Document:

Exhibit 10.1

 

AMENDED AND
RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(this “Agreement”), dated as of August 23, 2016 (the “Effective Date”), is made by and
between JetPay Corporation (the “Employer”) and
Michael Collester (“Executive”).

 

RECITALS

 

WHEREAS, ACI Merchant Systems, LLC, a wholly
owned subsidiary of the Employer (“ACI”), and Executive are parties to that certain Employment Agreement dated
as of November 7, 2014 (the “Prior Employment Agreement”);

 

WHEREAS, the parties desire to enter into this
Agreement to, among other things, amend and restate the Prior Employment Agreement in its entirety;

 

WHEREAS, Executive is currently employed by
ACI as the CEO of ACI; and

 

WHEREAS, the Employer desires to employ Executive
as the Chief Operating Officer of the Employer, and Executive agrees to accept such employment, in accordance with the terms and
conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual
covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Agreement, intending to be legally bound, hereby agree as follows:

 

1.          Employment.
The Employer agrees to employ Executive, and Executive accepts such employment hereunder, for a period beginning on the Effective
Date through December 31, 2017 (the “Initial Termination Date”) unless terminated sooner in accordance with Section
1(c) (the “Employment Period”). Notwithstanding the foregoing, the Employment Period shall be automatically extended
for an additional one-year period beginning on the Initial Termination Date and on each subsequent anniversary of the Initial Termination
Date thereafter unless either party notifies the other party in writing of its decision not to extend the Employment Period at
least 90 days prior to the automatic extension thereof or the Employment Period is otherwise terminated in accordance with Section
1(c).

 

(a)          Position
and Duties.

 

(i)          During
the Employment Period, Executive shall serve as the Chief Operating Officer of the Employer and in such other positions with the
Employer’s Affiliates (for no additional compensation) as are determined by the Board and shall have the normal duties,
responsibilities and authority implied by such position(s) and such other duties and responsibilities as are assigned by the
Board or its designee(s); provided that Executive’s principal place of employment shall remain at the Employer’s
offices in Bucks County, Pennsylvania, although Executive acknowledges that his position will require travel and the performance
of work on behalf of the Employer away from the principal place of employment, including in and around Dallas, Texas.

 

     

     

    

  

(ii)         During
the Employment Period, Executive shall faithfully, conscientiously and to the best of his ability devote Executive’s full
business time and attention to the business and affairs of the Employer and its Affiliates. Executive shall not engage, directly
or indirectly, in any other business, investment or activity that (a) interferes with the performance of Executive’s
duties under this Agreement (which shall include, without limitation, the preceding sentence), (b) is contrary to the interests
of the Employer or any of its Affiliates or (c) requires any portion of Executive’s business time; provided,
however, that, to the extent that the following does not impair Executive’s ability to perform Executive’s duties
pursuant to this Agreement (which shall include, without limitation, the preceding sentence), Executive may (1) serve on the
board or committee of any charitable, religious, or educational institution and (2) serve as a director of such other organizations.

 

(b)          Salary,
Bonus, Benefits and Expenses.

 

(i)          Salary.
During the Employment Period, the Employer will pay Executive an initial base salary of $300,000 per annum for the period from
the Effective Date through December 31, 2016 and $325,000 per annum thereafter (the “Base Salary”). The Board
may from time to time, in its sole discretion, review the Base Salary of Executive and increase (but not decrease) the Base
Salary by such amount as the Board, in its sole discretion, shall deem appropriate, based upon the performance of Executive. The
term “Base Salary” as used in this Agreement shall refer to the Base Salary as it may be so increased.

 

(ii)         Annual
Bonus. During the Employment Period, Executive shall be eligible to receive an annual bonus as determined by the Board in its
sole discretion.

 

(iii)        Benefits.
During the Employment Period, Executive shall be eligible to participate in and be covered on the same basis as other similarly
situated senior management employees of the Employer, under all employee benefit plans and programs of the Employer, including,
without limitation, vacation, paid-time off, retirement, health insurance and life insurance.

 

(iv)        Expenses.
Employer shall pay or reimburse Executive for reasonable and necessary expenses directly incurred by Executive in the course of
Executive’s employment by Employer in accordance with Employer’s standard policies and practices as in effect from
time to time. All reimbursements under this Section 1(b)(iv) shall be made as soon as practicable following submission
of a reimbursement request, but no later than the end of the calendar quarter following the month during which the underlying expense
was incurred. No right of Executive to reimbursement of expenses under this Agreement shall be subject to liquidation or exchange
for another benefit.

 

(v)         Rental
Home. During the Employment Period, the Employer shall (i) rent for Executive an apartment in or around Dallas, Texas for use
in connection with his service to the Employer, at a rental cost not to exceed $2,500 per month, and (ii) reimburse Executive for
the reasonable costs for Executive to fly to and from Dallas, Texas.

 

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(c)          Separation.
The Employment Period will terminate immediately upon Executive’s death. In addition, the Employer may, at any time, terminate
the Executive’s employment and the Employment Period with or without Cause, or due to Executive’s Disability, in each
case, upon written notice to Executive of such termination, and Executive may terminate the Employment Period with or without Good
Reason upon 60 days’ advance written notice to the Employer. Effective immediately upon any Separation, Executive shall resign,
and shall be deemed to have resigned, from all officer, employee and director positions held by Executive with the Employer or
any of its Affiliates.

 

(d)          Severance.

 

(i)          Termination
Without Cause or for Good Reason. If Executive’s employment with the Employer and its Affiliates is terminated during
the Employment Period by the Employer without Cause (other than by notice of nonrenewal of the Employment Period) or by Executive
for Good Reason, the Employer shall provide Executive with the following payments and benefits:

 

(1)          contingent
upon the effectiveness of a reasonable general release of claims in form and substance satisfactory to the Employer which is executed
within forty-five (45) days of the date of such termination, (A) Base Salary continuation during the period commencing
on the sixtieth (60th) date following such Separation and ending sixty (60) days following the last day of
the then-current Employment Period without giving effect to any automatic extension thereof (the “Severance Period”);
(B) provided that such Separation occurs on or after July 1 of the applicable calendar year, the annual bonus, if any, Executive
would have received for such calendar year had Executive remained employed through the date on which such bonuses are paid to eligible
employees generally, which annual bonus shall be paid at the time the Employer pays such bonuses to eligible employees generally
but in no event later than March 15 of the calendar year following the calendar year in which such Separation occurs and (C) payment
of Executive’s premiums for continuation coverage pursuant to the Consolidated Omnibus Budget Act of 1985, as amended (“COBRA”),
less the amount that an active employee would be required to pay for such coverage, for the Employer’s medical insurance
plan during the Severance Period (if eligible for COBRA and COBRA is timely elected), or until Executive obtains replacement medical
coverage, whichever occurs first;

 

(2)          immediate
vesting of all unvested equity incentives granted to Executive under the Employer’s equity incentive plan;

 

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(3)          any
accrued but unpaid Base Salary and unreimbursed expense due Executive under Section 1(b)(iv) together with any earned but
unpaid annual bonus with respect to the year prior to the year of Separation and accrued but unused vacation time; and

 

(4)          any
accrued and vested benefits under any employee benefit plan of the Employer or its Affiliates in which Executive was participating
immediately prior to such termination, such benefits to be provided in accordance with the terms of the applicable employee benefit
plan.

 

In addition, if Executive’s employment is terminated
by the Employer without Cause and in bad faith with the intention of thwarting Executive’s ability to earn the Contingency
Consideration as a “Seller” under the Purchase Agreement (each as defined in the Purchase Agreement), Employer shall
pay to Executive an amount equal to Executive’s share of the Contingency Consideration in his capacity as a Seller equal
to the product of (i) Executive’s percentage ownership of Employer immediately prior to the Closing (as defined in the
Purchase Agreement) multiplied by (ii) the difference of (x) $500,000.00, minus (y) the amount
of Contingency Consideration earned and paid to the Sellers, if any, under the Purchase Agreement as of the date of such termination
(provided that in no event shall there be any duplication of Contingency Consideration payments).

 

Notwithstanding the foregoing, if Executive breaches any
of the provisions of Section 3, Section 4 or Section 5 hereof, any and all remaining payments and benefits payable under this Agreement
shall be immediately forfeited.

 

(ii)         Other
Terminations. If Executive’s employment with the Employer and its Affiliates is terminated during the Employment Period
by the Employer for Cause or due to nonrenewal of the Employment Period or by Executive without Good Reason, the Employer’s
and its Affiliates’ sole obligation to Executive shall be to pay to Executive (x) any accrued but unpaid Base Salary
and accrued but unused vacation time for the period prior to the date of termination and (y) any accrued and vested benefits
under any employee benefit plan of the Employer or its Affiliates in which Executive was participating immediately prior to such
termination, such benefits to be provided in accordance with the terms of the applicable employee benefit plan. If Executive’s
employment with the Employer and its Affiliates is terminated during the Employment Period due to Executive’s death or Disability,
in addition to (x) and (y) above, the Employer or its Affiliates, as the case may be, shall also pay to Executive (or
his estate or beneficiaries, as the case may be) (z) accrued but unused vacation time and any unreimbursed expense due
Executive under Section 1(b)(iv); (aa) any earned but unpaid annual bonus with respect to the year prior to the year of termination;
and (ab) a pro-rata bonus with respect to the year of termination equal to a fraction where the numerator is the number of
completed calendar months of employment in such year and the denominator is twelve (12), payable when such bonuses are paid to
other employees of the Employer or its Affiliates.

 

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2.          Equity
Participation. During the Employment Period, Executive shall be eligible to participate in any equity-based compensation plan
approved by the Board in its sole discretion for similarly situated employees of the Employer and its Affiliates on the terms and
conditions set forth in such plan and the applicable award agreement.

 

3.          Confidential
Information.

 

(a)          Obligation
to Maintain Confidentiality. Executive shall not, during or after the Employment Period, without the prior express written
consent of the Employer, directly or indirectly use or divulge, disclose or make available or accessible any Confidential Information
(as defined below) to any Person (other than when required to do so in good faith to perform Executive’s duties and
responsibilities under this Agreement or when required to do so by a lawful order of a court of competent jurisdiction, any governmental
authority or agency, or any recognized subpoena power). In the event that Executive becomes legally compelled (by oral questions,
interrogatories, request for information or documents, subpoena, criminal or civil investigative demand or similar process) to
disclose any of the Confidential Information, then, prior to such disclosure, Executive will, if permissible under applicable law,
provide the Employer with prompt written notice so that the Employer may seek (with Executive’s cooperation but at Employer’s
sole expense) a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement.
In the event that such protective order or other remedy is not obtained, then Executive will furnish only that portion of the Confidential
Information which he is advised by counsel is legally required, and will cooperate with the Employer in the Employer’s efforts
to obtain reliable assurance that confidential treatment will be accorded to the Confidential Information. Executive shall also
proffer to the Employer, no later than the effective date of any termination of Executive’s employment with the Employer
for any reason (or upon earlier request by the Employer), and without retaining any copies, notes or excerpts thereof, all memoranda,
computer disks or other media, computer programs, diaries, notes, records, data, customer or client lists, marketing plans and
strategies, and any other documents consisting of or containing Confidential Information that are in Executive’s actual or
constructive possession or which are subject to Executive’s control at such time. For purposes of this Agreement, “Confidential
Information” shall mean all information respecting the business and activities of the Employer or any Affiliate of the
Employer, including, without limitation, the clients, customers, suppliers, employees, consultants, computer or other files, projects,
products, computer disks or other media, computer hardware or computer software programs, marketing plans, financial information,
methodologies, know-how, processes, practices, approaches, projections, forecasts, formats, systems, trade secrets, data gathering
methods and/or strategies of the Employer or any Affiliate of the Employer. Notwithstanding the immediately preceding sentence,
Confidential Information shall not include (i) any information that is, or becomes, generally available to the public (unless
such availability occurs as a result of Executive’s breach of any portion of this Agreement); (ii) any information that
became available to the public from a third party source which was not bound by a confidentiality agreement; and (iii) any
information not otherwise considered by the Board to be confidential and proprietary.

 

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(b)          Ownership
of Property. Executive acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments,
methods, processes, programs, designs, analyses, drawings, reports, patent applications, copyrightable work and mask work (whether
or not including any Confidential Information) and all registrations or applications related thereto, all other proprietary
information and all similar or related information (whether or not patentable) that relate to the Employer’s or any
Affiliate of the Employer’s actual or anticipated business, research and development, or existing or future products or services
and that are conceived, developed, contributed to, made, or reduced to practice by Executive (either solely or jointly with others) while
employed by Employer (including any of the foregoing that constitutes any proprietary information or records) (“Work
Product”) belong to the Employer or any Affiliate of the Employer designated by the Employer, and Executive hereby
assigns, and agrees to assign, all of the above Work Product to the Employer or such Affiliate of the Employer. Any copyrightable
work prepared in whole or in part by Executive in the course of Executive’s work for any of the foregoing entities shall
be deemed a “work made for hire” under the copyright laws, and the Employer or such Affiliate of the Employer shall
own all rights therein. To the extent that any such copyrightable work is not a “work made for hire,” Executive hereby
assigns and agrees to assign to the Employer or such Affiliate of the Employer all right, title, and interest, including without
limitation, copyright in and to such copyrightable work. Executive shall promptly disclose such Work Product and copyrightable
work to the Board and perform all actions reasonably requested by the Board (whether during or after the Employment Period) to
establish and confirm the ownership of the Employer or such Affiliate of the Employer (including, without limitation, assignments,
consents, powers of attorney and other instruments).

 

(c)          Third
Party Information. Executive understands that the Employer and its Affiliates will receive from third parties confidential
or proprietary information (“Third Party Information”) subject to a duty on the Employer’s and its
Affiliates’ part to maintain the confidentiality of such information and to use it only for certain limited purposes. During
the Employment Period and thereafter, and without in any way limiting the provisions of Section 3(a) above, Executive
will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than (i) personnel and
consultants of the Employer or its Affiliates who need to know such information in connection with their work for the Employer
or any of its Affiliates; and (ii) as required by a lawful order of a court of competent jurisdiction, any governmental authority
or agency, or any recognized subpoena power) or use, except in connection with his work for the Employer or any of its Affiliates,
Third Party Information unless expressly authorized by a member of the Board (other than Executive if Executive is on the Board) in
writing.

 

(d)          Use
of Information of Prior Employers. During the Employment Period and thereafter, Executive will not improperly use or disclose
any confidential information or trade secrets, if any, of any former employers or any other Person to whom Executive has an obligation
of confidentiality, and will not bring onto the premises of the Employer or any of its Affiliates any unpublished documents or
any property belonging to any former employer or any other Person to whom Executive has an obligation of confidentiality unless
consented to in writing by the former employer or Person. Executive will use in the performance of Executive’s duties only
information which is (i) generally known and used by persons with training and experience comparable to Executive’s
and which is (x) common knowledge in the industry or (y) otherwise legally in the public domain, (ii) otherwise
provided or developed by the Employer or any of its Affiliates or (iii) in the case of materials, property or information
belonging to any former employer or other Person to whom Executive has an obligation of confidentiality, approved for such use
in writing by such former employer or Person.

 

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4.          Non-Disparagement.
Except as required by applicable law, rule or regulation or any recognized subpoena power, Executive agrees that, during and after
the Employment Period, he shall not at any time make any statement or representation, written or oral, which Executive knows or
should know will, or which he knows or should know is reasonably likely to, impair or adversely affect in any way the reputation,
goodwill, business, customer or supplier relationships, or public relations of the Employer and/or any of its Affiliates, and/or
any of their respective shareholders, owners, customers, suppliers, directors, employees or officers. In the event that Executive
becomes legally compelled (by oral questions, interrogatories, request for information or documents, subpoena, criminal or civil
investigative demand or similar process) to make any such statements or representations, then prior thereto, Executive will,
if permitted by law, provide the Employer with prompt written notice so that the Employer may seek (with Executive’s cooperation
but at Employer’s sole expense) a protective order or other appropriate remedy and/or waive compliance with the provisions
of this Agreement. In the event that such protective order or other remedy is not obtained, then Executive will only make such
statements or representations which he is advised by counsel is legally required, and will cooperate with the Employer in the Employer’s
efforts to obtain reliable assurance that confidential treatment will be accorded to any such statements or representations.

 

5.          Non-Competition
and Non-Solicitation. Executive acknowledges that in the course of Executive’s employment with Employer, Executive has
or will become familiar with the Employer’s and its Affiliates’ trade secrets and with other Confidential Information
concerning the Employer and/or its Affiliates and that Executive’s services have been and will be of special, unique and
extraordinary value to the Employer and its Affiliates. In consideration of the foregoing and for other good and valuable consideration
and as a material inducement to the Employer to enter into this Agreement, Executive agrees that:

 

(a)          Non-Competition.
Executive shall not, while Executive is employed by the Employer and for (x) 24 months after the date of any Separation by
Executive without Good Reason or by Employer for Cause and (y) 12 months after the date of any other Separation (the “Restricted
Period”), engage directly or indirectly anywhere in the United States, without the prior express written consent of the
Employer, in any business or activity, whether as an employee, consultant, partner, principal, agent, representative, director,
stockholder, investor or in any other individual, corporate or representative capacity, or render any services or provide any advice
to any business, activity, service or Person, if such business, activity, service or Person competes with the Business (as defined
below). For purposes of this Agreement, the “Business” shall mean (i) the business of providing merchant
credit card processing services and directly related products and services to businesses and (ii) any other business activity
that is competitive with the business, activities, products or services of the type conducted, authorized, offered, or provided
by the Employer or any of its Affiliates, or, to the knowledge of the Employee, with respect to which the Employer or any of its
Affiliates has spent significant time or resources analyzing for the purposes of assessing expansion opportunities by the Employer
or any of its Affiliates, during the twenty-four (24) month period prior to date of Executive’s Separation. In addition,
Executive shall not, during the Restricted Period, assist, help or otherwise support, without the prior express written consent
of the Employer, any Person, business or other activity, whether as an employee, consultant, partner, principal, agent, representative,
director, stockholder, investor or in any other individual, corporate or representative capacity, to create, commence or otherwise
initiate, or to develop, enhance or otherwise further, any business or activity if such business or activity competes with the
Business. Notwithstanding the foregoing, Executive shall not be prohibited during the Restricted Period from being a passive investor
where Executive owns less than five percent (5%) of the outstanding capital stock of any publicly-held company.

 

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(b)          Non-Solicitation.
Executive shall not during the Restricted Period, (a) take any action to solicit or divert any business, clients or customers
(or potential business, clients or customers) away from the Employer or any of its Affiliates, (b) induce customers,
clients, business partners, suppliers, agents or other Persons under contract or otherwise associated or doing business with the
Employer or any of its Affiliates to terminate, reduce or alter any such association or business with or from the Employer or such
Affiliate or (c)contact, solicit, approach or induce any person who is an employee or consultant of the Employer or any of its
Affiliates or who was an employee or consultant of the Employer or any of its Affiliates during the one (1) year period prior
to such contact, solicitation, approach or inducement to leave the employment or other service of the Employer or any of its Affiliates
for any reason or to otherwise accept employment with or provide services to any other Person. For purposes of this Section
5(b), “potential business” shall mean any current or reasonably foreseeable commercial activity or any current
or reasonably foreseeable commercial opportunities associated with Business.

 

(c)          Injunctive
Relief. The provisions of Section 3, Section 4 and Section 5 are material inducements to the Employer
entering into and performing this Agreement. Executive acknowledges and agrees that the Employer and its Affiliates will have no
adequate remedy at law, and would be irreparably harmed, if Executive breaches or threatens to breach any of the provisions of
Section 3, Section 4 or Section 5 of this Agreement. Executive agrees that the Employer and its Affiliates
shall be entitled to equitable and/or injunctive relief to prevent any breach or threatened breach of Section 3, Section
4 and/or Section 5 of this Agreement, and to specific performance of each of the terms of such Sections in addition
to any other legal or equitable remedies that the Employer or its Affiliates may have. Executive further agrees that he shall not,
in any equity proceeding relating to the enforcement of the terms of Section 3, Section 4 and/or Section 5 of
this Agreement, raise the defense that the Employer has an adequate remedy at law. Each Affiliate of the Employer is a third party
beneficiary of Sections 3, 4 and 5 and may enforce their terms as if it were party hereto. Executive
further acknowledges and agrees that (i) any breach or claimed breach of the provisions set forth in this Agreement, or any
other claims Executive may have against the Employer or any of its Affiliates, will not be a defense to enforcement of the restrictions
set forth in Sections 3, 4 and 5 and (ii) the circumstances of Executive’s termination of
employment with the Employer will have no impact on the Executive’s obligations under Sections 3, 4
and 5.

 

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(d)          Special
Severability. The terms and provisions of Section 3, Section 4 and Section 5 of this Agreement are intended
to be separate and divisible provisions and if, for any reason, any one or more of them is held to be invalid or unenforceable,
neither the validity nor the enforceability of any other provision of this Agreement shall thereby be affected. It is the intention
of the parties to this Agreement that the potential restrictions on Executive’s future employment imposed by such Sections
be reasonable in both duration and geographic scope and in all other respects. If for any reason any court of competent jurisdiction
shall find any provisions of Section 3, Section 4 and/or Section 5 of this Agreement unreasonable in duration
or geographic scope or otherwise, Executive and the Employer agree that the restrictions and prohibitions contained herein shall
be effective to the fullest extent allowed under applicable law in such jurisdiction.

 

(e)          Extension
of Restricted Period. If Executive breaches any of the covenants contained in Section 5(a) or Section 5(b),
then the Restricted Period shall be extended for a period of time equal to the period of time during which Executive is in breach
of such restrictive covenant.

 

(f)          Additional
Acknowledgments. Executive acknowledges that the provisions of this Section 5 are in consideration of employment with
Employer and additional good and valuable consideration. In addition, Executive agrees and acknowledges that the restrictions contained
in Sections 3, 4 and 5 do not preclude Executive from earning a livelihood, nor do they unreasonably impose
limitations on Executive’s ability to earn a living. The covenants in Sections 3, 4 and 5 of
this Agreement are independent of the covenants in any other agreement between the parties.

 

6.           Definitions.

 

“Affiliate” means, with respect
to any Person, any Person that controls, is controlled by or is under common control with such Person or an Affiliate of such Person.

 

“Board” means the Employer’s
board of directors.

 

“Cause” means: (A) Executive’s
conviction of or plea of guilty or nolo contendere to a felony or any crime involving moral turpitude; (B) a determination
by the Board that Executive committed fraud, misappropriation or embezzlement against any Person; (C) Executive’s breach
of any material term of this Agreement or Executive’s material breach of any other agreement with the Employer or any of
its Affiliates; (D) Executive’s willful or gross neglect of Executive’s duties or willful or gross misconduct
in performance of Executive’s duties; (E) Executive’s failure or refusal to carry out Executive’s assigned
responsibilities; or (F) Executive’s material breach of a fiduciary duty owed to the Employer or any of its Affiliates;
provided, however, that with respect to subsections (C), (D), (E) and (F) above, Cause will only be deemed
to occur after written notice to Executive of such failure, neglect or misconduct giving rise to Cause and the failure by Executive
to cure such failure, neglect or misconduct (which is capable of cure) within thirty (30) days after written notice,
provided that Executive shall be entitled to no more than one opportunity to cure with respect to subsections (C), (D), (E) and
(F).

 

“Code” means the Internal
Revenue Code of 1986, as amended, and the regulations and other guidance promulgated thereunder.

 

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“Disability” means the disability
of Executive caused by any physical or mental injury, illness or incapacity as a result of which Executive is unable to effectively
perform the essential functions of Executive’s duties, notwithstanding reasonable accommodation, for a period of 120 consecutive
days or a total of 120 non-consecutive days within a 365-day period, as determined by the Board in good faith.

 

“Good Reason” means, without
Executive’s consent, (i) a significant diminution in Executive’s level of responsibilities; (ii) the permanent
relocation of Executive’s primary work address to a location more than 50 miles beyond Executive’s then current work
address; (iii) a material reduction in Executive’s Base Salary or benefits; or (iv) the breach by Employer of any
material term of this Agreement or any other agreement with the Employer or any of its Affiliates during the Employment Period.
Notwithstanding the foregoing, Good Reason shall not be deemed to exist unless Executive notifies the Employer within ninety (90) days
after the occurrence of the event which Executive believes constitutes the basis for Good Reason, specifying the particular act
or failure to act which Executive believes constitutes the basis for Good Reason and the Employer does not cure such act or failure
to act within sixty (60) days after receipt of such notice.

 

“Person” means an individual,
a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, investment fund, any other business entity and a governmental entity or any department, agency or
political subdivision thereof.

 

“Purchase Agreement” means
that certain Unit Purchase Agreement dated as of November 7, 2014 by and among the Executive, Cathy Smith, ACI and the Employer.

 

“Separation” means the cessation
of employment of Executive with the Employer or any successor thereto for any reason that meets the definition of a “separation
from service,” as defined in Treasury Regulation Section 1.409A-1(h).

 

7.          Notices.
Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the
recipient at the address below indicated and shall be effective upon receipt:

 

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	 	To the Employer:	 
	 	 	 
	 	 	JetPay Corporation
	 	 	Suite 200
	 	 	1175 Lancaster Avenue
	 	 	Berwyn, PA19312
	 	 	Attention: Chief Executive Officer
	 	 	Facsimile:215-741-6974
	 	 	 
	 	With a copy to Employer’s	 
	 	counsel at:	Dechert LLP
	 	 	Cira Centre
	 	 	2929 Arch Street
	 	 	Philadelphia, PA19104
	 	 	Attention: James A.  Lebovitz, Esq.
	 	 	Facsimile:(215) 994-2222
	 	 	 
	 	To Executive:	at the address listed in the Employer’s personnel records

 

8.           General
Provisions.

 

(a)          Severability.
Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will (except as otherwise expressly provided herein) be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

(b)          Entire
Agreement. This Agreement contains the entire agreement between the parties concerning the subject matter hereof and supersedes
all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the parties
with respect thereto, including without limitation the Prior Employment Agreement.

 

(c)          No
Strict Construction; Headings. The language used in this Agreement shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction shall be applied against any party. The headings of the
sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction
of any provision of this Agreement.

 

(d)          Counterparts.
This Agreement may be executed and delivered in separate counterparts (including by means of email and facsimile), each of which
is deemed to be an original and all of which taken together constitute one and the same agreement. This Agreement shall become
effective only when counterparts have been executed and delivered by all parties whose names are set forth on the signature page(s) hereof.

 

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(e)          Successors
and Assigns. This Agreement may be assigned by the Employer to one of its Affiliates or to a successor to the Employer or one
of its Affiliates, but shall not be assignable by Executive. Except as otherwise provided herein, this Agreement shall bind and
inure to the benefit of and be enforceable by Executive, the Employer and their respective successors and assigns.

 

(f)          Applicable
Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, applied
without reference to principles of conflicts of law. Both the Employer and Executive agree to appear before and submit exclusively
to the jurisdiction of the federal courts with authority over Allentown, Pennsylvania with respect to any controversy, dispute,
or claim arising out of or relating to this Agreement (or if such controversy, dispute or claim may not be brought in federal court,
to the state courts located in Lehigh, Pennsylvania). Both the Employer and Executive also agree to waive, to the fullest possible
extent, the defense of an inconvenient forum. THE EMPLOYER AND EXECUTIVE HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.

 

(g)          Executive’s
Cooperation. During the Employment Period and thereafter, Executive shall cooperate with the Employer and its Affiliates, at
the Employer or its Affiliates’ sole expense, in any disputes with third parties, internal investigations or administrative,
regulatory or judicial proceedings as reasonably requested by the Employer (including, without limitation, Executive being available
to the Employer upon reasonable notice and at a reasonable location for interviews and factual investigations, appearing at the
Employer’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the
Employer all pertinent information and turning over to the Employer all relevant documents which are or may come into Executive’s
possession, all at times and on schedules that are reasonably consistent with Executive’s other permitted activities and
commitments). In the event the Employer requires Executive’s cooperation in accordance with this Section after Executive’s
Separation, the Employer shall reimburse Executive solely for reasonable travel expenses (including lodging and meals, upon submission
of receipts).

 

(h)          Amendment
and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Employer
and Executive.

 

(i)          Insurance.
The Employer, at its sole discretion, may apply for and procure in its own name and for its own benefit life and/or disability
insurance with respect to Executive in any amount or amounts considered advisable by Employer. Executive agrees to cooperate in
any medical or other examination, supply any information, and to execute and deliver any applications or other instruments in writing
as may be reasonably necessary to obtain and continue such insurance.

 

(j)          Withholding.
All payments and benefits due to Executive under this Agreement or otherwise shall be subject to withholding on account of federal,
state and local taxes, as determined by the Employer.

 

    	 	12	 

     

    

  

(k)          Survival.
Sections 3 through 8 shall survive a Separation and the termination of the Employment Period and shall remain
in full force and effect after such Separation or termination.

 

(l)          Code
Section 409A.

 

(i)          It
is the intent of the parties that this Agreement be interpreted and administered in a manner so that any amount or benefit payable
hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Code Section 409A.
Notwithstanding the foregoing, neither the Employer, its Affiliates nor any of their respective directors, officers, employees
or advisors shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive as a result of
the application of Code Section 409A.

 

(ii)         Notwithstanding
anything in this Agreement to the contrary, any severance payments due hereunder, and any other amount or benefit that would constitute
non-exempt “deferred compensation” for purposes of Code Section 409A and that would otherwise be payable or distributable
hereunder by reason of Executive’s termination of employment, will not be payable or distributable to Executive unless the
circumstances giving rise to such termination of employment meet any description or definition of “separation from service”
within the meaning of Code Section 409A. If this provision prevents the payment or distribution of any amount or benefit, such
payment or distribution shall be made on the date on which an event occurs that constitutes a Code Section 409A-compliant “separation
from service.”

 

(iii)        Executive’s
right to receive any installment payments under this Agreement, including without limitation any salary continuation payments following
Executive’s Separation, shall be treated as a right to receive a series of separate payments and, accordingly, each such
installment payment shall at all times be considered a separate and distinct payment as permitted under Code Section 409A.

 

(m)          Code
Section 280G. Notwithstanding anything in this Agreement to the contrary, if any of the payments and benefits provided for
under this Agreement or any other agreement or arrangement between the Employer or its Affiliates and the Executive (collectively,
the “Payments”) constitute a “parachute payment’ within the meaning of Code Section 280G and,
but for the reduction specified in this Section 8(m), would be subject to the excise tax imposed by Code Section 4999 or would
otherwise not be deductible by reason of Code Section 280G, then the Payments shall be reduced by the least amount necessary to
result in no portion of such Payments being subject to the excise tax under Code Section 4999 and no portion of such Payments being
non-deductible by reason of Code Section 280G. Any reduction in the Payments pursuant to the preceding sentence shall be applied
first against the Payments that are payable in cash, with amounts that are payable last reduced first; then against Payments due
in respect of any equity or equity derivatives that are included under Code Section 280G at full value; then against Payments due
in respect of any equity or equity derivatives included under Code Section 280G at an accelerated value; and, finally, against
any other non-cash benefits.

 

    	 	13	 

     

    

  

(n)          Indemnification.
Employer shall provide indemnification to the Executive in accordance with that certain letter agreement dated November 7, 2014,
incorporated herein by reference thereto.

 

[The
remainder of this page is intentionally left blank.]

 

    	 	14	 

     

    

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement on the date first written above.

 

	 	JETPAY CORPORATION
	 	 
	 	By:	/s/ Diane (Vogt) Faro         
	 	 
	 	Name: Diane (Vogt) Faro
	 	Title: Chief Executive Officer

 

	 	EXECUTIVE:
	 	 
	 	/s/ Michael Collester
	 	 
	Acknowledged and Agreed:	 
	 	 
	ACI Merchant Systems, LLC	 

 

	By:	/s/ Michael Collester	 
	 	Name: Michael Collester	 
	 	Title: President	 

 

    	 	15Exhibit 4.1

 

WARRANT

NEITHER THIS WARRANT, NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT (COLLECTIVELY, THE “SECURITIES”), HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, PURSUANT TO REGISTRATION OR QUALIFICATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY PROPOSED TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THIS WARRANT IS SUBJECT TO THE TRANSFER RESTRICTIONS SET FORTH HEREIN AND IN A SECURITIES PURCHASE AGREEMENT, DATED AS OF AUGUST 29, 2016, AND AS AMENDED FROM TIME TO TIME, COPIES OF WHICH ARE AVAILABLE WITH THE SECRETARY OF THE COMPANY.

ONCOCYTE CORPORATION

COMMON STOCK WARRANT

 

	
Warrant No.  [·]

	
Date of Original Issuance: August 29, 2016

 

OncoCyte Corporation, a California corporation (the “Company”), hereby certifies that, for value received, [·], or its registered assign (the “Holder”), is entitled to purchase from the Company [·] shares (as adjusted from time to time as provided in Section 11) of common stock, par value $0.001 per share, of the Company (the “Common Stock”) (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”), at the Exercise Price determined pursuant to Section 3 hereof, at any time after the earlier of (i) the date that Shareholder Approval is first obtained, or (ii) November 28, 2016 (the “Initial Exercisability Date”) through and including the fifth anniversary of the Initial Exercisability Date (the “Expiration Date”), and subject to the following terms and conditions:

1.         Purchase Agreement. This Common Stock Warrant (this “Warrant”) is one of the Warrants issued by the Company in connection with that certain Securities Purchase Agreement, entered into on August 29, 2016 (as amended from time to time, the “Purchase Agreement”), by and among the Company and Holder and certain other Purchasers, and is subject to, and the Company and the Holder shall be bound by, all the applicable terms, conditions and provisions of the Purchase Agreement.

2.         Definitions. In addition to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein shall have the meanings assigned to such terms in the Purchase Agreement. As used herein, the following terms shall have the following respective meanings:

“Black Scholes Value” means the value of a Warrant based on the Black Scholes Option Pricing Model obtained from the “OV” function on the Bloomberg determined as of the day of closing of the Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the closing of the Fundamental Transaction and the Expiration Date, (B) an expected volatility equal to the lesser of 60% and the 180-day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the Fundamental Transaction, (C) the price per Warrant Share shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in the Fundamental Transaction and (D) a remaining option time equal to the time between the date of the closing of the Fundamental Transaction and the Expiration Date. For purposes of the foregoing, the value of any non-cash consideration in any Fundamental Transaction will be determined in good faith by the Board of Directors of the Company or the Acquirer.

 

“Bloomberg” means Bloomberg, L.P.

“Closing Sale Price” means, for the Common Stock the last closing trade price for such security on the Principal Trading Market, as reported by Bloomberg, or, if the Principal Trading Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price, respectively, of such security prior to 4:00 p.m., New York time, as reported by Bloomberg.

“Eligible Market” means any of the NYSE MKT, The NASDAQ Capital Market, The NASDAQ Global Market, The NASDAQ Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

“Fair Market Value” of one share of Common Stock on the Date of Exercise (as hereinafter defined) means (i) the VWAP for the Trading Day immediately prior to the Date of Exercise, or (ii) if an Eligible Market is not then the Principal Trading Market, the average of the reported sales prices reported by Bloomberg on the Trading Market for the Common Stock on the Trading Day immediately prior to the Date of Exercise, or, if there is no sales price on such Trading Day, the last sales price reported by Bloomberg for such Trading Day, or (iii) if neither of the foregoing applies, the last sales price of the Common Stock in the over-the-counter market as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) (or any similar organization or agency succeeding to its functions of reporting prices) for the Common Stock as reported by Bloomberg, or if no sales price is so reported for the Common Stock, the last bid price of such Common Stock as reported by Bloomberg or (iv) if fair market value cannot be calculated as of such date on any of the foregoing bases, the fair market value shall be as determined by the Board of Directors of the Company in the exercise of its good faith business judgment.

“NYSE MKT” means NYSE MKT LLC, formerly known as the American Stock Exchange.

“Principal Trading Market” means the Trading Market on which the Common Stock is primarily listed on and quoted for trading.

“Shares” means the Company’s currently authorized common stock, no par value per share, and stock of any other class or other consideration into which such currently authorized capital stock may hereafter have been changed.

“Trading Day” means (a) a day on which the Common Stock is listed or quoted and traded on the Principal Trading Market (other than the OTC Bulletin Board), or (b) if the Common Stock is not then listed or quoted and traded on any Eligible Market, then a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (c) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported in the “pink sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC) (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading Day shall mean a Business Day.

 

“Trading Market” means the OTC Bulletin Board or any Eligible Market, or any national securities exchange, market or trading or quotation facility on which the Common Stock is then listed or quoted.

“VWAP” shall mean the daily volume weighted average price (based on a Trading Day from 9:30 a.m. to 4:00 p.m. (New York time)) of the Common Stock on the Principal Trading Market as reported by Bloomberg Financial L.P. using the AQR function.

3.         Exercise Price. This Warrant may be exercised for a price per Warrant Share equal $3.25, subject to adjustment from time to time pursuant to Section 11 (the “Exercise Price”).

4.         Registration of Warrant. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

5.         Transfer of Warrant.

(a)            No Holder may, directly or indirectly, sell, exchange, assign or otherwise transfer all or any portion of this Warrant without the prior written consent of the Company; provided that, subject in each case to Section 5(b) hereof, (i) a Holder that is a natural person may transfer all or a portion of this Warrant to one or more trusts for the benefit of such Holder, such Holder’s spouse, a lineal descendant of such Holder or such Holder’s parents, the spouse of any such descendant or a lineal descendant of any such spouse and (ii) a Holder that is a Person other than a natural person may transfer all or a portion of the Warrant to an Affiliate of such Holder.

(b)           Subject to the Holder’s appropriate compliance with the restrictive legend on this Warrant and the transfer restrictions set forth herein and in the Purchase Agreement, the Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon (i) surrender of this Warrant, with the Form of Assignment substantially in the form attached hereto as Attachment B duly completed and signed, to the Company at its address specified herein and (ii) delivery to the Company at its address specified herein an investment letter, in form and substance reasonably satisfactory to the Company, signed by the transferee. Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

6.         Duration and Exercise of Warrants; Mandatory Cash Settlement.

(a)           Duration. This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the Initial Exercisability Date and through and including the Expiration Date. At 6:30 p.m., New York City time, on the Expiration Date (the “Exercise Period”), the portion of this Warrant not exercised prior thereto shall be and become void and of no value.

 

(b)           Mandatory Cash Settlement.  Notwithstanding anything in this Warrant or in the Purchase Agreement to the contrary, if (i) Shareholder Approval has not been obtained on or before November 28, 2016, or (ii) at any time during the Exercise Period, there are then an insufficient number of authorized and reserved shares of Common Stock to provide for the exercise of the rights represented by this Warrant, then this Warrant may not be exercised for Warrant Shares and the Company shall instead settle any exercises of this Warrant by making a cash payment to the Holder, in the amount as determined below (and in lieu of delivery of the number of Warrant Shares so indicated by the Holder to be purchased upon any such exercise) (such cash settlement, a “Mandatory Cash Settlement”). In the event of a Mandatory Cash Settlement pursuant to this Section 6(b), in lieu of delivery of any Warrant Shares upon such exercise, the Company shall pay to the Holder an amount in cash equal to the result obtained by multiplying (a) the number of Warrant Shares so indicated by the Holder to be purchased upon such exercise as set forth in the Holder’s Exercise Notice (as defined below) by (b) the excess of (i) the Fair Market Value of one share Common Stock on the Date of Exercise, over (ii) the Exercise Price (such amount, the “Cash Settlement Payment”). In the event of a Mandatory Cash Settlement pursuant to this Section 6(b), the Company shall pay the Holder the Cash Settlement Payment as soon as reasonably practical after the Date of Exercise, and in any event within three (3) Trading Days thereafter. For the avoidance of doubt, if the Fair Market Value of one share Common Stock on the Date of Exercise is less than the Exercise Price, then no Cash Settlement Payment shall be payable to the Holder.

(c)            Not later than three (3) Trading Days after each Date of Exercise (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder a certificate representing the Warrant Shares which, to the extent provided in the Purchase Agreement, shall be free of restrictive legends and trading restrictions representing the number of Warrant Shares being acquired upon the exercise of the Warrant. If, on any applicable Share Delivery Date, such certificate(s) (or the Cash Settlement Payment in lieu thereof in the event Mandatory Cash Settlement is then required pursuant to Section 6(b)) are not timely delivered to or as directed by the Holder, then the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such certificate(s), to rescind such exercise, in which event the Company shall promptly return to the Holder the original Warrants (if any) delivered to the Company and if applicable, the Holder shall promptly return to the Company the Common Stock book-entry statements issued to such Holder pursuant to the rescinded Exercise Notice.

(d)           In connection with any exercise of this Warrant (other than any exercise that is subject to Mandatory Cash Settlement as provided in Section 6(b)), if the Company shall fail for any reason to deliver the Warrant Shares by the Share Delivery Date, and if on or after the Share Delivery Date the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of any portion of such Warrant Shares that the Holder anticipated receiving by the Share Delivery Date, then the Company shall, within three (3) Trading Days after the Holder’s request and in the Holder’s discretion, either: (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the number of Warrant Shares so purchased, at which point the Company’s obligation to deliver such Warrant Shares shall terminate, or (ii)  pay cash to the Holder on each Trading Day an amount equal to 1% of the product of (A) the aggregate number of shares of Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled and (B) the Closing Sale Price of Common Stock on the Trading Day immediately preceding the last possible date on which the Company could have issued such shares of Common Stock to the Holder.

7.         Delivery of Warrant Shares on Exercise; Net Exercise.

(a)           To effect exercises hereunder, the Holder shall not be required to physically surrender this Warrant, and unless this Warrant is surrendered upon such exercise, the execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares (if any). Upon delivery of an Exercise Notice substantially in the form attached hereto as Attachment A (an “Exercise Notice”) to the Company at its address for notice determined as set forth herein, and, unless Mandatory Cash Settlement is then required pursuant to Section 6(b), upon payment of the Exercise Price for the number of Warrant Shares so indicated by the Holder to be purchased (which may take the form a “net exercise” as permitted pursuant to Section 7(b) and so indicated in the Exercise Notice), the Company shall promptly (but in no event later than three (3) Trading Days after the Date of Exercise) either (x) pay the Holder the Cash Settlement Payment in the event Mandatory Cash Settlement is then required pursuant to Section 6(b) or (y) in the event Mandatory Cash Settlement is not then required pursuant to Section 6(b), issue and deliver, or cause its transfer agent to issue and deliver, to the Holder a certificate for the Warrant Shares issuable upon such exercise registered in the name of the Holder or its designee. A “Date of Exercise” means the date on which the Holder shall have delivered to the Company: (i) an Exercise Notice, appropriately completed and duly signed, and (ii) unless either (x) Mandatory Cash Settlement is then required pursuant to Section 6(b) or (y) the exercise of this Warrant is being effected as a “net exercise” pursuant to Section 7(b), as applicable, payment of the Exercise Price (by certified or official bank check, intra-bank account transfer or wire transfer) for the number of Warrant Shares so indicated by the Holder to be purchased.

 

(b)           Provided that (i) the Fair Market Value of one share of Common Stock (as of the Date of Exercise) is greater than the Exercise Price (as of the Date of Exercise), and (ii) a Registration Statement (as defined in the Purchase Agreement) with respect to the underlying shares of Common Stock is not effective on the Exercise Date, then the Holder may, at its election, effect a “net exercise” of this Warrant as indicated in the Holder’s Exercise Notice, in which event, if so effected, the Holder shall be entitled to receive Warrant Shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company, if applicable, together with the appropriately completed and duly signed Exercise Notice, in which event the Company shall issue to the Holder a number of Warrant Shares computed using the following formula:

 

	
X =

	
Y*(A-B)

		
A

 

Where:

X = the number of Warrant Shares to be issued to the Holder

Y = the number of Warrant Shares with respect to which this Warrant is being exercised

A = the Fair Market Value of one share of Common Stock (as of the Date of Exercise)

B = Exercise Price (as of the Date of Exercise)

For the avoidance of doubt, if the foregoing calculation results in zero or a negative number, then no Warrant Shares shall be issued upon exercise pursuant to this Section 7(b).

(c)           The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver the certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof; provided, however, that, unless Mandatory Cash Settlement is then strictly required pursuant to Section 6(b), under no circumstances shall the Company be required to settle any exercises of this Warrant by cash payment or to otherwise “net cash settle” this Warrant.

 

8.         Charges, Taxes and Expenses. Issuance and delivery of certificated or uncertificated shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee, or other incidental tax or expense in respect of the issuance of such shares, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

9.         Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a new Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which shall not include a surety bond), if requested. Applicants for a new Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a new Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver this mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the new Warrant.

10.       Reservation of Warrant Shares. The Company covenants that, from and after the Shareholder Approval date, the Company shall at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from liens, encumbrances or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 11). The Company covenants and warrants that, from and after the Shareholder Approval date, all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and non-assessable.

11.       Certain Adjustments. The Exercise Price and the number of Warrant Shares issuable upon exercise of this Warrant is subject to adjustment from time to time as set forth in this Section 11.

(a)           Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of Common Stock any shares of capital stock of the Company; then in each such case (A) the Exercise Price shall be adjusted by multiplying the Exercise Price then in effect by a fraction, the numerator of which equals the number of shares of Common Stock outstanding immediately prior to such event (excluding treasury shares, if any), and the denominator of which equals the number of shares of Common Stock outstanding immediately after such event (excluding treasury shares, if any), and (B) the number of Warrant Shares issuable hereunder shall be concurrently adjusted by multiplying such number by the reciprocal of such fraction. Such adjustments shall take effect (i) if a record date shall have been fixed for determining the shareholders or security holders, as applicable, of the Company entitled to receive such dividend, distribution or issuance by reclassification, as the case may be, immediately after such record date, or (ii) otherwise, immediately after the effective date of such dividend, distribution, subdivision, combination, or issuance by reclassification, as the case may be.

 

(b)           Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or a series of related transactions, (A) effects any merger, consolidation or reorganization or other similar transaction or a series of related transactions which results in the voting securities of the Company outstanding immediately prior thereto representing immediately thereafter (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity) less than 50% of the combined voting power of the voting securities of or economic interests in the Company or such surviving or acquiring entity outstanding immediately after such merger, consolidation or reorganization, (B) effects any sale, lease, license, assignment, transfer, conveyance, distribution or other disposition of all or substantially all of its assets, (C) effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (except for issuances by reclassification contemplated by Section 11(a)(iv) or transactions for the purpose of changing the domicile of the Company), or (D) consummates a stock or share purchase agreement or other business combination (including a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act) whereby such other Person or “group” acquires more than 50% of the voting power of or economic interests in the then outstanding shares of capital stock of the Company (after giving effect to such transaction), or (ii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person or group of Persons) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property (each transaction or series of transactions referred to in clause (i) or (ii) above, a “Fundamental Transaction”); then, the Company shall (x) unless such Fundamental Transaction is an unsolicited third-party tender offer, use its best efforts to ensure that lawful and adequate provision shall be made whereby the Holder shall thereafter continue to have the right to purchase and receive, upon the basis and upon the terms and conditions herein specified (or as nearly equivalent as practicable), and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of this Warrant, shares in the surviving or acquiring entity in the Fundamental Transaction (such entity, or the parent thereof in a consolidated group, the “Acquirer”) with an aggregate value equal to the Black Scholes Value of the Holder’s Warrants (an “Acquirer Assumption”); and (y) if an Acquirer Assumption does not occur, the Acquirer shall pay to the Holder an amount equal to the aggregate value equal to the Black Scholes Value of the Holder’s Warrants, which amount shall be paid in cash in the event that the Company’s shareholders receive cash consideration from the Acquirer at the closing of the Fundamental Transaction, or shall be such stock, securities or other non-cash consideration of the Acquirer as it pays to the Company’s shareholders as consideration for the Fundamental Transaction.

(c)           Adjustment Rules.

(i)          Any adjustments pursuant to this Section 11 shall be made successively whenever any event referred to herein shall occur, except that, notwithstanding any other provision of this Section 11, no adjustment shall be made to the number of Warrant Shares to be delivered to the Holder (or to the Exercise Price) if such adjustment represents less than 1% of the number of Warrant Shares previously required to be so delivered, but any lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to 1% or more of the number of Warrant Shares to be so delivered.

(ii)          No adjustments shall be made pursuant to this Section 11 in respect of the issuance of Warrant Shares upon exercise of the Warrant.

(iii)          If the Company shall take a record of the holders of its shares for any purpose referred to in this Section 11, then (x) such record date shall be deemed to be the date of the issuance, sale, distribution or grant in question and (y) if the Company shall legally abandon such action prior to effecting such action, no adjustment shall be made pursuant to this Section 11 in respect of such action.

(iv)          In computing adjustments under this Section 11, (A) fractional interests in Shares shall be taken into account to the nearest one-thousandth of a Share, and (B) calculations of the Exercise Price shall be carried to the nearest one-thousandth of one cent.

(d)           Proceedings Prior to Any Action Requiring Adjustment. Subject to the below proviso, as a condition precedent to the taking of any action which would require an adjustment pursuant to this Section 11, the Company shall take any action which may be necessary, including obtaining regulatory approvals or exemptions, in order that the Company may thereafter validly and legally issue as fully paid and nonassessable all Warrant Shares which the Holder is entitled to receive upon exercise of the Warrant; provided, however, that, notwithstanding the foregoing, effecting the Shareholder Approval shall not be a condition precedent to the taking of any action which would require an adjustment pursuant to this Section 11.

(e)           Notice of Adjustment. Not less than 20 days prior to the record date or effective date, as the case may be, of any action which requires or might require an adjustment or readjustment pursuant to this Section 11, the Company shall give notice to the Holder of such event, describing such event in reasonable detail and specifying the record date or effective date, as the case may be, and, if determinable, the required adjustment and computation thereof. If the required adjustment is not determinable as the time of such notice, the Company shall give notice to the Holder of such adjustment and computation as soon as reasonably practicable after such adjustment becomes determinable. In connection with any such adjustment or readjustment, the Company shall prepare a report setting forth such adjustment or readjustment and showing in reasonable detail the method of calculation thereof and the facts upon which such adjustment or readjustment is based, including a statement of (i) the number of Shares outstanding or deemed to be outstanding, and (ii) the Exercise Price in effect immediately prior to such issue or sale and as adjusted and readjusted (if required by this Section 11) on account thereof. The Company shall forthwith mail a copy of each such report to the Holder and shall, upon the written request at any time of the Holder, furnish to such Holder a like report setting forth the Exercise Price at the time in effect and showing in reasonable detail how it was calculated. The Company shall also keep copies of all such reports at its office and shall cause the same to be available for inspection at such office during normal business hours by the Holder.

(f)            Disputes. Any dispute which arises between the Holder and the Company with respect to the calculation of the adjusted Exercise Price or Warrant Shares issuable upon exercise shall be determined by the independent auditors of the Company in accordance with the terms of this Warrant, and such determination shall be binding upon the Company and the holders of the Warrants and the Warrant Shares if made in good faith and without manifest error. 

 

12.       [RESERVED]

13.       No Fractional Shares. No fractional shares of Common Stock shall be issued in connection with any exercise of this Warrant. In lieu of any fractional shares which would otherwise be issuable, the Company shall pay the Holder an amount of cash equal to the product of such fraction multiplied by the Fair Market Value of one share of Common Stock on the Date of Exercise.

 

14.       No Impairment. The Company shall not by any action including, without limitation, amending its Certificate of Incorporation, any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such action, as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company shall take all such action as may be necessary or appropriate, including by taking the actions set forth in Section 6.12 of the Purchase Agreement, in order that the Company may, from and after the Shareholder Approval date, validly issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant at the then Exercise Price therefor.

15.       No Rights as a Shareholder; Notice to Holder. Nothing contained in this Warrant shall be construed as conferring upon the Holder the right to vote or to consent or to receive notice as a shareholder in respect of any meeting of shareholders for the election of directors of the Company or any other matter, or any rights whatsoever as a shareholder of the Company.

16.       Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

17.       Miscellaneous.

(a)           Notices. Any and all notices or other communications or deliveries hereunder (including any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number pursuant to this Section 17(a) prior to 5:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified pursuant to this Section 17(a) on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by nationally recognized overnight courier service to the street address specified pursuant to this Section 17(a), or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be as follows:

(i)         if to the Company, to:

OncoCyte Corporation

1010 Atlantic Avenue, Suite 102

Alameda, California 94501

	 	
Attn:

	
Chief Executive Officer

	 	
Email:

	
wannett@oncocyte.com

with a copy to (which shall not constitute notice to the Company):

 

DLA Piper LLP (US)

2000 University Avenue

East Palo Alto, CA 94303

	 	
Attn:

	
Bruce Jenett

Andrew D. Ledbetter

	 	
Email:

	
bruce.jenett@dlapiper.com

	 	
Email:

	
andrew.ledbetter@dlapiper.com

(ii)        if to the Holder, to the address, facsimile number or street address appearing on the Warrant Register (which shall initially be the facsimile number and street address set forth for the initial Holder in the Purchase Agreement);

or to such other address, facsimile number or email address as the Company or the Holder may provide to the other in accordance with this Section 17(a).

(b)           Assignment. Subject to the restrictions on transfer described herein and in the Purchase Agreement, the rights and obligations of the Company and the Holder shall be binding upon, and inure to the benefit of, the successors, assigns, heirs, administrators and transferees of the parties. Without the prior written consent of the Holder, which may be withheld in the Holder’s sole discretion, this Warrant may not be assigned by the Company except to a successor in the event of a Fundamental Transaction.

(c)           No Third Party Beneficiaries. Nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant.

(d)           Amendments; Waiver. Any term of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) with the written consent of the Company and the Holder. No waiver of any default with respect to any provision, condition or requirement of this Warrant shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

(e)           Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflict of laws.

(f)            Severability. If one or more provisions of this Warrant are held to be unenforceable under applicable law in any respect, such provision shall be excluded from this Warrant and the balance of this Warrant shall be construed and interpreted as if such provision were so excluded and shall be enforceable in accordance with its remaining terms.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

 

	 	
ONCOCYTE CORPORATION

	 	 	 
	 	
By:

	 
	 	
Name:

	
William Annett

	 	
Title:

	
President and Chief Executive Officer

 

[Signature Page to Warrant]

 

ATTACHMENT A

EXERCISE NOTICE

To OncoCyte Corporation:

The undersigned hereby irrevocably elects to purchase shares (the “Shares”) of common stock, no par value per share (“Common Stock”), of OncoCyte Corporation, a California corporation, pursuant to Warrant No. [·] originally issued on August 29, 2016 (the “Warrant”). The undersigned elects to utilize the following manner of exercise:

Shares:

		☐	Full Exercise of Warrant

		☐	Partial Exercise of Warrant (in the amount of Shares)

Exercise Price: $

The Holder intends that payment of the Exercise Price shall be made as (check one): *

		☐	“Net Exercise” under Section 7(b) of the Warrant (if available)

		☐	Certified or Official Bank Check

		☐	Intra-Bank Account Transfer

		☐	Wire Transfer

[Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the [undersigned]/[the undersigned’s nominee as is specified below].]

 

	
Date:

		
	 	 	 
	
Full Name of Holder†:

		
	 	 	  
	
Signature of Holder or Authorized Representative:

		
	 	 	 
	
Name and Title of Authorized Representative††:

		
	 	 	 
	
Additional Signature of Holder (if jointly held):

		
	 	 	 
	
Social Security or Tax Identification Number:

		
	 	 	 
	
Address of Holder:

		
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
Full Name of Nominee of Holder††:

		
	 	 	 

 

	
Address of Nominee of Holder††:

		
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

	*	Payable unless Mandatory Cash Settlement is required pursuant to Section 6(b) of the Warrant at the time this Warrant is being exercised.

 

	†	Must conform in all respects to name of holder as specified on the face of the Warrant.

 

	††	If applicable.

 

ATTACHMENT B

FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant]

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto [·] the right represented by the attached Common Stock Warrant to purchase [·] shares of Common Stock of OncoCyte Corporation, a Delaware corporation (the “Company”), to which the Warrant relates and appoints [·] as attorney to transfer said right on the books of the Company with full power of substitution in the premises.

 

	
Date:

		
	 		 
	
Full Name of Holder*:

		
	 		 
	
Signature of Holder or Authorized Representative:

		
	 		 
	
Name and Title of Authorized Representative†:

		
	 		 
	
Additional Signature of Holder (if jointly held):

		
	 		 
	
Address of Holder:

		
	 		
 

	 	 	 
	 	 	  
	 	 	 
	 	 	  
	  		
	
Full Name of Transferee:

		 
	  		
	
Address of Transferee:

	
 

	
 

	  		
	  	 	  
	   	 	 
	 	 	  
	 	 	 
	 	 	  
	
In the presence of:

	 	 
	 	 	  

 

	*	Must conform in all respects to name of holder as specified on the face of the Warrant.

 

	†	If applicable.

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