Document:

Exhibit 4.5

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

WARRANT TO PURCHASE COMMON STOCK

	Company:	
 OncoCyte Corporation

	Number of Shares of Common Stock:	
An amount equal to $40,000 divided by the Warrant Price (the “Initial Shares”), plus all Additional Shares which Holder is entitled to purchase pursuant to Section 1.7

	Warrant Price:	
A price per share equal to the lower of (i) the average closing price of a share of Common Stock reported on the Trading Market (as defined below) for the 10 consecutive trading days, or (ii) the closing price of a share of Common Stock reported on the Trading Market for the trading day, in either case, ending immediately prior to the (x) with respect to the Initial Shares, the Issue Date, (y) with respect to the Tranche 2 Achievement Additional Shares (as defined below), the Tranche 2 Achievement Date (as defined below), or (z) with respect to all other Additional Shares, the applicable Funding Date (as defined in the Loan Agreement).

	Issue Date:	
February 21, 2017

	Expiration Date:	February 21, 2027	See also Section 5.1(b).

	Credit Facility:	
This Warrant to Purchase Common Stock (“Warrant”) is issued in connection with that certain Loan and Security Agreement of even date herewith between Silicon Valley Bank and the Company (the “Loan Agreement”).

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK (together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, “Holder”) is entitled to purchase the number of fully paid and non-assessable shares (the “Shares”) of the above-stated common stock (the “Common Stock”) of the above-named company (the “Company”) at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.  Reference is made to Section 5.4 of this Warrant whereby Silicon Valley Bank shall transfer this Warrant to its parent company, SVB Financial Group.

SECTION 1. EXERCISE.

1.1           Method of Exercise.  Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

1.2           Cashless Exercise.  On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised.  Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:

 

1

X = Y(A-B)/A

where:

	 	
X = 

	
the number of Shares to be issued to the Holder;

		Y =	
the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

		A =	
the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and

		B =	
the Warrant Price.

1.3           Fair Market Value.  If the Company’s Common Stock is then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”), the fair market value of a Share shall be the closing price or last sale price of a share of Common Stock reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company.  If the Company’s Common Stock is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

1.4           Delivery of Certificate and New Warrant.  Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.

1.5           Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

1.6           Treatment of Warrant Upon Acquisition of Company.

(a)           Acquisition.  For the purpose of this Warrant, “Acquisition” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization; or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.  For the sake of clarity, under no circumstance shall a transaction or series of related transactions between the Company and one or more consolidated subsidiaries of the Company (or the Company itself) constitute an "Acquisition," unless another party has ultimately acquired the assets or voting power described in clauses (i), (ii) or (iii).

 

2

(b)           Treatment of Warrant at Acquisition.    In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), and the fair market value of one Share as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date immediately prior to such Cash/Public Acquisition, and Holder has not exercised this Warrant pursuant to Section 1.1 above as to all Shares, then this Warrant shall automatically be deemed to be Cashless Exercised pursuant to Section 1.2 above as to all Shares effective immediately prior to and contingent upon the consummation of a Cash/Public Acquisition.  In connection with such Cashless Exercise, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as of the date thereof and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon exercise.  In the event of a Cash/Public Acquisition where the fair market value of one Share as determined in accordance with Section 1.3 above would be less than the Warrant Price in effect immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of such Cash/Public Acquisition.

(c)           Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

(d)           As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise or convert this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition.

1.7           Additional Shares.  Upon Holder’s receipt of evidence satisfactory to Holder, in its sole discretion, that the Company has achieved both the Equity Event and the Launch Event (as such terms are defined in the Loan Agreement) (the day on which Holder so receives such evidence, the “Tranche 2 Achievement Day”), the Company shall be deemed to have automatically granted to Holder, in addition to the number of Shares which this Warrant can otherwise be exercised for by Holder, the right to purchase an amount of additional Shares equal to (i) the amount of the Second Tranche (as defined in the Loan Agreement), multiplied by (ii) two percent (2%), divided by (iii) the Warrant Price, subject to adjustment pursuant to Section 2 below (such additional shares, the “Tranche 2 Achievement Additional Shares”).  In addition, upon the funding of each Growth Capital Advance under the First Tranche and the Second Tranche (as such terms are defined in the Loan Agreement), the Company shall be deemed to have automatically granted to Holder, in addition to the number of Shares which this Warrant can otherwise be exercised for by Holder, the right to purchase an amount of additional Shares equal to (i) the amount of such Growth Capital Advance, multiplied by (ii) two percent (2%), divided by (iii) the Warrant Price, subject to adjustment pursuant to Section 2 below. All such additional shares issuable under this Section 1.7 being called the “Additional Shares”).

 

3

SECTION 2.  ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

2.1           Stock Dividends, Splits, Etc.  If the Company declares or pays a dividend or distribution on the outstanding shares of the Common Stock payable in securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred.  If the Company subdivides the outstanding shares of the Common Stock by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased.  If the outstanding shares of the Common Stock are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

2.2           Reclassification, Exchange, Combinations or Substitution.  Upon any event whereby all of the outstanding shares of the Common Stock are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations, substitutions, replacements or other similar events.

2.3           Intentionally Omitted.

2.4           Intentionally Omitted.

2.5           No Fractional Share.  No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share.  If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.

2.6           Notice/Certificate as to Adjustments.  Upon each adjustment of the Warrant Price, Common Stock and/or number of Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, class and/or number of Shares and facts upon which such adjustment is based.  The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, class and number of Shares in effect upon the date of such adjustment.

 

4

SECTION 3.  REPRESENTATIONS AND COVENANTS OF THE COMPANY.

3.1           Representations and Warranties.  The Company represents and warrants to, and agrees with, the Holder as follows:

(a)           The initial Warrant Price referenced on the first page of this Warrant is not greater than the lower of (i) the average closing price of a share of Common Stock reported on the Trading Market (as defined below) for the 10 consecutive trading days, or (ii) the closing price of a share of Common Stock reporting on the Trading Market for the trading day, in either case, ending immediately prior to the Issue Date.

(b)           All Shares which may be issued upon the exercise of this Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.  The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of securities as will be sufficient to permit the exercise in full of this Warrant.

3.2           Notice of Certain Events.  If the Company proposes at any time to:

(a) declare any dividend or distribution upon the outstanding shares of the Company’s stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

(b) offer for subscription or sale pro rata to the holders of the outstanding shares any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);

(c) effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Common Stock; or

(d) effect an Acquisition or to liquidate, dissolve or wind up;

then, in connection with each such event, the Company shall give Holder:

(1) in the case of the matters referred to in (a) and (b) above, at least seven (7) Business Days prior written notice of the earlier to occur of the effective date thereof or the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Common Stock will be entitled thereto) or for determining rights to vote, if any; and

(2) in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such event giving rise to the notice).

 

5

Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements.

SECTION 4.  REPRESENTATIONS, WARRANTIES OF THE HOLDER.

The Holder represents and warrants to the Company as follows:

4.1           Purchase for Own Account.  This Warrant and the Shares to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act.  Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.

4.2           Disclosure of Information.  Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities.  Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

4.3           Investment Experience.  Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk.  Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

4.4           Accredited Investor Status.  Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

4.5           The Act.  Holder understands that this Warrant and the Shares issuable upon exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein.  Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available.  Holder is aware of the provisions of Rule 144 promulgated under the Act.

4.6           No Voting Rights.  Holder, as a Holder of this Warrant, will not have any voting rights until the exercise of this Warrant.

 

6

SECTION 5.  MISCELLANEOUS.

5.1          Term and Automatic Conversion Upon Expiration.

(a)           Term.  Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Pacific time, on the Expiration Date and shall be void thereafter.

(b)           Automatic Cashless Exercise upon Expiration.  In the event that, upon the Expiration Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares (or such other securities) issued upon such exercise to Holder.

5.2           Legends.  The Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE COMMON STOCK ISSUED BY THE ISSUER TO SILICON VALLEY BANK DATED FEBRUARY 21, 2017, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

5.3           Compliance with Securities Laws on Transfer.  This Warrant and the Shares issuable upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company).  The Company shall not require Holder to provide an opinion of counsel if the transfer is to SVB Financial Group (Silicon Valley Bank’s parent company) or any other affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act.  Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act.

 

7

5.4           Transfer Procedure.  After receipt by Silicon Valley Bank of the executed Warrant, Silicon Valley Bank will transfer all of this Warrant to its parent company, SVB Financial Group.  By its acceptance of this Warrant, SVB Financial Group hereby makes to the Company each of the representations and warranties set forth in Section 4 hereof and agrees to be bound by all of the terms and conditions of this Warrant as if the original Holder hereof.  Subject to the provisions of Section 5.3 and upon providing the Company with written notice, SVB Financial Group and any subsequent Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable directly or indirectly, upon conversion of the Shares, if any) to any transferee, provided, however, in connection with any such transfer, SVB Financial Group or any subsequent Holder will give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable); and provided further, that any subsequent transferee other than SVB Financial Group shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant.

5.5           Notices.  All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5.  All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

SVB Financial Group

Attn:  Treasury Department

3003 Tasman Drive, HC 215

Santa Clara, CA 95054

Telephone: (408) 654-7400

Facsimile:  (408) 988-8317

Email address:  derivatives@svb.com

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

	
 

	
OncoCyte Corporation

	 
	
 

	
Attn:  William Annett, Chief Executive Officer

	 
	
 

	
1010 Atlantic Avenue, Suite 102

	 
	
 

	
Alameda, CA  94501

	 
	
 

	
Telephone:

	
 

	 
	
 

	
Facsimile:

	
 

	 
	
 

	
Email:

	
 

	 

5.6           Waiver.  This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

5.7           Attorney’s Fees.  In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

5.8           Counterparts; Facsimile/Electronic Signatures.  This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement.  Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

 

8

5.9           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.

5.10         Headings.  The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

5.11         Business Days.  “Business Day” is any day that is not a Saturday, Sunday or a day on which Silicon Valley Bank is closed.

[Remainder of page left blank intentionally]

[Signature page follows]

 

9

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Common Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.

 

	
“COMPANY”

	 
	
ONCOCYTE CORPORATION

	   
	
By:

	/s/ William Annett	 
	 	 	 
	
Name:

	William Annett	 
		
(Print)

	 
	
Title:

	President & Chief Executive Officer	 

	
“HOLDER”

	 
	
SILICON VALLEY BANK

	 
	
By:

	/s/ Milo Bissin	 
	 	 	 
	
Name:

	Milo Bissin	 
	 	 	 
		
(Print)

	 
	
Title:

	VP	 

 

10

APPENDIX 1

NOTICE OF EXERCISE

1.             The undersigned Holder hereby exercises its right to purchase ___________ shares of the Common Stock of ONCOCYTE CORPORATION (the “Company”) in accordance with the attached Warrant To Purchase Common Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:

		[    ]	
Check in the amount of $________ payable to the order of the Company enclosed herewith

		[    ]	
Wire transfer of immediately available funds to the Company’s account

		[    ]	
Cashless Exercise pursuant to Section 1.2 of the Warrant

 

		[    ]	
Other [Describe]  ___________________________________________________

  

2.             Please issue a certificate or certificates representing the Shares in the name specified below:

	
 

	
 

	
 

	
 

	
Holder’s Name

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	 	
(Address)

	 

3.             By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Common Stock as of the date hereof.

	
 

	
HOLDER:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	 	
 

	
 

	
By:

	 	
 

	 	 	 	 
	 	Name:	 	 
	 	 	 	 
	 	Title:	 	 
	 	 	 	 
	 	(Date):	 	 
	 	 	 	 
	
 

	
 

	 	
 

 

 

Appendix 1Exhibit 10.26

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made as of November 1, 2016 by and between OncoCyte Corporation (“OncoCyte”), a California corporation, and Lyndal Hesterberg ("Executive").

1.         Engagement; Position and Duties.

 

(a)           OncoCyte agrees to employ Executive in the position described on Exhibit A (which Exhibit A is a part of this Agreement) effective as of the date of this Agreement. Executive shall perform the duties and functions described on Exhibit A and such other duties as the executive(s) to whom Executive reports or the Board of Directors of OncoCyte may from time to time determine.  Executive shall devote Executive’s best efforts, skills, and abilities to the business of OncoCyte and any Subsidiaries pursuant to, and in accordance with, business policies and procedures, as fixed from time to time by the Board of Directors (the “Policies”).  Executive covenants and agrees that Executive will faithfully adhere to and fulfill the Policies, including any changes to the Policies that may be made in the future.  Executive may be provided with a copy of OncoCyte’s employee manual (the “Manual”) which contains the Policies. OncoCyte may change its Policies from time to time, in which case Executive will be notified of the changes in writing by a memorandum, a letter, or an update or revision of OncoCyte’s employee manual.

 

(b)           Performance of Services for Subsidiaries.  Executive acknowledges and agrees that although OncoCyte does not have any subsidiaries as of the Effective Date, it is possible that OncoCyte will organize or acquire one or more subsidiary companies in the future, which may be wholly-owned or partially owned by OncoCyte (each a “Subsidiary”).  In addition to the performance of services for OncoCyte, Executive shall, to the extent so required by OncoCyte, also perform services for one or more Subsidiaries, provided that such services are consistent with the kind of services Executive performs or may be required to perform for OncoCyte under this Agreement.  If Executive performs any services for any Subsidiary, Executive shall not be entitled to receive any compensation or remuneration in addition to or in lieu of the compensation and remuneration provided under this Agreement on account of such services for the Subsidiary.  The Policies will govern Executive’s employment by OncoCyte and any Subsidiaries for which Executive is asked to provide Services. In addition, Executive covenants and agrees that Executive will faithfully adhere to and fulfill such additional policies governing executive officers or employees generally as may be established from time to time by the board of directors of any Subsidiary for which Executive performs services, to the extent that such policies and procedures differ from or are in addition to the Policies adopted by OncoCyte.

 

(c)           No Conflicting Obligations.  Executive represents and warrants to OncoCyte that Executive is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with Executive’s obligations under this Agreement or that would prohibit Executive, contractually or otherwise, from performing Executive’s duties as under this Agreement and the Policies.

 

(d)           No Unauthorized Use of Third Party Intellectual Property.  Executive represents and warrants to OncoCyte that Executive will not use or disclose, in connection with Executive’s employment by OncoCyte or any Subsidiary, any patents, trade secrets, confidential information, or other proprietary information or intellectual property as to which any other person has any right, title or interest, except to the extent that OncoCyte or a Subsidiary holds a valid license or other written permission for such use from the owner(s) thereof.  Executive represents and warrants to OncoCyte that Executive has returned all property and confidential information belonging to any prior employer, other than his current consulting clients.

 

2.         Compensation

(a)           Salary.  During the term of this Agreement, OncoCyte shall pay to the Executive the salary shown on Exhibit A.  Executive's salary shall be paid in equal semi-monthly installments, consistent with OncoCyte's regular salary payment practices.  Executive's salary may be increased from time-to-time by OncoCyte, in OncoCyte’s sole and absolute discretion, without affecting this Agreement.

 

(b)           Bonus.  Executive may be eligible for an annual bonus, with a target of thirty-five percent (35%) of Executive’s annual salary, as may be approved by the Board of Directors in its discretion, based on Executive's performance and achievement of goals or milestones set by the Board of Directors from time to time.  Executive agrees that the Board of Directors of OncoCyte may follow the recommendations of the Compensation Committee of the Board of Directors of OncoCyte in determining whether to award a bonus or to establish performance goals or milestones.  Executive also agrees that the Board of Directors and OncoCyte are not obligated to adopt any bonus plan, to maintain in effect any bonus plan that may now be in effect or that may be adopted during the term of Executive’s employment, or to pay Executive a bonus unless a bonus is earned under the terms and conditions of any bonus plan adopted by OncoCyte or Executive attaining the bonus performance goals for Executive established by the Board of Directors or its Compensation Committee; provided, that unless otherwise provided in a bonus plan or award, a bonus shall not be earned until paid and shall not be paid unless Executive remains an employee of OncoCyte on the date of payment.

 

(c)           Expense Reimbursements. OncoCyte or a Subsidiary shall reimburse Executive for reasonable travel and other business expenses (but not expenses of commuting to his primary workplace) incurred by Executive in the performance of Executive’s duties under this Agreement, subject to the Policies and procedures in effect from time to time, and provided that Executive submits supporting vouchers.

 

(d)           Benefit Plans.  Executive may be eligible (to the extent Executive qualifies) to participate in certain retirement, pension, life, health, accident and disability insurance, stock option plan or other similar employee benefit plans which may be adopted by OncoCyte (or a Subsidiary) for its executive officers or other employees. OncoCyte and the Subsidiaries have the right, at any time and without any amendment of this Agreement, and without prior notice to or consent from Executive, to adopt, amend, change, or terminate any such benefit plans that may now be in effect or that may be adopted in the future, in each case without any further financial obligation to Executive; provided that such unilateral change does apply to Executive in a manner different than other OncoCyte executives or employees of a comparable executive level, except for changes required by applicable federal, state, or local law, or implemented in response to any change of federal, state or local law or regulation  Any benefits to which Executive may be entitled under any benefit plan shall be governed by the terms and conditions of the applicable benefit plan, and any related plan documents, as in effect from time to time.  If Executive receives any grant of stock options or restricted under any stock option plan or stock purchase plan of OncoCyte or any Subsidiary, the terms and conditions of the stock options or restricted stock, and Executive’s rights with respect to the stock options or restricted stock, shall be governed by (i) the terms of the applicable stock option or stock purchase plan, as the same may be amended from time to time, and (ii) the terms and conditions of any stock option agreement or stock purchase agreement and related agreements that Executive may sign or be required to sign with respect to the stock options or restricted stock.

 

2

(e)           Vacation; Sick Leave.  Executive shall be entitled to the number of days of vacation and sick leave (without reduction in compensation) during each calendar year shown on Exhibit A or as may be provided by the Policies.  Executive’s vacation shall be taken at such time as is consistent with the needs and Policies of OncoCyte and its Subsidiaries.  All vacation days and sick leave days shall accrue annually based upon days of service.  Executive’s right to leave from work due to illness is subject to the Policies and the provisions of this Agreement governing termination due to disability, sickness or illness.  The Policies governing the disposition of unused vacation days and sick leave days remaining at the end of OncoCyte's fiscal year shall govern whether unused vacation days or sick leave days will be paid, lost, or carried over into subsequent fiscal years.

3.         Competitive Activities. During the term of Executive's employment, and for one year thereafter, Executive shall not, for Executive or any third party, directly or indirectly employ, solicit for employment or recommend for employment any person employed by OncoCyte or any Subsidiary.  During the term of Executive's employment, Executive shall not, directly or indirectly as an employee, contractor, officer, director, member, partner, agent, or equity owner, engage in any activity or business that to the best of Executive’s knowledge competes with the business of OncoCyte or any Subsidiary.  Executive acknowledges that there is a substantial likelihood that the activities described in this Section would (a) involve the unauthorized use or disclosure of OncoCyte's or a Subsidiary's Confidential Information and that use or disclosure would be extremely difficult to detect, and (b) result in substantial competitive harm to the business of OncoCyte or a Subsidiary.  Executive has accepted the limitations of this Section as a reasonably practicable and unrestrictive means of preventing such use or disclosure of Confidential Information and preventing such competitive harm.

4.         Inventions/Intellectual Property/Confidential Information

(a)           As used in this Agreement, “Intellectual Property” means any and all inventions, discoveries, formulas, improvements, writings, designs, or other intellectual property.  Any and all Intellectual Property relating to or in any way pertaining to or connected with the systems, products, apparatus, or methods employed, manufactured, constructed, or researched by OncoCyte, or any Subsidiary, which Executive may conceive or make while performing services for OncoCyte or a Subsidiary shall be the sole and exclusive property of OncoCyte or the applicable Subsidiary and is referred to in this Agreement as OncoCyte Intellectual Property.  Executive hereby irrevocably assigns and transfers to OncoCyte, or a Subsidiary, all rights, title and interest in and to all OncoCyte Intellectual Property that Executive may now or in the future have under patent, copyright, trade secret, trademark or other law, in perpetuity or for the longest period otherwise permitted by law, without the necessity of further consideration.  OncoCyte and the Subsidiaries will be entitled to obtain and hold in their own name all copyrights, patents, trade secrets, trademarks and other similar registrations with respect to such OncoCyte Intellectual Property.

 

(b)           Moral Rights.  To the extent allowed by law, the rights to OncoCyte Intellectual Property assigned by Executive to OncoCyte or any Subsidiary includes all rights of paternity, integrity, disclosure and withdrawal, and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like (collectively “Moral Rights”).  To the extent Executive retains any such Moral Rights under applicable law, Executive hereby ratifies and consents to any action that may be taken with respect to such Moral Rights by or authorized by OncoCyte or a Subsidiary and agrees not to assert any Moral Rights with respect thereto.  Executive shall confirm in writing any such ratifications, consents, and agreements from time to time as requested by OncoCyte or Subsidiary.

 

3

(c)           Execution of Documents; Power of Attorney.  Executive agrees to execute and sign any and all applications, assignments, or other instruments which OncoCyte or a Subsidiary may deem necessary in order to enable OncoCyte or a Subsidiary, at its expense, to apply for, prosecute, and obtain patents of the United States or foreign countries for the OncoCyte Intellectual Property, or in order to assign or convey to, perfect, maintain or vest in OncoCyte or a Subsidiary the sole and exclusive right, title, and interest in and to the OncoCyte Intellectual Property.  If OncoCyte or a Subsidiary is unable after reasonable efforts to secure Executive’s signature, cooperation or assistance in accordance with the preceding sentence, whether because of Executive’s incapacity or any other reason whatsoever, Executive hereby designates and appoints OncoCyte or any Subsidiary or its designee as Executive’s agent and attorney-in-fact, to act on Executive’s behalf, to execute and file documents and to do all other lawfully permitted acts necessary or desirable to perfect, maintain or otherwise protect OncoCyte’s or a Subsidiary’s rights in the OncoCyte Intellectual Property.  Executive acknowledges and agrees that such appointment is coupled with an interest and is irrevocable.

 

(d)           Disclosure of Intellectual Property.  Executive agrees to disclose promptly to OncoCyte or a Subsidiary all OncoCyte Intellectual Property which Executive may create or conceive solely, jointly, or commonly with others.

 

(e)           Limitations.  The obligations provided for by this Section 4 do not apply to any rights Executive may have acquired in connection with Intellectual Property for which no equipment, supplies, facility, or trade secret information of OncoCyte or a Subsidiary was used and which was developed entirely on the Executive’s own time and (i) which at the time of conception or reduction to practice does not relate directly or indirectly to the business of OncoCyte or a Subsidiary, or to the actual or demonstrable anticipated research or development activities or plans of OncoCyte or a Subsidiary, or (ii) which does not result from any work performed by Executive for OncoCyte or a Subsidiary.  All Intellectual Property that (1) results from the use of equipment, supplies, facilities, or trade secret information of OncoCyte or a Subsidiary; (2) relates, at the time of conception or reduction to practice of the invention, to the business of OncoCyte or a Subsidiary, or actual or demonstrably anticipated research or development of OncoCyte or a Subsidiary; or (3) results from any work performed by Executive for OncoCyte or a Subsidiary shall be deemed OncoCyte Intellectual Property and shall be assigned and is hereby assigned to OncoCyte or the applicable Subsidiary.  The parties understand and agree that this limitation is intended to be consistent with California Labor Code, Section 2870, a copy of which is attached as Exhibit A.  If Executive wishes to clarify that something created by Executive prior to Executive’s employment by OncoCyte that relates to the actual or proposed business of OncoCyte is not within the scope of this Agreement, Executive has listed it on Exhibit B in a manner that does not violate any third party rights.

 

4

(f)           Confidential and Proprietary Information.  During Executive’s employment, Executive will have access to trade secrets and confidential information of OncoCyte and one or more Subsidiaries.  Confidential Information means all information and ideas, in any form, relating in any manner to matters such as: products; formulas; technology and know-how; inventions; clinical trial plans and data; business plans; marketing plans; the identity, expertise, and compensation of employees and contractors; systems, procedures, and manuals; customers; suppliers; joint venture partners; research collaborators; licensees; and financial information.  Confidential Information also shall include any information of any kind, whether belonging to OncoCyte, a Subsidiary, or any third party, that OncoCyte or a Subsidiary has agreed to keep secret or confidential under the terms of any agreement with any third party.  Confidential Information does not include:  (i) information that is or becomes publicly known through lawful means other than unauthorized disclosure by Executive; (ii) information that was rightfully in Executive's possession prior to Executive’s employment with OncoCyte and was not assigned to OncoCyte or a Subsidiary or was not disclosed to Executive in Executive’s capacity as a director or other fiduciary of OncoCyte or a Subsidiary; or (iii) information disclosed to Executive, after the termination of Executive’s employment by OncoCyte, without a confidential restriction by a third party who rightfully possesses the information and did not obtain it, either directly or indirectly, from OncoCyte or a Subsidiary, and who is not subject to an obligation to keep such information confidential for the benefit of OncoCyte, a Subsidiary, or any third party with whom OncoCyte or a Subsidiary has a contractual relationship.  Executive understands and agrees that all Confidential Information shall be kept confidential by Executive both during and after Executive’s employment by OncoCyte or any Subsidiary.  Executive further agrees that Executive will not, without the prior written approval by OncoCyte or a Subsidiary, disclose any Confidential Information, or use any Confidential Information in any way, either during the term of Executive’s employment or at any time thereafter, except as required by OncoCyte or a Subsidiary in the course of Executive’s employment.

5.         Termination of Employment.  Executive understands and agrees that Executive’s employment has no specific term.  This Agreement, and the employment relationship, are "at will" and may be terminated by Executive or by OncoCyte (and the employment of Executive by any Subsidiary by be terminated by the Subsidiary) with or without cause at any time by notice given orally or in writing.  Except as otherwise agreed in writing or as otherwise provided in this Agreement, upon termination of Executive's employment, OncoCyte and the Subsidiaries shall have no further obligation to Executive by way of compensation or otherwise as expressly provided in this Agreement or in any separate employment agreement that might then exist between Executive and a Subsidiary.

(a)           Payments Due Upon Termination of Employment.  Upon termination of Executive's employment with OncoCyte and all Subsidiaries at any time and for any reason, Executive will be entitled to receive only the severance benefits set forth below, but Executive will not be entitled to any other compensation, award, or damages with respect to Executive’s employment or termination of employment.

(i)          Termination for Cause, Death, Disability, or Resignation.  In the event of the termination of Executive’s employment by OncoCyte for Cause, or termination of Executive’s employment as a result of death, Disability, or resignation, Executive will be entitled to receive payment for all accrued but unpaid salary actually earned prior to or as of the date of termination of Executive’s employment, and vacation or paid time off accrued as of the date of termination of Executive’s employment.  Executive will not be entitled to any cash severance benefits or additional vesting of any stock options or other equity or cash awards.

 

(ii)         Termination Without Cause.  In the event of  termination of Executive’s employment by OncoCyte without Cause, Executive will be entitled to (A) the benefits set forth in paragraph (a)(i) of this Section, and (B) payment in an amount equal to: (1) three months' base salary if terminated within the first 12 months of employment, or (2) six months’ base salary if terminated after 12 months of employment, either of which may be paid in a lump sum or, at the election of OncoCyte, in installments consistent with the payment of Executive's salary while employed by OncoCyte, subject to such payroll deductions and withholdings as are required by law.  This paragraph shall not apply to (x) termination of Executive’s employment by a Subsidiary if Executive remains employed by OncoCyte, or (y) termination of Executive’s employment by OncoCyte if Executive remains employed by a Subsidiary.

 

5

(iii)        Change of Control.  In the event OncoCyte (or any successor in interest to OncoCyte that has assumed OncoCyte's obligation under this Agreement) terminates Executive's employment without Cause " or Executive resigns for "Good Reason" within twelve (12) months following a Change in Control, Executive will be entitled to (A) the benefits set forth in paragraph (a)(i) and (a)(ii) of this Section, and (B) accelerated vesting of (x) fifty percent of any then unvested stock options as may have been granted to Executive by OncoCyte if termination of employment occurs during the first year of Executive’s employment by OncoCyte, or (y) accelerated vesting of one hundred percent (100%) of any then unvested stock options as may have been granted to Executive by OncoCyte if termination of employment occurs after the first year of Executive’s employment by OncoCyte. This paragraph shall not apply to (x) termination of Executive’s employment by a Subsidiary if Executive remains employed by OncoCyte or a successor in interest, or (y) termination of Executive’s employment by OncoCyte or a successor in interest if Executive remains employed by a Subsidiary.

(b)           Release.  Any other provision of this Agreement notwithstanding, paragraphs (a)(ii) and (a)(iii) of this Section shall not apply unless the Executive (i) has executed a general release of all claims against OncoCyte or its successor in interest and the Subsidiaries (in a form prescribed by OncoCyte or its successor in interest),  (ii) has returned all property in the Executive's possession belonging OncoCyte or its successor in interest and any Subsidiaries, and (iii) if serving as a director of OncoCyte or any Subsidiary, has tendered his written resignation as a director as provided in Section 7.

 

(c)           Definitions.  For purposes of this Section, the following definitions shall apply:

(i)           "Affiliated Group" means (A) a Person and one or more other Persons in control of, controlled by, or under common control with such Person; and (B) two or more Persons who, by written agreement among them, act in concert to acquire Voting Securities entitling them to elect a majority of the directors of OncoCyte.

 

(ii)         "Cause" means: (A) the failure to properly perform Executive's job responsibilities, as determined reasonably and in good faith by the Board of Directors; (B) commission of any act of fraud, gross misconduct or dishonesty with respect to OncoCyte or any Subsidiary; (C) conviction of, or plea of guilty or "no contest" to, any felony, or a crime involving moral turpitude; (D) breach of any provision of this Agreement or any provision of any proprietary information and inventions agreement with OncoCyte or any Subsidiary; (E) failure to follow the lawful directions of the Board of Directors of OncoCyte or any Subsidiary; (F) chronic alcohol or drug abuse; (G) obtaining, in connection with any transaction in which OncoCyte, any Subsidiary, or any of OncoCyte’s affiliates is a party, a material undisclosed financial benefit for Executive or for any member of Executive’s immediate family or for any corporation, partnership, limited liability company, or trust in which Executive or any member of Executive’s immediate family owns a material financial interest; or (H) harassing or discriminating against, or participating or assisting in the harassment of or discrimination against, any employee of OncoCyte (or a Subsidiary or an affiliate of OncoCyte) based upon gender, race, religion, ethnicity, or nationality.

 

6

(iii)        "Change of Control" means (A) the acquisition of Voting Securities of OncoCyte by a Person or an Affiliated Group entitling the holder thereof to elect a majority of the directors of OncoCyte; provided, that an increase in the amount of Voting Securities held by a Person or Affiliated Group who on the date of this Agreement owned beneficially owned (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the regulations thereunder) more than 10% of the Voting Securities shall not constitute a Change of Control; and provided, further, that an acquisition of Voting Securities by one or more Persons acting as an underwriter in connection with a sale or distribution of such Voting Securities shall not constitute a Change of Control under this clause (A); (B) the sale of all or substantially all of the assets of OncoCyte; or (C) a merger or consolidation of OncoCyte with or into another corporation or entity in which the stockholders of OncoCyte immediately before such merger or consolidation do not own, in the aggregate, Voting Securities of the surviving corporation or entity (or the ultimate parent of the surviving corporation or entity) entitling them, in the aggregate (and without regard to whether they constitute an Affiliated Group) to elect a majority of the directors or persons holding similar powers of the surviving corporation or entity (or the ultimate parent of the surviving corporation or entity); provided, however, that in no event shall any transaction described in clauses (A), (B) or (C) be a Change of Control if all of the Persons acquiring Voting Securities or assets of OncoCyte or merging or consolidating with OncoCyte are one or more Subsidiaries.

 

(iv)          "Disability" shall mean Executive's inability to perform the essential functions of Executive’s job responsibilities for a period of one hundred eighty (180) days in the aggregate in any twelve (12) month period.

 

(v)          "Good Reason" means (A) a diminution in Executive's base salary; (B) a material change in geographic location at which Executive must perform services (a change in location of the OncoCyte office at which Executive will primarily work will be considered material only if it increases Executive’s current one-way commute by more than fifty (50) miles); (C) any material failure of the successors to OncoCyte after a Change of Control to perform, or causing OncoCyte not to perform, OncoCyte' obligations under this Agreement; (D) any action or inaction of OncoCyte that constitutes a material breach of the terms of this Agreement; or (E) any other material adverse change in Executive's duties, authorities, responsibilities, or reporting structure (for example, if Executive is required to report to anyone other than a Chief Executive Officer or the Board of Directors of OncoCyte or its successor).

 

(vi)          "Person" means any natural person or any corporation, partnership, limited liability company, trust, unincorporated business association, or other entity.

 

(vii)          "Voting Securities" means shares of capital stock or other equity securities entitling the holder thereof to regularly vote for the election of directors (or for person performing a similar function if the issuer is not a corporation), but does not include the power to vote upon the happening of some condition or event which has not yet occurred.

6.         Turnover of Property and Documents on Termination.  Executive agrees that on or before termination of Executive’s employment, Executive will return to OncoCyte and all Subsidiaries all equipment and other property belonging to OncoCyte and the Subsidiaries, and all originals and copies of Confidential Information (in any and all media and formats, and including any document or other item containing Confidential Information) in Executive's possession or control, and all of the following (in any and all media and formats, and whether or not constituting or containing Confidential Information) in Executive's possession or control:  (a) lists and sources of customers; (b) proposals or drafts of proposals for any research grant, research or development project or program, marketing plan, licensing arrangement, or other arrangement with any third party; (c) reports, job or laboratory notes, specifications, and drawings pertaining to the research, development, products, patents, and technology of OncoCyte and any Subsidiaries; (d) any and all Intellectual Property developed by Executive during the course of employment; and (e) the Manual and memoranda related to the Policies.

 

7

7.         Resignation as a Director on Termination of Employment.  If Executive’s employment by OncoCyte is terminated for any reason or for no reason, whether by way of resignation, Disability, or termination by OncoCyte with or without Cause, and if Executive is then a member of the Board of Directors of OncoCyte or any Subsidiary, Executive shall within two business days after such termination of employment resign from the Board of Directors of OncoCyte and from the board of directors of each and every Subsidiary, by delivering to OncoCyte (and each Subsidiary, as applicable) a letter or other written communication addressed to the Board of Directors of OncoCyte (and each Subsidiary, as applicable) stating that Executive is resigning from the Board of Directors of OncoCyte (and each Subsidiary, as applicable) effective immediately.  A business day shall be any day other than a Saturday, Sunday, or federal holiday on which federal offices are closed.

8.         Arbitration.  Except for injunctive proceedings against unauthorized disclosure of Confidential Information, any and all claims or controversies between OncoCyte or any Subsidiary and Executive, including but not limited to (a) those involving the construction or application of any of the terms, provisions, or conditions of this Agreement or the Policies; (b) all contract or tort claims of any kind; and (c) any claim based on any federal, state, or local law, statute, regulation, or ordinance, including claims for unlawful discrimination or harassment, shall be settled by arbitration in accordance with the then current Employment Dispute Resolution Rules of the American Arbitration Association.  Judgment on the award rendered by the arbitrator(s) may be entered by any court having jurisdiction over OncoCyte and Executive.  The location of the arbitration shall be San Francisco, California.  Unless OncoCyte or a Subsidiary and Executive mutually agree otherwise, the arbitrator shall be a retired judge selected from a panel provided by the American Arbitration Association, or the Judicial Arbitration and Mediation Service (JAMS).  OncoCyte, or a Subsidiary if the Subsidiary is a party to the arbitration proceeding, shall pay the arbitrator’s fees and costs.  Executive shall pay for Executive’s own costs and attorneys' fees, if any.  OncoCyte and any Subsidiary that is a party to an arbitration proceeding shall pay for its own costs and attorneys' fees, if any.  However, if any party prevails on a statutory claim which affords the prevailing party attorneys' fees, the arbitrator may award reasonable attorneys' fees and costs to the prevailing party.

EMPLOYEE UNDERSTANDS AND AGREES THAT THIS AGREEMENT TO ARBITRATE CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A TRIAL BY JURY OF ANY MATTERS COVERED BY THIS AGREEMENT TO ARBITRATE.

9.         Severability. In the event that any of the provisions of this Agreement or the Policies shall be held to be invalid or unenforceable in whole or in part, those provisions to the extent enforceable and all other provisions shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable parts had not been included in this Agreement or the Policies.  In the event that any provision relating to a time period of restriction shall be declared by a court of competent jurisdiction to exceed the maximum time period such court deems reasonable and enforceable, then the time period of restriction deemed reasonable and enforceable by the court shall become and shall thereafter be the maximum time period.

10.      Agreement Read and Understood. Executive acknowledges that Executive has carefully read the terms of this Agreement, that Executive has had an opportunity to consult with an attorney or other representative of Executive’s own choosing regarding this Agreement, that Executive understands the terms of this Agreement, and that Executive is entering this agreement of Executive’s own free will.

8

11.      Complete Agreement, Modification.  This Agreement is the complete agreement between Executive and OncoCyte on the subjects contained in this Agreement.  This Agreement supersedes and replaces all previous correspondence, promises, representations, and agreements, if any, either written or oral with respect to Executive’s employment by OncoCyte or any Subsidiary and any matter covered by this Agreement.  No provision of this Agreement may be modified, amended, or waived except by a written document signed both by OncoCyte and Executive.

12.      Governing Law.  This Agreement shall be construed and enforced according to the laws of the State of California.

13.      Assignability.  This Agreement, and the rights and obligations of Executive and OncoCyte under this Agreement, may not be assigned by Executive.  OncoCyte may assign any of its rights and obligations under this Agreement to any successor or surviving corporation, limited liability company, or other entity resulting from a merger, consolidation, sale of assets, sale of stock, sale of membership interests, or other reorganization, upon condition that the assignee shall assume, either expressly or by operation of law, all of OncoCyte's obligations under this Agreement.

14.      Survival.  This Section 14 and the covenants and agreements contained in Sections 4 and 6 of this Agreement shall survive termination of this Agreement and Executive's employment.

15.      Notices.  Any notices or other communication required or permitted to be given under this Agreement shall be in writing and shall be mailed by certified mail, return receipt requested, or sent by next business day air courier service, or personally delivered to the party to whom it is to be given at the address of such party set forth on the signature page of this Agreement (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 15).

IN WITNESS WHEREOF, Executive and OncoCyte have executed this Agreement on the day and year first above written.

	
EMPLOYEE:

	 
	 	 
	
/s/Lyndal K Hesterberg

	 
	
(Signature)

	 

 

	
Lyndal K Hesterberg

	 
	
(Please Print Name)

	 

	
Address:

	 	 
	 	 	 

 

9

ONCOCYTE:

OncoCyte Corporation

	 	
By:

	
/s/William Annett

	 
	 	 	
William Annett

	 
	 	
Title:

	
Chief Executive Officer

	 

 

	 	
Address:

	
1010 Atlantic Avenue, Suite 102

	 	 	
Alameda, California 94501

 

10

EXHIBIT A

 

Job Title:  Senior Vice President—Research and Development

Description of Job and Duties:

•          Reports to Chief Executive Officer (“CEO”).

•          Responsible for:  (i) providing OncoCyte with guidance and assistance in driving the development strategies for all research, development, clinical operations and regulatory affairs programs; (ii) overseeing the diagnostic test and product development, clinical operations and regulatory affairs functional areas, and supervising and managing OncoCyte’s research and development, clinical operations and regulatory affairs staff, including researchers, managers, and Vice Presidents; (iii) sharing leadership with other functional area leaders across OncoCyte to develop and achieve company-wide milestones, and such other services as may be mutually agreed upon by the parties from time to time.

Executive’s duties shall include, but not be limited to, the following:

		a)	
As a member of the senior management team, define the product development, clinical operations and regulatory affairs projects in alignment with company goals and milestones.

		b)	
Develop studies that fulfill company goals for research, product development, CLIA and clinical validation, and clinical utility.

		c)	
Develop product development, clinical operations and regulatory affairs strategies, including integration with CLIA laboratory and commercial operations.

		d)	
Provide research and development, clinical and regulatory expertise across the organization, contributing to concept and study development and reimbursement and commercialization plans. Ensure that projects align with accepted diagnostic test development practice and guidelines, and that studies utilize recognized standards (i.e., CLSI), when applicable.

		e)	
Oversee the research and development, clinical operations and regulatory affairs teams to ensure the completion of projects to timelines and budgets and the performance of risk assessments and implementation of corrective action plans for projects or tasks/deliverables at risk.

		f)	
Ensure that critical study documents, including protocols and case report forms, are designed to achieve study goals and CLIA regulatory requirements.

		g)	
Establish SOPs in compliance the Quality System at OncoCyte and generally accepted guidelines for CLIA laboratory developed tests.

		h)	
Oversee the research and development, clinical operations and regulatory affairs functions and teams, ensuring that gaps are identified, assessed, that appropriate regulatory requirements are met and that quality systems meeting company needs are developed and implemented.

		i)	
Develop and oversee budgets for the research and development, clinical operations and regulatory affairs function.

		j)	
Lead cross-functional activities across all company projects, including those related to pipeline, research, product development, clinical operations, regulatory affairs and commercialization.

 

11

		k)	
Coordinate with project managers so timely and accurate reports of project status are provided.

Annual Salary:          $210,750

Salary is based on an expected average working time of 30 hours/week. Executive will track his hours and on not less than a quarterly basis report actual hours expended on OncoCyte business to the CEO. The CEO and the Executive may adjust the Salary or make other payments, as mutually agreed upon, to compensate for additional hours expended on OncoCyte business.

Stock Options:          Options to purchase 125,000 shares of OncoCyte common stock under OncoCyte’s Employee Stock Option Plan (the “Plan”). The exercise price of the options shall be the fair market value of OncoCyte’s common shares on the date of grant determined in accordance with the Plan.  The date of grant of the options shall be the date on which Executive has executed this Agreement.  Executive shall also execute a stock option agreement consistent with the terms of the option grant and the Plan.  The options shall vest and thereby become exercisable as follows:  twenty-five percent of the options shall vest upon Executive’s completion of one year of continuous service as an employee of OncoCyte or of a Subsidiary, and the balance of the options shall vest in 36 equal monthly installments, commencing on the first anniversary date of the grant, based upon Executive’s continued service as an employee of OncoCyte or of a Subsidiary.  To the extent not exercised, the options shall expire ten years from the effective date of grant.  The options shall be incentive stock options to the extent permitted by Section 422 of the Internal Revenue Code.

Paid Time Off:  Executive shall be entitled to a total of 15 business days per year as “paid time off” for sick leave and vacation.

Office Location:  Executive shall work primarily from his office in Loveland, Colorado or in such other location in Colorado as Executive may choose. OncoCyte shall reimburse Executive, in accordance with the Policies, for his reasonable and properly documented expenses for transportation, food and lodging incurred in travel at the request of OncoCyte or any Subsidiary.

Consulting: Executive shall be permitted to continue to provide consulting services to clients for his own account, provided that (a) such clients are not engaged in activities that to the best of Executive’s knowledge compete with the business or diagnostic tests of OncoCyte or any Subsidiary; (b) Executive complies with the provisions of Section 1(d) and Section 4(f) of this Agreement, and (c) Executive devotes no more than 35% of his time and efforts to providing consulting services to his consulting clients.  Executive may provide such consulting services directly or through Hesterberg Consulting Services, Inc.  Executive shall not be required by the provisions of Section 4 to disclose or assign to OncoCyte or any Subsidiary any Intellectual Property or other confidential or proprietary information (a) belonging or disclosed to Executive by any of Executive’s consulting clients, or (b) developed by Executive (alone or with others) for any of Executive’s consulting clients, provided that in the case of this clause (b) such Intellectual Property or confidential or proprietary information does not constitute OncoCyte Intellectual Property, and was not developed using OncoCyte Intellectual Property, or the confidential or proprietary information, facilities, personnel, or other resources of OncoCyte or any Subsidiary.

In connection with Executive’s appointment as Senior Vice President-Research and Development, the Consulting Agreement between OncoCyte and Hesterberg Consulting Services, Inc. is being terminated concurrently with the execution of this Agreement.

 

12

EXHIBIT B

California Labor Code Section 2870.

Application of provision providing that employee shall assign or offer to assign rights in invention to employer.

(a)           Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either:

(i)          Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

(ii)         Result from any work performed by the employee for his employer.

(b)           To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

 

13

EXHIBIT C

PRIOR MATTERS

None

 

 

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00267-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00267-of-00352.parquet"}]]