Document:

obln-ex107_176.htm

Exhibit 10.7

Retention Agreement

This Retention Agreement (the “Agreement”) is entered into by and between [Name] (the “Executive”) and Obalon Therapeutics, Inc., a Delaware corporation (the “Company”), on _________ __, 2016, and is effective on the first date on which a registration statement covering the initial public offering of the common stock of the Company is declared effective by the United States Securities and Exchange Commission (the “Effective Date”).

1.Term of Agreement.

Except to the extent renewed as set forth in this Section 1, this Agreement shall terminate the earlier of the third (3rd) anniversary of the Effective Date (the “Expiration Date”) or the date the Executive’s employment with the Company terminates for a reason other than a Qualifying Termination or CIC Qualifying Termination; provided however, if a definitive agreement relating to a Change in Control has been signed by the Company on or before Expiration Date, then this Agreement shall remain in effect through the earlier of:

(a)The date the Executive’s employment with the Company terminates for a reason other than a Qualifying Termination or CIC Qualifying Termination, or

(b)The date the Company has met all of its obligations under this Agreement following a termination of the Executive’s employment with the Company due to a Qualifying Termination or CIC Qualifying Termination.

This Agreement shall renew automatically and continue in effect for three (3) year periods measured from the initial Expiration Date, unless the Company provides Executive notice of non-renewal at least three (3) months prior to the date on which this Agreement would otherwise renew. For the avoidance of doubt, and notwithstanding anything to the contrary in Section 2 or 3 below, the Company’s non-renewal of this Agreement shall not constitute a Qualifying Termination or CIC Qualifying Termination, as applicable. 

2.Qualifying Termination. If the Executive is subject to a Qualifying Termination, then, subject to Sections 4, 9, and 10 below, Executive will be entitled to the following benefits: 

(a)Severance Benefits. The Company shall pay the Executive [twelve (12)]1 / [six (6)]2 months of his or her monthly base salary (at the rate in effect immediately prior to the actions that resulted in the Qualifying Termination).  The Executive will receive his or her severance payment in a cash lump-sum in accordance with the Company’s standard payroll procedures which will be made on the first business day occurring after the sixtieth (60th) day following the Separation, provided that the Release Conditions have been satisfied.  

(b)Continued Employee Benefits.  If Executive timely elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), the Company shall pay the full amount of Executive’s COBRA premiums on behalf of the Executive for the Executive’s continued coverage under the Company’s health, dental and vision plans, including coverage for the Executive’s eligible dependents, for the [twelve (12)]3 / [six (6)]4 month period following the Executive’s Separation or, if earlier, until Executive is eligible to be covered under another substantially equivalent medical insurance plan by a subsequent employer.  Notwithstanding the foregoing, if the Company, in its sole discretion, 

	
	 

	
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determines that it cannot provide the foregoing subsidy of COBRA coverage without potentially violating or causing the Company to incur additional expense as a result of noncompliance with applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company instead shall provide to Executive a taxable monthly payment in an amount equal to the monthly COBRA premium that Executive would be required to pay to continue the group health coverage in effect on the date of the Separation (which amount shall be based on the premium for the first month of COBRA coverage), which payments shall be made regardless of whether Executive elects COBRA continuation coverage and shall commence on the later of (i) the first day of the month following the month in which Executive experiences a Separation and (ii) the effective date of the Company’s determination of violation of applicable law, and shall end on the earlier of (x) the effective date on which Executive becomes covered by a health, dental or vision insurance plan of a subsequent employer, and (y) the last day of the period twelve (12)]5 / [six (6)]6 months after the Separation, provided that, any taxable payments under Section 2(b) will not be paid before the first business day occurring after the sixtieth (60th) day following the Separation and, once they commence, will include any unpaid amounts accrued from the date of Executive’s Separation (to the extent not otherwise satisfied with continuation coverage).  However, if the period comprising the sum of the sixty (60)-day period described in the preceding sentence and the ten (10)-day period described in Section 7(e)(3) below spans two calendar years, then the payments which constitute deferred compensation subject to Section 409A will not in any case be paid in the first calendar year.  Executive shall have no right to an additional gross-up payment to account for the fact that such COBRA premium amounts are paid on an after-tax basis. 

3.CIC Qualifying Termination. If the Executive is subject to a CIC Qualifying Termination, then, subject to Sections 4, 9, and 10 below, Executive will be entitled to the following benefits:

(a)Severance and Bonus Payments.  The Company or its successor shall pay the Executive (i) twelve (12) months of his or her monthly base salary (at the rate in effect immediately prior to the actions that resulted in the Separation) and (ii) a pro rata portion (based on number of months worked in the Company’s fiscal year of the Separation) of Executive’s then-current target bonus opportunity.  Such payment shall be paid in a cash lump sum payment in accordance with the Company’s standard payroll procedures, which payment will be made on the first business day occurring after the sixtieth (60th) day following the Separation, provided that the Release Conditions have been satisfied. 

(b)Equity.  

	
 
	
(i)
	
Post-IPO Equity Awards.  Each of Executive’s then-outstanding Post-IPO Equity Awards, including awards that would otherwise vest only upon satisfaction of performance criteria, shall accelerate and become vested and exercisable as to 100% of the then unvested shares subject to the Equity Award.  “Post-IPO Equity Awards” means all options to purchase shares of Company common stock that are granted on or after the Effective Date, as well as any and all other stock-based awards granted to the Executive, including but not limited to stock bonus awards, restricted stock, restricted stock units or stock appreciation rights that are granted on or after the Effective Date. Subject to Section 4, the accelerated vesting described above shall be effective as of the Separation.

	
 
	
(ii)
	
Pre-IPO Equity Awards.  For clarity, except as explicitly provided in Section 3(b)(iii) below, any options to purchase shares of Company common stock that were granted prior to the Effective Date, regardless of whether or not exercised prior to the Effective Date (“Pre-IPO Equity Awards” and, together with the Post-IPO Equity Awards, the “Equity Awards”), shall not be affected by or subject to 

	
	 

	
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this Agreement, and such Pre-IPO Equity Awards shall continue to be governed by the vesting and acceleration provisions contained in the grant agreements for the Pre-IPO Equity Awards and, if applicable, any separate letter agreement pertaining to vesting acceleration of Pre-IPO Equity Awards entered into between the Company and Executive (such agreements, collectively, the “Pre-IPO Equity Award Agreements”). 

	
 
	
(iii)
	
Non-Assumption of Equity Awards.  Notwithstanding anything to the contrary, if the successor or acquiring corporation (if any) of the Company refuses to assume, convert, replace or substitute Executive’s unvested Equity Awards, as provided in Section 2.1.1 of the Plan, in connection with a Corporate Transaction (as defined in the Plan), then notwithstanding any other provision in this Agreement, the Plan or any Pre-IPO Equity Award Agreement to the contrary, each of Executive’s then-outstanding and unvested Equity Awards that are not assumed, converted, replaced or substituted, including awards that would otherwise vest only upon satisfaction of performance criteria (measured at 100% of target), shall accelerate and become vested and exercisable as to 100% of the then unvested shares subject to the Equity Award effective immediately prior to the Corporate Transaction.

(c)Pay in Lieu of Continued Employee Benefits.  If Executive timely elects continued coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), the Company or its successor shall pay the full amount of Executive’s COBRA premiums on behalf of the Executive for the Executive’s continued coverage under the Company’s health, dental and vision plans, including coverage for the Executive’s eligible dependents, for the twelve (12) month period following the Executive’s Separation or, if earlier, until Executive is eligible to be covered under another substantially equivalent medical insurance plan by a subsequent employer.  Notwithstanding the foregoing, if the Company, in its sole discretion, determines that it cannot provide the foregoing subsidy of COBRA coverage without potentially violating or causing the Company to incur additional expense as a result of noncompliance with applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company instead shall provide to Executive a taxable monthly payment in an amount equal to the monthly COBRA premium that Executive would be required to pay to continue the group health coverage in effect on the date of the Separation (which amount shall be based on the premium for the first month of COBRA coverage), which payments shall be made regardless of whether Executive elects COBRA continuation coverage, shall commence on the later of (i) the first day of the month following the month in which Executive experiences a Separation and (ii) the effective date of the Company’s determination of violation of applicable law, and shall end on the earlier of (x) the effective date on which Executive becomes covered by a health, dental or vision insurance plan of a subsequent employer, and (y) the last day of the period twelve (12) months after the Separation, provided that, any taxable payments under Section 3(c) will not be paid before the first business day occurring after the sixtieth (60th) day following the Separation and, once they commence, will include any unpaid amounts accrued from the date of Executive’s Separation (to the extent not otherwise satisfied with continuation coverage). However, if the period comprising the sum of the sixty (60)-day period described in the preceding sentence and the ten (10)-day period described in Section 7(e)(3) below spans two calendar years, then the payments which constitute deferred compensation subject to Section 409A will not in any case be paid in the first calendar year.  Executive shall have no right to an additional gross-up payment to account for the fact that such COBRA premium amounts are paid on an after-tax basis.

4.General Release.  Any other provision of this Agreement notwithstanding, the benefits under Section 2 and 3 shall not apply unless the Executive (i) has executed a general release (in substantially the form attached hereto as Exhibit A) of all known and unknown claims that he or she may then have against the Company or persons affiliated with the Company and such release has become effective and (ii) has agreed not to prosecute any legal action or other proceeding based upon any of such claims.  The release must be in the form prescribed by the Company, without alterations (this document effecting the foregoing, the “Release”).  The Company will deliver the form of Release to the Executive within thirty (30) days after the Executive’s Separation.  The Executive must execute and return the Release within the time period specified in the form.

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5.Accrued Compensation and Benefits.  Notwithstanding anything to the contrary in Section 2 and 3 above, in connection with any termination of employment (whether or not a Qualifying Termination or CIC Qualifying Termination), the Company shall pay Executive’s earned but unpaid base salary and other vested but unpaid cash entitlements for the period through and including the termination of employment, including unused earned vacation pay and unreimbursed documented business expenses incurred by Executive through and including the date of termination (collectively “Accrued Compensation and Expenses”), as required by law and the applicable Company plan or policy. In addition, Executive shall be entitled to any other vested benefits earned by Executive for the period through and including the termination date of Executive’s employment under any other employee benefit plans and arrangements maintained by the Company, in accordance with the terms of such plans and arrangements, except as modified herein (collectively “Accrued Benefits”).  Any Accrued Compensation and Expenses to which the Executive is entitled shall be paid to the Executive in cash as soon as administratively practicable after the termination and, in any event, no later than two and one-half (2-1/2) months after the end of the taxable year of the Executive in which the termination occurs or at such earlier time as may be required by Section 10 below or to such lesser extent as may be mandated by Section 9 below.  Any Accrued Benefits to which the Executive is entitled shall be paid to the Executive as provided in the relevant plans and arrangements.

6.Covenants.

(a)Non-Competition.  The Executive agrees that, during his or her employment with the Company, he or she shall not engage in any other employment, consulting or other business activity (whether full-time or part-time) that would create a conflict of interest with the Company.

(b)Cooperation and Non-Disparagement.  The Executive agrees that, during the six (6) month period following his or her cessation of employment, he or she shall cooperate with the Company in every reasonable respect and shall use his or her best efforts to assist the Company with the transition of Executive’s duties to his or her successor.  The Executive further agrees that, during this six-month period, he or she shall not in any way or by any means disparage the Company, the members of the Company’s Board of Directors or the Company’s officers and employees.  

7.Definitions.

(a)“Cause” means: (i) Executive’s conviction for, or guilty plea to, a felony involving moral turpitude; (ii) a willful refusal by Executive to comply with the lawful and reasonable instructions of the Company, or to otherwise perform Executive’s duties as lawfully and reasonably determined by the Company, in each case that is not cured by Executive (if such refusal is of a type that is capable of being cured) within 15 days of written notice being given to Executive of such refusal; (iii) any willful act or acts of dishonesty undertaken by Executive and intended to result in Executive’s (or any other person’s) material gain or personal enrichment at the expense of the Company or any of its customers, partners, affiliates, or employees; or (iv) any willful act of gross misconduct by Executive which is injurious to the Company.

(b) “Code” means the Internal Revenue Code of 1986, as amended.

(c)“Change in Control.”  For all purposes under this Agreement, a Change in Control shall mean a “Corporate Transaction,” as such term is defined in the Plan, provided that the transaction (including any series of transactions) also qualifies as a change in control event under U.S. Treasury Regulation 1.409A-3(i)(5).

(d)“CIC Qualifying Termination” means a Separation (i) within twelve (12) months following a Change in Control or (ii) within three (3) months preceding a Change in Control (but as to part (ii), only if the Separation occurs after a Potential Change in Control) resulting, in either case (i) or (ii), from (A) the Company or its successor terminating the Executive’s employment for any reason other than Cause or (B) the Executive voluntarily resigning his or her employment for Good Reason. A termination or resignation due to the Executive’s death or disability shall not constitute a CIC Qualifying Termination.  A 

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“Potential Change in Control” means the date of execution of a legally binding and definitive agreement for a corporate transaction which, if consummated, would constitute the applicable Change in Control (which for the avoidance of doubt, would include a merger agreement, but not a term sheet for a merger agreement).  In the case of a termination following a Potential Change in Control and before a Change in Control, solely for purposes of benefits under this Agreement, the date of Separation will be deemed the date the Change in Control is consummated. 

(e) “Good Reason” means, without the Executive’s consent, (i) a reduction in Executive’s then-current base salary (except for a reduction that is part of a proportional reduction of the base salaries of all Company executives), bonus opportunity or commissions opportunity; (ii) the offices of the Company that Executive is required to report to being moved such that Executive’s usual commuting distance is increased by more than ten (10) miles; or (iii) [a material and adverse change to Executive’s duties or responsibilities, or if there is a change to Executive’s title and role after which Executive does not have the title and role of Chief Financial Officer of the top-level acquiring entity whose stock is publicly traded]7 / [a material and adverse change to Executive’s title, duties or responsibilities]8; provided, however, that a resignation by Executive shall not be considered to be for a “Good Reason” unless (i) Executive provides written notice to the Company’s Chief Executive Officer of the occurrence of the event which Executive contends constitutes Good Reason within ninety (90) days of the date such event occurs, which notice states Executive’s intention to resign for a “Good Reason” under this Agreement as a result thereof, (ii) the Company does not effect a cure with respect to such event within thirty (30) days of receipt of such written notice, and (iii) Executive thereafter resigns and ceases to perform services as an employee of the Company within ten (10) days of the expiration of the Company’s cure period.

(f) “Plan” means the Company’s 2016 Equity Incentive Plan, as may be amended from time to time.

(g)“Release Conditions” mean the following conditions: (i) Company has received the Executive’s executed Release in substantially the form attached hereto as Exhibit A, and (ii) any rescission period applicable to the Executive’s executed Release has expired.  

(h)“Qualifying Termination” means a Separation that is not a CIC Qualifying Termination, but which results from (i) the Company terminating the Executive’s employment for any reason other than Cause or (ii) the Executive voluntarily resigning his or her employment for Good Reason. A termination or resignation due to the Executive’s death or disability shall not constitute a Qualifying Termination.  

(i)“Separation” means a “separation from service,” as defined in the regulations under Section 409A of the Code.

8.Successors.

(a)Company’s Successors.  The Company shall require any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets, by an agreement in substance and form satisfactory to the Executive, to assume this Agreement and to agree expressly to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession.  For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets or which becomes bound by this Agreement by operation of law.

(b)Executive’s Successors.  This Agreement and all rights of the Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

	
	 

	
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9.Golden Parachute Taxes.

(a)Best After-Tax Result.  In the event that any payment or benefit received or to be received by Executive pursuant to this Agreement or otherwise (“Payments”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this subsection (a), be subject to the excise tax imposed by Section 4999 of the Code, any successor provisions, or any comparable federal, state, local or foreign excise tax (“Excise Tax”), then, subject to the provisions of Section 10, such Payments shall be either (A) provided in full pursuant to the terms of this Agreement or any other applicable agreement, or (B) provided as to such lesser extent which would result in no portion of such Payments being subject to the Excise Tax (“Reduced Amount”), whichever of the foregoing amounts, taking into account the applicable federal, state, local and foreign income, employment and other taxes and the Excise Tax (including, without limitation, any interest or penalties on such taxes), results in the receipt by Executive, on an after-tax basis, of the greatest amount of payments and benefits provided for hereunder or otherwise, notwithstanding that all or some portion of such Payments may be subject to the Excise Tax.  Unless the Company and Executive otherwise agree in writing, any determination required under this Section shall be made by independent tax counsel designated by the Company and reasonably acceptable to Executive (“Independent Tax Counsel’), whose determination shall be conclusive and binding upon Executive and the Company for all purposes.  For purposes of making the calculations required under this Section, Independent Tax Counsel may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code; provided that Independent Tax Counsel shall assume that Executive pays all taxes at the highest marginal rate.  The Company and Executive shall furnish to Independent Tax Counsel such information and documents as Independent Tax Counsel may reasonably request in order to make a determination under this Section.  The Company shall bear all costs that Independent Tax Counsel may reasonably incur in connection with any calculations contemplated by this Section.  In the event that Section 9(a)(ii)(B) above applies, then based on the information provided to Executive and the Company by Independent Tax Counsel, Executive may, in Executive’s sole discretion and within thirty (30) days of the date on which Executive is provided with the information prepared by Independent Tax Counsel, determine which and how much of the Payments (including the accelerated vesting of equity compensation awards) to be otherwise received by Executive shall be eliminated or reduced (as long as after such determination the value (as calculated by Independent Tax Counsel in accordance with the provisions of Sections 280G and 4999 of the Code) of the amounts payable or distributable to Executive equals the Reduced Amount).  If the Internal Revenue Service (the “IRS”) determines that any Payment is subject to the Excise Tax, then Section 9(b) hereof shall apply, and the enforcement of Section 9(b) shall be the exclusive remedy to the Company.

(b)Adjustments.  If, notwithstanding any reduction described in Section 9(a) hereof (or in the absence of any such reduction), the IRS determines that Executive is liable for the Excise Tax as a result of the receipt of one or more Payments, then Executive shall be obligated to surrender or pay back to the Company, within one-hundred twenty (120) days after a final IRS determination, an amount of such payments or benefits equal to the “Repayment Amount.”  The Repayment Amount with respect to such Payments shall be the smallest such amount, if any, as shall be required to be surrendered or paid to the Company so that Executive’s net proceeds with respect to such Payments (after taking into account the payment of the Excise Tax imposed on such Payments) shall be maximized.  Notwithstanding the foregoing, the Repayment Amount with respect to such Payments shall be zero (0) if a Repayment Amount of more than zero (0) would not eliminate the Excise Tax imposed on such Payments or if a Repayment Amount of more than zero would not maximize the net amount received by Executive from the Payments.  If the Excise Tax is not eliminated pursuant to this Section 9(b), Executive shall pay the Excise Tax.

10.Miscellaneous Provisions.

(a)Section 409A.  To the extent (i) any payments to which Executive becomes entitled under this Agreement, or any agreement or plan referenced herein, in connection with Executive’s termination of employment with the Company constitute deferred compensation subject to Section 409A of the Code and (ii) Executive is deemed at the time of such termination of employment to be a “specified” employee under 

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Section 409A of the Code, then such payment or payments shall not be made or commence until the earlier of (i) the expiration of the six (6)-month period measured from the Executive’s Separation; or (ii) the date of Executive’s death following such Separation; provided, however, that such deferral shall only be effected to the extent required to avoid adverse tax treatment to Executive, including (without limitation) the additional twenty percent (20%) tax for which Executive would otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of such deferral.  Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this paragraph shall be paid to Executive or Executive’s beneficiary in one lump sum (without interest). Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement (or otherwise referenced herein) is determined to be subject to (and not exempt from) Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement or in kind benefits to be provided in any other calendar year, in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which Executive incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit. To the extent that any provision of this Agreement is ambiguous as to its exemption or compliance with Section 409A, the provision will be read in such a manner so that all payments hereunder are exempt from Section 409A to the maximum permissible extent, and for any payments where such construction is not tenable, that those payments comply with Section 409A to the maximum permissible extent.  To the extent any payment under this Agreement may be classified as a “short-term deferral” within the meaning of Section 409A, such payment shall be deemed a short-term deferral, even if it may also qualify for an exemption from Section 409A under another provision of Section 409A.  Payments pursuant to this Agreement (or referenced in this Agreement) are intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the regulations under Section 409A. 

(b)Other Arrangements.  This Agreement supersedes any and all cash severance arrangements and vesting acceleration arrangements on change in control under any agreement governing Equity Awards, severance and salary continuation arrangements, programs and plans which were previously offered, or may be offered on the Effective Date or thereafter, by the Company to the Executive, including change in control severance arrangements and vesting acceleration arrangements pursuant to an agreement governing Equity Awards, employment agreement or offer letter, and Executive hereby waives Executive’s rights to such other benefits, provided that this Agreement shall not supersede the acceleration of vesting arrangements of any Pre-IPO Equity Awards (except as explicitly provided in Section 3(b)(iii) hereof).  In no event shall any individual receive cash severance benefits under both this Agreement and any other vesting acceleration arrangement, severance pay or salary continuation program, plan or other arrangement with the Company, provided that this Agreement shall not supersede the acceleration of vesting arrangements of any Pre-IPO Equity Awards (except as explicitly provided in Section 3(b)(iii) hereof).  For the avoidance of doubt, in no event shall Executive receive (i) payment under both Section 2 and Section 3 and/or (ii) acceleration of Equity Award vesting under both (a) Section 3(b)(iii) and (b) Section 3(b)(i) and/or Section 3(b)(ii), as applicable, in each case with respect to Executive’s Separation.

(c)Dispute Resolution.  To ensure rapid and economical resolution of any and all disputes that might arise in connection with this Agreement, Executive and the Company agree that any and all disputes, claims, and causes of action, in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation, will be resolved solely and exclusively by final, binding, and confidential arbitration, by a single arbitrator, in San Diego County, and conducted by Judicial Arbitration & Mediation Services, Inc. (“JAMS”) under its then-existing employment rules and procedures. Nothing in this section, however, is intended to prevent either party from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Each party to an arbitration or litigation hereunder shall be responsible for the payment of its own attorneys’ fees.

(d)Notice.  Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid or deposited with Federal Express Corporation, with shipping charges prepaid.  In the case of the Executive, mailed notices shall be 

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addressed to him or her at the home address which he or she most recently communicated to the Company in writing.  In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

(e)Waiver.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(f)Withholding Taxes.  All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be withheld by law.

(g)Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(h)No Retention Rights.  Nothing in this Agreement shall confer upon the Executive any right to continue in service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company or any subsidiary of the Company or of the Executive, which rights are hereby expressly reserved by each, to terminate his or her service at any time and for any reason, with or without Cause.

(i)Choice of Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California (other than its choice-of-law provisions).

 

 

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

 

	
EXECUTIVE
	
 
	
OBALON THERAPEUTICS, INC.

	
 
	
 
	
 

	
[Name]
	
 
	
By:
	
 

	
 
	
 
	
Title:
	
 

 

 

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26901/00003/DOCS/4086671.9

 

EXHIBIT A

 

GENERAL RELEASE OF ALL CLAIMS AND COVENANT NOT TO SUE

 

This General Release of All Claims and Covenant Not to Sue (the “ Release”) is entered into between [Name of Executive] (“Executive”) and Obalon Thereapeutics, Inc. (the “Company”) (collectively, “the parties”).

WHEREAS, on __________, Executive and the Company entered into a Retention Agreement with the Company (the “Retention Agreement,” to which this Release is attached as Exhibit A);

WHEREAS, on __________, Executive’s employment with the Company terminated (the “Separation Date”);

WHEREAS, this agreement serves as the Release, pursuant to the Retention Agreement; and

WHEREAS, Executive and the Company desire to mutually, amicably and finally resolve and compromise all issues and claims surrounding Executive’s employment and separation from employment with the Company;

NOW THEREFORE, in consideration for the mutual promises and undertakings of the parties as set forth below, Executive and the Company hereby enter into this Release.

1.Acknowledgment of Payment of Wages:  By his signature below, Executive acknowledges that, on the Separation Date, the Company paid him for all wages, salary, bonuses, commissions, reimbursable expenses, accrued but unused vacation and any similar payments due him from the Company as of the Separation Date.  By signing below, Executive acknowledges that the Company does not owe him any other amounts, except as may become payable under the Retention Agreement and the Release.

2.Return of Company Property:  Executive hereby warrants to the Company that he has returned to the Company all property or data of the Company of any type whatsoever that has been in his possession, custody or control.

3.Consideration:  In exchange for Executive’s agreement to this Release and his other promises in the Retention Agreement and herein, and pursuant to the Retention Agreement, the Company agrees to provide Executive with the consideration set forth in Section _____ of the Retention Agreement.  By signing below, Executive acknowledges that he is receiving the consideration in exchange for waiving his rights to claims referred to in this Release.  

4.General Release and Waiver of Claims:  

a.The payments and promises set forth in this Release are in full satisfaction of all accrued salary, vacation pay, bonus and commission pay, profit‐sharing, stock, stock options, restricted stock units or other ownership interest in the Company, termination benefits or other compensation to which Executive may be entitled by virtue of his employment with the Company or his separation from the Company, including pursuant to the Retention Agreement.  To the fullest extent permitted by law, Executive hereby releases and waives any other claims he may have against the Company and its owners, agents, officers, shareholders, employees, directors, attorneys, subscribers, subsidiaries, affiliates, successors and assigns (collectively “Releasees”), whether known or not known, including, without limitation, claims under any employment laws, including, but not limited to, claims of unlawful discharge, breach of contract, breach of the covenant of good faith and fair dealing, fraud, violation of public policy, defamation, physical injury, emotional distress, claims for additional compensation or benefits arising out of his employment or separation of employment, including pursuant to the Offer Letter, claims under Title VII of the 1964 Civil Rights Act, as amended, the California Fair Employment 

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and Housing Act and any other laws and/or regulations relating to employment or employment discrimination, including, without limitation, claims based on age or under the Age Discrimination in Employment Act or Older Workers Benefit Protection Act, and/or claims based on disability or under the Americans with Disabilities Act. 

b.By signing below, Executive expressly waives any benefits of Section 1542 of the Civil Code of the State of California, which provides as follows: 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

c.Executive and the Company do not intend to release claims that he may not release as a matter of law, including but not limited to claims for indemnity under California Labor Code Section 2802, or any claims for enforcement of this Release.  To the fullest extent permitted by law, any dispute regarding the scope of this general release shall be determined by an arbitrator under the procedures set forth in the Dispute Resolution section set forth in the Retention Agreement.

5.Covenant Not to Sue:  

a.To the fullest extent permitted by law, at no time subsequent to the execution of this Release will Executive pursue, or cause or knowingly permit the prosecution, in any state, federal or foreign court, or before any local, state, federal or foreign administrative agency, or any other tribunal, of any charge, claim or action of any kind, nature and character whatsoever, known or unknown, which he may now have, have ever had, or may in the future have against Releasees, which is based in whole or in part on any matter released by this Release.  

b.Nothing in this paragraph shall prohibit Executive from filing a charge or complaint with a government agency where, as a matter of law, the parties may not restrict his right to file such administrative complaints.  However, Executive understands and agrees that, by entering into this Release, he is releasing any and all individual claims for relief, and that any and all subsequent disputes between Executive and the Company shall be resolved through arbitration as provided in the Retention Agreement.

c.Nothing in this paragraph shall prohibit or impair Executive or the Company from complying with all applicable laws, nor shall this Release be construed to obligate either party to commit (or aid or abet in the commission of) any unlawful act.

6.Review of Release:  Executive understands that he may take up to twenty-one (21) days to consider this Release and, by signing below, affirms that he was advised to consult with an attorney prior to signing this Release.  Executive also understands that he may revoke this Release within seven (7) days of signing this document and that the consideration to be provided to him pursuant to Paragraph 2(c) of the Retention Agreement will be provided only at the end of that seven (7) day revocation period. 

7.Effective Date:  This Release is effective on the eighth (8th) day after Executive signs it, provided he has not revoked it as of that time.  

 

[Remainder of page intentionally left blank.]

11

 

 

8.Other Terms of Retention Agreement Incorporated Herein:  All other terms of the Retention Agreement to the extent not inconsistent with the terms of this Release are hereby incorporated in this Release as though fully stated herein and apply with equal force to this Release, including, without limitation, the provisions on Non-Competition, Cooperation and Non-Disparagement, Section 409A, Dispute Resolution and Choice of Law.

 

	
Dated:
	
 
	
 
	
 

	
 
	
 
	
Name:

	
 
	
 
	
Title:

	
 
	
 
	
For the Company

	
 
	
 
	
 

	
Dated:
	
 
	
 
	
 

	
 
	
 
	
Name: [Name of Executive]

	
 
	
 
	
 

 

 

12Exhibit

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

SECOND AMENDED AND RESTATED NANTOMICS EXCLUSIVE RESELLER AGREEMENT
This Second Amended and Restated NantOmics Exclusive Reseller Agreement (this “Agreement”) is made as of September 20, 2016, with an effective date as of June 19, 2015 (the “Effective Date”), by and between NantOmics, LLC, a Delaware limited liability company (“NantOmics”), and NantHealth, Inc., a Delaware corporation (“NantHealth”).  NantOmics and NantHealth are sometimes referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, NantOmics has developed and makes available certain genomic and proteomic analysis and bioinformatics services;
WHEREAS, NantHealth and NantOmics are parties to that certain NantOmics Exclusive Reseller Agreement (the “Original Agreement”), effective as of June 19, 2015, under which NantHealth obtained the right to market and resell such services on an exclusive basis in the Commercial Field of Use (defined below);
WHEREAS, NantHealth and NantOmics amended and restated the Original Agreement pursuant to an Amended and Restated NantOmics Exclusive Reseller Agreement dated May 9, 2016 (the “First Restated Agreement”) to clarify certain terms of the Original Agreement;
WHEREAS, NantHealth and NantOmics wish to amend and restate the First Restated Agreement with the terms of this Agreement to clarify certain terms of the First Restated Agreement. 
NOW, THEREFORE, for good and valuable consideration, including the mutual covenants and conditions herein contained, the Parties do hereby (a) amend, restate and replace the First Restated Agreement in its entirety and (b) otherwise agree as follows:
AGREEMENT
1.    Definitions.  Capitalized terms that are used but not otherwise defined in this Agreement shall have the meanings set forth below:
“Affiliate” means, with respect to a Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Person.  For purposes of this Agreement, (i) NantHealth and its Subsidiaries shall not be deemed to be Affiliates of NantOmics and (ii) NantOmics and its Affiliates shall not be deemed to be Affiliates of NantHealth.
“Claim” means any claim, action, suit, or proceeding. 
“Commercial Field of Use” means the marketing, sale and provision of Omics Services on a fee basis to Institutional Customers, in each case, for use in connection with the information provided to an Institutional Customer.  For the avoidance of doubt, the “Commercial Field of Use” does not include Omics Services provided primarily for research or educational purposes or for consumer applications or primarily for the discovery, development, evaluation, trial, analysis or regulatory approval of any pharmaceutical or therapeutic product or treatment, or any companion diagnostic, biomarker, neoantigen or neoepitope.
“Confidential Information” means non-public information of a Disclosing Party or its Affiliates, including (a) any trade secrets and any information relating to the Disclosing Party’s current and planned 

Page 1 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

products and services, technology, source code, techniques, know-how, research, engineering, designs, finances, accounts, procurement requirements, manufacturing, customer lists, business forecasts, and marketing; (b) any information disclosed in writing that is clearly marked “confidential” or with a similar proprietary notice at the time of disclosure; (c) any information disclosed verbally that is identified as “confidential” or similarly at the time of disclosure, or which, by its nature, a reasonable person would consider confidential; (d) the terms and conditions of this Agreement; and (e) Omics Data.
“Contractual Allowance” means the difference between (i) the gross amount billed by NantHealth to an Institutional Customer for the Omics Services minus (ii) the amount approved for payment by an Institutional Customer in exchange for the Omics Services.
“Control” means the direct or indirect power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Customer Agreement” means an agreement that is accepted and agreed to by an Institutional Customer for the provision Omics Services sold by NantHealth or its Subsidiary under this Agreement.
“Institutional Customer” means an insurer, payor, self-insured health plan or healthcare provider that pays for, or agrees to pay for, Omics Services.  For the avoidance of doubt, unless otherwise agreed on a case by case basis by NantOmics in its discretion, “Institutional Customers” shall not include research, academic or educational institutions, pharmaceutical or biotechnology companies or individual patients or consumers.
“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, or other requirement or rule of any federal, state, local, or foreign government or political subdivision thereof, or any arbitrator, court, or tribunal of competent jurisdiction.
“License Agreement” means that certain License Agreement between NantHealth and NantOmics of even date herewith, in form attached hereto as Exhibit A.
“Loss” means all losses, damages, liabilities, deficiencies, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including reasonable attorneys’ fees, the costs of enforcing any right to indemnification hereunder, and the cost of pursuing any insurance providers.
“NantOmics Marks” means the trade names, trade dress, trademarks, service marks, logos, brand names and other identifiers of NantOmics or otherwise used in connection with any Omics Services, including any applications, registrations, and renewals thereof.
“Net Billing Amount” means the difference between (i) the gross amount billed by NantHealth to an Institutional Customer for the Omics Services minus (ii) the Contractual Allowance, if any. 
“Omics Data” means [***]
“Omics Platform” means the hardware, software, systems, tools, database processes, reporting methodology, testing procedures and other technology utilized by or for NantOmics in the operation or provision of Omics Services.
“Omics Report” means the final, clinical report issued via the Omics Services hereunder for delivery to the applicable requisitioning physician.

Page 2 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

“Omics Services” means whole genome sequencing, whole exome sequencing, RNA-Seq and quantitative proteomics, and computational and data management and bioinformatics services, made commercially available by NantOmics to NantHealth for NantHealth to resell to Institutional Customers during the Term in accordance with this Agreement.
“Other Services” means consulting and other professional services that may be provided by or on behalf of NantOmics to NantHealth or its Subsidiaries from time to time in connection with this Agreement.
“Person” means any natural person, corporation, limited liability company, general partnership, limited partnership, trust, proprietorship, joint venture, business organization, or government, political subdivision, agency or instrumentality.
“Representatives” means a with respect to a Party or its Affiliates, each of their respective employees, officers, directors, partners, shareholders, agents, attorneys, and third-party advisors.
“Services” means the Omics Services and Other Services, collectively. 
“Subsidiary” means, with respect to a Person, any other Person that is directly or indirectly, through one or more intermediaries, Controlled by such Person.  
“Term” has the meaning set forth in Section 13 hereof. 
“Territory” means the entire world. 
2.    Appointment as Reseller.
2.1     Appointment.  Subject to the restrictions and obligations set forth in this Agreement, NantOmics hereby appoints NantHealth, during the Term, as an exclusive reseller of the Omics Services in and for the Commercial Field of Use, with the exclusive right to market and sell Omics Services in the Territory to and for Institutional Customers in and for the Commercial Field of Use.
2.2     Exclusivity. The rights granted to NantHealth under Section 2.1 are exclusive. Accordingly, during the Term and except to the extent otherwise agreed by the Parties on a case-by-case basis, NantOmics will not provide or otherwise make available Omics Services to other Persons in or for the Commercial Field of Use and will not authorize or grant any other Person the right to market or sell Omics Services in or for the Commercial Field of Use.  For the avoidance of doubt, and notwithstanding anything herein to the contrary:  (a) the foregoing exclusivity does not apply, and NantOmics reserves the right to offer and make Omics Services available, outside the Commercial Field of Use; and (b) NantHealth and its Subsidiaries have the right to use vendors other than NantOmics to provide whole genome sequencing, whole exome sequencing, RNA-Seq and quantitative proteomics, and computational and data management and bioinformatics services.  To the extent that NantHealth uses another vendor for some or all of such services, the Parties agree to negotiate together in good faith to develop a revised pricing structure separate and apart from Section 3.1.
2.3    Customer Engagement, Billing and Order Processing.  NantHealth will provide and manage, in its reasonable discretion, relationships relating to the Omics Services, including (i) processing all order requisitions received from customers, (ii) handling all inquiries and customer service requests from physicians, patients and Institutional Customers, both prior to and after the receipt of an order, (iii) maintaining a team of appropriately trained medical professionals that will be responsible for assisting the customer to understand and interpret the Omics Reports and (iv) managing billing, payments, billing inquiry, collections 

Page 3 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

and other transaction related processes for the Omics Services via direct interaction with Institutional Customers (which may include the delivery of general reports to Institutional Customers regarding Omics Services provided to/for such Institutional Customers) (collectively, “Omics Transactional Activities”). 
2.4     Order Fulfillment Process.  NantHealth will be responsible for (i) coordinating all aspects of the performance of the Omics Services with physicians, patients and Institutional Customers, including obtaining from such parties the required order requisition, patient consent and Health Insurance Portability and Accountability Act forms, and (ii) the ultimate acceptability and medical necessity of the Omics Services ordered by NantHealth’s customer. 
2.5     Branding. All branding of the Omics Services (including sample collection kits) will be controlled by NantHealth; provided that NantHealth shall give appropriate reference to NantOmics and its laboratories in order to comply with applicable laws, rules, regulations or industry practice.
              2.6 Marketing and Promotion.  
(a)    NantHealth will be responsible for developing its own marketing strategies, plans and materials to be used for the promotion and sale of Omics Services under this Agreement and shall have no obligation to acknowledge in such materials that NantOmics is providing the Omics Services to NantHealth, unless and to the extent required by applicable laws, rules or regulations. 
(b)    NantOmics will provide commercially reasonable marketing support to NantHealth regarding the Omics Services, which may include:  (i) providing commercially reasonable training to NantHealth’s sales personnel; and (ii) reasonably cooperating with NantHealth in responding to requests regarding specific technical requirements in Customer Agreements that relate to the Omics Services.
(c)    NantHealth shall: (i) use commercially reasonable efforts to market and actively promote the Omics Services in a professional manner; and (ii) refrain from making false or misleading claims or representations concerning Omics Services, whether in the marketing materials or otherwise.
2.7     Provision and Quality of Services and Capacity Planning.  NantOmics will use its commercial reasonable efforts to provide the Services in a timely, skillful, professional and workmanlike manner by qualified personnel exercising care, skill and diligence consistent with industry standards, and in accordance with the terms and conditions of this Agreement. NantHealth shall cooperate in good faith with NantOmics to coordinate capacity planning for the Omics Services.
2.8     Authorization and Informed Consent.  NantHealth will only exercise its rights under Section 2.1 if NantHealth obtains appropriate authorization and the informed consent from the applicable patient under an informed consent document approved by NantOmics (which informed consent document shall provide NantOmics with rights to Omics Data as contemplated in this Agreement).
2.9     Subsidiaries.  NantHealth may authorize its Subsidiaries to exercise the rights granted to NantHealth under Section 2.1, provided that such Subsidiaries agree to comply with the terms and conditions of this Agreement to the same extent that they apply to NantHealth.  NantHealth shall be responsible for the acts and omissions of such Subsidiaries which, for purposes of this Agreement, shall be deemed to be the acts and omissions of NantHealth.
2.10     Personnel.  Each Party will use a reasonably adequate number of qualified personnel with suitable training, education, experience and skill to enable such Party to perform under this Agreement.  The 

Page 4 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Parties agree to use their reasonable efforts to promptly resolve any good faith complaints regarding any of the other Party’s personnel, or otherwise concerning the value or efficacy of any Services or other functions performed by or on behalf of a Party in connection with this Agreement. 
2.11     Other Services.  The Parties may agree, from time to time, for NantOmics to provide Other Services to NantHealth, in which case the Parties shall discuss in good faith and mutually agree upon the applicable rates for such Services. 
3.    Revenue Share and Payment Terms.
3.1     Revenue Share.  Unless otherwise agreed by the Parties on a case-by-case basis, (i) NantHealth shall pay to NantOmics [***] and (ii) with respect to any of the Other Services provided by NantOmics, NantOmics may invoice NantHealth for such Other Services on a monthly basis and such invoices shall be due and payable by NantHealth within 45 days of receipt; [***].  Subject to the foregoing and any restrictions expressly set forth in this Agreement or as may be separately agreed in writing by the Parties, NantHealth will have the right, in its sole discretion, to determine the fees charged to Institutional Customers for the Omics Services resold pursuant to the Agreement and NantHealth’s delay in collecting, or failure to collect, fees from customers shall not affect NantHealth’s obligation to pay NantOmics the applicable fees for the Omics Services.  Further, except as expressly set forth in this Agreement, NantHealth shall have no recourse to NantOmics for any amounts refunded to an Institutional Customer to resolve any deficiencies in the Omics Services or the content contained in the Omics Reports.
[***]
3.2     Annual Minimum.  NantHealth agrees to pay NantOmics a non-cancellable annual minimum in fees in the amount of (a) $2,000,000 for each calendar year during the Initial Term beginning with and for the 2016 calendar year (i.e., $2 million for each of the 2016-2020 calendar years), (b) $25,000,000 for each calendar year during the Initial Exclusive Renewal Term (i.e., $25 million for each of the 2021-2023 calendar years) and (c) $50,000,000 for each calendar year during the Additional Exclusive Renewal Terms (i.e., $50 million for each of the 2024-2029 calendar years) (the “Annual Minimum”). The Annual Minimum shall be pro-rated on a per day basis if this Agreement is terminated on a date other than December 31 (i.e., ($2,000,000, $25,000,000 or $50,000,000 as applicable ÷ total number of days in such calendar year) multiplied by the number of days that have occurred up to the date of termination). If, at the end of any calendar year or, if applicable, the termination date, the total fees paid and payable to NantOmics for such calendar year are less than the Annual Minimum, NantHealth shall pay to NantOmics the difference between the amounts paid and payable and the Annual Minimum (the “True-up Payment”).  The True-up Payment shall be due and payable to NantOmics within forty-five (45) days after the end of such calendar year or, if applicable, the termination date.
3.3     Expenses.  Unless otherwise expressly set forth in this Agreement, each Party will bear all of its own costs and expenses incurred in connection with this Agreement or its performance hereunder, including any development costs, sales and marketing costs, and support costs.
3.4     Taxes.  All fees for the Services are exclusive of any taxes, duties or other similar governmental charges (collectively, “Taxes”).  If NantOmics is required by law to collect any Taxes for the provision or supply of any Services hereunder, then NantHealth will pay such Taxes or present an exemption certificate acceptable to the taxation authorities, provided that such Taxes are billed as a separate item on each invoice.

Page 5 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

3.5     Records and Audits.  NantHealth shall keep accurate records (together with supporting documentation) of Services sold pursuant to this Agreement, appropriate to determine the amount of fees and other monies due to NantOmics hereunder.  Such records shall be retained for at least two (2) years following the end of the Term.  Upon at least thirty (30) days prior written notice to NantHealth, NantOmics will be entitled to retain, at its own expense, an independent certified public accounting firm reasonably acceptable to Nant Health (the “Auditor”), solely for the purpose of auditing those records (which shall not include access or examination of any systems) that are reasonably necessary to determine NantHealth’s compliance with its payment obligations under this Agreement.  Prior to any audit, the Auditor will be required to sign a confidentiality and/or non-disclosure agreement reasonably acceptable to NantHealth, and the results of the audit and all information reviewed during such audit will be deemed the NantHealth’s Confidential Information.  Such audit shall be conducted in accordance with generally accepted auditing standards, during NantHealth’s customary business hours, and according to its customary office policies and procedures.  NantOmics shall be entitled to one audit per calendar year during the Term and during the two (2) years thereafter.  Upon the conclusion of an audit, the period covered during such an audit may not be reexamined in any subsequent audit.   If an audit discloses that NantHealth has underpaid NantOmics an amount that is more than five percent (5%) of the amount actually due under this Agreement during any 6 month period, then NantHealth shall pay all reasonable expenses of the Auditor directly incurred by NantOmics Party for such audit in addition to the underpaid amount disclosed through such audit and due under this Agreement.
3.6     License.  In addition to the fees payable to NantOmics under this Agreement, in further consideration of the rights granted to NantHealth hereunder, NantHealth has entered into the License Agreement with NantOmics as of the Effective Date.  
     4.    Licenses and Intellectual Property Ownership.
4.1    Reserved.  
4.2    Trademarks.
(a)    Subject to the terms and conditions of this Agreement and only to the extent required by applicable laws, rules or regulations, NantOmics hereby grants to NantHealth and its Subsidiaries a non-exclusive, non-transferable (except in accordance with Section 16.4) right and license to use the NantOmics Marks in connection with the marketing, sale and provision of Omics Services hereunder and to otherwise fulfill the terms of this Agreement.
(b)    NantHealth’s and its Subsidiaries’ use of the NantOmics Marks as contemplated by Section 4.2(a) above must be in accordance with the NantOmics’ trademark use guidelines and instructions, if any, furnished in writing from time to time.  NantOmics will give NantHealth written notice of any changes to such specifications or guidelines, and will give NantHealth a reasonable time to modify its use of the NantOmics Marks to comply therewith.
(c)    All goodwill in and to the NantOmics Marks will inure solely to the benefit of NantOmics.  
4.3     Omics Reports.  Subject to the terms and conditions of this Agreement, NantOmics hereby grants to NantHealth a non-exclusive, non-transferable (except in accordance with Section 16.4), right and license to distribute the Omics Reports solely to the applicable requisitioning physicians.

Page 6 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

4.4     Omics Data.  Subject to the terms and conditions of this Agreement, NantOmics hereby grants to NantHealth a non-exclusive, non-transferable (except in accordance with Section 16.4), right and license to use Omics Data collected by or for NantHealth as reasonably necessary to perform Omics Transactional Activities.
4.5     Restrictions.  NantHealth agrees that it will not, and will not permit others to: (a) reverse engineer, disassemble, decompile, decode, modify or adapt any aspect of the technology platform used by NantOmics to provide the NantOmics Services or otherwise attempt to derive or gain access to the source code or algorithms thereof, in whole or in part; (b) remove, obscure or alter from any NantOmics marketing materials or Omics Service reports any titles, trademarks, or copyright, patent or other proprietary or restrictive legends or notices, or any end user warning or advisory, affixed to or contained therein or thereon; (c) release to a third party the results of any evaluation or testing of any Omics Services without NantOmics prior written approval; (d) otherwise market or sell any Omics Service or use any NantOmics Marks or NantOmics marketing materials except as expressly set forth this Agreement or otherwise agreed in writing. 
4.6     Ownership, Reservation of Rights.  Other than the express license rights granted by NantOmics in Sections 4.1 through 4.4 above, (a) NantOmics and its licensors reserve, retain and shall own all right, title, and interest (including intellectual property rights) in and to the Omics Services, Omics Platform, NantOmics Marks, NantOmics marketing materials, Omics Reports, Omics Data and all other data, information, discoveries and inventions (including any improvements modifications or derivative works of any of the foregoing) created by either party, alone or with others, in connection with the foregoing or this Agreement (collectively, the “Omics Materials”) and (b) neither NantHealth nor any third party: (i) has or will have, acquire or claim any right, title, or interest in or to any of the Omics Materials; or (ii) has or will have any right or license to, and shall not, use any of the Omics Materials.  For the avoidance of doubt, and without limitation of the foregoing, the Omics Materials constitute the Confidential Information of NantOmics and shall include any and all companion diagnostic, biomarker, neoantigen, neoepitope and other discoveries and inventions arising from the Omics Services, Omics Reports and/or Omics Data.  NantHealth and its Affiliates agree to assign and do hereby assign any right, title or interest it may have in and to the Omics Materials to NantOmics.  NantHealth and its Affiliates covenant that they will not take any action inconsistent with NantOmics’ or its licensors’ ownership and interests set forth in this Section 4.6, or assist any Person in doing the same, including, for the avoidance of doubt, asserting any claim or suit that the Omics Materials (or any use thereof or operation of NantOmics’ business) infringes any intellectual property right owned or controlled by NantHealth or its Affiliates.  In no event will any transaction contemplated by this Agreement be construed as a sale or assignment of NantOmics’ intellectual property.  Furthermore and for the avoidance of doubt, NantOmics expressly reserves, and NantHealth may not exercise, any and all rights with respect to the Omics Services outside the Commercial Field of Use.
5.    Other Covenants.
5.1     Insurance.  During the Term, at such Party’s expense, each Party will maintain policies of insurance with insurance companies having a financial strength rating no lower than “A-” and a size category not lower than “XII” as rated by the A.M. Best Company, and in amounts which are reasonable and prudent in light of such Party’s business, potential liabilities to the other Party hereunder, and other relevant factors, including the following:  (i) Commercial General Liability insurance with limits not less than One Million U.S. Dollars ($1,000,000) combined single limit per occurrence and Two Million U.S. Dollars ($2,000,000) aggregate for products, completed operations, personal injury (including death) and property damage arising 

Page 7 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

out of this Agreement; (ii) Errors and Omissions insurance with limits of at least Five Million U.S. Dollars ($5,000,000) per occurrence and in the aggregate; and (iii) Workers’ Compensation insurance with applicable statutory limits.  The policies must contain no exclusions for sole proprietors, executive officers, partners or members and must have waivers of subrogation.
5.2     Subcontractors.  NantOmics may subcontract its obligations under this Agreement to a third party.  NantOmics will remain responsible to NantHealth for any performance of its obligations hereunder notwithstanding the permitted engagement of any such third party.
5.3     Further Assurances.  Each Party will, upon the reasonable request of the other Party and at the requesting Party’s sole cost and expense, promptly execute such documents and perform such acts as may be necessary to give full effect to the terms of this Agreement.   
5.4     Compliance with Laws.  Each Party will comply with all applicable Laws, governmental requirements, and industry standards, including those with respect to privacy, data protection, portability, or accountability, applicable to such Party or its personnel with respect to the Omics Services and the performance of its obligations and exercise of its rights under this Agreement.  Neither Party will, nor permit any third parties to, export, re-export, or release, directly or indirectly, any Controlled Technology to any country or jurisdiction to which the export, re-export, or release of any Controlled Technology (a) is prohibited by applicable Law or (b) without first completing all required undertakings (including obtaining any necessary export license or other governmental approval).   As used herein, “Controlled Technology” means any software, documentation, technology, or other technical data, or any products that include or use any of the foregoing, of which the export, re-export, or release to certain jurisdictions or countries is prohibited or requires an export license or other governmental approval under any Law, including the U.S. Export Administration Act and its associated regulations.
6.    Force Majeure.
6.1     Force Majeure.  Neither Party will be liable or responsible to the other Party, nor be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement, when and to the extent such failure or delay is caused by (a) acts of God; (b) flood, fire, or explosion; (c) war, terrorism, invasion, riot, or other civil unrest; or (d) embargoes or blockades in effect on or after the Effective Date (each of the foregoing, a “Force Majeure Event”); 
6.2     Obligations.  Section 6.1 and Section 14.3 will only apply to the extent (a) the Force Majeure Event is outside the reasonable control of the affected Party and is not due to the affected Party’s fault or negligence; (b) the affected Party provides notice of the Force Majeure Event to the other Party, stating the period of time the occurrence is expected to continue; and (c) the affected Party uses diligent efforts to end the failure or delay and minimize the effects of such Force Majeure Event.
7.    Regulatory Matters.
7.1     Privacy and Security Matters.  The Parties agrees that protected health information exchanged in connection with this Agreement shall be governed by that certain Bilateral Business Associate Agreement executed by the Parties (“BAA”).
7.2    Regulation.  

Page 8 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(a)    If and to the extent any Omics Service is subject to regulation by the FDA or other governmental authority, NantOmics shall fulfill, and NantHealth shall provide reasonable assistance and cooperation so that NantOmics can fulfill, all corresponding regulatory requirements, including compliance with all applicable Laws related to premarket clearance or approval, marketing, sale and distribution of the Omics Service (and upon NantHealth’s request, NantOmics will provide NantHealth with any such clearance or approval documentation to support the marketing of the Omics Service).
(b)    Unless expressly agreed by NantOmics in writing on a case-by-case basis, NantHealth will not seek any licenses, permits or approvals or make any determinations that may result in imposition of any obligations or limitations on NantOmics with respect to the regulatory status of any of Omics Service.
(c)    If NantOmics decides to seek, or permits NantHealth to seek, any licenses, permits, or approvals or to take any action that may result in any Omics Service being deemed regulated by the FDA or that may otherwise materially impact the regulatory status of any Omics Offering, then NantOmics will inform NantHealth and the Parties will work together to minimize the effect of such regulation, obligation or limitation, to the extent reasonably practicable. 
7.3     Omnibus Reconciliation Act of 1980.  As applicable under the Omnibus Reconciliation Act of 1980, until the expiration of four (4) years after the furnishing of Services pursuant to this Agreement, each Party will, upon receipt of written request, and if then requested to make such information available under the then-existing Law, make available to the Secretary of the U.S. Department of Health and Human Services, the Comptroller General of the U.S. Department of Secretary of Health and Human Services, or any of their fully-authorized representatives, the books, documents, and/or records of such Party that are necessary to verify the nature and extent of costs associated therewith.  The record keeping and disclosure provisions of this Section 7.3 will apply to all services provided, offered or sold a Party hereunder, but will be applicable only if a Party receives remuneration in the amount of $10,000 or more with regard to such services performed in relation to a single customer.
8.    Confidentiality.
8.1     Obligations.  From time to time in connection with this Agreement, either Party (as the “Disclosing Party”) has or may disclose or make available to the other Party or its Affiliates (each, the “Receiving Party”) Confidential Information, whether before or after the Effective Date.  In such cases, and subject to the exceptions and limitations expressly set forth in this Agreement, the Receiving Party will (a) not use the Disclosing Party’s Confidential Information, or permit it to be accessed or used, for any purpose other than to exercise its rights or perform its obligations under this Agreement; and (b) not disclose the Disclosing Party’s Confidential Information to any Person except to its Representatives who need to know the Confidential Information in order to assist the Receiving Party, or to act on its behalf, in exercising the Receiving Party’s rights or performing the Receiving Party’s obligations under this Agreement, where such Representatives are themselves bound by nondisclosure agreements or obligations as least as restrictive as those set forth in this Section 8.1.  The Receiving Party will be responsible for any breach of, or non-compliance with, this Section 8.1 by its Representatives.  The obligation not to use or disclose a Party’s Confidential Information will remain in effect until one of the exceptions in Section 8.2 occurs.
8.2     Exceptions.  The restrictions set forth in Section 8.1 will not apply to Confidential Information that, at the time of disclosure to or receipt by the Receiving Party or its Representatives:  (a) is in the public domain or is or becomes generally available to and known by the public other than resulting from, directly 

Page 9 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

or indirectly, any breach of this Section 8 by the Receiving Party or its Representatives; (b) is or becomes available to the Receiving Party or any of its Representatives on a non-confidential basis from a third party; provided, that such third party is not and was not prohibited from disclosing the Confidential Information; or (c) was or is independently developed by the Receiving Party or its Representatives without reference to or use of, in whole or in part, any of the Disclosing Party’s Confidential Information.
8.3     Legally Required Disclosure.  Notwithstanding anything in this Section 8 to the contrary, if a Receiving Party or any of its Representatives is required pursuant to applicable Law or the rules or regulations of a stock exchange or similar self-regulatory authority, to disclose any of the Disclosing Party’s Confidential Information, then the Receiving Party agrees, to the extent legally permissible and as soon as reasonably practicable, to provide the Disclosing Party with written notice of the event so that the Disclosing Party may, at the Disclosing Party’s expense, seek a protective order or other remedy.  The Receiving Party or its Representative (as applicable) will use its commercially reasonable efforts to consult with the Disclosing Party with respect to any effort by the Disclosing Party to resist or narrow the scope of such requirement or request, or to seek such protective order or other remedy.  If such protective order or other remedy is not obtained, then the Receiving Party or its Representative (as applicable):  (a) may, without liability, disclose that portion of the Disclosing Party’s Confidential Information that it is required to disclose; and (b) will use its commercially reasonable efforts to have confidential treatment accorded to the Confidential Information so disclosed.  Furthermore, Section 8 will not apply to the disclosure of Confidential Information if such disclosure is necessary to establish rights or enforce obligations under this Agreement, but only to the extent that any such disclosure is necessary.  Any information disclosed pursuant to this Section 8.3 will retain its confidential status for all other purposes.
8.4     Effect of Termination.  Upon termination of this Agreement, at the Disclosing Party’s request, the Receiving Party will, and will cause its Representatives (and, if applicable, its Affiliates) to, promptly return or destroy (at the Receiving Party’s option) all Confidential Information received from the Disclosing Party in tangible form, together with all copies thereof, in such Person’s possession; provided, however, that the Receiving Party may keep one (1) copy of the Disclosing Party’s Confidential Information: (a) to the extent necessary to exercise its surviving rights and perform its surviving obligations hereunder; (b) to the extent required to be maintained pursuant to applicable law or to satisfy the Receiving Party’s record retention obligations and (c) in accordance with its corporate security and/or disaster recovery procedures, to the extent such Confidential Information is in electronic form.  The Receiving Party will, upon request, promptly certify in writing that it has complied with the obligations of this Section 8.4.
8.5     Protected Health Information.  For the avoidance of doubt, the use and protection of protected health information received by a Party or its Representatives hereunder will be governed by the BAA.
9.    Public Announcements.
9.1      Publicity.  Except as may be required by applicable Law or the rules or regulations of a stock exchange or similar self-regulatory authority, neither Party will issue or release any public announcement, statement, press release or other publicity relating to this Agreement without the prior written consent of the other Party.  
9.2     Use of Marks.  Except as expressly authorized by this Agreement, neither Party will use the other Party’s trademarks, service marks, trade names, logos, domain names or other indicia of source, origin, association or sponsorship, without the prior written consent of the other Party.

Page 10 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

10.    Representations and Warranties.
10.1     Mutual Representations and Warranties.  Each Party represents and warrants to the other Party that: (a) it is duly formed, validly existing, and in good standing as a limited liability company under the Laws of its jurisdiction of formation;  (b) it has, and throughout the term of this Agreement and any Customer Agreement will retain, the full right, power, and authority to enter into this Agreement, to grant the rights it grants hereunder and to perform its obligations under this Agreement; (c) its execution of this Agreement has been duly authorized by all necessary organizational action of such Party; (d) when executed and delivered by it, this Agreement will constitute its legal, valid, and binding obligation, enforceable against it in accordance with its terms; and (e) its execution, delivery, and performance of its obligations under this Agreement does not and will not violate any judgment, order, decree, or applicable Law, nor does it or will it violate any agreement to which it is a party.
10.2     Disclaimer.  EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, EACH PARTY HEREBY DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, WITH RESPECT TO THIS AGREEMENT OR ANY SUBJECT MATTER HEREOF.   NEITHER PARTY SHALL MAKE ANY REPRESENTATIONS OR WARRANTIES REGARDING THE OTHER PARTY’S PRODUCTS OR SERVICES OTHER THAN THOSE SET FORTH IN THIS AGREEMENT.
11.    Indemnification.
11.1     Indemnification.  Subject to the provisions of this Section 11, each Party (the “Indemnifying Party”) agrees to defend the other Party and its Representatives, and all of such Persons’ successors and assigns (collectively, the “Indemnified Persons”), from and against any and all third party Claims, and indemnify and hold the Indemnified Persons harmless from and against any and all Losses incurred or sustained by the Indemnified Persons, or any of them, to the extent such Claim and related Loss is a result of any of the following:
     (a)    any violation of applicable Law by the Indemnifying Party;
(b)    any gross negligence or willful misconduct in connection with its performance of any covenant or agreement applicable to Indemnifying Party contained in this Agreement (including the performance of the Services), including any personal injury, death, or damage to tangible personal or real property; except any of the foregoing based on allegations of medical malpractice or liability arising out of delivery of (or a failure to deliver) medical care;
(c)    taxes assessed or claimed against any of the Indemnified Persons that are obligations of the Indemnifying Party in connection with this Agreement or which result from the breach of this Agreement by the Indemnifying Party; and
(d)    any Claims that the Indemnifying Party’s services, products, marketing materials or any use, promotion, marketing, distribution, sale or delivery thereof as permitted and in accordance with this Agreement, infringe, misappropriate, or violate any intellectual property or other rights of a third party, including any damages suffered by Indemnified Persons’ customers as a result thereof for which the Indemnified Persons are liable.
11.2    Infringement Remedy.  

Page 11 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(a)    In the event of a Claim that the Indemnifying Party’s services, products, or marketing materials, or any use, promotion, marketing, distribution, sale or delivery thereof in accordance with this Agreement, infringe, misappropriate, or violate any intellectual property right of a third party, or if any use of any of such item (or any respective component thereof) is enjoined or threatened to be enjoined, then the Indemnifying Party will, at its sole cost and expense, (i) procure for the Indemnified Persons the right to continue to receive and use such item to the full extent contemplated by this Agreement; or (ii) modify or replace the elements that infringe or are alleged to infringe to make them non-infringing while providing reasonably equivalent services, features and/or functionality (as applicable).  
(b)    If, in Indemnifying Party’s discretion, none of the options set forth in Section 11.2(a) are commercially practicable, then either Party will have the right to terminate this Agreement with respect to the applicable products or services immediately.  
(c)    The remedies set forth in this Section 11.2 are in addition to, and not in lieu of, all other remedies that may be available to the Indemnified Persons under this Agreement or otherwise, including the Indemnified Persons’ right to indemnification pursuant to Section 11.1.
11.3     Exclusions from Indemnification.  Notwithstanding Sections 11.1 and 11.2 above, the Indemnifying Party will have no obligation or liability under this Section 11 for any Claim or action regarding any Claim resulting from any of the following: (a) modifications to the Indemnifying Party’s services, products or marketing materials made pursuant to the Indemnified Persons’ designs, specifications, or instructions; (b) modifications to the Indemnifying Party’s services, products, or marketing materials by anyone other than the Indemnifying Party, other than modifications authorized in writing by the Indemnifying Party; (c) the combination, operation, or use of Indemnifying Party’s services, products or marketing materials with other products, processes, or materials if the Indemnifying Party’s services, products or marketing materials themselves do not infringe; (d) Indemnified Persons’ or its customers’ continued engagement in allegedly infringing activities after receipt of notice from the Indemnifying Party of a Claim and after being provided with modifications that would have avoided the alleged infringement; or (e) any marketing, sale or use of the Indemnifying Party’s services, products or marketing materials that is not in compliance with this Agreement. 
11.4    Indemnification Procedure.
(a)    A Person seeking defense and indemnification under this Section 11 (the “Indemnified Person”) will promptly notify the Party from whom defense and indemnification is being sought (the “Indemnifying Party”) in writing, describing the circumstances, in reasonable detail, for which it seek defense and indemnification.
(b)    Upon notice of a Claim, the Indemnifying Party will immediately assume the investigation and defense of such Claim, and, in connection therewith, will employ counsel of its own choosing at its sole cost and expense.  At the Indemnifying Party’s request and expense, the Indemnified Person will provide reasonable cooperation in connection with the investigation and defense of such Claim; provided, however, that the Indemnified Person will not be required to disclose any confidential information which it does not have the right to disclose or to waive any privilege.  The Indemnified Person may also participate in and observe (but not control) the investigation and defense of such Claim, at its own cost and expense and with counsel of its choosing.

Page 12 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

(c)    If the Indemnifying Party fails to defend a Claim hereunder within a reasonable amount of time after receiving notice thereof, the Indemnified Person will have the right, but not the obligation, and without waiving any of its other rights hereunder, to undertake the defense of and to compromise or settle such Claim, on behalf of and at the risk and expense of the Indemnifying Party.  
(d)    The Indemnifying Party will not settle any Claim in a manner that adversely affects the rights or assets, or restrains or interferes with the business or operations of, the Indemnified Person or its Affiliates, or which involves an admission of liability of behalf of the Indemnified Person or its Affiliates, or imposes any obligation upon the Indemnified Person that the Indemnifying Party does not discharge, in each case without the Indemnified Person’s prior written consent (which shall not be unreasonably withheld).
(e)    An Indemnified Person’s failure to perform any obligations under this Section 11.4 will not diminish an Indemnifying Party’s obligations hereunder, except to the extent that the Indemnifying Party can demonstrate that it has been materially prejudiced as a result of such failure.
12.    Limitation of Liability.
12.1     Limitation of Liability.  EXCEPT AS OTHERWISE SET FORTH IN SECTION 12.3, IN NO EVENT WILL A PARTY’S LIABILITY UNDER THIS AGREEMENT EXCEED THE GREATER OF: (i) AGGREGATE FEES AND REIMBURSABLE EXPENSES PAID TO NANTOMICS UNDER THIS AGREEMENT (INCLUDING AMOUNTS ALREADY PAID AND AMOUNTS THAT HAVE ACCRUED BUT NOT YET BEEN PAID) IN THE EIGHTEEN (18) MONTH PERIOD PRECEDING THE CLAIM AND (ii) ONE MILLION DOLLARS ($1,000,000).
12.2     EXCLUSION OF CONSEQUENTIAL DAMAGES.  EXCEPT AS OTHERWISE SET FORTH IN SECTION 12.3, IN NO EVENT WILL ANY PARTY BE LIABLE UNDER THIS AGREEMENT FOR ANY LOST PROFITS OR FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL, OR PUNITIVE DAMAGES, REGARDLESS OF WHETHER SUCH PARTY HAS BEEN NOTIFIED OF THE POTENTIAL FOR SUCH DAMAGES, OR WHETHER SUCH DAMAGES WERE REASONABLY FORESEEABLE, OR WHETHER ANY CLAIM FOR RECOVERY IS BASED ON THEORIES OF CONTRACT, TORT, OR OTHERWISE.
12.3    Exceptions.  The exclusions in Section 12.1 and 12.2 will not apply to (a) Losses arising out of or relating to a Party’s knowing or negligent failure to comply with its obligations under Section 4 (Licenses and Intellectual Property Ownership) or Section 7 (Regulatory Matters) or failure to comply with Section 8 (Confidentiality); (b) amounts finally awarded by a court of competent jurisdiction to third party claimants which are obligated to be covered under a Party’s indemnification obligations under Section 11; (c) Losses arising from a Party’s gross negligence or more culpable conduct, including any willful misconduct or intentionally wrongful acts; or (d) a Party’s obligation to pay attorneys’ fees and other costs pursuant to Section 16.9(e)
12.4     Essential Basis.  THE DISCLAIMERS, EXCLUSIONS AND LIMITATIONS OF LIABILITY SET FORTH IN THIS AGREEMENT FORM AN ESSENTIAL BASIS OF THE BARGAIN BETWEEN THE PARTIES AND, ABSENT ANY OF SUCH DISCLAIMERS, EXCLUSIONS OR LIMITATIONS OF LIABILITY, THE PROVISIONS OF THIS AGREEMENT, INCLUDING THE ECONOMIC TERMS, WOULD BE SUBSTANTIALLY DIFFERENT.  THE DISCLAIMERS, EXCLUSIONS AND LIMITATIONS OF LIABILITY SET FORTH IN THIS AGREEMENT WILL APPLY TO THE MAXIMUM 

Page 13 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

EXTENT PERMITTED BY APPLICABLE LAW, EVEN IF ANY REMEDY FAILS ITS ESSENTIAL PURPOSE.
13.    Term.  
13.1     Initial Term.  The initial term of this Agreement commences on the Effective Date and will continue in effect until December 31, 2020, unless terminated earlier pursuant to Section 14 (the “Initial Term”).  The Initial Term, together with each Exclusive Renewal Term (if any) and the Non-Exclusive Renewal Term (as defined below), are collectively referred to as the “Term”.
13.2    Renewal Options.  
(a)    If NantHealth meets the applicable Renewal Threshold set forth below for the Initial Term, NantHealth may, at its option, renew this Agreement (with exclusivity under Section 2.2) for an additional three (3) years (i.e., through December 31, 2023) by providing NantOmics with written notice of its election to renew at least ninety (90) days prior to the end of the Initial Term (the “Initial Exclusive Renewal Term”).  
(b)    Following the Initial Exclusive Renewal Term, NantHealth may, at its option, renew this Agreement (with exclusivity under Section 2.2) for up to two (2) additional three (3) year periods (i.e., through December 31, 2026 for the first renewal option and through December 31, 2029 for the second renewal option) (each, an “Additional Exclusive Renewal Term”) by providing NantOmics with written notice at least ninety (90) days prior to the end of the then-current renewal term, if NantHealth meets the applicable Renewal Threshold for the then-current renewal term.  The Initial Exclusive Renewal Term and each Additional Exclusive Renewal Term are collectively referred to as the “Exclusive Renewal Terms.”
(c)    The “Renewal Threshold” for the Initial Term and each Exclusive Renewal Term is set forth in the table below:
	
		
	 
	Renewal Threshold

	Initial Term
	300,000 Omics Service tests completed between the Effective Date and June 30, 2020

	First Exclusive Renewal Term
	570,000 Omics Service tests completed between July 1, 2020 and June 30, 2023

	Second Exclusive Renewal Term
	760,000 Omics Service tests completed between July 1, 2023 and June 30, 2026

(d)    If this Agreement is not renewed for an Exclusive Renewal Term as provided above, then NantHealth may, at its option at the end of the Initial Term or the first or second Exclusive Renewal Term (as applicable), renew this Agreement on a non-exclusive basis for one additional three (3) year term (the “Non-Exclusive Renewal Term”) by providing NantOmics with written notice at least ninety (90) days prior to the end of the Initial Term or such Exclusive Renewal Term, in which case the exclusive rights granted to NantHealth under Section 2.2 shall not renew and shall automatically terminate as of the last day of the Initial Term or such Exclusive Renewal Term.
(e)    For the avoidance of doubt, this Agreement shall automatically expire (i) at the end of the Initial Term or the first or second Exclusive Renewal Term, unless renewed by NantHealth as expressly 

Page 14 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

provided above or (ii) in any case, at the end of the third Exclusive Renewal Term or Non-Exclusive Renewal Term. 
14.    Termination.
14.1     Termination for Cause.  Either Party may terminate this Agreement, immediately upon written notice to the other Party, if the other Party materially breaches this Agreement and such breach (a) is incapable of cure or (b) being capable of cure, remains uncured thirty (30) days after the breaching Party receives written notice from the non-breaching Party thereof.
14.2     Termination for Insolvency.  Either Party may terminate this Agreement, immediately upon written notice to the other Party, if the other Party: (a) becomes insolvent or admits inability to pay its debts generally as they become due; (b) becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency Law, which is not fully stayed within seven (7) days or is not dismissed or vacated within forty-five (45) days after filing; (c) is dissolved or liquidated or takes any action for such purpose; (d) makes a general assignment for the benefit of creditors; or (e) has a receiver, trustee, custodian, or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any portion of its property or business (and such appointment is not discontinued within sixty (60) days thereafter).
14.3     Termination for Force Majeure.  Subject to Section 6.2, either Party may terminate this Agreement, immediately upon written notice to the other Party, if a Force Majeure Event affecting the other Party continues substantially uninterrupted for a period of thirty (30) days or more.
14.4     Termination for Exclusion.  Either Party may terminate this Agreement, immediately upon written notice to the other Party, if the other Party is debarred, excluded, suspended or otherwise determined to be ineligible to participate in federal healthcare programs (collectively, “Excluded” or “Exclusion”).  Accordingly, the Excluded Party will provide the other Party with prompt written notice if it (a) receives notice of action or threat of action with respect to its Exclusion during the term of this Agreement; or (b) becomes Excluded.
14.5     Termination for Convenience.  NantHealth may terminate this Agreement at any time for any reason upon providing at least six (6) months prior written notice to NantOmics.
14.6    Effect of Termination.
(a)    The termination of this Agreement will not have the effect of terminating any Customer Agreement entered into prior to the effective date of termination.  Each Party will continue to honor commitments made under the terms and conditions of each such Customer Agreement for up to three (3) years after the effective date of termination of this Agreement, including the provision of Services to/for such Institutional Customers for such three (3) year period.  NantHealth will continue to make payments to NantOmics with respect to each Customer Agreement still in effect in accordance with this Agreement.
(b)    Upon termination of this Agreement, except in connection with the rights and obligations set forth in this Section 14.6, (i) NantHealth shall promptly cease all use of the NantOmic’s Marks and all marketing and sales-related efforts with respect to the Omics Services; (ii) NantHealth will promptly cease to solicit or procure orders/transactions for Omics Services; (iii) NantHealth shall promptly deliver a copy of all Omics Data in its possession and return to NantOmics all copies of NantOmic’s marketing and related 

Page 15 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

materials; (iv) NantHealth shall promptly discontinue its use of Omics Data and delete and otherwise remove or destroy all other copies of any Omics Data that is in NantHealth’s possession or control; and (v) each Party will provide reasonable cooperation and assistance to the other Party in transitioning Institutional Customers to NantOmics for the continued provision of Omics Services.
15.    Survival.  The provisions of Sections 1 (Definitions), 3.3 (Expenses), 3.4 (Taxes), 3.5 (Records and Audits), 4.5 (Restrictions), 4.6 (Ownership, Reservation of Rights), 6 (Force Majeure), 8 (Confidentiality), 10.2 (Disclaimer), 11 (Indemnification), 12 (Limitation of Liability), 14.6 (Effect of Termination), 15 (Survival), and 16 (Miscellaneous) will survive and continue after expiration or termination of this Agreement indefinitely.  The provisions of Sections 2.3 (Customer Engagement, Billing and Order Processing) through 2.11 (Other Services), 3.1 (Revenue Share), 5 (Other Covenants), 7 (Regulatory Matters) and 10.1 (Mutual Representations and Warranties) will survive and continue after termination of this Agreement for the full duration of any Customer Agreement, but in each case solely with respect to any such continuing Customer Agreement.  In addition, the rights and obligations of any Party which, by their nature, extend beyond the termination of this Agreement will continue in full force and effect notwithstanding the termination of this Agreement.
16.    Miscellaneous.    
16.1     Relationship of the Parties.  The relationship between the Parties is that of independent contractors.  Nothing contained in this Agreement will be construed as creating any agency, partnership, joint venture, or other form of joint enterprise, employment, or fiduciary relationship between the Parties.  Neither Party will have authority to contract for or bind the other Party in any manner whatsoever, except as expressly set forth in this Agreement.
16.2     Notices.  All notices hereunder will be in writing and addressed to a Party at the address set forth under such Party’s name on the signature page hereto (or as otherwise specified by a Party in a notice given in accordance with this Section 16.2).  Notices sent in accordance with this Section 16.2 will be deemed effectively given:  (a) when received, if delivered by hand (with written confirmation of receipt); (b) when received, if sent by a nationally recognized overnight courier (receipt requested); or (c) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.
16.3     Interpretation.  For purposes of this Agreement, (a) the words “include,” “includes,” and “including” will be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto,” and “hereunder” refer to this Agreement as a whole.  Unless the context otherwise requires, references herein: (i) to Sections and Exhibits refer to the sections of, and exhibits attached to, this Agreement; (ii) to an agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof; and (iii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder.  This Agreement will be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing an instrument to be drafted.  The Exhibits referred to herein will be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.  The headings in this Agreement are for reference only and will not affect the interpretation of this Agreement.

Page 16 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

16.4     Assignment.  Neither Party may assign or otherwise transfer any of its rights, or delegate or otherwise transfer any of its obligations or performance, under this Agreement, in each case whether voluntarily or involuntarily, without the other Party’s prior written consent, which will not be unreasonably withheld, conditioned, or delayed; provided, however, that NantOmics may assign this Agreement to an Affiliate with the capability to provide and perform the NantOmics Services or in connection with the sale of all or substantially all of the assets to which this Agreement relates.  Any assignment, delegation, or other transfer without such prior written consent will be null and void.  This Agreement is binding upon and inures to the benefit of the Parties and their respective permitted successors and assigns.
16.5     No Third Party Beneficiaries.  This Agreement is for the sole benefit of the Parties, their respective permitted successors and assigns, and the Indemnified Persons, and nothing herein, express or implied, is intended to or will confer on any other Person any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.
16.6    Amendment and Modification; Waiver.  This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party.  No waiver by any Party of any of the provisions hereof will be effective unless explicitly set forth in writing and signed by the Party so waiving.  Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement will operate or be construed as a waiver thereof; nor will any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
16.7     Severability.  If any provision of this Agreement or the application thereof to any Party or circumstances is declared void, illegal, or unenforceable, then the remainder of this Agreement will be valid and enforceable to the extent permitted by applicable Law.  
16.8     Governing Law.  This Agreement will be governed by and construed in accordance with the Laws of the State of California applicable to agreements made and to be performed wholly within that State without regard to its conflicts of laws provisions.
16.9    Dispute Resolution.
(a)    Informal Resolution.  Except as otherwise provided in this Agreement, in the event of any dispute, claim, or controversy arising under, out of, or in connection with this Agreement (a “Dispute”), including as to the breach, performance, or interpretation of this Agreement or the rights, duties or liabilities of either Party hereunder, the Parties will first attempt in good faith to resolve such Dispute by negotiation and consultation between themselves.  If such Dispute is not resolved on an informal basis within thirty (30) days, each Party may, at its sole discretion, seek resolution of such matter in accordance with Section 16.9 and exercise its rights according to any other applicable sections of this Agreement, including, but not limited to, Section 14.
(b)    Arbitration.  Except as otherwise expressly provided in this Section, if the Parties do not reach a mutually acceptable resolution pursuant to Section 16.9(a) as to a Dispute, the Dispute shall be referred for resolution by final, binding arbitration in accordance with the provisions of this Section.  The arbitration shall be conducted by the American Arbitration Association (or any successor entity thereto) (“AAA”) under its rules of commercial arbitration then in effect, except as modified in this Agreement.  The arbitration shall be conducted in the English language, by a single arbitrator knowledgeable in the subject matter at issue in the Dispute and acceptable to both Parties; provided, however, that the Parties may by 

Page 17 of 20
Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

mutual agreement elect to have the arbitration conducted by a panel of three arbitrators (such single arbitrator or panel, the “Arbitrator”).  The Arbitrator shall, if appropriate, engage an independent expert with experience in the subject matter of the Dispute to advise the Arbitrator.
(i)    With respect to any Dispute referred to arbitration pursuant to this Section 16.9, the Parties and the Arbitrator shall use all reasonable efforts to complete any such arbitration within three (3) months from the issuance of notice of a referral of any such Dispute to arbitration.  The Arbitrator shall determine what discovery will be permitted, consistent with the goal of limiting the cost and time which the Parties must expend for discovery; provided that the Arbitrator shall permit such discovery as he or she deems necessary to permit an equitable resolution of the Dispute.
(ii)    The decision of the Arbitrator shall be the sole, exclusive, and binding remedy between them regarding the Dispute presented to the Arbitrator.  Any decision of the Arbitrator may be entered in a court of competent jurisdiction for judicial recognition of the decision and an order of enforcement.  The arbitration proceedings and the decision of the Arbitrator shall not be made public without the joint consent of the Parties, and each Party shall maintain the confidentiality of such proceedings and decision.
(iii)    Unless otherwise agreed by the Parties, the arbitration proceedings shall be conducted in Los Angeles, California.  The Parties shall share equally the cost of the arbitration filing and hearing fees, the cost of the independent expert retained by the Arbitrator, and the cost of the Arbitrator and administrative fees of AAA.  Each Party shall bear its own costs and attorneys’ and witnesses’ fees and associated costs and expenses.
(c)    Temporary Relief.  Pending the selection of the Arbitrator or pending the Arbitrator’s determination of the merits of any Dispute, either Party may seek appropriate interim or provisional relief from any court of competent jurisdiction as necessary to protect the rights or property of that Party.
16.10     Waiver of Jury Trial.  EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
16.11     Equitable Relief.  Notwithstanding anything else in this Agreement to the contrary, each Party acknowledges that a breach by a Party of this Agreement may cause the non-breaching Party immediate and irreparable harm, for which an award of damages may not be adequate compensation and agrees that, in the event of such breach or threatened breach, the non-breaching Party will be entitled to seek equitable relief, including in the form of orders for preliminary or permanent injunction, specific performance, interim or conservatory relief, and any other relief that may be available for any court, and the Parties hereby waive any requirement for the securing or posting of any bond in connection with such relief.  Such remedies will not be deemed to be exclusive but will be in addition to all other remedies available under this Agreement, at law or in equity, subject to any express exclusions or limitations in this Agreement to the contrary.
16.12     Counterparts.  This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.  Counterparts may be 

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Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

delivered by facsimile, electronic mail (including .pdf or any electronic signature complying with the U.S. Federal ESIGN Act of 2000) or other transmission method, and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
16.13     Entire Agreement.  This Agreement, together with all Exhibits and the BAA, constitutes the sole and entire agreement between the Parties solely with respect to the subject matter hereof, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.  There are no agreements, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein.  
[Signature Page Follows]

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Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated NantOmics Exclusive Reseller Agreement as of the date first written above.
	
			
	NantOmics, LLC
	 
	NantHealth, Inc.

	 
	 
	 

	 
	 
	 

	By:   /s/Charles Kim
	 
	By:    /s/Paul Holt

	 
	 
	 

	Name:   Charles Kim
	 
	Name:   Paul Holt

	 
	 
	 

	Title:   General Counsel
	 
	Title:  CFO

	 
	 
	 

	Address for Notices:
	 
	Address for Notices:

	 
	 
	 

	9920 Jefferson Blvd.
	 
	9920 Jefferson Blvd.

	Culver City, CA 90232
	 
	Culver City, CA 90232

	Attention:  General Counsel
	 
	Attention:  President

	 
	 
	 

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Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

Exhibit 10.1
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

EXHIBIT A
LICENSE AGREEMENT

Attached
	
		
	 
	 

	 
	 

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Second Amended and Restated NantOmics Exclusive Reseller Agreement
CONFIDENTIAL

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