Item
5.02 - Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Executive
Leadership Changes
On
December 16, 2022, Oncocyte issued a press release announcing its C-suite has been restructured and the positions occupied by Gisela
Paulsen, President and Chief Operating Officer, and Douglas Ross, Chief Scientific Officer, will be eliminated. A copy of the press release
is filed as Exhibit 99.1 hereto and incorporated herein by reference.
Chief
Operating Officer Separation and Release Agreement
In
connection with Ms. Paulsen’s separation, the Company and Ms. Paulsen entered into a separation agreement and general release of
all claims dated December 16, 2022 (the “Paulsen Separation Agreement”). The Paulsen Separation Agreement provides that Ms.
Paulsen will receive benefits consisting of (i) a cash severance amount of $207,500.02, which is payable over six (6) months in substantially
equal installments following December 16, 2022 (the “Paulsen Effective Date”), (iii) accelerated vesting of Ms. Paulsen’s
unvested time-based stock options and restricted stock unit awards that were scheduled to vest based solely on the passage of time during
the twelve (12) month period following the Paulsen Effective Date, (iv) accelerated vesting of 175,000 performance-based restricted stock
units, and (v) the extension of the deadline to exercise vested stock options to the earlier to occur of the one-year anniversary of
the Paulsen Effective Date and on the maximum term under the applicable stock option award agreement.
As
part of the Paulsen Separation Agreement, Ms. Paulsen agreed to a general release of all claims against the Company and certain related
entities. The Paulsen Separation Agreement confirms that (x) certain provisions contained in Ms. Paulsen’s and change in control
and severance plan agreement, effective as of October 4, 2021, and (y) Ms. Paulsen’s employee confidential information and inventions
assignment agreement with the Company, effective October 5, 2021, including a twelve (12) month post-Paulsen Effective Date non-solicit
covenant, in each case, shall remain in full force and effect. The Paulsen Separation Agreement also contains customary terms applicable
to the departure of an executive of the Company, including mutual non-disparagement.
Chief
Science Officer Separation and Release Agreement
In
connection with Dr. Ross’ separation, the Company and Dr. Ross entered into a separation agreement and general release
of all claims dated December 16, 2022 (the “Ross Separation Agreement”). The Ross Separation Agreement provides that Dr.
Ross will receive benefits, consisting of (i) a cash severance amount of $281,250.06, which is payable over nine (9) months in substantially
equal installments following December 16, 2022 (the “Ross Effective Date”), and (ii) a payment of nine (9) months of premium
costs of group health plan continuation coverage in the total amount of $20,799, which is payable over nine (9) months in substantially
equal installments following the Ross Effective Date.
As
part of the Ross Separation Agreement, Dr. Ross agreed to a general release of all claims against the Company and certain related
entities. The Ross Separation Agreement confirms that (x) certain provisions contained in Dr. Ross’ employment agreement
with the Company, dated March 23, 2020, as amended, and change in control and severance plan agreement, effective as of March 1, 2020,
including a twelve (12) month post-Ross Effective Date non-solicit covenant, and (y) Dr. Ross employee confidential information
and inventions assignment agreement with the Company, effective March 16, 2020, in each case, shall remain in full force and effect.
The Ross Separation Agreement also contains customary terms applicable to the departure of an executive of the Company, including mutual
non-disparagement.
In
addition, to ensure a smooth transition, the Company and Dr. Ross entered into a consulting agreement, dated as of December 16,
2022 (the “Consulting Agreement”), pursuant to which Dr. Ross will provide non-employee consulting and advisory services
to the Company, on a non-exclusive basis, from December 17, 2022 until March 31, 2023. The Consulting Agreement provides that in consideration
of the services, on the third business day following December 17, 2022, Dr. Ross will receive a grant of restricted stock pursuant to
the Company’s 2018 Equity Incentive Plan, as amended from time to time (the “Plan”), with a grant date fair market
value of $56,250 (as determined in accordance with the Plan), which restricted stock units shall vest in three equal monthly installments
(with the first installment vesting January on 31, 2023) over the consulting term, subject to Dr. Ross’ continued compliance
with any restrictive covenants by which he may be bound and continued provision of services on each applicable vesting date; provided,
that if the if the Company terminates the Consulting Agreement prior to March 31, 2023, any unvested restricted stock units will vest.
Either party may terminate the Consulting Agreement for any reason upon ten (10) days’ written notice
The
foregoing descriptions of the Paulsen Separation Agreement, the Ross Separation Agreement and the Consulting Agreement are not intended
to be complete and are qualified in their entirety by the Paulsen Separation Agreement, the Ross Separation Agreement and the Consulting
Agreement filed herewith as Exhibits 10.1, 10.2, and 10.3 to this Current Report on Form 8-K and incorporated herein by reference.