit, when aggregated with other
payments and benefits from the Company or any of its affiliates used in
determining if a “parachute payment” exists, exceeds one dollar ($1.00) less
than three times Employee’s base amount, then Employee shall immediately repay
such excess to the Company upon notification that an overpayment has been made. 
Nothing in this Section 24 shall require the Company to be responsible for, or
have any liability or obligation with respect to, Employee’s excise tax
liabilities under Section 4999 of the Code.

 

25.  Clawback. To the extent required by applicable law or any applicable
securities exchange listing standards, amounts paid or payable under this
Agreement shall be subject to the provisions of any applicable clawback policies
or procedures adopted by the Company, which clawback policies or procedures may
provide for forfeiture and/or recoupment of amounts paid or payable under this
Agreement. 

 

 16 

 

 

26.  Indemnification. In the event that Employee is made a party or threatened
to be made a party to any action, suit, or proceeding (a “Proceeding”), other
than any Proceeding initiated by Employee or the Company related to any contest
or dispute between Employee and the Company or any of its subsidiaries, by
reason of the fact that Employee is or was a director or officer of, or was
otherwise acting on behalf of, the Company, any member of the Company Group, or
any other entity at the request of the Company, Employee shall be indemnified
and held harmless by the Company, to the maximum extent permitted under
applicable law, from and against any and all liabilities, costs, claims and
expenses, including any and all costs and expenses incurred in defense of any
Proceeding, and all amounts paid in settlement thereof after consultation with,
and receipt of approval from, the Company, which approval shall not be
unreasonably withheld, conditioned or delayed. Costs and expenses incurred by
Employee in defense of such Proceeding shall be paid by the Company in advance
of the final disposition of such litigation upon receipt by the Company of: (i)
a written request for payment; (ii) appropriate documentation evidencing the
incurrence, amount and nature of the costs and expenses for which payment is
being sought; and (iii) an undertaking adequate under applicable law made by or
on behalf of Employee to repay the amounts so paid if it shall ultimately be
determined that Employee is not entitled to be indemnified by the Company under
this Agreement. The rights to indemnification and advancement of costs and
expenses provided in this Section 26 are not and will not be deemed exclusive of
any other rights or remedies to which Employee may at any time be entitled under
applicable law, the organizational documents of the Company or any of its
subsidiaries, any agreement or otherwise, and each such right under this Section
26 will be cumulative with all such other rights, if any.

 

27.  Directors’ and Officers’ Insurance. During the Employment Period, the
Company or any successor to the Company hereunder shall purchase and maintain,
at its own expense, directors’ and officers’ liability insurance providing
coverage to Employee on terms that are no less favorable than the coverage
provided to other similarly situated directors and senior officers of the
Company.

 

28.  Effect of Termination. The provisions of Sections 7, 9-14 and 22 and those
provisions necessary to interpret and enforce them, shall survive any
termination of this Agreement and any termination of the employment relationship
between Employee and the Company.

 

29.  Third-Party Beneficiaries. Each member of the Company Group that is not a
signatory to this Agreement shall be a third-party beneficiary of Employee’s
obligations under Sections 8, 9, 10, 11 and 12 and shall be entitled to enforce
such obligations as if a party hereto.

 

30.  Severability. If an arbitrator or court of competent jurisdiction
determines that any provision of this Agreement (or portion thereof) is invalid
or unenforceable, then the invalidity or unenforceability of that provision (or
portion thereof) shall not affect the validity or enforceability of any other
provision of this Agreement, and all other provisions shall remain in full force
and effect.

 

[Remainder of Page Intentionally Blank;
Signature Page Follows]

 

 17 

 

 

IN WITNESS WHEREOF, Employee and the Company each have caused this Agreement to
be executed and effective as of the Effective Date.

 

EMPLOYEE       /s/ Michael I. Ruxin, M.D.   Michael I. Ruxin, M.D.  

 

AVANT DIAGNOSTICS, INC.         By: /s/ Scott VanderMeer   Name: Scott
VanderMeer   Title: Interim Chief Financial Officer  

 

Signature Page to

Employment Agreement