PART
III
Item
10. Directors, Executive Officers, and Corporate Governance
Directors
The
names and ages of our directors are:
Ronald
Andrews, 61, joined our Board of Directors in April 2018 and has served as our President and Chief Executive Officer since July 1,
2019. Mr. Andrews has over 30 years of experience in the molecular diagnostics and genomics industries, including experience integrating
companies acquired in mergers. Mr. Andrews is the founder and former principal of the Bethesda Group, a consulting firm that advises
companies in the molecular diagnostics and genomics fields. Prior to founding the Bethesda Group in 2015, Mr. Andrews served as President,
Genetic Sciences Division of Thermo Fisher Scientific from September 2013 to December 2014, and as President, Medical Sciences Venture
for Life Technologies from February 2012 to September 2013 when Life Technologies was acquired by Thermo Fisher. From 2004 to December
2010, Mr. Andrews was the Chief Executive Officer and Vice Chairman of the Board of Clarient, Inc., a cancer diagnostics company, and
from December 2010 to February 2012 he served as CEO of GE Molecular Diagnostics after Clarient was acquired by GE Healthcare. Mr. Andrews
oversaw the transition of Clarient, Inc. into GE Healthcare and established a strategic plan to integrate in vivo and in vitro diagnostic
tests and expand GE’s presence in oncology. Mr. Andrews also held management positions with companies in diagnostics and related
medical fields, including Roche Molecular Diagnostics, Immucor, Inc. and Abbott Labs. Mr. Andrews also serves as a director of Precipio,
Inc. and previously served as a director of Oxford ImmunoTec. Mr. Andrews is also a member of the Board of Governors of CancerLinQ LLC,
a wholly-owned non-profit subsidiary of the American Society of Clinical Oncology.
Andrew
Arno, 61, joined our Board of Directors in June 2015 and has 30 years of experience handling a wide range of corporate and financial
matters, including work as an investment banker and strategic advisor to emerging growth companies. He is currently Vice Chairman of
Special Equities Group, LLC a privately held investment banking firm affiliated with Dawson James Securities Inc. and previously with
Bradley Woods & Co. Ltd. Mr. Arno previously served as Vice Chairman at Chardan Capital Markets, LLC. From June 2013 until July 2015
Mr. Arno served as Managing Director of Emerging Growth Equities, an investment bank, and Vice President of Sabr, Inc., a family investment
group. He was previously President of LOMUSA Limited, an investment banking firm. From 2009 to 2012, Mr. Arno served as Vice Chairman
and Chief Marketing Officer of Unterberg Capital, LLC, an investment advisory firm that he co-founded. He was also Vice Chairman and
Head of Equity Capital Markets of Merriman Capital LLC, an investment banking firm, and served on the board of the parent company, Merriman
Holdings, Inc. Mr. Arno currently serves on the boards of directors of Smith Micro Software, Inc. and served as a director of Asterias
Biotherapeutics, Inc. from August 2014 until it was acquired by Lineage Cell Therapeutics, Inc. in March 2019.
Jennifer
Levin Carter, 57, joined our Board of Directors during August 2020. Dr. Carter is a healthcare executive, investor, board member
and entrepreneur with a track record of developing and investing in innovative strategies and solutions at the intersection of and healthcare
IT and services, digital health and machine learning, precision medicine, and genomics. Dr. Carter is a Managing Director at Sandbox
Industries and Blue Venture Fund. Sandbox provides healthcare-related investment management exclusively for the Blue Venture Fund. Previously,
Dr. Carter as Managing Director of JLC Precision Health Strategies and VP and of Head of Precision Health at Integral Health (now Valo
Health), a Flagship Pioneering company. In 2018, Dr. Carter founded TrialzOWN, Inc. a healthcare company that was acquired in the development
stage by Integral Health in March 2019. Prior to serving as CEO of TrialzOWN, Dr. Carter founded N-of-One, Inc. and served as its Chief
Executive Officer from 2008 to 2012, and as its Chief Medical Officer from 2012 until its acquisition by Qiagen in 2019. At N-of-One,
Dr. Carter led the creation of novel treatment strategies for cancer patients. Prior to founding N-of-One, Dr. Carter spent nine years
working as an Investment Consultant with Levin Capital Strategies and with other groups specializing in biotechnology and life sciences
investments evaluating existing and emerging markets, new medical technologies, and early-stage companies. After obtaining her medical
degree, Dr. Carter practiced internal medicine at Mount Auburn Hospital in Cambridge, MA. Dr. Carter serves on the board of directors
of DFP Healthcare Acquisitions Corp. Dr. Carter received a B.S. degree from Yale University, an MD from Harvard Medical School, an MPH
from the Harvard School of Public Health, and an MBA from MIT.
Melinda
Griffith, 66, joined our Board of Directors in July 2019. Ms. Griffith brings to our Board her years of business development and
legal experience in advising public and private companies in the diagnostics and life sciences sectors. Ms. Griffith has been Vice President
of Strategic Alliance Management and Chief Legal Counsel at the Parker Institute for Cancer Immunotherapy since 2016. Since 2015, Ms.
Griffith has served as the Chair of the Board of Directors of Thrive Networks, a non-profit organization supporting healthcare, water
and sanitation, and education projects in Vietnam, Cambodia and Laos. Previously, Ms. Griffith worked at Clarient, Inc., a CLIA-certified
cancer testing lab, where she served as Senior Vice President from 2010 through 2013, as General Counsel from 2010 to 2011, and as Chief
Compliance Officer and head of Business Development and Product Strategy from 2011 to 2013, where she aided the company through the public
tender offer and sale process to GE Healthcare. Ms. Griffith previously served in executive roles at Axys Pharmaceuticals from 1992 to
1995, Genelabs Technologies from 1995 to 1998, Tethys Bioscience from 2008 to 2009, and CardioDx from 2014 to 2015. Additionally, Ms.
Griffith served as the global head of licensing and law for Hoffmann La-Roche’s molecular diagnostic business from 1998 to 2007,
where she oversaw the worldwide PCR licensing programs and directed its IP strategy and litigation in U.S. and foreign courts and agencies.
Ms. Griffith directed GE Healthcare’s Congressional and Medicare lobbying efforts to address CMS coverage and reimbursement determinations
for in vitro diagnostic tests from 2011 to 2013, and was on the Board of Directors of the California Clinical Laboratory Association
from 2012 to 2013. Ms. Griffith received a JD from the University of California, Hastings College of the Law, and a Bachelor of Science
degree in Business Administration from the University of California, Berkeley. She is admitted to practice law in New York and California.
Alfred
D. Kingsley, 78, joined the Board of Directors during September 2009 and served as Chairman of the Board from December 2010
until April 2018. Mr. Kingsley is also the Chairman of the Board of Directors of Lineage Cell Therapeutics, Inc. (Lineage), formerly
BioTime. Mr. Kingsley’s long career in corporate finance and mergers and acquisitions includes substantial experience in
helping companies to improve their management and corporate governance, and to restructure their operations in order to add value
for shareholders. As Chairman of the Board of Lineage and formerly of Oncocyte, Mr. Kingsley has been instrumental in structuring
their equity and debt financings and their business acquisitions. Mr. Kingsley has been general partner of Greenway Partners,
L.P., a private investment firm, and President of Greenbelt Corp., a business consulting firm, since 1993. Mr. Kingsley was Senior
Vice-President of Icahn and Company and its affiliated entities for more than 25 years. Mr. Kingsley served as a director of Asterias
Biotherapeutics, Inc. from September 2012 until it was acquired by Lineage in March 2019. Mr. Kingsley holds a BS degree in economics
from the Wharton School of the University of Pennsylvania, and a J.D. degree and LLM in taxation from New York University Law
School.
Andrew
J. Last, 61, joined the Board of Directors during December 2015. Dr. Last shares with our Board his many years of senior management
experience commercializing products internationally in the genomics and life-sciences industries. Since 2019 Dr. Last has served as Executive
Vice President and Chief Operating Officer of Bio-Rad Laboratories, Inc., a global leader in developing, manufacturing, and marketing
a broad range of innovative products for the life science research and clinical diagnostic markets. Dr. Last previously served as Chief
Commercial Officer at Berkeley Lights Inc., a digital cell biology company focused on enabling and accelerating the rapid development
and commercialization of biotherapeutics and other cell-based products, and as Chief Operating Officer of Intrexon Corporation, company
using synthetic biology to focus on programming biological systems to alleviate disease, remediate environmental challenges, and provide
sustainable food and industrial chemicals. From 2010 to 2016, Dr. Last was Executive Vice President and Chief Operating Officer of Affymetrix.
Before joining Affymetrix, Dr. Last served as Vice President, Global and Strategic Marketing of BD Biosciences and as General Manager
of Pharmingen from 2004 to 2010. From 2002 to 2004, Dr. Last held management positions at Applied Biosystems, Inc., including as Vice
President and General Manager from 2003-2004 and Vice President of Marketing 2002-2003. Earlier in his career, he served in a variety
of management positions at other companies, including Incyte Genomics and Monsanto. Dr. Last holds Ph.D. and MS degrees with specialization
in Agrochemical Chemicals and Bio-Aeronautics, respectively, from Cranfield University, and a BS degree in Biological Sciences from the
University of Leicester in the United Kingdom.
Cavan
Redmond, 60, joined our Board of Directors in August of 2015 and was appointed Chairman of the Board during April 2018. Mr. Redmond
brings to our Board decades of executive pharmaceutical and healthcare experience demonstrating leadership in a diverse compliment of
healthcare areas. Since 2014, Mr. Redmond has served as Partner for Zarsy, LLC. Mr. Redmond served as Chief Executive Officer of WebMD
from May 2012 until May 2013. From August 2011 until May 2012, Mr. Redmond served as Group President, Animal Health, Consumer Healthcare
and Corporate Strategy of Pfizer Inc., a pharmaceutical company. He served as Pfizer’s Group President, Animal Health, Consumer
Healthcare, Capsugel and Corporate Strategy from December 2010 until August 2011 and as its Senior Vice President and Group President,
Pfizer Diversified Businesses from October 2009 until December 2010. Prior to Pfizer’s acquisition of Wyeth, a pharmaceutical company,
Mr. Redmond served as President, Wyeth Consumer Healthcare and Animal Health Business. Before that, he held the positions of President,
Wyeth Consumer Healthcare from December 2007 until May 2009 and served on Wyeth Parmaceuticals’ Executive Leadership Team. At Wyeth,
Mr. Redmond served as General Manager and Executive Vice President of Wyeth Bioparhma which grew into a leading global biotech company
under his leadership. Mr. Redmond also served as a director of Lineage Cell Therapeutics, Inc. from February 2018 through July 2019 and
has served on the boards of directors of The Wistar Institute of Anatomy and Biology and the Arthritis Foundation.
Code
of Ethics
We
have adopted a Code of Business Conduct and Ethics (“Code of Ethics”) that applies to our principal executive officers, our
principal financial officer and accounting officer, our other executive officers, and our directors. The purpose of the Code of Ethics
is to deter wrongdoing and to promote the conduct of all Oncocyte business in accordance with high standards of integrity, including,
among other things: (i) compliance with applicable governmental laws, rules, and regulations; (ii) honest and ethical conduct, including
the ethical handling of actual or apparent conflicts of interest; (iii) the prompt internal reporting of any suspected violations of
the Code of Ethics to appropriate persons or through Oncocyte’s Compliance Hotline/Helpline; (iv) complete cooperation in the investigation
of reported violations and the provision of truthful, complete and accurate information; and (v) accountability for adherence to the
Code of Ethics. A copy of our Code of Ethics has been posted on our internet website and can be found at www.oncocyte.com.
We intend to disclose any future amendments to certain provisions of our Code of Ethics, and any waivers of those provisions granted
to our principal executive officers, principal financial officer, principal accounting officer or controller or persons performing similar
functions, by posting the information on our website within four business days following the date of the amendment or waiver.
Audit
Committee
The
Board of Directors has an Audit Committee, the members of which are independent in accordance with Rule 5605(a)(2) and Rule 5605(c)(2)
of The Nasdaq Stock Market LLC (“Nasdaq”) and Section 10A-3 under the Exchange Act.
The
members of the Audit Committee are Andrew Arno (Chair), Alfred D. Kingsley,
Andrew J. Last, and Cavan Redmond. The purpose of the Audit Committee is to recommend the engagement of our
independent registered public accountants, to review their performance and the plan, scope, and results of the audit, and to
review and approve the fees we pay to our independent registered public accountants. The Audit Committee also will review our
accounting and financial reporting procedures and controls.
Our
Board of Directors has determined that Andrew Arno meets the criteria of an “audit committee financial expert” within the
meaning of the SEC’s regulations based on his many years of experience in the investment banking industry, and his audit committee
service at another company, including the evaluation of financial statements.
Executive
Officers
Ronald
Andrews, Chief Executive Officer and President, Mitchell Levine, Chief Financial Officer, Douglas Ross, M.D., Chief Medical Officer,
and Padma Sundar, Chief Commercial Officer are our executive officers. Albert Parker served as our Chief Operating Officer, Lyndal K.
Hesterberg served as our Chief Scientific Officer, and Tony Kalajian served as our Sr. Vice President and Chief Accounting Officer during
2020.
Mitchell
Levine joined Oncocyte as Chief Financial Officer in November 2017. In 2000, Mr. Levine founded
Enable Capital Management. LLC, the general partner of Enable Growth Partners, L.P. which provided growth capital to private and publicly
traded companies, catalyzing transformative corporate innovation, job growth, and economic expansion in technology, life sciences, consumer
products, and energy. Prior to founding Enable, Mr. Levine was a founding member of The Shemano Group, a leading San Francisco-based
investment bank that focused on the capital needs of growth companies. He has also worked at Bear Stearns and Lehman Brothers. Mr. Levine
received his BA from the University of California, Davis.
Douglas
Ross, M.D. was appointed Chief Medical Officer during March 2020. Prior to joining Oncocyte, Dr. Ross was a principal of the Bethesda
Group, LLC, biomedical consulting company that he co-founded in 2015. From 2014, until founding Bethesda Group, Dr. Ross served as Chief
Scientific Officer of CardioDx, Inc. In 2011 Dr. Ross joined the Medical Science Division of Life Technologies and served as its Chief
Scientific Officer on a consulting basis until that company was acquired by Thermo Fisher Scientific in 2013. Dr. Ross’s private
sector career started in 2000 as Chief Scientific Officer of Applied Genomics, Inc. (AGI), a company he co-founded after post-doctoral
training at Stanford University. AGI translated insights from gene expression patterns into immunohistochemistry multivariate assays
targeted to actionable clinical problems. In 2009, Clarient, Inc., a national pathology reference laboratory, acquired AGI and Dr. Ross
continued his role as Chief Scientific Officer. General Electric Healthcare acquired Clarient in December 2010, and Dr. Ross continued
as Chief Scientific Officer, working with the business development and partnership teams at Clarient and capital teams at GE Healthcare.
Dr. Ross obtained his M.D. and his Ph.D. in Pathology from the University of Washington while studying at the Fred Hutchinson Cancer
Research Center in Seattle, Washington.
Padma
Sundar was appointed Chief Commercial Officer during January 2021 after serving as Senior Vice President—Marketing and Market
Access since May 2019. Before joining Oncocyte, Ms. Sundar served as Vice President of Strategy and Market Access at CellMax Life, a
liquid biopsy company, from 2017 until 2019, and she served as Director of Marketing at Guardant Health, Inc., cancer diagnostics company,
from 2016 until 2017. Previously, Ms. Sundar was Senior Director at Roche Sequencing and was Senior Director for the oncology portfolio
at Affymetrix. Ms. Sundar began her career at McKinsey and Company, and received her M.B.A. and M.P.H. from the University of California,
Berkeley, and her B.A. in Chemistry from the University of Delhi.
Delinquent
Section 16(a) Reports
Section
16(a) of Exchange Act, requires our directors and executive officers and persons who own more than ten percent (10%) of a registered
class of our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock
and other Oncocyte equity securities.
To
our knowledge, based solely on our review of the copies of Forms, 3 and 4 and amendments thereto filed during the last fiscal year, and
Forms 5 and amendments thereto filed with respect to the last fiscal year, by the Reporting Persons, or written representation from the
Reporting Persons that no Form 5 was required, Ronald Andrews and Mitchell Levine each were delinquent in filing one Form 4.
Item
11. Executive Compensation
Director
Compensation
Directors
and members of committees of the Board of Directors who are salaried employees of Oncocyte are entitled to receive compensation as employees
but are not compensated for serving as directors or attending meetings of the Board or committees of the Board. All directors are entitled
to reimbursements for their out-of-pocket expenses incurred in attending meetings of the Board or committees of the Board.
Non-employee
directors, other than the Chairman of the Board of Directors, received an annual fee of $35,000 in cash during 2020. In addition to cash
fees, non-employee directors received options to purchase 57,000 shares of common stock under our 2018 Equity Incentive Plan (the “Incentive
Plan”) during 2020. In 2020, our Chairman received an annual cash fee of $70,000 and an annual award of options to purchase 62,000
shares of Oncocyte common stock.
The
annual fee of cash was paid in quarterly installments, and the stock options granted vested and became exercisable one year from the
date of grant, subject to the non-employee director’s continued service as a director of Oncocyte or a subsidiary from the date
of grant until the vesting date or, if earlier, until the next annual meeting of shareholders. The options will expire if not exercised
ten years from the date of grant.
Directors
who served on the Audit Committee, the Compensation Committee, the Nominating/Corporate Governance Committee, Science and Technology
Committee or the Finance Committee during 2020 received, in addition to other fees payable to them as directors, the following annual
fees which were paid in quarterly installments:
|
●
|
Audit
Committee Chairman: $15,000
|
|
●
|
Audit
Committee Member other than Chairman: $7,500
|
|
●
|
Compensation
Committee Chairman: $10,000
|
|
●
|
Compensation
Committee Member other than Chairman: $5,000
|
|
●
|
Nominating/Corporate
Governance Committee Chairman: $10,000
|
|
●
|
Nominating/Corporate
Governance Committee Member other than Chairman: $5,000
|
|
●
|
Science
and Technology Committee Chairman: $10,000
|
|
●
|
Science
and Technology Committee Member other than Chairman: $5,000
|
|
●
|
Finance
and Strategy Committee Member: $5,000
|
During
May 2020, we entered into Acknowledgement and Agreements (the “Deferral Agreements”) with certain of our non-employee directors
pursuant to which our they agreed to defer a portion of their compensation. Deferred fees accrued interest at 6% per annum. On December
8, 2020 the deferred fee obligations were settled by paying the fees and accrued interest in cash or, as agreed individually by participating
directors and Oncocyte, a combination of cash and shares of our common stock.
The
following table summarizes certain information concerning the compensation paid during the past fiscal year to each of the persons who
served as directors during the year ended December 31, 2020 and who were not our employees on the date the compensation was earned.
Name
|
|
Fees
Earned
Or Paid in Cash(1)
|
|
|
Option
Awards (2)
|
|
|
Nonqualified
Deferred Compensation
Earnings(3)
|
|
|
Total
|
|
Andrew Arno
|
|
$
|
65,000
|
(4)
|
|
$
|
106,590
|
(5)
|
|
$
|
628
|
|
|
$
|
172,218
|
|
Jennifer Levin Carter
|
|
$
|
17,500
|
|
|
$
|
61,560
|
(6)
|
|
|
–
|
|
|
$
|
79,060
|
|
Melinda Griffith
|
|
$
|
55,000
|
|
|
$
|
106,590
|
(5)
|
|
$
|
1,163
|
|
|
$
|
162,753
|
|
Alfred D. Kingsley
|
|
$
|
40,000
|
(7)
|
|
$
|
106,590
|
(5)
|
|
$
|
387
|
|
|
$
|
146,977
|
|
Andrew J. Last
|
|
$
|
72,500
|
(8)
|
|
$
|
106,590
|
(5)
|
|
$
|
1,459
|
|
|
$
|
180,549
|
|
Aditya
Mohanty (9)
|
|
$
|
17,500
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
17,500
|
|
Cavan Redmond
|
|
$
|
82,500
|
(10)
|
|
$
|
115,940
|
(11)
|
|
$
|
1,660
|
|
|
$
|
200,100
|
|
(1)
|
Certain
directors elected to receive shares of Oncocyte common stock at market value in lieu of a portion of their cash fees.
|
|
|
(2)
|
Options
granted will vest and become exercisable one year from the date of grant, subject to the non-employee director’s continued
service as a director of Oncocyte or a subsidiary from the date of grant until the vesting date or, if earlier, until the next annual
meeting of shareholders, but must be reported here at the aggregate grant date fair value, as if all options were fully vested and
exercisable at the date of grant. Values are computed in accordance with FASB Accounting Standards Codification (ASC) Topic 718,
Compensation - Stock Compensation. We used the Black-Scholes Pricing Model to compute option fair values based on applicable
exercise and stock prices, an expected option term, volatility assumptions, and risk-free interest rates.
|
|
|
(3)
|
Reflects
interest accrued and paid to those directors who elected to enter into Deferral Agreements. Certain directors elected to receive
a portion of their interest in shares of Oncocyte common stock at market value.
|
|
|
(4)
|
Of
the total fees earned and interest accrued on deferred fees, $19,877 was paid in 9,602 shares of common stock at $2.07 per share
based on the closing price of Oncocyte common stock.
|
|
|
(5)
|
Mr.
Arno, Ms. Griffith, Mr. Kingsley, and Mr. Last each received 57,000 stock options on June 17, 2020. The options are exercisable at
an exercise price of $2.38 per share.
|
|
|
(6)
|
Ms.
Carter received 57,000 stock options on August 24, 2020 upon joining our Board of Directors. The options are exercisable at an exercise
price of $1.40 per share.
|
|
|
(7)
|
Of
the total fees earned and interest accrued on deferred fees, $12,232 was paid in 5,909 shares of common stock at $2.07 per share
based on the closing price of Oncocyte common stock.
|
|
|
(8)
|
Of
the total fees earned and interest accrued on deferred fees, $33,500 was paid in 16,184 shares of common stock at $2.07 per share
based on the closing price of Oncocyte common stock.
|
|
|
(9)
|
Mr.
Mohanty’s term as a director expired on the date of our 2020 Annual Meeting of Shareholders.
|
|
|
(10)
|
Of
the total fees earned and interest accrued on deferred fees, $38,121 was paid in 18,416 shares of common stock at $2.07 per share
based on the closing price of Oncocyte common stock.
|
|
|
(11)
|
Mr.
Redmond received 62,000 stock options on June 17, 2020. The options are exercisable at an exercise price of $2.38 per share.
|
Executive
Compensation
Emerging
Growth Company and Smaller Reporting Company
We
are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and a “smaller reporting
company” as defined in the rules and regulations of the SEC. As an emerging growth company and as a smaller reporting company we
may take advantage of specified reduced disclosure and other requirements that are otherwise applicable, in general, to public companies
that are not emerging growth companies or smaller reporting companies. Accordingly, this Report includes reduced disclosure about our
executive compensation arrangements.
The
following tables show certain information relating to the compensation of our President and Chief Executive Officer, the two highest
paid individuals other than our President and Chief Executive Officer who were serving as executive officers at year end and whose total
individual compensation exceeded $100,000 during 2020, and our former Chief Operating Officer whose total individual compensation exceeded
$100,000 during 2020 and who would have been among the two highest paid executive officers other than our President and Chief Executive
Officer had he continued to serve as an executive officer at the end of 2020. We refer to such executive officers as our “Named
Executive Officers”.
Summary
Compensation Table
Name
and principal position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards(1)
|
|
|
Option
Awards(1)
|
|
|
Nonqualified
Deferred Compensation Earnings(2)
|
|
|
All
Other
Compensation(3)
|
|
|
Total
|
|
Ronald
Andrews
|
|
2020
|
|
|
$
|
487,385
|
|
|
$
|
465,600
|
(4)
|
|
|
—
|
|
|
$
|
68,500
|
(5)
|
|
$
|
9,190
|
|
|
$
|
16,175
|
|
|
$
|
1,046,850
|
|
President
and Chief Executive Officer
|
|
2019
|
|
|
$
|
276,250
|
(6)
|
|
$
|
—
|
|
|
|
163,150
|
(7)
|
|
$
|
1,626,562
|
(7)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,065,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell
Levine
|
|
2020
|
|
|
$
|
361,999
|
(8)
|
|
$
|
131,670
|
|
|
$
|
44,800
|
(9)
|
|
$
|
504,431
|
(10)
|
|
$
|
721
|
(8)
|
|
$
|
14,839
|
|
|
$
|
1,058,460
|
|
Chief
Financial Officer
|
|
2019
|
|
|
$
|
343,063
|
|
|
$
|
131,670
|
|
|
$
|
70,400
|
(11)
|
|
$
|
600,142
|
(11)
|
|
$
|
—
|
|
|
$
|
12,662
|
|
|
$
|
1,157,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Padma
Sundar
|
|
2020
|
|
|
$
|
293,260
|
(13)
|
|
$
|
60,000
|
|
|
|
|
|
|
$
|
543,150
|
(14)
|
|
$
|
297
|
(13)
|
|
$
|
11,665
|
|
|
$
|
908,372
|
|
Senior
Vice President, Marketing and Market Access(12)
|
|
2019
|
|
|
$
|
158,323
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
615,600
|
(14)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
773,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert
P. Parker
|
|
2020
|
|
|
$
|
348,948
|
(16)
|
|
$
|
133,465
|
|
|
|
|
|
|
$
|
530,363
|
(17)
|
|
$
|
1,082
|
(16)
|
|
$
|
386,135
|
(18)
|
|
$
|
1,399,993
|
|
Chief
Operating Officer(15)
|
|
2019
|
|
|
$
|
350,233
|
|
|
$
|
57,120
|
|
|
|
|
|
|
$
|
490,000
|
(19)
|
|
$
|
—
|
|
|
$
|
14,000
|
|
|
$
|
911,353
|
|
(1)
|
Option
awards granted under our 2010 Employee Stock Option Plan (the “Option Plan”)
or under our Incentive Plan are valued at the aggregate grant date fair value, as if all
options were fully vested and exercisable at the date of grant. Except as otherwise indicated
below, one quarter of the options will vest upon completion of 12 full months of continuous
employment measured from the grant date, and the balance of the options shall vest in 36
equal monthly installments commencing on the first anniversary of the date of grant, based
upon the completion of each month of continuous employment. Amounts shown in this column
do not reflect dollar amounts actually received by our Named Executive Officers. Instead,
these amounts reflect the aggregate grant date fair value of each stock option granted, computed
in accordance with the provisions of FASB ASC Topic 718. For stock options that have performance-based
(sometimes referred to as milestone-based) vesting conditions, compensation is shown in the
tables in the same manner as Oncocyte recorded stock based compensation expense for the grant
on the basis of the estimated probability that the vesting condition will be met or the determination
that the condition has been met. We used the Black-Scholes Pricing Model to compute option
fair values based on applicable exercise and stock prices, an expected option term, volatility
assumptions, and risk-free interest rates. Our Named Executive Officers will only realize
compensation upon exercise of the stock options and to the extent the trading price of our
common stock is greater than the exercise price of such stock options at the time of exercise.
Stock
awards consist entirely of restricted stock units (“RSUs”) and are valued in the table at the aggregate grant date fair
value based on the closing price of Oncocyte common stock as quoted on the NYSE American as if the stock awards were fully vested.
Beginning on March 8, 2021, our common stock began trading on the NASDAQ Global Market under
the symbol “OCX”, and prior to that date our common stock was traded on the NYSE American under the same symbol.
For
a full discussion of OncoCyte’s accounting of stock-based compensation under ASC 718, please refer to Note 11 to our consolidated
financial statements found elsewhere in this Report.
|
|
|
(2)
|
Reflects
interest accrued and paid to those executives who elected to enter into Deferral Agreements. Certain executives elected to receive
a portion of their interest in shares of Oncocyte common stock at market value on the date of payment. Also includes accrual of severance
compensation in the case of an executive terminated in December 2020.
|
|
|
(3)
|
Other
compensation consists primarily of employer contributions to employee accounts under our 401(k) plan.
|
|
|
(4)
|
The
amount of Mr. Andrews bonus includes RSUs for 106,221 shares of common stock under our Incentive Plan that Mr. Andrews agreed to
accept in lieu of $279,360 in cash as part of his discretionary bonus. The number of RSUs granted was determined based on the $279,360
divided by the $2.63 per share closing price of Oncocyte common stock on May 7, 2020. The RSUs will vest on May 7, 2021, the anniversary
of the grant date.
|
|
|
(5)
|
In
July 2020, Mr. Andrews was granted 50,000 stock options exercisable at an exercise price of $1.68 per share.
|
|
|
(6)
|
Mr.
Andrews was appointed President and Chief Executive Officer effective July 1, 2019. Amounts shown as salary in the table above includes
$36,250 of cash fees that Mr. Andrews received for services as a non-employee director prior to July 1, 2019.
|
|
|
(7)
|
In
July 2019, Mr. Andrews was granted (i) options to purchase 950,000 shares of common stock, effective on the date his employment commenced,
at an exercise price of $2.51 per share, (ii) options to purchase 50,000 shares of common stock effective on upon completion of one
year of continuous service as an employee which are included in the table as part of his 2020 compensation because the grant of the
options did not become effective until July 2020 when Mr. Andrews completed a year of continuous service as an employee, and (iii)
RSUs with respect to 65,000 shares of common stock, effective upon his completion of one year of continuous service as an employee.
The fair value of the RSUs was measured as of the July 1, 2019 grant date based on the closing price of Oncocyte common stock quoted
on the NYSE American on that date.
|
|
|
(8)
|
Of
the total salary earned and interest accrued on deferred salary, $20,950 was paid in 10,121 shares of common stock at $2.07 per share
based on the closing price of Oncocyte common stock on the payment date.
|
|
|
(9)
|
In
April 2020, Mr. Levine was granted 20,000 RSUs which vest one year from the date of grant. The fair value of the RSUs was measured
as of the April 28, 2020 grant date based on the closing price of Oncocyte common stock quoted on the NYSE American on that date.
|
|
|
(10)
|
In
February 2020, Mr. Levine was granted 204,000 stock options exercisable at an exercise price of $2.63 per share. The amount shown
in the table also includes $69,911 of value for stock options granted in May 2018 that vested during June 2020 when the performance
conditions required for vesting were met.
|
|
|
(11)
|
In
March 2019, Mr. Levine was granted 245,000 stock options exercisable at an exercise price of $3.52 per share and 20,000 RSUs. The
RSUs vested on March 14, 2020. The fair value of the RSUs was measured as of the March 14, 2019 grant date based on the closing price
of Oncocyte common stock quoted on the NYSE American on that date.
|
(12)
|
Ms.
Sundar was appointed Senior Vice President, Marketing and Market Access effective May 22, 2019 and was promoted to Chief Commercial
Officer effective January 4, 2021. All amounts shown in the table above reflect Ms. Sundar’s compensation prior to her promotion.
|
|
|
(13)
|
Of
the total salary earned and interest accrued on deferred salary, $8,646 was paid in 4,177 shares of common stock at $2.07 per share
based on the closing price of Oncocyte common stock on the payment date.
|
|
|
(14)
|
In
February 2020, Ms. Sundar was granted 255,000 stock options at an exercise price of $2.63 per share and in May 2019, Ms. Sundar was
granted 180,000 stock options at an exercise price of $4.94 per share.
|
|
|
(15)
|
Mr.
Parker served as our Chief Operating Officer from August 2018 until December 2020.
|
|
|
(16)
|
Of
the total salary earned and interest accrued on deferred salary, $11,564 was paid in 5,586 shares of common stock at $2.07 per share
based on the closing price of Oncocyte common stock on the payment date.
|
|
|
(17)
|
In
February 2020, Mr. Parker was granted 204,000 stock options at an exercise price of $2.63 per share. The amount shown in the table
also includes $95,843 of value for stock options granted in August 2018 that vested during June 2020 when the performance conditions
required for vesting were met.
|
|
|
(18)
|
Includes
$361,757 of severance compensation accrued pursuant to Mr. Parker’s CIC Agreement, as discussed below, upon the termination
of Mr. Parker’s employment in December 2020
|
|
|
(19)
|
In
March 2019, Mr. Parker was granted 200,000 stock options at an exercise price of $3.52 per share.
|
Executive
Employment Agreements, Deferral Agreements, and Change of Control Provisions
Employment
Agreements
We
have entered into Employment Agreements with our Named Executive Officers.
Pursuant
to his employment agreement, the annual salary of our President and Chief Executive Officer Ronald Andrews, was set at $480,000. Mr.
Andrews is also eligible to receive annual bonuses, to the extent approved by the Board of Directors in its discretion, based on the
achievement of predetermined company and individual objectives set by the Board of Directors or its Compensation Committee from time
to time. During 2020 Mr. Andrews was awarded a discretionary bonus of $465,600. Mr. Andrews agreed to accept RSUs for 106,221 shares
of common stock under our Incentive Plan in lieu of a $279,360 cash portion of that discretionary bonus. The 106,221 RSUs were determined
based on $279,360 divided by the $2.63 per share closing price of Oncocyte common stock as quoted on the NYSE American on May 7, 2020.
The RSUs will vest on May 7, 2021, the anniversary of the grant date.
Pursuant
to his employment agreement, Mr. Andrews received the following equity awards under the Incentive Plan: (i) options to purchase 950,000
shares of Oncocyte common stock effective on the date his employment commenced (the “Initial Grant”); (ii) options to purchase
50,000 shares of common stock, effective on upon his completion of one year of continuous service as an employee (the “Second Grant”);
and (iii) RSUs with respect to 65,000 shares of common stock, effective upon his completion of one year of continuous service as an employee.
The exercise price of the options in the Initial Grant and Second Grant was the fair market value of a share of Oncocyte common stock
on the applicable effective date of grant, determined in accordance with the Incentive Plan.
The
vesting schedule of the options in the Initial Grant pursuant to which the options became or will become exercisable is as follows: twenty-five
percent of the options vested upon Mr. Andrew’s completion of one year of continuous service as an employee, and the balance of
the options began to vest in 36 equal monthly installments, commencing on the first anniversary of the effective date of the Initial
Grant, subject to his continued service as an employee on the applicable vesting date.
The
options in the Second Grant vested upon Mr. Andrew’s completion of one year of continuous service as an employee from the effective
date of the Second Grant. The 65,000 RSUs will vest on July 1, 2021.
During
2020, the annual salary of Mitchell Levine our Chief Financial Officer was increased from $346,500 to $362,000. Pursuant to Mr. Levine’s
employment agreement he is eligible to receive annual cash incentive bonus awards determined by the Board of Directors, with a target
bonus of not less than 40% of his base salary, based on his achievement of specific, objectively determinable, performance goals at target
levels for the year.
During
2020, the annual salary of Padma Sundar, then our Vice President—Marketing and Market Access, was increased from her starting salary
of $260,000 pursuant to her employment agreement to $294,580. Pursuant to her employment agreement, she is eligible to receive annual
cash incentive bonus awards determined by the Board of Directors, with a target bonus of not less than 35% of her base salary, based
on the achievement of specific, objectively determinable, individual and company performance goals at target levels for the year.
On
September 28, 2020, the full-time employment of Albert Parker, our Chief Operating Officer and Secretary, was terminated and he was retained
as a part-time employee under the terms of a Reduction in Salary Agreement as part of a cost savings plan that also included the conversion
of certain other executive officers from full-time to part-time employees. Mr. Parker’s part-time employment terminated on December
18, 2020. During the period of his part-time employment, Mr. Parker received 50% of his regular bi-weekly salary and remained eligible
to participate in Oncocyte’s employee benefit plans and our Incentive Plan, but he no longer accrued paid time off. Mr. Parker’s
salary deferral under the terms of his Deferral Agreement, as discussed below under “Salary Deferral Agreements,”
ended on September 28, 2020 and his accrued deferred salary plus accrued interest was paid during December 2020.
Salary
Deferral Agreements.
During
May 2020, we entered into Deferral Agreements with certain of our executive officers pursuant to which our they agreed to defer a portion
of their compensation and to receive interest on the deferred amount.
Ronald
Andrews, our Chief Executive Officer, agreed to defer 30% of his base salary, and $186,240 of a discretionary bonus that otherwise would
have been payable in cash. Mitchell Levine, our Chief Financial Officer and Albert Parker, our former Chief Operating Officer, each agreed
to defer 20% of their base salary, and Padma Sundar, our Chief Commercial Officer, agreed to defer 10% of her base salary.
On
December 11, 2020, Messrs. Andrews, Levine, and Parker, and Ms. Sundar received payment of their deferred compensation and accrued interest.
Mr. Andrews received payment in cash and Messrs. Levine and Parker and Ms. Sundar received payment in cash and shares of Oncocyte common
stock valued at the closing price of the common stock on the NYSE American on December 8, 2020.
Change
in Control and Severance Plan
We
have adopted the OncoCyte Corporation Change in Control and Severance Plan (the “CIC Plan”) which provides change in control
and other severance benefits to a select group of our management or highly compensated employees, including our executive officers, who
have executed a Change in Control and Severance Agreement (“CIC Agreement”) and who otherwise satisfy the conditions set
forth in their CIC Agreement and the provisions of the CIC Plan. Pursuant to the CIC Plan, we have entered into CIC Agreements with certain
executive officers, including our President and Chief Executive Officer, Ronald Andrews, our Chief Financial Officer, Mitchell Levine,
our Chief Commercial Officer, Padma Sundar, and our former Chief Operating Officer, Albert Parker. Each of their CIC Agreements has the
effect of modifying the executive’s employment agreement and provides that if we terminate the executive’s employment without
“cause” or if the executive resigns for “good reason”, the executive will receive a severance payment in the
amount of 12 months of his or her base salary and accelerated vesting of stock options, restricted stock units, and any other equity
awards (“Equity Awards”) that were schedule to vest based on the passage of time during the 12 months following the termination
of employment. In addition to those severance benefits, if a termination of the executive’s employment without “cause”
or a resignation for “good reason” occurs within three months before or twelve months after a “change in control,”
the executive will also receive his or her target bonus for the year and the vesting of all Equity Awards will be fully accelerated.
In addition to the foregoing, the terminated executive will receive a lump sum payment (which shall not be grossed up for applicable
income and employment taxes) equal to twelve months of the premium costs of group health plan continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”) to the same extent provided under Oncocyte’s group health plan.
In order to receive the severance benefits, the executive must execute and comply with a separation agreement and general release of
all claims against Oncocyte.
Equity
Awards Outstanding at Year End
The
following table summarizes certain information concerning stock options and other equity awards granted by us under the Option Plan and
the Incentive Plan held as of December 31, 2020 by our Named Executive Officers:
Equity
Awards Outstanding At Year-End
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Securities
Underlying
Unexercised Options
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised Options
Unexercisable (1)
|
|
|
Equity Incentive plan awards: Number of
securities underlying
unexercised unearned options
(#)
|
|
|
Option Exercise
Price
|
|
|
Option Expiration
Date
|
|
Number of shares or units of stock that have not vested (#)
|
|
|
Market value of shares of units of stock that have not vested ($)
|
|
|
Equity Incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)
|
|
|
Equity Incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
|
|
Ronald Andrews
|
|
|
20,000
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
2.10
|
|
|
April 1, 2028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
n/a
|
|
|
n/a
|
|
|
65,000
|
(3)
|
|
$
|
155,350
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,000
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
2.40
|
|
|
August 29, 2028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
n/a
|
|
|
n/a
|
|
|
106,221
|
(5)
|
|
$
|
253,868
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
336,458
|
(6)
|
|
|
613,542
|
|
|
|
—
|
|
|
$
|
2.51
|
|
|
June 30, 2029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
50,000
|
(7)
|
|
|
—
|
|
|
$
|
1.68
|
|
|
June 30, 2030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell Levine
|
|
|
154,169
|
(8)
|
|
|
45,831
|
|
|
|
|
|
|
$
|
5.90
|
|
|
November 15, 2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,958
|
(9)
|
|
|
17,708
|
|
|
|
—
|
|
|
$
|
2.35
|
|
|
May 22, 2028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107,188
|
(10)
|
|
|
137,812
|
|
|
|
|
|
|
$
|
3.52
|
|
|
March 13, 2029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
n/a
|
|
|
n/a
|
|
|
20,000
|
(12)
|
|
$
|
47,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
204,000
|
(11)
|
|
|
|
|
|
$
|
2.63
|
|
|
February 9, 2030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albert P. Parker
|
|
|
200,000
|
(13)
|
|
|
—
|
|
|
|
|
|
|
$
|
2.30
|
|
|
August 5, 2028,
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137,052
|
(14)
|
|
|
62,498
|
|
|
|
|
|
|
$
|
3.52
|
|
|
March 13, 2029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
93,500
|
(15)
|
|
|
110,500
|
|
|
|
|
|
|
$
|
2.63
|
|
|
February 9, 2030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Padma Sundar
|
|
|
71,250
|
(16)
|
|
|
108,750
|
|
|
|
|
|
|
$
|
4.94
|
|
|
May 21, 2029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
255,000
|
(17)
|
|
|
|
|
|
$
|
2.63
|
|
|
February 9, 2030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Except
as otherwise indicated below, one quarter of the options shall vest upon completion of 12 full months of continuous employment measured
from the date of grant, and the balance of the options will vest in 36 equal monthly installments commencing on the first anniversary
of the date of grant, based upon the completion of each month of continuous employment.
|
|
|
(2)
|
The
date of grant was April 2, 2018 for services of Mr. Andrews as a non-employee director of Oncocyte. The options vested on the first
anniversary of the grant date.
|
|
|
(3)
|
The
date of grant of the RSUs was July 1, 2019. The RSUs will vest upon completion of two years of continuous service as an employee
from the grant date. The market value of the RSUs was determined based on the closing price of Oncocyte common stock on December
31, 2020.
|
.
|
|
(4)
|
The
date of grant was August 30, 2018 for services of Mr. Andrews as a non-employee director of Oncocyte. The options vested on the first
anniversary of the grant date.
|
|
|
(5)
|
Mr.
Andrews agreed to accept RSUs for 106,221 shares of common stock under our Incentive Plan in lieu of $279,360 in cash as part of
his discretionary bonus. The 106,221 shares of RSUs were determined based on the cash payable value of $279,360 divided by the $2.63
per share closing price of Oncocyte common stock on May 7, 2020. The RSUs will vest on May 7, 2021, the anniversary of the grant
date. The market value of the RSUs shown above was determined based on the closing price of Oncocyte common stock on December 31,
2020.
|
|
|
(6)
|
The
date of grant was July 1, 2019.
|
|
|
(7)
|
The
date of grant was July 1, 2020.
|
|
|
(8)
|
These
options were granted to Mr. Levine upon his appointment as Chief Financial Officer on November 16, 2017.
|
|
|
(9)
|
The
date of grant was May 23, 2018. Included in the number of options exercisable is 41,666 options which vested in June 2020 based on
certain performance conditions for vesting having been met.
|
|
|
(10)
|
The
date of grant was March 14, 2019.
|
|
|
(11)
|
The
date of grant was February 10, 2020.
|
|
|
(12)
|
The
date of the grant was April 28, 2020 and the 20,000 restricted stock units will vest one year from the date of grant. The market
value of the RSUs was determined based on the closing price of Oncocyte common stock on December 31, 2020.
|
|
|
(13)
|
The
date of grant was August 6, 2018. The number of exercisable options includes 65,000 options that vested during June 2020 upon on
the attainment of certain performance conditions required for vesting, and includes additional stock options that vested through
acceleration, pursuant to Mr. Parker’s CIC Agreement, upon the termination of Mr. Parker’s employment in December 2020.
|
|
|
(14)
|
The
date of grant was March 14, 2019. The number of exercisable options includes stock options that vested through acceleration, pursuant
to Mr. Parker’s CIC Agreement, upon the termination of Mr. Parker’s employment in December 2020.
|
|
|
(15)
|
The
date of grant was February 10, 2020. The number of exercisable options includes stock options that vested through acceleration, pursuant
to Mr. Parker’s CIC Agreement, upon the termination of Mr. Parker’s employment in December 2020.
|
|
|
(16)
|
The
date of grant was May 22, 2019.
|
|
|
(17)
|
The
date of grant was February 10, 2020.
|
The
Incentive Plan
The
following summary of the Incentive Plan is a summary only and does not purport to include all of the terms of the Inventive Plan, and
is qualified by the full terms of the Incentive Plan.
We
have adopted the Incentive Plan that permits us to grant awards, or Awards, consisting of stock options, the grant or sale of restricted
stock (“Restricted Stock”), the grant of stock appreciation rights (“SARs”), and the grant of hypothetical units
issued with reference to our common stock (“Restricted Stock Units” or “RSUs”), for up to 11,000,000 shares of
our common stock. The Incentive Plan also permits Oncocyte to issue such other securities as our Board of Directors (the “Board”)
or the Compensation Committee (the “Committee”) administering the Incentive Plan may determine. Awards of stock options,
Restricted Stock, SARs, and RSUs (“Awards”) may be granted under the Incentive Plan to Oncocyte employees, directors, and
consultants.
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. 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 only in the limited circumstances
specified 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, 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 RSUs 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,
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, or “non-qualified” stock options that do not qualify incentive stock options. Incentive
stock options may be granted only to Oncocyte employees and employees of 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 Oncocyte stock, the exercise price of any
incentive stock option must be at least 110% of the fair market value of the 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 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 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,
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.
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 RSUs subject to such vesting, transfer, and repurchase terms, and other restrictions. The price at which Restricted Stock may
be issued or sold will be not less than 100% of fair market value. Employees or consultants, but not executive officers or directors,
who purchase Restricted Stock may be permitted 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. Restricted Stock may also be issued for services actually performed by the
recipient prior to the issuance of the Restricted Stock. Unvested Restricted Stock for which we have not received payment may be forfeited,
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 with respect to the particular Award, 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 for the recipient’s account, and interest may be credited
on the amount of the cash dividends withheld. 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 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 RSUs shall be determined by the Board or Committee. No shares of common stock shall be issued at the
time a RSU is granted. A recipient of Restricted Stock Units shall have no voting rights with respect to the RSUs. Upon the expiration
of the restrictions applicable to a RSU, we will either issue to the recipient, without charge, one share of common stock per RSU or
cash in an amount equal to the fair market value of one share of common stock.
At
the discretion of the Board or Committee, each RSU (representing one share of common stock) may be credited with cash and stock dividends
paid in respect of one share (“Dividend Equivalents”). Dividend Equivalents shall be withheld for the recipient’s account,
and interest may be credited on the amount of cash Dividend Equivalents withheld. Dividend Equivalents credited to a recipient’s
account and attributable to any particular RSU (and earnings thereon, if applicable) shall be distributed in cash or 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
RSU. If a RSU 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, 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. No SAR may be exercised later than 10 years after the date of grant.
The
exercise price of an SAR shall not be less than 100% of the fair market value of one share of common stock 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.
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 principal 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 us 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 us 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.
Other
Compensation Plans
We
do not have any pension plans, defined benefit plans, or non-qualified deferred compensation plans other than those described above.
We do make contributions to 401(k) plans for participating executive officers and other employees.
Item
12. Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters
Principal
Shareholders
The
following table sets forth information as of March 31, 2021 concerning beneficial ownership of our common stock by each shareholder known
by us to be the beneficial owner of 5% or more of our outstanding shares of common stock. Information concerning certain beneficial owners
of more than 5% of the outstanding common stock is based upon information disclosed by such owners in their reports on Schedule 13D or
Schedule 13G.
Shareholder
|
|
Number of Shares
|
|
|
Percent
of Total
|
|
|
|
|
|
|
|
|
Broadwood Partners, L.P. (1)
Broadwood Capital, Inc.
Neal Bradsher
724 Fifth Avenue, 9th Floor
New York, New York 10019
|
|
|
18,409,051
|
|
|
|
20.57
|
%
|
|
|
|
|
|
|
|
|
|
Pura Vida Investments, LLC(2)
Efrem Kamen
150 East 52nd Street, Suite 32001
New York, NY 10022
|
|
|
12,223,953
|
|
|
|
13.75
|
%
|
|
|
|
|
|
|
|
|
|
George Karfunkel
126 East 56th Street/15th Floor
New York, New York 10022
|
|
|
5,120,000
|
|
|
|
5.76
|
%
|
(1)
|
Includes
17,832,445 shares beneficially owned by Broadwood Partners, L.P. and 3,145 shares owned by Neal Bradsher. Broadwood Capital, Inc.
is the general partner of Broadwood Partners, L.P. Neal Bradsher is the President of Broadwood Capital, Inc. Mr. Bradsher and Broadwood
Capital, Inc. share voting power over and may be deemed to beneficially own the shares owned by Broadwood Partners, L.P. The shares
owned by Broadwood Partners, L.P. include 573,461 shares that may be acquired upon the exercise of certain warrants.
|
|
|
(2)
|
Includes
shares held by Pura Vida Master Fund, Ltd. (the “Pura Vida Master Fund”) and certain separately managed accounts (the
“Accounts”). Pura Vida Investments, LLC (“PVI”) serves as the investment manager to the Pura Vida Master
Fund and the Accounts. Efrem Kamen serves as the managing member of PVI. PVI and Mr. Kamen may be deemed to have shared voting and
dispositive power with respect to the shares owned directly by the Pura Vida Master Fund and the Accounts. PVI and Mr. Kamen disclaim
beneficial ownership of those shares except to the extent of their pecuniary interest therein.
|
Security
Ownership of Management
The
following table sets forth information as of March 31, 2021 concerning beneficial ownership of our common stock and equity awards by
each member of the Board of Directors, all Named Executive Officers, and all executive officers and directors as a group.
|
|
Number
of
Shares
|
|
|
Percent
of
Total
|
|
Ronald
Andrews (1)
|
|
|
737,817
|
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
Mitchell
Levine (2)
|
|
|
520,824
|
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
Padma
Sundar (3)
|
|
|
173,865
|
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
Albert
Parker (4)
|
|
|
333,586
|
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
Alfred
D. Kingsley (5)
|
|
|
759,523
|
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
Andrew
Arno (6)
|
|
|
311,016
|
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
Andrew
J. Last (7)
|
|
|
176,690
|
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
Cavan
Redmond (8)
|
|
|
279,830
|
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
Melinda
Griffith (9)
|
|
|
45,000
|
|
|
|
*%
|
|
|
|
|
|
|
|
|
|
|
Jennifer
Levin Carter (10)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
executive officers and directors as a group (11 persons) (11)
|
|
|
3,416,384
|
|
|
|
3.74%
|
|
*Less
than 1%
(1)
|
Includes
500,416 shares that may be acquired through the exercise of stock options that are presently exercisable or that may become exercisable
within 60 days, 106,221 RSUs that will vest within 60 days, and 17,482 shares that may be acquired upon the exercise of certain warrants.
Excludes 1,064,584 shares that may be acquired upon the exercise of certain stock options that are not presently exercisable and
that will not become exercisable within 60 days and 65,000 RSUs that are currently unvested and will not vest within 60 days.
|
|
|
(2)
|
Includes
450,629 shares that may be acquired through the exercise of stock options that are presently exercisable or that may become exercisable
within 60 days, 20,000 RSUs that will vest within 60 days, and 3,495 shares that may be acquired upon the exercise of certain warrants.
Excludes 545,037 shares that may be acquired upon the exercise of certain stock options that are not presently exercisable and that
will not become exercisable within 60 days.
|
|
|
(3)
|
Includes
169,688 shares that may be acquired through the exercise of stock options that are presently exercisable or that may become exercisable
within 60 days. Excludes 561,112 shares that may be acquired upon the exercise of certain stock options that are not presently exercisable
and that will not become exercisable within 60 days.
|
|
|
(4)
|
Includes
323,000 shares that may be acquired through the exercise of stock options that are presently exercisable or that may become exercisable
within 60 days. Excludes 139,331 shares that may be acquired upon the exercise of certain stock options that are not presently exercisable
and that will not become exercisable within 60 days.
|
|
|
(5)
|
Includes
384,111 shares held solely by Mr. Kingsley, and 75,345 shares held by Greenbelt Corp. and 18,767 shares held by Greenway Partners,
LP, which are affiliates of Mr. Kingsley. Mr. Kingsley disclaims beneficial ownership of 15,069 shares held by Greenbelt Corp. Includes
281,300 shares that may be acquired through the exercise of stock options that are presently exercisable or that may become exercisable
within 60 days. Excludes 57,000 shares that may be acquired upon the exercise of certain stock options that are not presently exercisable
and that will not become exercisable within 60 days.
|
(6)
|
Includes
146,520 shares that may be acquired through the exercise of stock options that are presently exercisable or that may become exercisable
within 60 days and 52,447 shares that may be acquired upon the exercise of certain warrants. Excludes 57,000 shares that may be acquired
upon the exercise of certain stock options that are not presently exercisable and that will not become exercisable within 60 days.
|
|
|
(7)
|
Includes
146,520 shares that may be acquired through the exercise of stock options that are presently exercisable or that may become exercisable
within 60 days and 6,993 shares that may be acquired upon the exercise of certain warrants. Excludes 57,000 shares that may be acquired
upon the exercise of certain stock options that are not presently exercisable and that will not become exercisable within 60 days.
|
|
|
(8)
|
Includes
156,520 shares that may be acquired through the exercise of stock options that are presently exercisable or that may become exercisable
within 60 days and 52,447 shares that may be acquired upon the exercise of certain warrants. Excludes 62,000 shares that may be acquired
upon the exercise of certain stock options that are not presently exercisable and that will not become exercisable within 60 days.
|
|
|
(9)
|
Includes
45,000 shares that may be acquired through the exercise of stock options that are presently exercisable or that may become exercisable
within 60 days. Excludes 57,000 shares that may be acquired upon the exercise of certain stock options that are not presently exercisable
and that will not become exercisable within 60 days.
|
|
|
(10)
|
Excludes
57,000 shares that may be acquired upon the exercise of certain stock options that are not presently exercisable and that will not
become exercisable within 60 days.
|
|
|
(11)
|
Includes
2,292,509 shares and that may be acquired upon the exercise of certain stock options that are presently exercisable or that may become
exercisable within 60 days, 126,221 RSUs that will vest within 60 days, and 132,864 shares that may be acquired upon the exercise
of certain warrants. Excludes 3,089,148 shares that may be acquired upon the exercise of certain stock options that are not presently
exercisable and that will not become exercisable within 60 days, and 65,000 RSUs that are currently unvested and will not vest within
60 days.
|
Item
13. Certain Relationships and Related Transactions, and Director Independence
Shared
Facilities Agreement and Relationship with Lineage
During
2009 Oncocyte and Lineage entered into a Shared Facilities Agreement pursuant to which Lineage provided Oncocyte with the use of office
and laboratory facilities, laboratory and office equipment and supplies, utilities, insurance, and the services of Lineage employees
and contractors, for which we have reimbursed Lineage, either through cash payments, shares of our common stock, or delivering convertible
promissory notes. Lineage provided us with the use of its facilities, equipment and supplies, utilities, and personnel at its cost until
2016, and at its cost plus 5% thereafter. Oncocyte ceased using shared services from Lineage during October 2019 and ceased using Lineage’s
office and laboratory facilities under the Shared Facilities Agreement effective December 31, 2019 at which time the Shared Facilities
Agreement terminated. Total fees incurred under the Shared Facilities Agreement during 2019 were $1.2 million, which have been paid in
full.
Prior
to January 7, 2021, Lineage beneficially owned more than 5% of the outstanding shares of Oncocyte common stock. Alfred D. Kingsley, who
is a member of our Board of Directors, is also a director of Lineage. Broadwood Partners, L.P. (“Broadwood”) beneficially
owns more than 5% of the outstanding common shares of Lineage. All of our directors and beneficial owners of more than 5% of our outstanding
common stock (“5% Shareholders”) as reported in this Report, in the aggregate beneficially own more than 20% of the outstanding
common shares of Lineage. The fact that certain of our directors and 5% Shareholders own Lineage common shares should not be considered
to mean that they constitute or are acting in concert as a “group” with respect to those shares or that they otherwise share
power or authority to vote or dispose of the shares that each of them own.
Certain
Sales of Equity Securities
During
March 2018, Oncocyte entered into securities purchase agreements with Broadwood and George Karfunkel, each of whom beneficially own more
than 5% of our outstanding common stock, pursuant to which Broadwood purchased 3,968,254 shares of common stock, and Mr. Karfunkel purchased
3,968,254 shares of common stock for $1.26 per share. Under the securities purchase agreements, we agreed to register the shares for
resale under the Securities Act of 1933, as amended (the “Securities Act”), not later than 60 days after the closing of the
sale of the shares. We also agreed to pay liquidated damages calculated in the manner provided in the securities purchase agreement if
we did not file the registration statement in a timely manner. Because the registration statement was not filed as required by the securities
purchase agreement, during 2019 we paid $300,000 to Broadwood on account of liquidated damages owed.
During
February 2019, Broadwood purchased 533,333 shares of our common stock for $3.75 per share, the same price paid by other investors, in
an underwritten public offering of our common stock.
During
November 2019, we sold a total of 5,058,824 shares of common stock for $1.70 per share in cash in an offering registered under the Securities
Act. Broadwood purchased 1,176,471 shares, and certain funds and accounts managed by Pura Vida Investments, LLC (“Pura Vida”)
purchased 2,941,176 shares, on the same terms as other investors.
During
January 2020, we sold 768,376 shares of common stock to Broadwood, and 2,755,400 shares of common stock to certain funds and accounts
managed by Pura Vida, for $2.156 per share in an offering registered under the Securities Act.
During
April 2020, we sold a total of 4,733,700 shares of common stock for $2.27 per share in cash in an offering registered under the Securities
Act. Broadwood purchased 1,050,000 shares, and certain funds and accounts managed by Pura Vida Investments purchased 600,000 shares,
on the same terms as other investors.
During
January 2021, we sold a total of 7,301,410 shares of our common stock for $3.424 per share in an offering registered under the Securities
Act. Broadwood purchased 1,460,280 shares, and certain funds and accounts managed by Pura Vida Investments purchased 5,841,130 shares,
on the same terms as other investors.
During
February 2021, we sold a total of 8,947,000 shares of our common stock for $4.50 per share in an offering registered under the Securities
Act. Broadwood purchased 600,000 shares on the same terms as other investors.
Director
Independence
Our
Board of Directors has determined that Andrew Arno, Jennifer Levin Carter, Melinda Griffith, Alfred D. Kingsley, Andrew
Last, and Cavan Redmond, qualify as “independent” in accordance with Rule 5605(a)(2) of The Nasdaq Stock Market LLC
(“Nasdaq”). The members of our Audit Committee meet the additional independence standards under Nasdaq Rule 5605(c)(2)
and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the members of our
Compensation Committee meet the additional independence standards under Nasdaq Rule 5605(d)(2). Our independent directors received
no compensation or remuneration for serving as directors except as disclosed under “CORPORATE GOVERNANCE—Compensation
of Directors.” None of these directors, nor any of the members of their respective families, have participated in any transaction
with us that would disqualify them as “independent” directors under the standards described above. Ronald Andrews
does not qualify as “independent” because he is our Chief Executive Officer and President.
Item
14. Principal Accounting Fees and Services
OUM
& Co., LLP (“OUM”) has served as our independent registered public accountants since the fourth quarter of 2015, and
audited our annual consolidated financial statements for the fiscal years ended December 31, 2020 and 2019.
Audit
Fees, Audit Related Fees, Tax Fees and Other Fees
The
following table sets forth the aggregate fees billed to us during the fiscal years ended December 31, 2020 and 2019 by OUM:
|
|
2020
|
|
|
2019
|
|
Audit Fees (1)
|
|
|
$206,400
|
|
|
|
$179,780
|
|
Audit Related Fees (2)
|
|
|
145,202
|
|
|
|
80,064
|
|
Total Fees
|
|
|
$351,602
|
|
|
|
$259,844
|
|
(1)
|
Audit
Fees consist of fees billed for professional services rendered for the audit of Oncocyte’s annual consolidated financial statements
included in our Annual Report on Form 10-K, and review of the interim consolidated financial statements included in our Quarterly
Reports on Form 10-Q, as applicable, and services that are normally provided by our independent registered public accountants in
connection with statutory and regulatory filings or engagements.
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(2)
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Audit-Related
Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review
of our consolidated financial statements and are not reported under “Audit Fees.” This category includes fees related
to non-routine SEC filings.
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Pre-Approval
of Audit and Permissible Non-Audit Services
Our
Audit Committee requires pre-approval of all audit and non-audit services. Other than de minimis services incidental to audit
services, non-audit services shall generally be limited to tax services such as advice and planning and financial due diligence services.
All fees for such non-audit services must be approved by the Audit Committee, except to the extent otherwise permitted by applicable
SEC regulations. The Committee may delegate to one or more designated members of the Committee the authority to grant pre-approvals,
provided such approvals are presented to the Committee at a subsequent meeting. During 2020, all of the fees paid to OUM were approved
by the Audit Committee.