Item
5.02 - Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers
As
reported in Item 5.07, at our annual meeting of shareholders held on August 27, 2018, our shareholders approved a new 2018 Equity
Incentive Plan (the “Incentive Plan”).
Summary
of the Incentive Plan
The
following summary of the Incentive Plan is qualified in all respects by reference to the full text of the Incentive Plan, a copy
of which has been filed as an exhibit to this Report.
The
Incentive Plan will reserve 5,000,000 shares of our common stock for the grant of stock options or the sale of restricted stock
(“Restricted Stock”) or for the settlement of hypothetical units issued with reference to common stock (“Restricted
Stock Units”). We may also grant stock appreciation rights (“SARs”) under the Incentive Plan. The Incentive
Plan also permits us to issue such other securities as our Board of Directors or the Compensation Committee (the “Committee”)
administering the Incentive Plan may determine.
Awards
of stock options, Restricted Stock, SARs, and Restricted Stock Units (“Awards”) may be granted under the Incentive
Plan to our employees, directors, and consultants, and those of any of our subsidiaries, including any subsidiaries that we may
form or acquire in the future. The Incentive Plan will be administered by our Board of Directors or by the Committee, who will
make all determinations with regard to the grant and terms of Awards, subject to the terms of the Incentive Plan.
Awards
may be granted under the Incentive Plan to our employees, directors, and consultants, and those of any subsidiaries that we may
form or acquire in the future. The Incentive Plan will be administered by our Board of Directors or by the Compensation Committee,
who will make all determinations with regard to the grant and terms of Awards, subject to the terms of the Incentive Plan.
Awards
may vest and thereby become exercisable or have restrictions on forfeiture lapse on the date of grant or in periodic installments
or upon the attainment of performance goals, or upon the occurrence of specified events as determined by the Board or the Committee.
Awards may not vest, in whole or in part, earlier than one year from the date of grant. Vesting of an Award after the date of
grant may be accelerated by the Committee or the Board, or under the terms of any Award agreement or employment agreement or other
agreement, only in the following limited circumstances: (a) the death or disability of the Award holder; (b) termination of employment
or “continuous service,” as defined in the Incentive Plan, of the Award holder by OncoCyte without “cause,”
as defined in the Incentive Plan, or by the Award holder for “good reason,” as defined in the Incentive Plan; or (c)
termination of the employment or “continuous service” of the Award holder by OncoCyte or a successor in interest without
“cause,” or by the Award holder for “good reason,” following a “change in control” of OncoCyte,
as defined in the Incentive Plan. In the case of the acceleration of vesting of any performance-based Award, acceleration of vesting
shall be limited to actual performance achieved, pro rata achievement of the performance goal(s) on the basis for the elapsed
portion of the performance period (as determined by the Committee or the Board), or a combination of actual and pro rata achievement
of performance goals.
No
person shall be granted, during any one year period, options to purchase, or SARs with respect to, more than 1,000,000 shares
in the aggregate, or any Awards of Restricted Stock or Restricted Stock Units with respect to more than 500,000 shares in the
aggregate. If an Award is to be settled in cash, the number of shares on which the Award is based shall not count toward the individual
share limit.
No
Awards may be granted under the Incentive Plan more than ten years after the date upon which the Incentive Plan was adopted by
the Board of Directors, and no options or SARS granted under the Incentive Plan may be exercised after the expiration of ten years
from the date of grant.
Stock
Options
Options
granted under the Incentive Plan may be either “incentive stock options” within the meaning of Section 422(b) of the
Internal Revenue Code of 1986, as amended (the “Code”), or “non-qualified” stock options that do not qualify
incentive stock options. Incentive stock options may be granted only to our employees and employees of our subsidiaries. The exercise
price of stock options granted under the Incentive Plan must be equal to the fair market of our common stock on the date the option
is granted. In the case of an optionee who, at the time of grant, owns more than 10% of the combined voting power of all classes
of our stock, the exercise price of any incentive stock option must be at least 110% of the fair market value of our common stock
on the grant date, and the term of the option may be no longer than five years. The aggregate fair market value of our common
stock (determined as of the grant date of the option) with respect to which incentive stock options become exercisable for the
first time by an optionee in any calendar year may not exceed $100,000.
The
exercise price of an option may be payable in cash or in common stock having a fair market value equal to the exercise price,
or in a combination of cash and common stock, or other legal consideration for the issuance of stock as the Board of Directors
or Committee may approve.
Generally,
options will be exercisable only while the optionee remains an employee, director or consultant, or during a specific period thereafter
as approved by the Board or Committee, but in the case of the termination of an employee, director, or consultant’s services
due to death or disability, the period for exercising a vested option shall be extended to the earlier of 12 months after termination
or the expiration date of the option.
The
number of shares covered by the Incentive Plan, and the number of shares and the exercise price per share of each outstanding
option, shall be proportionately adjusted for any increase or decrease in the number of issued and outstanding shares of common
stock resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease
in the number of issued and outstanding shares of common stock effected without receipt of consideration by us.
Restricted
Stock and Restricted Stock Units
In
lieu of granting options, we may enter into purchase agreements with employees under which they may purchase or otherwise acquire
Restricted Stock or Restricted Stock Units subject to such vesting, transfer, and repurchase terms and restrictions as the Board
or Committee may determine. The price at which Restricted Stock may be issued or sold will be not less than 100% of fair market
value. We may permit employees or consultants, but not executive officers or directors, who purchase Restricted Stock to pay for
their shares by delivering a promissory note or an installment payment agreement that may be secured by a pledge of their Restricted
Stock. We may also issue Restricted Stock for services actually performed by the recipient prior to the issuance of the Restricted
Stock.
The
Board of Directors or Committee may require that Restricted Stock shall be held by us or in escrow pending the expiration or release
of the applicable restrictions. Unvested Restricted Stock for which we have not received payment may be forfeited to us, or we
may have the right to repurchase unvested shares upon the occurrence of specified events, such as termination of employment.
Subject
to the restrictions set by the Board of Directors or Committee, a recipient of Restricted Stock generally shall have the rights
and privileges of a shareholder, including the right to vote the Restricted Stock and the right to receive dividends; provided
that, any cash dividends and stock dividends with respect to the Restricted Stock shall be withheld by us for the recipient’s
account, and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined
by the Board or Committee. The cash dividends or stock dividends so withheld and attributable to any particular share of Restricted
Stock (and earnings thereon, if applicable) shall be distributed to the recipient in cash or, at the discretion of the Board of
Directors or Committee, in shares of common stock having a fair market value equal to the amount of such dividends, if applicable,
upon the release of restrictions on the Restricted Stock and, if the Restricted Stock is forfeited, the recipient shall have no
right to the dividends.
The
terms and conditions of a grant of Restricted Stock Units shall be determined by the Board or Committee. No shares of common stock
shall be issued at the time a Restricted Stock Unit is granted, and we will not be required to set aside a fund for the payment
of any such award. A recipient of Restricted Stock Units shall have no voting rights with respect to the Restricted Stock Units.
Upon the expiration of the restrictions applicable to a Restricted Stock Unit, we will either issue to the recipient, without
charge, one common share per Restricted Stock Unit or cash in an amount equal to the fair market value of one common share.
At
the discretion of the Board of Directors or Committee, each Restricted Stock Unit (representing one common share) may be credited
with cash and stock dividends paid in respect of one common share (“Dividend Equivalents”). Dividend Equivalents shall
be withheld by us for the recipient’s account, and interest may be credited on the amount of cash Dividend Equivalents withheld
at a rate and subject to such terms as determined by the Board or Committee. Dividend Equivalents credited to a recipient’s
account and attributable to any particular Restricted Stock Unit (and earnings thereon, if applicable) shall be distributed in
cash or, at the discretion of the Board or Committee, in shares of common stock having a fair market value equal to the amount
of the Dividend Equivalents and earnings, if applicable, upon settlement of the Restricted Stock Unit. If a Restricted Stock Unit
is forfeited, the recipient shall have no right to the related Dividend Equivalents.
SARs
An
SAR is the right to receive, upon exercise, an amount payable in cash or shares or a combination of shares and cash, as determined
by the Board or Committee, equal to the number of shares subject to the SAR that is being exercised, multiplied by the excess
of (a) the fair market value of a common share on the date the SAR is exercised, over (b) the exercise price specified in the
SAR Award agreement. SARs may be granted either as free standing SARs or in tandem with options, and with such terms and conditions
as the Board or Committee may determine. No SAR may be exercised later than 10 years after the date of grant.
The
exercise price of an SAR will be determined by the Board or Committee, but shall not be less than 100% of the fair market value
of one common share on the date of grant. An SAR granted in conjunction with an option shall have the same exercise price as the
related option, shall be transferable only upon the same terms and conditions as the related option, and shall be exercisable
only to the same extent as the related option; provided, however, that the SAR by its terms shall be exercisable only when the
fair market value per share exceeds the exercise price per share of the SAR or related option. Upon any exercise of an SAR granted
in tandem with an option, the number of shares for which the related option shall be exercisable shall be reduced by the number
of shares for which the SAR has been exercised. The number of shares for which an SAR issued in tandem with an option shall be
exercisable shall be reduced by the number of shares for which the related option has been exercised.
Withholding
To
the extent provided by the terms of an Award Agreement or as may be approved by the Board or Committee, an optionee or recipient
of a Restricted Stock or Restricted Stock Unit Award or SAR may satisfy any federal, state or local tax withholding obligation
relating to the Award by any of the following means (in addition to our right to withhold from any compensation paid to the Award
recipient) or by a combination of such means: (a) tendering a cash payment; (b) authorizing us to withhold shares of common stock
from the shares otherwise issuable to the recipient as a result of the exercise or acquisition of shares under the Award, provided,
however, that no shares are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (c) delivering
to us previously owned and unencumbered shares of OncoCyte common stock.
Changes
in Shares Under the Incentive Plan
In
the event of changes in the outstanding common stock or in our capital structure by reason of any stock or extraordinary cash
dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization,
merger, consolidation, combination, exchange, or other relevant change in capitalization, the terms of Awards granted under the
Incentive Plan, and the maximum number of shares subject to all Awards under the Incentive Plan or with respect to which any one
person may be granted Awards during any one year period, will be equitably adjusted or substituted, as to the number, price or
kind of shares or other consideration subject to the Awards to the extent necessary to preserve the economic intent of the Awards.
In making such adjustments, the Board or Committee shall generally ensure that the adjustments will not constitute a modification,
extension or renewal of an incentive stock option within the meaning of Section 424(h)(3) of the Code, and in the case of non-qualified
options, ensure that any adjustments will not constitute a modification of such non-qualified options within the meaning of Section
409A of the Code.
Restrictions
on Transfers of Options
Under
the Incentive Plan, stock options may be transferred to a limited class of defined “permitted transferees,” such as
the option holder’s immediate family members, family trusts and family controlled companies. In addition, options may be
transferred to a securities broker/dealer to exercise the options on the option holder’s behalf as a means of the option
holder obtaining the funds needed to exercise the option, provided that the fair market value of the shares being acquired exceeded
the exercise price of the option at the close of the market on the trading day preceding the exercise date.
Repricing
Prohibition
The
Incentive Plan prohibits any modification of the purchase price or exercise price of an outstanding option or other Award if the
change would effect a “repricing’ without shareholder approval. As defined in the Incentive Plan, “repricing”
means a reduction in the exercise price of an outstanding option or SAR or cancellation of an “underwater” or “out-of-the-money”
Award in exchange for other Awards or cash. An “underwater” or “out-of-the-money” Award is defined to
mean an Award for which the exercise price is less than the “fair market value” of OncoCyte common stock. The fair
market value is generally determined by the closing price of OncoCyte common stock on the NYSE American or any other national
securities exchange or inter-dealer quotation system on which OncoCyte common stock is traded.
Limitation
on Share Recycling
Shares
subject to an Award shall not again be made available for issuance or delivery under the Incentive Plan if those shares are (a)
shares tendered in payment of an option, (b) shares delivered or withheld by OncoCyte to satisfy any tax withholding obligation,
(c) shares covered by a stock-settled SAR or other Award that were not issued upon the settlement of the Award, or (d) shares
repurchased by OncoCyte using the proceeds from option exercises. Only shares subject to an Award that is cancelled or forfeited
or expires prior to exercise or realization may be regranted under the Incentive Plan.
Item
5.07 - Submission of Matters to a Vote of Security Holders.
Our
2018 annual meeting of shareholders was held on August 27, 2018. At the meeting our shareholders elected seven directors to serve
until the next annual meeting and until their successors are duly elected and qualified. Our shareholders also ratified the Board
of Directors’ selection of OUM & Co. LLP as our independent registered public accountants to audit our financial statements
for the current fiscal year, approved the new 2018 Equity Incentive Plan described in Item 5.02 above, and approved an amendment
of our Articles of Incorporation to increase the number of authorized shares of common stock from 50,000,000 shares to 85,000,000
shares.
There
were 39,407,566 shares of OncoCyte common stock outstanding and eligible to vote at the annual meeting as of the close of business
on July 12, 2018, the record date for determining shareholders entitled to vote at the meeting. There were 26,833,527 shares,
or 68.1% of the voting power, represented at the meeting, either in person or by proxy. The following tables show the votes cast
by our shareholders and any abstentions with respect to the matters presented to shareholders for a vote at the meeting. Information
is also provided as to broker non-votes. A “broker non-vote” occurs when a shareholder whose shares are held in “street
name” in a brokerage account or similar account does not instruct the shareholder’s broker or other nominee in whose
name the shares are registered how to vote on a matter as to which brokers and nominees are not permitted to vote without instructions
from their client. Brokers were not permitted under applicable rules of the New York Stock Exchange and the NYSE American to vote
in the election of directors or to vote for approval of our 2018 Equity Incentive Plan, but were permitted to vote for approval
of the appointment of our independent registered public accountants and the amendment of our Articles of Incorporation.
Election
of Directors
Each
of the following directors was elected by the following vote:
Nominee
|
|
Votes For
|
|
|
Votes Withheld
|
|
Ronald Andrews
|
|
|
24,206,361
|
|
|
|
118,007
|
|
William Annett
|
|
|
24,207,181
|
|
|
|
117,187
|
|
Andrew Arno
|
|
|
24,209,927
|
|
|
|
114,441
|
|
Alfred D. Kingsley
|
|
|
24,205,891
|
|
|
|
118,477
|
|
Andrew J. Last
|
|
|
24,206,334
|
|
|
|
118,034
|
|
Aditya P. Mohanty
|
|
|
24,198,921
|
|
|
|
126,077
|
|
Cavan Redmond
|
|
|
24,205,872
|
|
|
|
118,496
|
|
In
addition, there were 2,509,159 broker non-votes with respect to the election of directors.
Ratification
of Appointment of Independent Registered Public Accountants
The
appointment of OUM & Co. LLP as our independent registered public accountants for the fiscal year ending December 31, 2018
was ratified by the following vote:
|
|
Shares Voted
|
|
For
|
|
|
26,788,600
|
|
Against
|
|
|
22,175
|
|
Abstain
|
|
|
22,752
|
|
There
were no broker non-votes on this matter.
Equity
Incentive Plan
A
new Equity Incentive Plan to make 5,000,000 shares of common stock available for the grant of stock options or the sale of restricted
stock or for the settlement of hypothetical units issued with reference to common stock and also permitting the grant of stock
appreciation rights was approved by the following vote:
|
|
Shares Voted
|
|
For
|
|
|
23,391,666
|
|
Against
|
|
|
904,134
|
|
Abstain
|
|
|
28,568
|
|
There
were 2,509,159 broker non-votes on this matter.
Amendment
of Articles of Incorporation
An
amendment of our Articles of Incorporation to increase the authorized number of shares of common stock from 50,000,000 shares
to 85,000,000 shares was approved by the following vote:
|
|
Shares Voted
|
|
For
|
|
|
25,987,466
|
|
Against
|
|
|
796,552
|
|
Abstain
|
|
|
49,509
|
|
There
were no broker non-votes on this matter.