EXECUTION VERSION


 


EMPLOYMENT AGREEMENT


 


This Employment Agreement
(the “Agreement”) is entered into effective as of October 31, 2012 (the “Effective Date”)
between Signal Genetics, LLC (the “Company” or “SG”) and Samuel D. Riccitelli (“Executive”).
(Executive and the Company are referenced collectively herein as the “Parties.”)


 


RECITALS


 


A.           SG
is currently in the process of developing and will be operating clinical laboratories and affiliated administrative services. SG
also is in the midst of raising money and obtaining funding for the operations of its business and facilities, including an intended
initial capital raise of twenty-five million dollars ($25,000,000) (hereinafter referenced as the “Initial Capital Raise”).
The period until the Initial Capital Raise is fully funded shall be referenced herein as the “Initial Capital Raise Period.”


 


B.           SG
desires to retain Executive as President and Chief Executive Officer to manage and oversee certain business, financial and administrative
aspects of the Company, and Executive desires to be employed by SG, in accordance with the terms and conditions of this Agreement.


 


NOW, THEREFORE, in
consideration of the above recitals and the mutual promises contained in this Agreement, the Parties agree as follows:


 


ARTICLE I.


 


EMPLOYMENT AND DUTIES
OF EXECUTIVE


 


1.1           Employment.
SG hereby employs Executive as President and Chief Executive Officer (“CEO”) and Executive accepts employment
as CEO of SG in accordance with the terms and conditions, and for the consideration, provided in this Agreement.


 


1.2           Employment
Period. The term of this Agreement shall commence on the Effective Date and shall continue for a period of three (3) years
thereafter (the “Initial Term”), subject to the termination provisions set forth in this Agreement. On each
anniversary of the Effective Date after the Initial Term, this Agreement and Executive’s employment shall be deemed to have
been automatically extended for an additional one (1) year term or such other period as mutually agreed to between the Parties
unless either Party shall give written notice of non-extension to the other Party at least thirty (30) days before such anniversary
date, or unless sooner terminated as provided in this Agreement. Executive’s total term of employment with the Company under
this Agreement during the Initial Term and any extended term is collectively defined and referred to as the “Employment
Period.”


 




    	 



    	 



    

 


1.3           Duties
of CEO.


 


 


1.3.1           During
the Employment Period, Executive (i) shall have the title of CEO, (ii) shall devote his full business time and attention and expend
his best efforts, energies and skills on a full-time basis to the business of the Company, and shall not engage in any other activity
that would materially interfere with the performance of his duties under this Agreement (provided that Executive is permitted to
continue to serve on the board of directors of Exagen Diagnostics, Inc., as well as any other board of directors to the extent
that doing so does not create any conflict of interest with Executive’s obligations or duties under this Agreement, subject
to approval of the Manager of the Company (Bennett S. LeBow) or his designee (the “Manager”), such approval not to
be unreasonably withheld, or to engage in endeavors related to the community, his faith, personal finances and effects and other
charitable functions that do not materially interfere with the performance of his duties hereunder), and (iii) shall perform such
duties, and comply with all reasonable directions and instructions of the Manager.


 


1.3.2           During
the Employment Period, (i) Executive will report only to the Manager, (ii) Executive will be the Company’s most senior and
highest-ranking executive (other than the Manager), and (iii) all other Company senior executives and employees (other than the
Manager) will report to Executive.


 


1.3.3           Subject
to the provisions of Section 2.1(B), during the Employment Period but after the Initial Capital Raise Period, Executive shall have
San Diego, California, as his primary and principal business location and, as such, the Company shall provide Executive, solely
at the Company’s own expense, with a mutually agreed-upon office in San Diego for Executive. Executive acknowledges that
he will be obligated to render services hereunder wherever such services are reasonably required by the Company, which may necessitate
substantial travel by Executive, including, without limitation travel necessary to meet with the Manager.


 


1.3.4           In
performing Executive’s duties hereunder, Executive shall in all material respects (i) abide by and comply with all applicable
laws, statutes, orders, rules, regulations, policies or guidelines promulgated, or judgments, decisions or orders entered, by any
court, arbitrator tribunal, administrative agency, or commission or other governmental or regulatory body, agency or instrumentality
or authority relating to the Company, (ii) abide by and adhere to the Company’s general policies and procedures as may be
adopted from time to time and (iii) conduct himself with respect to the Company with the prudence, care, dedication and skill as
would be manifested by one in the operation and management of his own assets and properties and in this regard shall owe a fiduciary
duty of prudence and dedication and care to the Company.


 


1.4           Principal
Employment.


 


1.4.1           Executive
agrees that his position as CEO of the Company shall be his principal employment and that he will not subordinate that position
to any other employment.


 


1.4.2           Executive
agrees that, during his employment with the Company, he will not engage in any matter whatsoever in a business or other endeavor
that would or might reasonably interfere with his duties or that is competitive with or similar in nature to the business of the
Company. Nonetheless, Executive shall have the right to own up to 3% of the outstanding shares of a publicly held company if such
shares are actively traded on a national stock exchange and he is not involved in the management of such company. Specifically
excluded from the restrictions set forth in this Section, and other provisions of this Agreement, is Executive’s ability
(as expressly permitted by the Company hereby) to continue to serve on the board of directors of Exagen Diagnostics, Inc.


 




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ARTICLE II.


 


COMPENSATION AND
BENEFITS


 


2.1           Compensation.
For all services rendered and required to be rendered by, covenants of and restrictions in respect to, Executive under this Agreement,
SG shall compensate Executive as follows:


 


A.           CEO
Base Salary. The Company shall pay to Executive during and with respect to the Employment Period, and Executive agrees to accept,
annual base salary (“Base Salary”) equal to $450,000, payable on a semi-monthly basis in accordance with the standard
payroll practices of the Company. Base salary will be re-evaluated on an annual basis and subject to a merit increase, pursuant
to the normal practices of the Company.


 


B.           Corporate
Apartment; New York Presence. During the Initial Capital Raise Period, the Company shall provide Executive, solely at the Company’s
own expense, with a mutually agreed-upon corporate apartment in New York City. The Company will gross up Executive’s salary
during the applicable tax year(s) to cover the income tax liability incurred by Executive for the receipt of such apartment. During
the Initial Capital Raise Period, Executive shall be required to be in New York a total of two (2) weeks (10 days) per month, taking
into consideration Executive’s full-time residence in San Diego, California. However, Executive recognizes and understands
that there will be months during this Initial Capital Raise Period when he will need to be in New York or other locations for business
purposes for more than the two-week period of time addressed above.


 


C.           Incentive
Units. Executive shall receive a grant of Class B Incentive Units representing up to 20% of the outstanding equity of SG, calculated
before the Initial Capital Raise. The terms of the distribution of the Incentive Units to Executive, including the vesting schedule
and other applicable relevant terms, are set forth in the Incentive Units Agreement, attached hereto as Exhibit “A.”


 


2.2           Benefits.
Commencing on the Effective Date, Executive will be entitled to participate in all of the Company’s benefit plans, as applicable.


 


A.           Paid
Time Off. For each calendar year during the Employment Period, Executive shall be entitled to paid time off (“PTO”)
at the rate consistent with the SG accrual rate for paid time off for SG senior executives. As such, Executive shall be entitled
to 4 weeks of paid vacation time (which equates to 20 days / 160 hours per year), as well as sick leave and personal leave pursuant
to the SG policies applicable to senior executives. Such PTO will be accrued on a pro-rata basis during the initial calendar year
of the Employment Period and will otherwise be subject to the Company’s policies and procedures , as in effect from time
to time.


 




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B.           Fringe
Benefits. Executive shall be entitled to receive the same employee benefits as are provided by the Company to other executive
employees. Such benefits shall include group health insurance, group life insurance, and disability insurance coverage, and also
may include such items as retirement plans and similar plans in effect from time to time. Attached as Exhibit B is a description
of applicable employee fringe benefits. Executive’s participation in the foregoing plans, and applicable perquisites, will
be at the highest level and on terms no less favorable than afforded to other senior executives of the Company commensurate with
Executive’s level.


 


C.           Civic
Affairs, Service Clubs and Social Functions. The Parties agree that Executive’s participation in civic affairs, service
clubs, professional organizations, and social functions is appropriate for the proper professional administration of the Company.
The Executive may participate in such affairs, professional organizations, clubs and functions as the Executive determines are
appropriate to enhance the operations and professional stature of the Company. SG shall reimburse Executive for reasonable expenses
incurred while representing the Company pursuant to this Agreement.


 


2.3           Reimbursement
of Expenses. During the Employment Period, Executive will be reimbursed for all reasonable business expenses, including travel
and entertainment expenses, incurred in the performance of his duties, responsibilities, or services performed for the Company,
upon presentation by Executive of the documentation, expense statements, vouchers, and such other supporting information as SG
may request or as may be consistent with SG practices. Executive will comply with the Company’s policies in incurring and
seeking reimbursement for such expenses.


 


ARTICLE III.


 


TERMINATION


 


3.1           Termination.
In addition to the expiration of the Employment Period, this Agreement may be terminated in the following circumstances:


 


A.           Termination
For Cause. SG may, at any time during the Employment Period by written notice to Executive (the “Termination Notice”),
terminate the Employment Period for uncured “Cause” effective immediately. The Termination Notice shall specify the
reason for termination. In such an event, Executive’s sole remedy shall be to collect all unpaid Base Salary, all accrued
PTO and all unreimbursed expenses payable for all periods through the effective date of termination, as well as any amount arising
from Executive’s participation in, or benefits under, any employee benefit plan, program or arrangement, payable in accordance
with the terms of such SG employee benefit plans, programs or arrangements. Executive shall not be entitled to earn or accrue any
compensation or other amount from the Company after the effective date of termination. The foregoing amounts shall be paid on the
date of termination.


 


For purposes hereof,
“Cause” as utilized herein shall mean:


 


(i)          Expiration
of the term of this Employment Agreement;


 




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(ii)         A
material breach by Executive of his fiduciary duty to SG that results in material harm to the Company;


 


(iii)        A
material breach by Executive of the terms of this Employment Agreement or any other agreement between Executive and SG, which remains
uncured for a period of 30 days following the receipt of written notice specifying the nature of the breach;


 


(iv)        The
willful commission by Executive of any act of embezzlement, fraud, larceny or theft on or from SG;


 


(v)         Substantial
and continuing willful neglect or inattention by Executive of the duties of his employment, refusal to perform the lawful and reasonable
directives of the Manager or the willful misconduct or gross negligence of Executive in connection with the performance of such
duties which remain uncured for a period of 30 days following the receipt of written notice specifying the nature of the breach:


 


(vi)        The
willful commission by Executive of any crime involving moral turpitude or a felony; and


 


(vii)       Executive’s
performance or omission of any act which, in the judgment of the Manager, if known to the customers, clients, stockholders or any
regulators of SG, would have a material adverse impact on the business of SG.


 


B.           Termination
Without Cause. The Company may terminate this Agreement at any time for any reason, by delivering a written notice to Executive,
effective thirty (30) days after Executive receives such notice in accordance with the terms hereof. In such an event, Executive’s
sole remedy shall be:


 


(1)         to
collect all unpaid Base Salary, accrued annual bonus or incentive compensation (including any unpaid, accrued annual bonus or incentive
compensation from the immediately preceding year), accrued PTO, and all unreimbursed expenses payable for all periods through the
effective date of termination (the foregoing amounts shall be paid on the date of termination of Executive’s employment);
plus


 


(2)         Executive
shall receive, in addition to the amounts specified above, the severance payments outlined below (the “Severance Payments”).
Executive shall not be required to mitigate the amount of any Severance Payments received by seeking other employment during the
term of the severance period. However, should Executive obtain other employment during the term of the severance period, SG shall
pay Executive, for the remaining length of the severance period, only the difference between his new salary and his Base Salary
(as in effect at the time of termination), if the new salary is less than his Base Salary. For the avoidance of doubt, the Company
shall not be obligated to make any Severance Payments thereafter if the new salary is greater than his applicable Base Salary.


 


The Severance
Payments shall be calculated as follows:


 




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(a)          should
the termination occur during the Initial Capital Raise Period, Executive shall continue to receive his then-current Base Salary
for a period of three (3) months;


 


(b)          should
the termination occur during the one-year period immediately following the final day of the Initial Capital Raise Period, Executive
shall continue to receive his then-current Base Salary for a period of six (6) months; and


 


(c)          should
the termination occur at any time during the Employment Period after the one-year period immediately following the final day of
the Initial Capital Raise Period, Executive shall continue to receive his then-current Base Salary for a period of twelve (12)
months.


 


The Severance
Payment (less all applicable withholdings) will be paid in equal monthly installments over the applicable period immediately following
termination of Executive’s employment, as applicable. The Company shall reimburse Executive for premiums for COBRA coverage
for Executive (and to the extent he has family coverage, his family), provided that Executive elects such coverage, during the
applicable period when Executive is receiving Severance Payments. Should Executive obtain other employment during such period of
COBRA coverage, and Executive is provided the opportunity to obtain comparable health insurance benefits to those benefits provided
by SG, then the Company shall no longer reimburse Executive for premiums for COBRA coverage for Executive (and to the extent he
has family coverage, his family), from the date Executive may obtain such health insurance benefits, whether or not Executive elects
such coverage. The Company shall be entitled to discontinue the Severance Payments in the event that Executive violates any of
the provisions of Sections 4.9, 4.10 or 4.11.


 


C.           Termination
After Disability or Death.


 


(1)         In
the event Executive becomes totally disabled or disabled such that he is rendered unable to perform substantially all of his usual
duties for the Company in a manner consistent with his performance prior to such disability, and if such disability shall persist
for a continuous period of one hundred eighty (180) days or more, or an aggregate period in excess of one hundred eighty (180)
days in any one fiscal year, the Company shall have the right at any time after the end of such period during continuance of Executive’s
disability by the delivery of not less than 30 days’ prior written notice to Executive to terminate Executive’s employment
under this Agreement whereupon the applicable provisions of this Section below shall apply.


 




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(2)         For
purposes of this Agreement, if Executive and the Company disagree as to whether Executive is totally disabled, or disabled such
that he is rendered unable to perform substantially all of his usual duties for the Company as set forth above, or as to the date
at which time such total disability began, the decision of a licensed medical practitioner, mutually agreed upon by the Parties,
shall be binding as to both questions. If the Parties cannot agree as to the identity of the licensed medical practitioner, Executive
shall select a licensed medical practitioner of his choice and the Company shall select a licensed medical practitioner of its
choice. The two licensed medical practitioners so selected shall select a third licensed medical practitioner, which third individual
shall resolve either or both of the questions referred to above and which resolution shall be binding upon the Parties. The costs
of such a third licensed medical practitioner shall be borne by the Company.


 


(3)         If
Executive’s employment with the Company is terminated on account of Executive’s disability as provided for in this
Section above or on account of Executive’s death, then Executive (or Executive’s estate or personal representative,
as applicable) shall be entitled only to receive, and Company shall pay to Executive (or Executive’s estate or personal representative,
as applicable) the following amounts:


 


(a)          all
unpaid Base Salary, accrued annual bonus or incentive compensation (including any unpaid, accrued annual bonus or incentive compensation
from the immediately preceding year), accrued PTO, and all unreimbursed expenses payable for all periods through the effective
date of termination (the foregoing amounts shall be paid on the date of termination of Executive’s employment); plus


 


(b)          in
the case of disability only, Executive shall receive, in addition to the amounts specified above, for a period of six months (“Continuation
Period”), a series of monthly payments equal to the then-current monthly Base Salary payments he received during his employment
(the “Continuation Payments”). Executive shall be entitled to the Continuation Payments if and only if he does not
receive any payments as a result of the short-term and long-term disability insurance benefits that the Company obtains on his
behalf, pursuant to Section 2.2(B) of this Agreement (“Insurance Payments”).


 


The Continuation
Payments will be paid in equal installments over the applicable period immediately following termination of Executive’s employment.
However, should Executive be provided such Insurance Payments, then SG shall pay Executive, during the Continuation Period, only
the difference between the Insurance Payments provided to Executive and his Base Salary, if the payments provided are less than
his Base Salary. In any event, Executive is not entitled to receive more than the full amount of his Base Salary with SG for the
time period covered by the Continuation Period. Accordingly, if Executive obtains such Insurance Payments for any portion of the
Continuation Period, then Executive shall inform SG of the amounts of such Insurance Payments so that SG may take an offset of
such amounts from any future Continuation Payments, if any. Moreover, if Executive obtains such Insurance Payments for any portion
of the Continuation Period, at any time after SG pays Continuation Payments to Executive, Executive shall make payment to SG of
an amount equal to the amount of received Insurance Payments to reimburse SG for such Continuation Payments it previously made
or otherwise inform SG of such Insurance Payments so that SG may take an offset of such amounts from any future Continuation Payments,
if any.


 




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D.           Termination
by Executive for “Good Reason”. Executive shall have the right to terminate his employment under this Agreement,
and collect all unpaid Base Salary, accrued annual bonus or incentive compensation (including any such unpaid, accrued compensation
from the immediately preceding year), accrued PTO and all unreimbursed expenses payable for all periods through the effective date
of termination (the foregoing amounts shall be paid on the date of termination of Executive’s employment); plus receive the
Severance Payment and the applicable payments for COBRA coverage, as set forth in Section 3.1(B)(3) above, by the delivery of written
notice to the Company within 30 days after the initial existence of any of the events herein below defined as Good Reason.


 


For purposes hereof, “Good Reason”
as utilized herein shall mean:


 


(i)          the
Company has materially breached this Agreement and the Company has failed to cure or remedy such breach after 30-days written notice
from Executive;


 


(ii)         there
has occurred any material and substantial diminution or reduction in duties, Base Salary, title, health care coverage (but only
if such diminution is disproportionate to a diminution in health care coverage applicable to other employees of the Company), authority
or responsibilities of Executive, whether in scope or nature, and the Company has failed to cure or remedy such breach after 30-days
written notice from Executive; and


 


(iii)        the
Company has required that Executive perform any act or refrain from performing any act that would be in violation of applicable
law.


 


Notwithstanding anything
to the contrary herein, Executive must resign within thirty (30) days after expiration of the 30-day period following written notice
without cure or remedy by the Company for such resignation to constitute a Termination for Good Reason.


 


E.           Termination
by Executive Without “Good Reason.” Executive shall have the right to terminate his employment under this Agreement
at any time for any reason. However, should Executive terminate his employment with the Company for any reason other than for Good
Reason, as defined in Section 3.1(D) above, Executive shall be entitled to collect from the Company only all unpaid Base Salary,
all accrued PTO and all unreimbursed expenses payable for all periods through the effective date of termination and Executive shall
not be entitled to any compensation or other amount from the Company after the effective date of termination. The foregoing amounts
shall be paid on the date of termination.


 




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Under such circumstances,
Executive may terminate this Agreement, only by delivering a written notice to the Company, effective no less than 45 days after
the Company receives such notice in accordance with the terms hereof.


 


ARTICLE IV.


 


MISCELLANEOUS PROVISIONS


 


4.1           Notice.
All notices, requests, demands, consents, and other communications required or permitted to be given or made hereunder shall be
in writing and shall be deemed to have been duly given and received, (i) if delivered by hand, the day it is so delivered, (ii)
if mailed via the United States mail, certified or registered first class mail, postage prepaid, return receipt requested, five
business days after it is mailed, or (iii) if sent by a nationally recognized overnight courier for next business day delivery,
the business day after it is sent, to the Party to whom the same is so given or made, as follows: (a) to the Company, at its administrative
offices and (b) to Executive, at the address maintained on the personnel records of the Company. Either Party may change the address
to which notice is required to be sent by providing notice of the change of address in accordance with this Agreement.


 


4.2           Headings.
All descriptive headings in this Agreement are inserted for convenience only and shall be disregarded in construing or applying
any provision of this Agreement.


 


4.3           Counterparts.
This Agreement may be executed in counterparts (including via e-mail with scan attachment or by facsimile transmission), and when
each Party has signed and delivered at least one such counterpart, each counterpart shall be deemed an original, and, when taken
together with other signed counterparts, shall constitute one Agreement, which shall be binding upon and effective as to all Parties.


 


4.4           Severability.
In the event that any term or provision of this Agreement, or part thereof, is held to be invalid, such invalidation shall not
affect the validity of the remainder of this Agreement. Further, the invalid provision shall be modified by the minimum amount
legally required to make the provision valid and enforceable and to carry out the purposes of this Agreement. Moreover, the remainder
of such provision and this Agreement, as the case may be, shall nevertheless remain in full force and effect.


 


4.5           Entire
Agreement. This Agreement contains the entire agreement and understanding among and between the Parties with respect to the
subject matter hereof, and supersedes any prior agreement and understanding among them with respect to the subject matter of this
Agreement. Except as otherwise provided herein, this Agreement cannot be changed or terminated except by an instrument in writing
signed by the Parties hereto. Any oral representations, modifications or amendments concerning this Agreement shall be of no force
or effect unless contained in a subsequent written modification signed by the Executive and a duly authorized representative of
the Company.


 




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4.6           Personal
Services Contract. This contract is a personal services contract and Executive may not assign any portion of his responsibilities
under this Agreement. However, Executive shall have the right, after consultation with the Manager, to reasonably delegate appropriate
administrative duties to any person who is an employee of the Company.


 


4.7           Binding
on Successors. This Agreement shall be binding upon, and inure to the benefit of, each Party’s successors, transferees,
heirs and assigns, only to the extent that such is permitted by this Agreement. It shall be binding on the Company and its officers,
directors, and employees and shall not be affected by any change of name, change of geographical location, change of form, or acquisition
by or merger with any other entity.


 


4.8           Indemnification.
The Company recognizes that the activities within the scope of Executive’s employment create the potential in some jurisdictions
of civil or even criminal actions being brought against Executive. To the fullest extent provided by applicable Delaware law and
the Company’s organizational and controlling documents, and consistent with any indemnification provided to other Company
executive employees under any applicable insurance policies, including its professional liability coverage for directors and officers
and for acts and omissions relating to employees’ administrative duties, the Company shall indemnify, defend, protect and
hold harmless Executive, from and against all claims, demands, causes of action, actions, suits, costs, damages, penalties, fines,
liabilities, losses and expenses, whether civil or criminal, including, without limitation, reasonable attorneys’ fees and
expenses, arising out of or resulting from the performance of Executive’s duties within the course and scope of Executive’s
employment with the Company.


 


4.9           Confidentiality;
Disclosure of Information.


 


(a)          Executive
recognizes and acknowledges that he will have access to Confidential Information (as defined below) relating to the business or
interests of the Company or of persons with whom the Company may have business relationships. Except as permitted herein or as
may be approved by the Company from time to time, Executive will not during the Employment Period or for a period of 12 months
thereafter, use or disclose to any other person or entity, any Confidential Information of the Company (except as required by applicable
law or in connection with performance of Executive’s duties and responsibilities hereunder or to Executive’s legal
and financial advisors so long as such advisors agree to be bound by the terms and conditions of this Paragraph 4.9(a)). Executive
may disclose the existence of the obligations under this Paragraph 4.9(a) to future employers. If Executive is requested or becomes
legally compelled to disclose any of the Confidential Information, he, if permitted by applicable law, will give prompt notice
of such request or legal compulsion to the Company. The Company may waive compliance with this Paragraph 4.9(a) or will provide
Executive with legal counsel at no cost to Executive to seek an appropriate remedy; provided however Executive may disclose any
Confidential Information in the event notwithstanding all such efforts of the Company and such legal counsel if compelled by court
order to do so.


 




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The term “Confidential
Information” shall mean information relating to the Company’s business affairs, proprietary technology, trade secrets,
patented processes, research and development data, know-how, market studies and forecasts, competitive analyses, pricing policies,
executive lists, employment agreements (other than this Employment Agreement), personnel policies (including compensation paid
to employees and consultants), the substance of agreements with patients, customers, suppliers, and others, marketing arrangements,
patient lists, customer lists, commercial arrangements, or any other information relating to the Company’s business which
is treated as confidential or proprietary by the Company in accordance with its policies. Notwithstanding the immediately preceding
sentence, the provisions of this Paragraph 4.9(a) shall not apply to any information that: (1) is in the public domain; (2) is
or becomes available to the public other than as a result of a disclosure by Executive in violation of this Paragraph 4.9(a); (3)
was available to Executive on a non-confidential basis prior to the date of this Employment Agreement; or (4) becomes available
to Executive on a non-confidential basis from a source other than the Company (other than through a known breach of a confidentiality
obligation). This obligation shall continue until such Confidential Information becomes publicly available, other than pursuant
to a breach of this Paragraph 4.9(a) by the Executive, regardless of whether the Executive continues to be employed by the Company.


 


(b)          It
is further agreed and understood by and between the Parties to this Agreement that all “Company Materials,” which include,
but are not limited to, computers, computer software, computer disks, tapes, printouts, source, HTML and other codes, flowcharts,
schematics, designs, graphics, drawings, photographs, charts, graphs, notebooks, patient lists, customer lists, sound recordings,
other tangible or intangible manifestation of content, and all other documents whether printed, typewritten, handwritten, electronic,
or stored on computer disks, tapes, hard drives, or any other tangible medium, as well as samples, prototypes, models, products
and the like shall be the exclusive property of the Company and, upon termination of Executive’s employment with the Company,
and/or upon the written request of the Company, all Company Materials, including copies thereof, as well as all other property
of the Company then in Executive’s possession or control, shall be returned to and left with the Company.


 


4.10         Intellectual
Property: Definition. Intellectual Property means any of the following that are conceived of, developed, reduced to practice,
created, modified, or improved by Executive, either solely or with others, in whole or in part, in the course of, or as a result
of, the Executive’s employment by the Company in any capacity, whether at the Company’s place of business or otherwise,
and whether on the Company’s time or on the Executive’s own time: (i) writings (including notes, reports, manuals and
instructions), software, source code, algorithms, works and copyrightable subject matter and rights, title and interest in copyrights
and copyright registrations, (ii) rights, title and interest in know-how, technical information, processes, practices and systems,
whether or not protectable by patent, copyright or trade secret law, (iii) trademarks, trade names, service marks, emblems, logos,
symbols and insignia and rights with respect thereto, including registrations and registration rights, (iv) all developments, including
trade secrets of any kind, discoveries, improvements, and ideas directly relating to or useable in the Company business and (v)
licenses granted by third parties of rights to use any of the foregoing.


 


(a)          Intellectual
Property shall be the exclusive property of the Company, and Executive shall have no right, title, or interest in, or to, the Intellectual
Property. The Company shall have the sole and exclusive right, title, and interest in, and to, the Intellectual Property, which
right shall continue notwithstanding the cessation of Executive’s employment. Executive also hereby irrevocably waives any
“moral rights” that Executive may have in the Intellectual Property, and confirms that the Company shall have the right,
in addition to the other rights granted hereunder and notwithstanding the termination of Executive’s employment for any reason,
to make or have made, and own, enhancements, derivative works, and other modifications to any part of the Intellectual Property.


 




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(b)          Executive
hereby assigns to the Company any right, title, and interest that Executive may have in, and to, the Intellectual Property in any
patent, copyright, industrial design, trademark registration, and any other similar right pertaining to the Intellectual Property
which Executive may have.


 


(c)          Executive
acknowledges that the assignments in (b) above are undertaken in part as a contingency against the possibility that any Intellectual
Property, by operation of law, may not be considered a work made for hire by the Executive for the Company. The Company and its
successors and assigns, shall have the right to obtain and hold in their own name all copyright registrations, patents, and other
evidence of rights that may be available for the Intellectual Property and/or any portion thereof. Executive further acknowledges
that all United States copyrights and all other intellectual property rights in the Intellectual Property (including any and all
patents that may issue with respect thereto) shall be exclusively owned by the Company and shall be considered “works made
for hire,” as such term is defined in the United States Copyright Act, by Executive for the Company.


 


(d)          Executive
hereby covenants and binds Executive and Executive’s successors, assigns and legal representatives to cooperate fully and
promptly with the Company and its designees, successors, and assigns, at the Company’s reasonable expense, and to do all
acts necessary or requested by the Company and its designee, successors, and assigns, to secure, maintain, enforce, and defend
the Company’s rights in the Intellectual Property. Without limitation to the foregoing, Executive shall execute on demand,
and bind Executive and Executive’s successors, assigns and legal representatives, whether during Executive’s employment
or at any time following the cessation of Executive’s employment, to any applications, transfers, assignments, and other
documents as the Company may consider necessary for the purpose of: (i) obtaining, maintaining, vesting in, or assigning to, the
Company absolute title to, (ii) applying for, prosecuting, obtaining, or protecting, or (iii) maintaining, enforcing, and/or defending
the Company’s rights in, any patent, copyright, industrial design, trademark registration, or any other right pertaining
to the Intellectual Property in any countries in the world. Executive further agrees, and binds Executive and Executive’s
successors, assigns and legal representatives, to cooperate fully and assist the Company in every way possible in the application
for, or prosecution of, such rights pertaining to the Intellectual Property and not developed during Executive’s employment
with the Company.


 


(e)          Executive
shall promptly disclose to the Company any patent application filed within one (1) year after termination of Executive’s
employment with the Company. Executive shall have the burden of proving that any invention that relates, or pertains, to the Company’s
business, and which is conceived less than one (1) year after the effective date of the termination of Executive’s employment
relationship, was in fact made after such termination and not developed during Executive’s employment with the Company. Executive
agrees that, during his employment with the Company, he will disclose to the Company all ideas, proposals, and plans, invented
or developed by him, which relate to the business of the Company and its subsidiaries.


 




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4.11         Non-Competition
and Non-Solicitation. Executive acknowledges that the Company has invested substantial time, money and resources in the development
and retention of its Confidential Information (including trade secrets), customers, patients, accounts and business partners, and
further acknowledges that, during the course of Executive’s employment with the Company, Executive will have access to the
Company’s Confidential Information (including trade secrets), and will be introduced to existing and prospective customers
and patients that are being targeted, vendors, accounts and business partners of the Company. Executive acknowledges and agrees
that any and all “goodwill” associated with any existing or prospective customer or patient that is being targeted,
vendor, account or business partner belongs exclusively to the Company, including, but not limited to, any goodwill created as
a result of direct or indirect contacts or relationships between Executive and any existing or prospective customers or patients
that are being targeted, vendors, accounts or business partners. Additionally, the Parties acknowledge and agree that Executive
possesses skills that are special, unique or extraordinary and that the value of the Company depends upon his use of such skills
on its behalf. Executive acknowledges that as a result of the foregoing the restrictions contained herein and elsewhere in this
Agreement are reasonably necessary to protect the Company from unfair competition by the Executive.


 


In recognition of this,
Executive covenants and agrees that:


 


(a)          During
Executive’s employment with the Company and for one year after the termination of Executive’s employment for any reason,
Executive shall not be employed by, or render any services to, any person, firm or corporation engaged in any business which is
directly or indirectly in competition with the Company anywhere in the world where the Company performs services for its clients
(“Competitive Business”), (ii) engage in any Competitive Business for his or its own account; (iii) be associated with
or interested in any Competitive Business (whether as an executive, agent, servant, owner, partner, consultant, independent contractor,
representative, stock or equity holder, lender or in any other capacity whatsoever). Specifically excluded from the restrictions
set forth in this Section, and other provisions of this Agreement, is Executive’s ability (as expressly permitted by the
Company hereby) to continue to serve on the board of directors of Exagen Diagnostics, Inc. However, the non-compete aspects of
this Section 4.11(a) will remain in effect only during the applicable time period when Executive is receiving a Severance Payment.
As such, the non-compete aspects of this Section 4.11(a) shall not apply to any period that follows the cessation of Severance
Payments to Executive. For the avoidance of doubt the non-solicitation provisions of Sections 4.11(b) and (c) are in effect and
shall apply for the specified time periods irrespective of whether Executive is receiving a Severance Payment.


 


(b)          During
Executive’s employment with the Company and for one year thereafter, Executive may not directly or indirectly induce, attempt
to induce, solicit, attempt to solicit or encourage any employee, consultant, or contractor to leave the employment or engagement
with the Company or any affiliate of the Company.


 




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(c)          During
Executive’s employment with the Company and for one year thereafter, Executive may not, directly or indirectly, induce, attempt
to induce, solicit, attempt to solicit or encourage any customer, client, subscriber or supplier of the Company to change its relationship
with the Company, or interfere with the Company’s business, relationships or prospective relationships with any person or
entity that was or is expected to become a customer or client of the Company. As such, Executive agrees that he will not divert
or take advantage of any actual or potential business opportunities of the Company in which it has a current interest or is actively
pursuing.


 


4.12         Non-Disparagement;
Non-Disclosure. Executive and the Company hereby agree that during the Employment Period and at all times thereafter, neither
Executive nor the Company will make any public statement, or engage in any conduct, that is disparaging, derogatory, or otherwise
is a negative or false statement about the other Party or, in the case of the Company, about any of its executives, officers, directors,
or shareholders, including, but not limited to, any statement that disparages the products, services, finances, financial condition,
capabilities or any other aspect of the business of the Company and the capabilities of Executive. Notwithstanding any term to
the contrary herein, neither Executive nor the Company shall be in breach of this Paragraph 4.12 for the making of any truthful
statements under oath or in a judicial or other proceeding.


 


4.13         Representation.
Executive represents and warrants to the Company that (i) Executive is able to enter into this Agreement with the Company, and
Executive’s ability to enter into this Agreement and to fully perform Executive’s anticipated duties for the Company
is not limited or restricted by any agreements, understandings, instruments, orders, judgments or decrees to which Executive is
a party or by which Executive is bound and (ii) Executive’s performance of such duties for the Company will not directly
or indirectly violate any contractual or common law obligations he has or had to other employers or entities. Executive agrees
that he will not improperly use, disclose, or induce the Company to use any proprietary information or trade secrets of any former
or concurrent employer or other person or entity. Executive agrees that he will not bring onto the premises of the Company or transfer
onto the Company’s technology systems any unpublished document, proprietary information or trade secrets belonging to any
such employer, person or entity unless consented to in writing by both the Company and such employer, person or entity.


 


4.14         Applicable
Law. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive and procedural laws
of the State of New York; provided that after Initial Capital Raise the substantive and procedural laws of the State of California
shall apply. Each Party hereto hereby irrevocably submits to the jurisdiction of the state and federal courts located in New York
County, New York, and San Diego County, California and waives any claim based upon forum non-conveniens or lack of jurisdiction;
provided that after the Initial Capital Raise the state and federal courts located in San Diego County, shall have exclusive jurisdiction.


 




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IN WITNESS WHEREOF,
the Parties have executed this Agreement effective as of the date first written above.


 





	EXECUTIVE:	 	EMPLOYER:	 
	 	 	 	 
	Samuel D. Riccitelli	 	Signal Genetics, LLC	 
	 	 	 	 
	/s/ Samuel D. Riccitelli	 	By:	/s/ Bennett S. LeBow	 
	 	 	 	 
	Oct. 18, 2012	 	10/18/12	 
	Date	 	Date	 




 








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