|
Delaware
|
| |
8071
|
| |
26-1911522
|
|
|
(State or other jurisdiction of
incorporation or organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification Number) |
|
|
Jonathan L. Kravetz
Megan N. Gates Daniel H. Follansbee Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo, P.C. One Financial Center Boston, MA 02111 (617) 542-6000 |
| |
Edwin M. O’Connor
Seo Salimi Goodwin Procter LLP 620 Eighth Avenue New York, New York 10018 (212) 813-8800 |
|
|
Large accelerated filer
☐
|
| |
Accelerated filer
☐
|
|
|
Non-accelerated filer
☒
|
| |
Smaller reporting company
☒
|
|
| | | |
Emerging growth company
☒
|
|
| | |||||||||||
Title of Securities being Registered
|
| | |
Proposed Maximum
Aggregate Offering Price(1) |
| | |
Amount of
Registration Fee(2) |
| |||
Class A Common Stock, $0.0001 par value per share
|
| | |
$75,000,000
|
| | | | $ | 8,182.50 | | |
| | |
Per Share
|
| |
Total
|
| ||||||
Initial public offering price | | | | $ | | | | | $ | | | ||
Underwriting discounts and commissions(1) | | | | $ | | | | | $ | | | ||
Proceeds, before expenses, to Sera Prognostics, Inc. | | | | $ | | | | | $ | | | |
| Citigroup | | |
Cowen
|
| |
William Blair
|
|
| | |
Page
|
| |||
| | | | 2 | | | |
| | | | 14 | | | |
| | | | 54 | | | |
| | | | 56 | | | |
| | | | 57 | | | |
| | | | 58 | | | |
| | | | 59 | | | |
| | | | 61 | | | |
| | | | 64 | | | |
| | | | 77 | | | |
| | | | 118 | | | |
| | | | 128 | | | |
| | | | 137 | | | |
| | | | 138 | | | |
| | | | 142 | | | |
| | | | 147 | | | |
| | | | 153 | | | |
| | | | 156 | | | |
| | | | 160 | | | |
| | | | 168 | | | |
| | | | 168 | | | |
| | | | 168 | | | |
| | | | F-1 | | |
| | |
Three Months Ended March 31,
|
| |
Year Ended December 31,
|
| ||||||||||||||||||
|
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||||
| | |
(in thousands, except share and per share amounts)
|
| |||||||||||||||||||||
| | |
(unaudited)
|
| | | | | | | | | | | | | |||||||||
Statements of Operations and Comprehensive Loss
Data: |
| | | | | | | | | | | | | | | | | | | | | | | | |
Revenue
|
| | | $ | 13 | | | | | $ | 8 | | | | | $ | 25 | | | | | $ | 36 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue
|
| | | | 5 | | | | | | 3 | | | | | | 11 | | | | | | 18 | | |
Research and development
|
| | | | 2,396 | | | | | | 2,050 | | | | | | 7,782 | | | | | | 9,353 | | |
Selling and marketing
|
| | | | 1,350 | | | | | | 868 | | | | | | 3,645 | | | | | | 2,963 | | |
General and administrative
|
| | | | 2,287 | | | | | | 1,379 | | | | | | 6,558 | | | | | | 4,278 | | |
Total operating expenses
|
| | | | 6,038 | | | | | | 4,300 | | | | | | 17,996 | | | | | | 16,612 | | |
Loss from operations
|
| | | | (6,025) | | | | | | (4,292) | | | | | | (17,971) | | | | | | (16,576) | | |
Interest expense
|
| | | | (307) | | | | | | (437) | | | | | | (1,839) | | | | | | (1,972) | | |
Other income (expense), net
|
| | | | (27) | | | | | | 33 | | | | | | (38) | | | | | | 2,027 | | |
Net loss and comprehensive loss
|
| | | $ | (6,359) | | | | | $ | (4,696) | | | | | $ | (19,848) | | | | | $ | (16,521) | | |
Net loss per share attributable to common stockholders, basic and diluted(1)
|
| | | $ | (1.71) | | | | | $ | (1.48) | | | | | $ | (6.14) | | | | | $ | (5.24) | | |
Weighted-average common shares outstanding, basic and diluted(1)
|
| | | | 3,725,328 | | | | | | 3,171,251 | | | | | | 3,234,476 | | | | | | 3,153,654 | | |
Pro forma net loss per share, basic and diluted (unaudited)(1)
|
| | | $ | (0.17) | | | | | | | | | | | $ | (0.56) | | | | | | | | |
Pro forma weighted-average common shares outstanding, basic and diluted (unaudited)(1)
|
| | | | 37,645,659 | | | | | | | | | | | | 35,756,690 | | | | | | | | |
| | |
As of March 31, 2021
(unaudited) |
| |||||||||||||||
|
Actual
|
| |
Pro forma(1)
|
| |
Pro forma
as adjusted(2) |
| |||||||||||
| | |
(in thousands)
|
| |||||||||||||||
Balance Sheet Data: | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 60,016 | | | | | $ | 98,816 | | | | | $ | | | |
Working capital(3)
|
| | | $ | 56,709 | | | | | $ | 95,509 | | | | | $ | | | |
Total assets
|
| | | $ | 62,744 | | | | | $ | 101,544 | | | | | $ | | | |
Convertible preferred stock
|
| | | $ | 188,343 | | | | | $ | — | | | | | $ | | | |
Accumulated deficit
|
| | | $ | (137,818) | | | | | $ | (137,818) | | | | | $ | | | |
Total stockholders’ (deficit) equity
|
| | | $ | (130,390) | | | | | $ | 97,247 | | | | | $ | | | |
| | |
As of March 31, 2021
(unaudited) |
| |||||||||||||||
(in thousands, except share and per share data)
|
| |
Actual
|
| |
Pro forma
|
| |
Pro forma as
adjusted(1) |
| |||||||||
Cash and cash equivalents
|
| | | $ | 60,016 | | | | | $ | 98,816 | | | | | $ | | | |
Loans payable
|
| | | | 1,050 | | | | | | 1,050 | | | | | | | | |
Preferred stock warrant liability
|
| | | | 494 | | | | | | — | | | | | | | | |
Capital lease obligation
|
| | | | 179 | | | | | | 179 | | | | | | | | |
Convertible Preferred Stock: | | | | | | | | | | | | | | | | | | | |
Junior convertible preferred stock, par value of $0.0001; 22,047,294 shares authorized, actual, 20,414,766 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted.
|
| | | | 77,844 | | | | | | — | | | | | | | | |
Senior convertible preferred stock, par value of $0.0001; 24,496,040 shares authorized, actual, 22,195,278 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted.
|
| | | | 110,499 | | | | | | — | | | | | | | | |
Stockholders’ (deficit) equity: | | | | | | | | | | | | | | | | | | | |
Class A common stock, $0.0001 par value: 75,000,000 shares
authorized, actual, 4,120,842 shares issued and outstanding, actual; 80,000,000 shares authorized, pro forma; 53,682,978 shares issued and outstanding, pro forma; shares authorized, pro forma as adjusted; shares issued and outstanding, pro forma as adjusted. |
| | | | — | | | | | | 5 | | | | | | | | |
Class B common stock, $0.0001 par value: 3,000,000 shares authorized, actual, no shares issued and outstanding, actual; 3,000,000 shares authorized, pro forma; no shares issued and outstanding, pro forma; shares authorized, pro forma as adjusted; shares issued and outstanding, pro forma as adjusted
|
| | | | — | | | | | | — | | | | | | | | |
Additional paid-in capital
|
| | | | 7,428 | | | | | | 235,060 | | | | | | | | |
Accumulated deficit
|
| | | | (137,818) | | | | | | (137,818) | | | | | | | | |
Total stockholders’ (deficit) equity
|
| | | | (130,390) | | | | | | 97,247 | | | | | | | | |
Total capitalization
|
| | | $ | 57,953 | | | | | $ | 97,247 | | | | | | | | |
|
Assumed initial public offering price per share of our common stock
|
| | | $ | | | | | | | | | |
|
Historical net tangible book value (deficit) per share as of March 31, 2021, before giving effect to this offering
|
| | | | | | | | | $ | (31.98) | | |
|
Increase in historical net tangible book value per share attributable to the pro forma transactions described in the preceding paragraphs
|
| | | | | | | | | $ | 33.77 | | |
|
Pro forma net tangible book value per share as of March 31, 2021
|
| | | | | | | | | $ | 1.79 | | |
|
Increase in net tangible book value per share attributable to new investors participating in this offering
|
| | | | | | | | | | | | |
| Pro forma as adjusted net tangible book value per share after giving effect to this offering | | | | | | | | | | | | | |
|
Dilution per share to new investors participating in this offering
|
| | | $ | | | | | | | | | |
| | |
Shares
Purchased |
| |
Total Consideration
|
| |
Weighted
Average Price/ Share |
| ||||||||||||||||||
| | |
Number
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| |||||||||||||||
Existing stockholders
|
| | | | | | | % | | | | | $ | | | | | | % | | | | | $ | | | ||
Investors participating in this offering
|
| | | | | | | % | | | | | $ | | | | | | | % | | | | | $ | | | |
Total
|
| | | | | | | 100% | | | | | $ | | | | | | | 100% | | | | | $ | | | |
| | |
Three Months Ended March 31,
|
| |||||||||||||||
|
2021
|
| |
2020
|
| |
Change
|
| |||||||||||
|
(in thousands)
(unaudited) |
| |||||||||||||||||
Revenue
|
| | | $ | 13 | | | | | $ | 8 | | | | | $ | 5 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | |
Cost of revenue
|
| | | | 5 | | | | | | 3 | | | | | | 2 | | |
Research and development
|
| | | | 2,396 | | | | | | 2,050 | | | | | | 346 | | |
Selling and marketing
|
| | | | 1,350 | | | | | | 868 | | | | | | 482 | | |
General and administrative
|
| | | | 2,287 | | | | | | 1,379 | | | | | | 908 | | |
Total operating expenses
|
| | | | 6,038 | | | | | | 4,300 | | | | | | 1,738 | | |
Loss from operations
|
| | | | (6,025) | | | | | | (4,292) | | | | | | (1,733) | | |
Interest expense
|
| | | | (307) | | | | | | (437) | | | | | | 130 | | |
Other income (expense), net
|
| | | | (27) | | | | | | 33 | | | | | | (60) | | |
Net loss and comprehensive loss
|
| | | $ | (6,359) | | | | | $ | (4,696) | | | | | $ | (1,663) | | |
| | |
Three Months Ended March 31,
|
| |
Change
|
| ||||||||||||
|
2021
|
| |
2020
|
| ||||||||||||||
| | |
(in thousands)
(unaudited) |
| |||||||||||||||
Research and Development | | | | | | | | | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | | | | | | | | |
Clinical studies
|
| | | $ | 693 | | | | | $ | 640 | | | | | $ | 53 | | |
Research and bioinformatics
|
| | | | 732 | | | | | | 655 | | | | | | 77 | | |
Laboratory operations
|
| | | | 971 | | | | | | 755 | | | | | | 216 | | |
Total research and development expenses
|
| | | $ | 2,396 | | | | | $ | 2,050 | | | | | $ | 346 | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
Change
|
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Revenue
|
| | | $ | 25 | | | | | $ | 36 | | | | | $ | (11) | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | |
Cost of revenue
|
| | | | 11 | | | | | | 18 | | | | | | (7) | | |
Research and product development
|
| | | | 7,782 | | | | | | 9,353 | | | | | | (1,571) | | |
Selling and marketing
|
| | | | 3,645 | | | | | | 2,963 | | | | | | 682 | | |
General and administrative
|
| | | | 6,558 | | | | | | 4,278 | | | | | | 2,280 | | |
Total operating expenses
|
| | | | 17,996 | | | | | | 16,612 | | | | | | 1,384 | | |
Loss from operations
|
| | | | (17,971) | | | | | | (16,576) | | | | | | (1,395) | | |
Interest expense
|
| | | | (1,839) | | | | | | (1,972) | | | | | | 133 | | |
Other income (expense), net
|
| | | | (38) | | | | | | 2,027 | | | | | | (2,065) | | |
Net loss and comprehensive, loss
|
| | | $ | (19,848) | | | | | $ | (16,521) | | | | | $ | (3,327) | | |
| | |
Year Ended December 31,
|
| |||||||||||||||
| | |
2020
|
| |
2019
|
| |
Change
|
| |||||||||
| | |
(in thousands)
|
| |||||||||||||||
Research and Development | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | |
Clinical studies
|
| | | $ | 2,557 | | | | | $ | 4,537 | | | | | $ | (1,980) | | |
Research and bioinformatics
|
| | | | 2,473 | | | | | | 2,157 | | | | | | 316 | | |
Laboratory operations
|
| | | | 2,752 | | | | | | 2,659 | | | | | | 93 | | |
Total research and development expenses
|
| | | $ | 7,782 | | | | | $ | 9,353 | | | | | $ | (1,571) | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
| | |
(in thousands)
|
| |||||||||
Interest income
|
| | | $ | 42 | | | | | $ | 64 | | |
Fair value remeasurements
|
| | | | (80) | | | | | | (129) | | |
Grant income
|
| | | | — | | | | | | 17 | | |
Other gains (losses), net
|
| | | | — | | | | | | 2,075 | | |
Other income (expense), net
|
| | | $ | (38) | | | | | $ | 2,027 | | |
| | |
Three Months Ended March 31,
|
| |
Year Ended December 31,
|
| ||||||||||||||||||
|
2021
|
| |
2020
|
| |
2020
|
| |
2019
|
| ||||||||||||||
|
(in thousands)
(unaudited) |
| |
(in thousands)
|
| ||||||||||||||||||||
Net cash provided by (used in): | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating activities
|
| | | $ | (6,950) | | | | | $ | (4,615) | | | | | $ | (16,868) | | | | | $ | (19,324) | | |
Investing activities
|
| | | | (41) | | | | | | (8) | | | | | | (149) | | | | | | (6) | | |
Financing activities
|
| | | | 53,474 | | | | | | 10,667 | | | | | | 9,160 | | | | | | 33,049 | | |
Net increase (decrease) in cash and cash equivalents
|
| | | $ | 46,483 | | | | | $ | 6,044 | | | | | $ | (7,857) | | | | | $ | 13,719 | | |
| | |
Payments Due by Period
|
| |||||||||||||||||||||||||||
| | |
Total
|
| |
Less Than
1 Year |
| |
1-3 Years
|
| |
3-5 Years
|
| |
More than
5 Years |
| |||||||||||||||
| | |
(in thousands)
|
| |||||||||||||||||||||||||||
Bank Loan (including interest and fees)(1)
|
| | | $ | 3,159 | | | | | $ | 3,159 | | | | | | — | | | | | | — | | | | | | — | | |
Convertible Note (including interest)(2)
|
| | | | 5,490 | | | | | | 5,490 | | | | | | — | | | | | | — | | | | | | — | | |
PPP loan payable (including interest)(3)
|
| | | $ | 1,065 | | | | | | 709 | | | | | | 356 | | | | | | | | | | | | | | |
Operating leases(4)
|
| | | | 1,099 | | | | | | 545 | | | | | | 554 | | | | | | — | | | | | | — | | |
Capital leases(5)
|
| | | | 215 | | | | | | 80 | | | | | | 135 | | | | | | — | | | | | | — | | |
Total
|
| | | $ | 11,028 | | | | | $ | 9,983 | | | | | $ | 1,045 | | | | | | — | | | | | | — | | |
Name
|
| |
Age
|
| |
Position
|
| |||
Executive Officers: | | | | | | | | | | |
Gregory C. Critchfield, M.D., M.S.
|
| | | | 69 | | | | Chairman, President and Chief Executive Officer | |
Jay Moyes
|
| | | | 67 | | | | Chief Financial Officer | |
John J. Boniface, Ph.D.
|
| | | | 59 | | | | Chief Scientific Officer | |
Douglas Fisher, M.D.
|
| | | | 45 | | | | Chief Business Officer | |
John Peltier, Ph.D.
|
| | | | 58 | | | | Senior Vice President of Lab Operations | |
Thomas Garite
|
| | | | 77 | | | | Vice President, Clinical Sciences | |
Nadia Altomare
|
| | | | 51 | | | | Chief Commercial Officer | |
Nichole L. Martin
|
| | | | 43 | | | |
Vice President of Quality/Regulatory and HIPAA Privacy Officer
|
|
Benjamin G. Jackson
|
| | | | 42 | | | | General Counsel | |
Non-Employee Directors: | | | | |||||||
Dennis Farrar
|
| | | | 83 | | | | Director | |
Joshua Phillips
|
| | | | 54 | | | | Director | |
Mansoor Raza Mirza, M.D.
|
| | | | 59 | | | | Director | |
Ryan Trimble
|
| | | | 69 | | | | Director | |
Kim Kamdar, Ph.D.
|
| | | | 54 | | | | Director | |
Michael F. Minahan
|
| | | | 61 | | | | Director | |
Elizabeth Canis
|
| | | | 50 | | | | Director | |
Marcus Wilson, Pharm.D.
|
| | | | 58 | | | | Director | |
Charles D. Kennedy, M.D.
|
| | | | 58 | | | | Director | |
Joseph Siletto
|
| | | | 52 | | | | Director | |
Name and Principal Position
|
| |
Year
|
| |
Salary
($) |
| |
Option
Awards ($)(1) |
| |
Non-Equity
Incentive Plan Compensation ($) (2) |
| |
All Other
Compensation ($) |
| |
Total
($) |
| ||||||||||||||||||
Gregory C. Critchfield, M.D., M.S.
President and Chief Executive Officer |
| | | | 2020 | | | | | | 400,000 | | | | | | 410,727 | | | | | | 113,831 | | | | | | — | | | | | | 924,558 | | |
Nadia Altomare
Chief Commercial Officer |
| | | | 2020 | | | | | | 340,616 | | | | | | 78,901 | | | | | | 70,000 | | | | | | — | | | | | | 489,517 | | |
John J. Boniface, Ph.D.
Chief Scientific Officer |
| | | | 2020 | | | | | | 316,685 | | | | | | 136,729 | | | | | | 70,000 | | | | | | — | | | | | | 523,414 | | |
Garrett K. Lam, M.D.
Former Chief Medical Officer |
| | | | 2020 | | | | | | 364,000 | | | | | | 49,060 | | | | | | 70,000 | | | | | | 182,000(3) | | | | | | 665,060 | | |
| | |
Option Awards(1)(2)
|
| |||||||||||||||||||||
Name
|
| |
Number of
Securities Underlying Unexercised Options (#) Exercisable |
| |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
| ||||||||||||
Gregory C. Critchfield, M.D., M.S.
|
| | | | 20 | | | | | | — | | | | | $ | 100.00 | | | | | | 3/7/2021 | | |
| | | | | 40 | | | | | | — | | | | | $ | 100.00 | | | | | | 4/29/2021 | | |
| | | | | 421,052 | | | | | | 26,040 | | | | | $ | 0.95 | | | | | | 5/28/2027 | | |
| | | | | 177,876 | | | | | | — | | | | | $ | 0.95 | | | | | | 5/28/2027 | | |
| | | | | — | | | | | | 363,887 | | | | | $ | 0.85 | | | | | | 2/27/2030 | | |
| | | | | 200,250 | | | | | | 397,063 | | | | | $ | 0.85 | | | | | | 2/27/2030 | | |
Nadia Altomare
|
| | | | 315,789 | | | | | | 46,875 | | | | | $ | 0.95 | | | | | | 5/18/2027 | | |
| | | | | 87,336 | | | | | | — | | | | | $ | 0.95 | | | | | | 5/18/2027 | | |
| | | | | — | | | | | | 146,548 | | | | | $ | 0.85 | | | | | | 2/27/2030 | | |
| | | | | 38,542 | | | | | | | | | | | $ | 0.85 | | | | | | 2/27/2030 | | |
John J. Boniface, Ph.D.
|
| | | | 52,000 | | | | | | — | | | | | $ | 0.35 | | | | | | 12/14/2021 | | |
| | | | | 158,000 | | | | | | — | | | | | $ | 0.35 | | | | | | 3/12/2022 | | |
| | | | | 12,150 | | | | | | — | | | | | $ | 0.35 | | | | | | 9/10/2022 | | |
| | | | | 152,564 | | | | | | — | | | | | $ | 0.44 | | | | | | 12/28/2024 | | |
| | | | | 225,030 | | | | | | 9,784 | | | | | $ | 0.95 | | | | | | 5/18/2027 | | |
| | | | | 43,917 | | | | | | 1,909 | | | | | $ | 0.95 | | | | | | 6/26/2027 | | |
| | | | | 39,232 | | | | | | 253,571 | | | | | $ | 0.85 | | | | | | 2/27/2030 | | |
| | | | | 27,497 | | | | | | — | | | | | $ | 0.85 | | | | | | 2/27/2030 | | |
Garrett K. Lam, M.D.
|
| | | | — | | | | | | — | | | | | | — | | | | | | N/A | | |
Position
|
| |
Retainer
|
|
Board Member | | | $ | |
Board Chairperson | | | | |
Audit Committee Chair | | | | |
Compensation Committee Chair | | | | |
Nominating and Corporate Governance Committee Chair | | | | |
Audit Committee Member | | | | |
Compensation Committee Member | | | | |
Nominating and Corporate Governance Committee Member
|
| | | |
Name
|
| |
Shares
|
| |
Warrants at
$4.34 |
| |
Warrants at
$5.21 |
| |
Aggregate
Purchase Price* |
| ||||||||||||
ATH Holding Company, LLC(1)
|
| | | | 2,073,733 | | | | | | 288,019 | | | | | | 288,019 | | | | | $ | 9,000,000 | | |
Entities affiliated with Blue Ox Healthcare Partners SP, LLC(2)
|
| | | | 5,385,946 | | | | | | 787,731 | | | | | | 787,731 | | | | | $ | 23,375,000 | | |
Chione Ltd.(3)
|
| | | | 867,634 | | | | | | 216,909 | | | | | | 216,909 | | | | | $ | 3,264,746 | | |
Entities affiliated with Domain Associates(4)
|
| | | | 524,981 | | | | | | 131,246 | | | | | | 131,246 | | | | | $ | 2,278,412 | | |
InterWest Partners X, L.P.(5)
|
| | | | 524,982 | | | | | | 131,246 | | | | | | 131,246 | | | | | $ | 2,278,419 | | |
Laboratory Corporation of America Holdings(6)
|
| | | | 343,248 | | | | | | 85,812 | | | | | | 85,812 | | | | | $ | 1,489,696 | | |
Entities affiliated with Catalyst Health Ventures, L.P.(7)
|
| | | | 140,899 | | | | | | 35,225 | | | | | | 35,225 | | | | | $ | 611,487 | | |
Gregory C. Critchfield, M.D., M.S.(8)
|
| | | | 59,731 | | | | | | 9,173 | | | | | | 9,173 | | | | | $ | 259,227 | | |
The Trimble Trust(9)
|
| | | | 73,545 | | | | | | 13,387 | | | | | | 13,387 | | | | | $ | 319,185 | | |
Name
|
| |
Shares
|
| |
Warrants at
$5.21 |
| |
Aggregate
Purchase Price |
| |||||||||
ATH Holding Company, LLC(1)
|
| | | | 2,504,174 | | | | | | 1,501,502 | | | | | $ | 15,000,000 | | |
Entities affiliated with Blue Ox Healthcare Partners SP, LLC(2)
|
| | | | 2,504,173 | | | | | | — | | | | | $ | 15,000,000 | | |
Entities affiliated with Baker Bros. Advisors LP(3)
|
| | | | 2,921,536 | | | | | | — | | | | | $ | 17,500,000 | | |
Vivo Capital Fund IX, L.P.(4)
|
| | | | 3,338,898 | | | | | | — | | | | | $ | 20,000,000 | | |
aMoon Growth Fund Limited Partnership(5)
|
| | | | 3,338,898 | | | | | | — | | | | | $ | 20,000,000 | | |
CHV Investments, LLC(6)
|
| | | | 333,890 | | | | | | — | | | | | $ | 2,000,000 | | |
| | |
Shares
Beneficially Owned |
| |
Percentage of Shares
Beneficially Owned |
| ||||||||||||
Name and Address of Beneficial Owner(1)
|
| |
Before
Offering |
| |
After
Offering |
| ||||||||||||
5% Stockholders: | | | | | | | | | | | | | | | | | | | |
Entities affiliated with Blue Ox Healthcare Partners, LLC(2)
|
| | | | 9,465,582 | | | | | | 17.1% | | | | | | % | | |
ATH Holding Company, LLC(3)
|
| | | | 6,655,446 | | | | | | 11.9% | | | | | | % | | |
Entities affiliated with Domain Associates, LLC(4)
|
| | | | 5,350,138 | | | | | | 9.9% | | | | | | % | | |
InterWest Partners X, LP(5)
|
| | | | 5,285,858 | | | | | | 9.8% | | | | | | % | | |
Chione, Ltd.(6)
|
| | | | 3,792,309 | | | | | | 7.0% | | | | | | % | | |
Laboratory Corporation of America Holdings(7)
|
| | | | 3,456,048 | | | | | | 6.4% | | | | | | % | | |
Vivo Capital Fund IX, L.P.(8)
|
| | | | 3,338,898 | | | | | | 6.2% | | | | | | % | | |
aMoon Growth Fund Limited Partnership(9)
|
| | | | 3,338,898 | | | | | | 6.2% | | | | | | % | | |
Entities affiliated with Baker Bros. Advisors LP(10)
|
| | | | 2,921,536 | | | | | | 5.4% | | | | | | % | | |
Named Executive Officers and Directors: | | | | | | | | | | | | | | | | | | | |
Dennis Farrar(11)
|
| | | | 731,433 | | | | | | 1.4% | | | | | | % | | |
Joshua Phillips(12)
|
| | | | 2,076,921 | | | | | | 3.9% | | | | | | % | | |
Mansoor Raza Mirza, M.D.(13)
|
| | | | 78,065 | | | | | | * | | | | | | % | | |
Ryan Trimble(14)
|
| | | | 235,827 | | | | | | * | | | | | | % | | |
Kim Kamdar, Ph.D.(15)
|
| | | | 5,363,920 | | | | | | 9.9% | | | | | | % | | |
Michael F. Minahan(16)
|
| | | | — | | | | | | * | | | | | | % | | |
Elizabeth Canis(17)
|
| | | | — | | | | | | * | | | | | | % | | |
Marcus Wilson, Pharm.D.(18)
|
| | | | — | | | | | | * | | | | | | % | | |
Joseph Siletto(19)
|
| | | | — | | | | | | * | | | | | | % | | |
Charles D. Kennedy, M.D.(20)
|
| | | | 9,465,582 | | | | | | 17.1% | | | | | | % | | |
Gregory C. Critchfield, M.D., M.S.(21)
|
| | | | 2,629,184 | | | | | | 4.8% | | | | | | % | | |
Nadia Altomare(22)
|
| | | | 522,545 | | | | | | 1.0% | | | | | | % | | |
John J. Boniface, Ph.D.(23)
|
| | | | 772,235 | | | | | | 1.4% | | | | | | % | | |
Garrett K. Lam, M.D.
|
| | | | 80,593 | | | | | | * | | | | | | % | | |
All current executive officers and directors as a group (21 persons)(24)
|
| | | | 23,358,616 | | | | | | 39.6% | | | | | | % | | |
Underwriter
|
| |
Number
of Shares |
|
Citigroup Global Markets Inc.
|
| | | |
Cowen and Company, LLC
|
| | | |
William Blair & Company, L.L.C.
|
| | | |
Total
|
| | | |
| | | | | | | | |
Total
|
| |||||||||
| | |
Per
share |
| |
No
exercise |
| |
Full
exercise |
| |||||||||
Public offering price
|
| | | $ | | | | | $ | | | | | $ | | | |||
Underwriting discounts and commissions paid by us
|
| | | $ | | | | | $ | | | | | $ | | | |||
Proceeds to us, before expenses
|
| | | $ | | | | | $ | | | | | $ | | | |
| | | | | F-2 | | | |
| Financial Statements: | | | | | | | |
| | | | | F-3 | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | |
| Unaudited Interim Condensed Financial Statements: | | | | | | | |
| | | | | F-30 | | | |
| | | | | F-31 | | | |
| | | | | F-32 | | | |
| | | | | F-33 | | | |
| | | | | F-34 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 13,533 | | | | | $ | 21,390 | | |
Accounts receivable
|
| | | | 2 | | | | | | 1 | | |
Prepaid expenses and other current assets
|
| | | | 198 | | | | | | 161 | | |
Total current assets
|
| | | | 13,733 | | | | | | 21,552 | | |
Property and equipment, net
|
| | | | 965 | | | | | | 1,635 | | |
Other assets
|
| | | | 98 | | | | | | 72 | | |
Total assets
|
| | | $ | 14,796 | | | | | $ | 23,259 | | |
Liabilities, Convertible Preferred Stock, and Stockholders’ Deficit | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 441 | | | | | $ | 748 | | |
Accrued and other current liabilities
|
| | | | 1,577 | | | | | | 1,303 | | |
Accrued interest on convertible note
|
| | | | 996 | | | | | | — | | |
Deferred rent, current portion
|
| | | | 130 | | | | | | 114 | | |
Capital lease obligation, current portion
|
| | | | 69 | | | | | | 72 | | |
Convertible promissory note, current portion
|
| | | | 4,353 | | | | | | — | | |
Loans payable, current portion
|
| | | | 3,676 | | | | | | 3,667 | | |
Total current liabilities
|
| | | | 11,242 | | | | | | 5,904 | | |
Deferred rent
|
| | | | 139 | | | | | | 268 | | |
Loans payable, net of current portion
|
| | | | 348 | | | | | | 1,935 | | |
Convertible promissory note, net of current portion
|
| | | | — | | | | | | 3,507 | | |
Preferred stock warrant liability
|
| | | | 474 | | | | | | 230 | | |
Capital lease obligation, net of current portion
|
| | | | 127 | | | | | | 134 | | |
Other liabilities
|
| | | | — | | | | | | 555 | | |
Total liabilities
|
| | | | 12,330 | | | | | | 12,533 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Convertible preferred stock: | | | | | | | | | | | | | |
Junior convertible preferred stock, par value of $0.0001; 20,537,294 shares authorized, 20,414,766 shares issued and outstanding as of December 31, 2020 and 2019; aggregate liquidation preference of $78,916 as of December 31, 2020 and 2019;
|
| | | | 77,844 | | | | | | 77,844 | | |
Senior convertible preferred stock, par value of $0.0001; 12,320,844 shares
authorized, 11,928,167 and 9,451,206 shares issued and outstanding as of December 31, 2020 and 2019, respectively; aggregate liquidation preference of $102,535 and $81,035 as of December 31, 2020 and 2019, respectively; |
| | | | 50,192 | | | | | | 39,506 | | |
Stockholders’ deficit: | | | | | | | | | | | | | |
Common stock, $0.0001 par value; 55,000,000 shares authorized,3,535,688 and
3,170,805 shares issued and outstanding as of December 31, 2020 and 2019, respectively |
| | | | — | | | | | | — | | |
Additional paid-in capital
|
| | | | 5,889 | | | | | | 4,987 | | |
Accumulated deficit
|
| | | | (131,459) | | | | | | (111,611) | | |
Total stockholders’ deficit
|
| | | | (125,570) | | | | | | (106,624) | | |
Total liabilities, convertible preferred stock, and stockholders’ deficit
|
| | | $ | 14,796 | | | | | $ | 23,259 | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Revenue
|
| | | $ | 25 | | | | | $ | 36 | | |
Operating expenses: | | | | | | | | | | | | | |
Cost of revenue
|
| | | | 11 | | | | | | 18 | | |
Research and development
|
| | | | 7,782 | | | | | | 9,353 | | |
Selling and marketing
|
| | | | 3,645 | | | | | | 2,963 | | |
General and administrative
|
| | | | 6,558 | | | | | | 4,278 | | |
Total operating expenses
|
| | | | 17,996 | | | | | | 16,612 | | |
Loss from operations
|
| | | | (17,971) | | | | | | (16,576) | | |
Interest expense
|
| | | | (1,839) | | | | | | (1,972) | | |
Other income (expense), net
|
| | | | (38) | | | | | | 2,027 | | |
Net loss and comprehensive loss
|
| | | $ | (19,848) | | | | | $ | (16,521) | | |
Net loss per share, basic and diluted
|
| | | $ | (6.14) | | | | | $ | (5.24) | | |
Weighted-average shares of common stock outstanding, basic and diluted
|
| | | | 3,234,476 | | | | | | 3,153,654 | | |
| | |
Senior Convertible
Preferred Stock |
| |
Junior Convertible
Preferred Stock |
| |
Common Stock
|
| |
Additional
Paid-In Capital |
| |
Accumulated
Deficit |
| |
Total
Stockholders’ Deficit |
| ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018
|
| | | | — | | | | | $ | — | | | | | | 20,414,766 | | | | | $ | 77,844 | | | | | | 3,126,748 | | | | | | — | | | | | $ | 3,617 | | | | | $ | (95,090) | | | | | $ | (91,473) | | |
Issuance of Series D senior convertible preferred stock at $4.34 per share, net of issuance costs and commissions of $0.4 million
|
| | | | 9,451,206 | | | | | | 39,681 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Fair value of warrants to purchase common stock issued to investors
|
| | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 902 | | | | | | — | | | | | | 902 | | |
Fair value of warrants to purchase Series D Senior convertible preferred stock issued as commissions
|
| | |
|
—
|
| | | | | (175) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock upon exercise of stock options, and vesting of early exercised options
|
| | |
|
—
|
| | | |
|
—
|
| | | | | — | | | | | | — | | | | | | 44,057 | | | | | | — | | | | | | 30 | | | | | | — | | | | | | 30 | | |
Stock-based compensation expense
|
| | |
|
—
|
| | | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 438 | | | | | | — | | | | | | 438 | | |
Net loss
|
| | |
|
—
|
| | | |
|
—
|
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (16,521) | | | | | | (16,521) | | |
Balance as of December 31, 2019
|
| | | | 9,451,206 | | | | | $ | 39,506 | | | | | | 20,414,766 | | | | | $ | 77,844 | | | | | | 3,170,805 | | | | | $ | — | | | | | $ | 4,987 | | | | | $ | (111,611) | | | | | $ | (106,624) | | |
Issuance of Series D senior convertible preferred stock at $4.34 per share, net of issuance costs of $0.1 million
|
| | | | 2,476,961 | | | | | | 10,686 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock upon exercise of stock options
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 364,883 | | | | | | — | | | | | | 176 | | | | | | — | | | | | | 176 | | |
Stock-based compensation expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 726 | | | | | | — | | | | | | 726 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (19,848) | | | | | | (19,848) | | |
Balance as of December 31, 2020
|
| | | | 11,928,167 | | | | | $ | 50,192 | | | | | | 20,414,766 | | | | | $ | 77,844 | | | | | | 3,535,688 | | | | | $ | — | | | | | $ | 5,889 | | | | | $ | (131,459) | | | | | $ | (125,570) | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net loss
|
| | | $ | (19,848) | | | | | $ | (16,521) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 895 | | | | | | 946 | | |
Stock-based compensation
|
| | | | 726 | | | | | | 438 | | |
Gain on disposal of fixed assets
|
| | | | — | | | | | | (103) | | |
Non-cash interest expense
|
| | | | 1,589 | | | | | | 1,509 | | |
Fair value adjustment to tranche forward liability
|
| | | | — | | | | | | (619) | | |
Other non-cash gain (loss)
|
| | | | 81 | | | | | | (1,328) | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | (2) | | | | | | 6 | | |
Prepaid expenses and other assets
|
| | | | (62) | | | | | | 23 | | |
Accounts payable
|
| | | | (307) | | | | | | (534) | | |
Deferred rent
|
| | | | (114) | | | | | | (98) | | |
Accrued and other current liabilities
|
| | | | 174 | | | | | | (3,043) | | |
Net cash used in operating activities
|
| | | | (16,868) | | | | | | (19,324) | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment
|
| | | | (149) | | | | | | (109) | | |
Proceeds from disposal of property and equipment
|
| | | | — | | | | | | 103 | | |
Net cash used in investing activities
|
| | | | (149) | | | | | | (6) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Proceeds from issuance of Series D convertible preferred stock, net of
issuance costs |
| | | | 10,686 | | | | | | 29,147 | | |
Proceeds allocated to issuance of common stock warrants
|
| | | | — | | | | | | 902 | | |
Proceeds from exercise of stock options
|
| | | | 176 | | | | | | 28 | | |
Proceeds from convertible notes payable
|
| | | | — | | | | | | 6,600 | | |
Proceeds from loan payable
|
| | | | 1,050 | | | | | | — | | |
Payment of loan payable
|
| | | | (2,667) | | | | | | (3,333) | | |
Capital lease principal payments
|
| | | | (85) | | | | | | (282) | | |
Payment of deferred finance fees
|
| | | | — | | | | | | (13) | | |
Net cash provided by financing activities
|
| | | | 9,160 | | | | | | 33,049 | | |
Net (decrease) increase in cash and cash equivalents
|
| | | | (7,857) | | | | | | 13,719 | | |
Cash and cash equivalents at beginning of year
|
| | | | 21,390 | | | | | | 7,671 | | |
Cash and cash equivalents at end of year
|
| | | $ | 13,533 | | | | | $ | 21,390 | | |
Supplemental disclosure of cash flow information | | | | | | | | | | | | | |
Cash paid for interest expense
|
| | | $ | 250 | | | | | $ | 463 | | |
Supplemental disclosure of non-cash investing and financing information | | | | | | | | | | | | | |
Purchases of property and equipment in accounts payable and accruals
|
| | | $ | 33 | | | | | $ | 30 | | |
Warrants to purchase convertible preferred stock issued as commissions
|
| | | $ | — | | | | | $ | 175 | | |
Conversion of convertible notes and accrued interest to Series D convertible preferred stock
|
| | | $ | — | | | | | $ | 10,033 | | |
| Computer equipment | | | 3 years | |
| Software | | | 3 years | |
| Machinery and equipment | | | 5 years | |
| Furniture and fixtures | | | 5 years | |
| Leasehold improvements | | | Shorter of useful life or remaining lease term | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Computer equipment
|
| | | $ | 767 | | | | | $ | 601 | | |
Software
|
| | | | 373 | | | | | | 373 | | |
Laboratory equipment
|
| | | | 4,194 | | | | | | 4,149 | | |
Furniture and fixtures
|
| | | | 292 | | | | | | 292 | | |
Leasehold improvements
|
| | | | 701 | | | | | | 689 | | |
Total property and equipment
|
| | | | 6,327 | | | | | | 6,104 | | |
Less accumulated depreciation and amortization
|
| | | | (5,362) | | | | | | (4,469) | | |
Property and equipment, net
|
| | | $ | 965 | | | | | $ | 1,635 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Accrued paid time off
|
| | | $ | 290 | | | | | $ | 158 | | |
Accrued compensation
|
| | | | 996 | | | | | | 782 | | |
Accrued clinical studies
|
| | | | — | | | | | | 183 | | |
Unrecognized grant income
|
| | | | — | | | | | | 43 | | |
Bank loan final payment fee
|
| | | | 100 | | | | | | — | | |
Other current liabilities
|
| | | | 191 | | | | | | 137 | | |
Total accrued and other current liabilities
|
| | | $ | 1,577 | | | | | $ | 1,303 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Interest income
|
| | | $ | 42 | | | | | $ | 64 | | |
Fair value remeasurements
|
| | | | (80) | | | | | | (129) | | |
Grant income
|
| | | | — | | | | | | 17 | | |
Other gains (losses), net
|
| | | | — | | | | | | 2,075 | | |
Other income (expense), net
|
| | | $ | (38) | | | | | $ | 2,027 | | |
| | |
2021
|
| |
2022
|
| |
2023
|
| |
2023 and
Thereafter |
| |
Total
|
| |||||||||||||||
Loan payable
|
| | | $ | 3,100 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 3,100 | | |
February 2019 Convertible Note
|
| | | $ | 4,494 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 4,494 | | |
Paycheck Protection Loan payable
|
| | | $ | 702 | | | | | $ | 348 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,050 | | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Assets:
Cash equivalents |
| | | $ | 13,533 | | | | | | — | | | | | $ | — | | |
Liabilities:
Warrant liability |
| | | | — | | | | | | — | | | | | | 474 | | |
Total
|
| | | $ | 13,533 | | | | | | — | | | | | $ | 474 | | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Assets:
Cash equivalents |
| | | $ | 21,390 | | | | | | — | | | | | $ | — | | |
Liabilities:
Warrant liability |
| | | | — | | | | | | — | | | | | | 230 | | |
Total
|
| | | $ | 21,390 | | | | | | — | | | | | $ | 230 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Senior convertible preferred stock
|
| | | | 11,928,167 | | | | | | 9,451,206 | | |
Junior convertible preferred stock
|
| | | | 20,889,401 | | | | | | 20,889,401 | | |
Shares issuable under convertible note
|
| | | | 1,383,989 | | | | | | 1,247,663 | | |
Warrants to purchase convertible preferred stock
|
| | | | 169,533 | | | | | | 167,460 | | |
Warrants to purchase common stock
|
| | | | 4,198,770 | | | | | | 4,198,770 | | |
Options to purchase common stock
|
| | | | 8,517,220 | | | | | | 5,677,248 | | |
Common stock available for future issuance under the 2011 Equity Incentive Plan
|
| | | | 807,702 | | | | | | 93,857 | | |
Total
|
| | | | 47,894,782 | | | | | | 41,725,605 | | |
Series
|
| |
Shares
Authorized |
| |
Shares Issued
and Outstanding |
| |
Original Issue
Price |
| |
Aggregate
Liquidation Preference |
| |
Proceeds,
net of issuance costs |
| |||||||||||||||
Series A-1 Junior Preferred Stock
|
| | | | 1,390 | | | | | | 1,390 | | | | | $ | 1,000.00 | | | | | $ | 1,390 | | | | | $ | 1,390 | | |
Series A-2 Junior Preferred Stock
|
| | | | 7,941,499 | | | | | | 7,908,277 | | | | | | 2.50 | | | | | | 19,771 | | | | | | 19,595 | | |
Series B-1 Junior Preferred Stock
|
| | | | 2,060,000 | | | | | | 2,000,000 | | | | | | 2.50 | | | | | | 5,000 | | | | | | 4,914 | | |
Series B-2 Junior Preferred Stock
|
| | | | 5,012,500 | | | | | | 5,000,000 | | | | | | 4.00 | | | | | | 20,000 | | | | | | 19,984 | | |
Series C-1 Junior Preferred Stock
|
| | | | 5,521,905 | | | | | | 5,505,099 | | | | | | 5.95 | | | | | | 32,755 | | | | | | 32,653 | | |
Series D Senior Preferred Stock
|
| | | | 12,320,844 | | | | | | 11,928,167 | | | | | | 4.34 | | | | | | 102,535 | | | | | | 50,415 | | |
Total Convertible Preferred Stock
|
| | | | 32,858,138 | | | | | | 32,342,933 | | | | | | | | | | | $ | 181,451 | | | | | $ | 128,951 | | |
Series
|
| |
Shares
Authorized |
| |
Shares Issued
and Outstanding |
| |
Original Issue
Price |
| |
Aggregate
Liquidation Preference |
| |
Proceeds,
net of issuance costs |
| |||||||||||||||
Series A-1 Junior Preferred Stock
|
| | | | 1,390 | | | | | | 1,390 | | | | | $ | 1,000.00 | | | | | $ | 1,390 | | | | | $ | 1,390 | | |
Series A-2 Junior Preferred Stock
|
| | | | 7,941,499 | | | | | | 7,908,277 | | | | | | 2.50 | | | | | | 19,771 | | | | | | 19,595 | | |
Series B-1 Junior Preferred Stock
|
| | | | 2,060,000 | | | | | | 2,000,000 | | | | | | 2.50 | | | | | | 5,000 | | | | | | 4,914 | | |
Series B-2 Junior Preferred Stock
|
| | | | 5,012,500 | | | | | | 5,000,000 | | | | | | 4.00 | | | | | | 20,000 | | | | | | 19,984 | | |
Series C-1 Junior Preferred Stock
|
| | | | 5,521,905 | | | | | | 5,505,099 | | | | | | 5.95 | | | | | | 32,755 | | | | | | 32,652 | | |
Series D Senior Preferred Stock
|
| | | | 12,320,844 | | | | | | 9,451,206 | | | | | | 4.34 | | | | | | 81,035 | | | | | | 39,729 | | |
Total Convertible Preferred Stock
|
| | | | 32,858,138 | | | | | | 29,865,972 | | | | | | | | | | | $ | 159,951 | | | | | $ | 118,264 | | |
| | |
Number of
Shares Subject to Options Outstanding |
| |
Weighted-
Average Grant Date Fair Value |
| |
Weighted-
Average Exercise Price Per Share |
| |
Weighted-
Average Remaining Contractual Life (In Years) |
| ||||||||||||
Outstanding – December 31, 2018
|
| | | | 5,673,947 | | | | | $ | 0.43 | | | | | $ | 0.73 | | | | | | 6.86 | | |
Granted
|
| | | | 234,000 | | | | | | 0.45 | | | | | | 0.87 | | | | | | | | |
Cancelled
|
| | | | (186,642) | | | | | | 0.44 | | | | | | 0.82 | | | | | | | | |
Exercised
|
| | | | (44,057) | | | | | | 0.42 | | | | | | 0.75 | | | | | | | | |
Outstanding – December 31, 2019
|
| | | | 5,677,248 | | | | | $ | 0.42 | | | | | $ | 0.73 | | | | | | 6.04 | | |
Granted
|
| | | | 4,036,933 | | | | | | 0.45 | | | | | | 0.85 | | | | | | | | |
Cancelled
|
| | | | (750,522) | | | | | | 0.43 | | | | | | 0.80 | | | | | | | | |
Expired
|
| | | | (81,556) | | | | | | 0.62 | | | | | | 1.16 | | | | | | | | |
Exercised
|
| | | | (364,833) | | | | | | 0.28 | | | | | | 0.48 | | | | | | | | |
Outstanding – December 31, 2020
|
| | | | 8,517,220 | | | | | | 0.44 | | | | | | 0.79 | | | | | | 6.99 | | |
Vested and expected to vest at December 31, 2020
|
| | | | 8,218,460 | | | | | $ | 0.44 | | | | | $ | 0.79 | | | | | | 6.91 | | |
Vested and exercisable at
December 31, 2020 |
| | | | 4,937,617 | | | | | $ | 0.43 | | | | | $ | 0.74 | | | | | | 5.44 | | |
Non-vested options at
December 31, 2020 |
| | | | 3,579,603 | | | | | $ | 0.45 | | | | | $ | 0.85 | | | | | | | | |
| | |
Year Ended
December 31, |
| |
Year Ended
December 31, |
| ||||||
| | |
2020
|
| |
2019
|
| ||||||
Expected volatility
|
| | | | 52.8 – 62.1% | | | | | | 53.2 – 54.4% | | |
Risk-free interest rate
|
| | | | 0.4 – 1.2% | | | | | | 1.7 – 2.6% | | |
Expected term (in years)
|
| | | | 5.2 – 6.2 | | | | | | 5.5 – 6.0 | | |
Expected dividends
|
| | | $ | — | | | | | $ | — | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Research and development expense
|
| | | $ | 208 | | | | | $ | 155 | | |
Sales and marketing expense
|
| | | | 131 | | | | | | 74 | | |
General and administrative expense
|
| | | | 320 | | | | | | 153 | | |
Total employee stock-based compensation
|
| | | $ | 659 | | | | | $ | 382 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Expected volatility
|
| | | | 54.5 – 59.5% | | | | | | 52.5 – 53.7% | | |
Risk-free interest rate
|
| | | | 0.6 – 0.9% | | | | | | 1.7 – 2.7% | | |
Expected term (in years)
|
| | | | 9.4 – 10.0 | | | | | | 9.2 – 10.0 | | |
Expected dividends
|
| | | $ | — | | | | | $ | — | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Research and development expense
|
| | | $ | 28 | | | | | $ | 27 | | |
Sales and marketing expense
|
| | | | 9 | | | | | | 25 | | |
General and administrative expense
|
| | | | 31 | | | | | | 4 | | |
Total nonemployee stock-based compensation
|
| | | $ | 68 | | | | | $ | 56 | | |
Related
Series |
| |
Grant
Date |
| |
Number of
Warrants |
| |
Exercise
Price |
| |
Fair Value Year-Ended
December 31, |
| |||||||||||||||
|
2020
|
| |
2019
|
| |||||||||||||||||||||||
Series A-2 | | |
Sep 2012
|
| | | | 26,000 | | | | | $ | 2.50 | | | | | $ | 41 | | | | | $ | 7 | | |
Series A-2 | | |
Sep 2014
|
| | | | 7,222 | | | | | $ | 2.50 | | | | | | 13 | | | | | | 4 | | |
Series B-1 | | |
Dec 2014
|
| | | | 60,000 | | | | | $ | 2.50 | | | | | | 113 | | | | | | 30 | | |
Series B-2 | | |
Dec 2015
|
| | | | 12,500 | | | | | $ | 4.00 | | | | | | 22 | | | | | | 6 | | |
Series C-1 | | |
Mar 2017
|
| | | | 16,806 | | | | | $ | 5.95 | | | | | | 31 | | | | | | 10 | | |
Series D | | |
Jul 2019
|
| | | | 47,005 | | | | | $ | 4.34 | | | | | | 254 | | | | | | 173 | | |
Total | | | | | | | | 169,533 | | | | | | | | | | | $ | 474 | | | | | $ | 230 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Series A-2 stock price fair value
|
| | | $ | 3.41 | | | | | $ | 1.53 | | |
Series B-1 stock price fair value
|
| | | $ | 3.41 | | | | | $ | 1.53 | | |
Series B-2 stock price fair value
|
| | | $ | 3.58 | | | | | $ | 1.71 | | |
Series C-1 stock price fair value
|
| | | $ | 3.89 | | | | | $ | 2.02 | | |
Series D stock price fair value
|
| | | $ | 7.35 | | | | | $ | 5.70 | | |
Expected volatility
|
| | | | 59.5 – 72.5% | | | | | | 49.8 – 53.2% | | |
Risk-free interest rate
|
| | | | 0.1 – 0.9% | | | | | | 1.6 – 1.9% | | |
Expected term (in years)
|
| | | | 1.7 – 9.1 | | | | | | 2.7 – 9.8 | | |
Expected dividends
|
| | | $ | — | | | | | $ | — | | |
| | |
Warrant
Liability Outstanding |
| |||
Outstanding – December 31, 2018
|
| | | $ | 240 | | |
Valuation of warrants to purchase preferred stock at issuance of Series D warrants
|
| | | | 175 | | |
Net decrease in fair value of preferred stock warrants
|
| | | | (185) | | |
Outstanding – December 31, 2019
|
| | | $ | 230 | | |
Net increase in fair value of preferred stock warrants
|
| | | | 244 | | |
Outstanding – December 31, 2020
|
| | | $ | 474 | | |
| | |
2021
|
| |
2022
|
| |
2023
|
| |
2024 and
Thereafter |
| |
Total
|
| |||||||||||||||
Operating leases
|
| | | $ | 545 | | | | | $ | 554 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,099 | | |
Capital leases
|
| | | | 80 | | | | | | 80 | | | | | | 55 | | | | | | — | | | | | | 215 | | |
Total
|
| | | $ | 625 | | | | | $ | 634 | | | | | $ | 55 | | | | | $ | — | | | | | $ | 1,314 | | |
| | | | | |
2020
|
| |
2019
|
| ||||||
Current:
|
| | Federal | | | | $ | — | | | | | $ | — | | |
| | | State | | | | | — | | | | | | — | | |
| | | Total current provision | | | | $ | — | | | | | $ | — | | |
Deferred
|
| | Federal | | | | $ | 3,658 | | | | | $ | 3,535 | | |
| | | State | | | | | 1,498 | | | | | | 1,142 | | |
| | |
Change in valuation allowance
|
| | | | (5,156) | | | | | | (4,676) | | |
| | | Total deferred provision | | | | $ | — | | | | | $ | — | | |
Total Income tax benefit (provision)
|
| | | | | | $ | — | | | | | $ | — | | |
| | | | | |
2020
|
| |
2019
|
| ||||||||||||||||||
Computed Federal income tax benefit (expense) at the statutory rate
|
| | | | | | $ | 4,167 | | | | | | 21.00% | | | | | $ | 3,469 | | | | | | 21.00% | | |
R&D credits
|
| | | | | | | 304 | | | | | | 1.53% | | | | | | 351 | | | | | | 2.15% | | |
Equity-based expenses
|
| | | | | | | (136) | | | | | | -0.68% | | | | | | (34) | | | | | | -0.21% | | |
State income taxes, net of federal benefit
|
| | | | | | | 1,065 | | | | | | 5.36% | | | | | | 958 | | | | | | 5.79% | | |
State net operating loss carryforward true up
|
| | | | | | | 49 | | | | | | 0.25% | | | | | | (127) | | | | | | -0.77% | | |
Other
|
| | | | | | | (294) | | | | | | -1.48% | | | | | | 58 | | | | | | 0.35% | | |
Valuation allowance
|
| | | | | | | (5,156) | | | | | | -25.98% | | | | | | (4,676) | | | | | | -28.31% | | |
Income tax benefit (provision)
|
| | | | | | $ | — | | | | | | — | | | | | $ | — | | | | | | — | | |
| | |
2020
|
| |
2019
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Net operating loss carryforwards
|
| | | $ | 31,234 | | | | | $ | 26,607 | | |
R&D
|
| | | | 2,033 | | | | | | 1,729 | | |
Accruals and reserves
|
| | | | 419 | | | | | | 338 | | |
Deferred revenue
|
| | | | — | | | | | | 11 | | |
Equity-based compensation
|
| | | | 220 | | | | | | 169 | | |
Other
|
| | | | 2 | | | | | | 2 | | |
Total deferred tax asset before allowance
|
| | | $ | 33,908 | | | | | $ | 28,856 | | |
Less: valuation allowance
|
| | | | (33,864) | | | | | | (28,708) | | |
Total deferred tax asset
|
| | | | 44 | | | | | | 148 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | (44) | | | | | | (148) | | |
Net deferred tax assets
|
| | | | — | | | | | | — | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Balance at the beginning of the year
|
| | | $ | 1,152 | | | | | $ | 918 | | |
Gross increases – prior period
|
| | | | — | | | | | | — | | |
Gross increases – current period
|
| | | | 202 | | | | | | 234 | | |
Balance at the end of the year
|
| | | $ | 1,354 | | | | | $ | 1,152 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net loss
|
| | | $ | (19,848) | | | | | $ | (16,521) | | |
Weighted average common stock outstanding, basic and diluted
|
| | | | 3,234,476 | | | | | | 3,153,654 | | |
Net loss per share – basic and diluted
|
| | | $ | (6.14) | | | | | $ | (5.24) | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Senior convertible preferred stock
|
| | | | 11,928,167 | | | | | | 9,451,206 | | |
Junior convertible preferred stock
|
| | | | 20,889,401 | | | | | | 20,889,401 | | |
Shares issuable under convertible note
|
| | | | 1,383,989 | | | | | | 1,247,663 | | |
Warrants to purchase convertible preferred stock
|
| | | | 169,533 | | | | | | 167,460 | | |
Warrants to purchase common stock
|
| | | | 4,198,770 | | | | | | 4,198,770 | | |
Options to purchase common stock
|
| | | | 8,517,220 | | | | | | 5,677,248 | | |
Total
|
| | | | 47,087,080 | | | | | | 41,631,748 | | |
| | |
March 31,
2021 |
| |
December 31,
2020 |
| ||||||
| | |
(unaudited)
|
| | | | | | | |||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 60,016 | | | | | $ | 13,533 | | |
Accounts receivable
|
| | | | 8 | | | | | | 2 | | |
Prepaid expenses and other current assets
|
| | | | 421 | | | | | | 198 | | |
Total current assets
|
| | | | 60,445 | | | | | | 13,733 | | |
Property and equipment, net
|
| | | | 826 | | | | | | 965 | | |
Other assets
|
| | | | 1,473 | | | | | | 98 | | |
Total assets
|
| | | $ | 62,744 | | | | | $ | 14,796 | | |
Liabilities, Convertible Preferred Stock, and Stockholders’ Deficit | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 829 | | | | | $ | 441 | | |
Accrued and other current liabilities
|
| | | | 2,001 | | | | | | 1,577 | | |
Accrued interest on convertible note
|
| | | | — | | | | | | 996 | | |
Deferred rent, current portion
|
| | | | 134 | | | | | | 130 | | |
Capital lease obligation, current portion
|
| | | | 70 | | | | | | 69 | | |
Convertible promissory note, current portion
|
| | | | — | | | | | | 4,353 | | |
Loans payable, current portion
|
| | | | 702 | | | | | | 3,676 | | |
Total current liabilities
|
| | | | 3,736 | | | | | | 11,242 | | |
Deferred rent
|
| | | | 104 | | | | | | 139 | | |
Loans payable, net of current portion
|
| | | | 348 | | | | | | 348 | | |
Preferred stock warrant liability
|
| | | | 494 | | | | | | 474 | | |
Capital lease obligation, net of current portion
|
| | | | 109 | | | | | | 127 | | |
Total liabilities
|
| | | | 4,791 | | | | | | 12,330 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Convertible preferred stock: | | | | | | | | | | | | | |
Junior convertible preferred stock, par value of $0.0001; 22,047,294 shares authorized, 20,414,766 shares issued and outstanding as of March 31, 2021 and December 31, 2020; aggregate liquidation preference of $78,916 as of March 31, 2021
|
| | | | 77,844 | | | | | | 77,844 | | |
Senior convertible preferred stock, par value of $0.0001; 24,496,040 and
12,320,844 shares authorized as of March 31, 2021 and December 31, 2020, respectively; 22,195,278 and 11,928,167 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively; aggregate liquidation preference of $164,035 as of March 31, 2021 |
| | | | 110,499 | | | | | | 50,192 | | |
Stockholders’ deficit: Common stock, $0.0001 par value; 78,000,000 and 55,000,000 shares authorized as of March 31, 2021 and December 31, 2020, respectively; 4,120,842 and 3,535,688 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
|
| | | | — | | | | | | — | | |
Additional paid-in capital
|
| | | | 7,428 | | | | | | 5,889 | | |
Accumulated deficit
|
| | | | (137,818) | | | | | | (131,459) | | |
Total stockholders’ deficit
|
| | | | (130,390) | | | | | | (125,570) | | |
Total liabilities, convertible preferred stock, and stockholders’ deficit
|
| | | $ | 62,744 | | | | | $ | 14,796 | | |
| | |
Three Months Ended
March 31, |
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Revenue
|
| | | $ | 13 | | | | | $ | 8 | | |
Operating expenses: | | | | | | | | | | | | | |
Cost of revenue
|
| | | | 5 | | | | | | 3 | | |
Research and development
|
| | | | 2,396 | | | | | | 2,050 | | |
Selling and marketing
|
| | | | 1,350 | | | | | | 868 | | |
General and administrative
|
| | | | 2,287 | | | | | | 1,379 | | |
Total operating expenses
|
| | | | 6,038 | | | | | | 4,300 | | |
Loss from operations
|
| | | | (6,025) | | | | | | (4,292) | | |
Interest expense
|
| | | | (307) | | | | | | (437) | | |
Other income (expense), net
|
| | | | (27) | | | | | | 33 | | |
Net loss and comprehensive loss
|
| | | $ | (6,359) | | | | | $ | (4,696) | | |
Net loss per share, basic and diluted
|
| | | $ | (1.71) | | | | | $ | (1.48) | | |
Weighted-average shares of common stock outstanding, basic and diluted
|
| | | | 3,725,328 | | | | | | 3,171,251 | | |
| | |
Senior Convertible
Preferred Stock |
| |
Junior Convertible
Preferred Stock |
| | |
Common Stock
|
| |
Additional
Paid-In Capital |
| |
Accumulated
Deficit |
| |
Total
Stockholders’ Deficit |
| ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2020
|
| | | | 11,928,167 | | | | | $ | 50,192 | | | | | | 20,414,766 | | | | | $ | 77,844 | | | | | | | 3,535,688 | | | | | $ | — | | | | | $ | 5,889 | | | | | $ | (131,459) | | | | | $ | (125,570) | | |
Issuance of Series E senior convertible preferred stock at $5.99 per share, net of issuance costs of $0.1 million
|
| | | | 10,267,111 | | | | | | 60,307 | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Fair value of warrants to purchase common stock issued to
investor |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 1,071 | | | | | | — | | | | | | 1,071 | | |
Issuance of common stock upon exercise of stock options
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 585,154 | | | | | | — | | | | | | 229 | | | | | | — | | | | | | 229 | | |
Stock-based compensation
expense |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 239 | | | | | | — | | | | | | 239 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (6,359) | | | | | | (6,359) | | |
Balance as of March 31, 2021
|
| | | | 22,195,278 | | | | | $ | 110,499 | | | | | | 20,414,766 | | | | | $ | 77,844 | | | | | | | 4,120,842 | | | | | $ | — | | | | | $ | 7,428 | | | | | $ | (137,818) | | | | | $ | (130,390) | | |
| | |
Senior Convertible
Preferred Stock |
| |
Junior Convertible
Preferred Stock |
| | |
Common Stock
|
| |
Additional
Paid-In Capital |
| |
Accumulated
Deficit |
| |
Total
Stockholders’ Deficit |
| ||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019
|
| | | | 9,451,206 | | | | | $ | 39,506 | | | | | | 20,414,766 | | | | | $ | 77,844 | | | | | | | 3,170,805 | | | | | $ | — | | | | | $ | 4,987 | | | | | $ | (111,611) | | | | | $ | (106,624) | | |
Issuance of Series D senior convertible preferred stock at $4.34 per share, net of issuance costs of $0.5 million
|
| | | | 2,476,961 | | | | | | 10,704 | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of common stock upon exercise of stock options
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | 1,100 | | | | | | — | | | | | | 1 | | | | | | — | | | | | | 1 | | |
Stock based compensation
expense |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | 135 | | | | | | — | | | | | | 135 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | — | | | | | | — | | | | | | — | | | | | | (4,696) | | | | | | (4,696) | | |
Balance as of March 31, 2020
|
| | | | 11,928,167 | | | | | $ | 50,210 | | | | | | 20,414,766 | | | | | $ | 77,844 | | | | | | | 3,171,905 | | | | | $ | — | | | | | $ | 5,123 | | | | | $ | (116,307) | | | | | $ | (111,184) | | |
| | |
Three Months Ended
March 31, |
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net loss
|
| | | $ | (6,359) | | | | | $ | (4,696) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation and amortization
|
| | | | 201 | | | | | | 227 | | |
Stock-based compensation
|
| | | | 239 | | | | | | 135 | | |
Non-cash interest expense
|
| | | | 168 | | | | | | 355 | | |
Other non-cash gain (loss)
|
| | | | 19 | | | | | | (5) | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | | | (6) | | | | | | — | | |
Prepaid expenses and other assets
|
| | | | (223) | | | | | | (118) | | |
Accounts payable
|
| | | | 339 | | | | | | 94 | | |
Deferred rent
|
| | | | (31) | | | | | | (27) | | |
Accrued and other current liabilities
|
| | | | (1,297) | | | | | | (580) | | |
Net cash used in operating activities
|
| | | | (6,950) | | | | | | (4,615) | | |
Cash flows from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment
|
| | | | (41) | | | | | | (8) | | |
Net cash used in investing activities
|
| | | | (41) | | | | | | (8) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Proceeds from issuance of Series D senior convertible preferred stock, net of issuance
costs |
| | | | — | | | | | | 10,704 | | |
Proceeds from issuance of Series E senior convertible preferred stock, net of issuance costs
|
| | | | 60,415 | | | | | | — | | |
Proceeds allocated to issuance of common stock warrants
|
| | | | 1,071 | | | | | | — | | |
Proceeds from exercise of stock options
|
| | | | 229 | | | | | | 1 | | |
Payment of convertible notes payable
|
| | | | (4,494) | | | | | | — | | |
Payment of loan payable
|
| | | | (3,100) | | | | | | — | | |
Capital lease principal payments
|
| | | | (17) | | | | | | (38) | | |
Payment of deferred offering costs
|
| | | | (630) | | | | | | — | | |
Net cash provided by financing activities
|
| | | | 53,474 | | | | | | 10,667 | | |
Net increase in cash and cash equivalents
|
| | | | 46,483 | | | | | | 6,044 | | |
Cash and cash equivalents at beginning of year
|
| | | | 13,533 | | | | | | 21,390 | | |
Cash and cash equivalents at end of period
|
| | | $ | 60,016 | | | | | $ | 27,434 | | |
Supplemental disclosure of cash flow information | | | | | | | | | | | | | |
Cash paid for interest
|
| | | $ | 1,277 | | | | | $ | 82 | | |
Supplemental disclosure of non-cash investing and financing information | | | | | | | | | | | | | |
Purchases of property and equipment in accounts payable and accruals
|
| | | $ | 21 | | | | | $ | 6 | | |
Series E senior convertible preferred stock offering costs included in accounts payable
and accrued liabilities |
| | | $ | 82 | | | | | $ | — | | |
Series E senior convertible preferred stock offering costs prepaid and deferred in prior
period and reclassified to Series E senior convertible preferred stock |
| | | $ | 26 | | | | | $ | — | | |
Deferred offering costs included in accounts payable and accrued liabilities
|
| | | $ | 771 | | | | | $ | — | | |
| | |
March 31,
2021 |
| |
December 31,
2020 |
| ||||||
Computer equipment
|
| | | $ | 823 | | | | | $ | 767 | | |
Software
|
| | | | 373 | | | | | | 373 | | |
Laboratory equipment
|
| | | | 4,200 | | | | | | 4,194 | | |
Furniture and fixtures
|
| | | | 292 | | | | | | 292 | | |
Leasehold improvements
|
| | | | 701 | | | | | | 701 | | |
Total property and equipment
|
| | | | 6,389 | | | | | | 6,327 | | |
Less accumulated depreciation and amortization
|
| | | | (5,563) | | | | | | (5,362) | | |
Property and equipment, net
|
| | | $ | 826 | | | | | $ | 965 | | |
| | |
March 31,
2021 |
| |
December 31,
2020 |
| ||||||
Accrued paid time off
|
| | | $ | 394 | | | | | $ | 290 | | |
Accrued compensation
|
| | | | 605 | | | | | | 996 | | |
Accrued invoices related to proposed equity offering
|
| | | | 743 | | | | | | — | | |
Bank loan final payment fee
|
| | | | — | | | | | | 100 | | |
Other current liabilities
|
| | | | 259 | | | | | | 191 | | |
Total accrued and other current liabilities
|
| | | $ | 2,001 | | | | | $ | 1,577 | | |
| | |
March 31,
2021 |
| |
March 31,
2020 |
| ||||||
Interest income
|
| | | $ | 2 | | | | | $ | 28 | | |
Fair value remeasurements
|
| | | | (10) | | | | | | 5 | | |
Other gains (losses), net
|
| | | | (19) | | | | | | — | | |
Other income (expense), net
|
| | | $ | (27) | | | | | $ | 33 | | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Assets: | | | | | | | | | | | | | | | | | | | |
Cash equivalents
|
| | | $ | 60,016 | | | | | | — | | | | | $ | — | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
Warrant liability
|
| | | | — | | | | | | — | | | | | | 494 | | |
Total
|
| | | $ | 60,016 | | | | | | — | | | | | $ | 494 | | |
| | |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |||||||||
Assets: | | | | | | | | | | | | | | | | | | | |
Cash equivalents
|
| | | $ | 13,533 | | | | | | — | | | | | $ | — | | |
Liabilities: | | | | | | | | | | | | | | | | | | | |
Warrant liability
|
| | | | — | | | | | | — | | | | | | 474 | | |
Total
|
| | | $ | 13,533 | | | | | | — | | | | | $ | 474 | | |
| | |
March 31, 2021
|
| |
December 31, 2020
|
| ||||||
Senior convertible preferred stock
|
| | | | 22,195,277 | | | | | | 11,928,167 | | |
Junior convertible preferred stock
|
| | | | 20,889,401 | | | | | | 20,889,401 | | |
Shares issuable under convertible note
|
| | | | — | | | | | | 1,383,989 | | |
Warrants to purchase convertible preferred stock
|
| | | | 169,533 | | | | | | 169,533 | | |
Warrants to purchase Class A common stock
|
| | | | 5,700,270 | | | | | | 4,198,770 | | |
Options to purchase Class A common stock
|
| | | | 10,308,231 | | | | | | 8,517,220 | | |
Class A common stock available for future issuance under the 2011 Equity Incentive Plan
|
| | | | 2,933,549 | | | | | | 807,702 | | |
Total
|
| | | | 62,196,261 | | | | | | 47,894,782 | | |
Series
|
| |
Shares
Authorized |
| |
Shares Issued
and Outstanding |
| |
Original
Issue Price |
| |
Aggregate
Liquidation Preference |
| |
Proceeds,
net of issuance costs |
| |||||||||||||||
Series A-1 Junior Preferred Stock
|
| | | | 1,390 | | | | | | 1,390 | | | | | $ | 1,000.00 | | | | | $ | 1,390 | | | | | $ | 1,390 | | |
Series A-2 Junior Preferred Stock
|
| | | | 7,941,499 | | | | | | 7,908,277 | | | | | | 2.50 | | | | | | 19,771 | | | | | | 19,595 | | |
Series B-1 Junior Preferred Stock
|
| | | | 2,060,000 | | | | | | 2,000,000 | | | | | | 2.50 | | | | | | 5,000 | | | | | | 4,914 | | |
Series B-2 Junior Preferred Stock
|
| | | | 5,012,500 | | | | | | 5,000,000 | | | | | | 4.00 | | | | | | 20,000 | | | | | | 19,984 | | |
Series C-1 Junior Preferred Stock
|
| | | | 5,521,905 | | | | | | 5,505,099 | | | | | | 5.95 | | | | | | 32,755 | | | | | | 32,653 | | |
Series C-2 Junior Preferred Stock
|
| | | | 1,510,000 | | | | | | — | | | | | | 8.28 | | | | | | — | | | | | | — | | |
Series D Senior Preferred Stock
|
| | | | 11,975,172 | | | | | | 11,928,167 | | | | | | 4.34 | | | | | | 102,535 | | | | | | 50,415 | | |
Series E Senior Preferred Stock
|
| | | | 12,520,868 | | | | | | 10,267,111 | | | | | | 5.99 | | | | | | 61,500 | | | | | | 61,378 | | |
Total Convertible Preferred Stock
|
| | | | 46,543,334 | | | | | | 42,610,044 | | | | | | | | | | | $ | 242,951 | | | | | $ | 190,329 | | |
Series
|
| |
Shares
Authorized |
| |
Shares Issued
and Outstanding |
| |
Original
Issue Price |
| |
Aggregate
Liquidation Preference |
| |
Proceeds,
net of issuance costs |
| |||||||||||||||
Series A-1 Junior Preferred Stock
|
| | | | 1,390 | | | | | | 1,390 | | | | | $ | 1,000.00 | | | | | $ | 1,390 | | | | | $ | 1,390 | | |
Series A-2 Junior Preferred Stock
|
| | | | 7,941,499 | | | | | | 7,908,277 | | | | | | 2.50 | | | | | | 19,771 | | | | | | 19,595 | | |
Series B-1 Junior Preferred Stock
|
| | | | 2,060,000 | | | | | | 2,000,000 | | | | | | 2.50 | | | | | | 5,000 | | | | | | 4,914 | | |
Series B-2 Junior Preferred Stock
|
| | | | 5,012,500 | | | | | | 5,000,000 | | | | | | 4.00 | | | | | | 20,000 | | | | | | 19,984 | | |
Series C-1 Junior Preferred Stock
|
| | | | 5,521,905 | | | | | | 5,505,099 | | | | | | 5.95 | | | | | | 32,755 | | | | | | 32,653 | | |
Series C-2 Junior Preferred Stock
|
| | | | 1,510,000 | | | | | | — | | | | | | 8.28 | | | | | | — | | | | | | — | | |
Series D Senior Preferred Stock
|
| | | | 12,320,844 | | | | | | 11,928,167 | | | | | | 4.34 | | | | | | 102,535 | | | | | | 50,415 | | |
Total Convertible Preferred Stock
|
| | | | 34,368,138 | | | | | | 32,342,933 | | | | | | | | | | | $ | 181,451 | | | | | $ | 128,951 | | |
Series
|
| |
March 31,
2021 |
| |
December 31,
2020 |
| ||||||
Series A-1 Junior Preferred Stock
|
| | | $ | 2.92 | | | | | $ | 2.92 | | |
Series A-2 Junior Preferred Stock
|
| | | | 2.50 | | | | | | 2.50 | | |
Series B-1 Junior Preferred Stock
|
| | | | 2.50 | | | | | | 2.50 | | |
Series B-2 Junior Preferred Stock
|
| | | | 4.00 | | | | | | 4.00 | | |
Series C-1 Junior Preferred Stock
|
| | | | 5.95 | | | | | | 5.95 | | |
Series C-2 Junior Preferred Stock
|
| | | | 8.28 | | | | | | 8.28 | | |
Series D Senior Preferred Stock
|
| | | | 4.34 | | | | | | 4.34 | | |
Series E Senior Preferred Stock
|
| | | | 5.99 | | | | |
|
—
|
| |
| | |
Number of
Shares Subject to Options Outstanding |
| |
Weighted-
Average Grant Date Fair Value |
| |
Weighted-
Average Exercise Price Per Share |
| |
Weighted-
Average Remaining Contractual Life (In Years) |
| ||||||||||||
Outstanding – December 31, 2020
|
| | | | 8,517,220 | | | | | $ | 0.44 | | | | | $ | 0.79 | | | | | | 6.99 | | |
Granted
|
| | | | 2,376,652 | | | | | | 1.47 | | | | | | 2.56 | | | | | | | | |
Expired
|
| | | | (70) | | | | | | 61.52 | | | | | | 100.00 | | | | | | | | |
Cancelled
|
| | | | (417) | | | | | | 0.49 | | | | | | 0.95 | | | | | | | | |
Exercised
|
| | | | (585,154) | | | | | | 0.25 | | | | | | 0.39 | | | | | | | | |
Outstanding – March 31, 2021
|
| | | | 10,308,231 | | | | | $ | 0.69 | | | | | $ | 1.22 | | | | | | 7.75 | | |
Vested and expected to vest at March 31, 2021
|
| | | | 9,739,423 | | | | | $ | 0.67 | | | | | $ | 1.18 | | | | | | 7.64 | | |
Vested and exercisable at March 31, 2021
|
| | | | 4,812,806 | | | | | $ | 0.46 | | | | | $ | 0.80 | | | | | | 5.88 | | |
Non-vested options at March 31, 2021
|
| | | | 5,495,425 | | | | | $ | 0.89 | | | | | $ | 1.59 | | | | | | | | |
| | |
Three months ended
March 31, |
| |||||||||
| | | | | 2021 | | | | | | 2020 | | |
Research and development expense
|
| | | $ | 64 | | | | | $ | 54 | | |
Sales and marketing expense
|
| | | | 62 | | | | | | 29 | | |
General and administrative expense
|
| | | | 113 | | | | | | 52 | | |
Total employee stock-based compensation
|
| | | $ | 239 | | | | | $ | 135 | | |
Related Series
|
| |
Grant
Date |
| |
Number of
Warrants |
| |
Exercise
Price |
| |
Fair Value as of
|
| |||||||||||||||
|
March 31,
2021 |
| |
December 31,
2020 |
| |||||||||||||||||||||||
Series A-2
|
| |
Sep 2012
|
| | | | 26,000 | | | | | $ | 2.50 | | | | | $ | 42 | | | | | $ | 41 | | |
Series A-2
|
| |
Sep 2014
|
| | | | 7,222 | | | | | $ | 2.50 | | | | | | 14 | | | | | | 13 | | |
Series B-1
|
| |
Dec 2014
|
| | | | 60,000 | | | | | $ | 2.50 | | | | | | 119 | | | | | | 113 | | |
Series B-2
|
| |
Dec 2015
|
| | | | 12,500 | | | | | $ | 4.00 | | | | | | 23 | | | | | | 22 | | |
Series C-1
|
| |
Mar 2017
|
| | | | 16,806 | | | | | $ | 5.95 | | | | | | 32 | | | | | | 31 | | |
Series D
|
| |
Feb 2020
|
| | | | 47,005 | | | | | $ | 4.34 | | | | | | 264 | | | | | | 254 | | |
Total
|
| | | | | | | 169,533 | | | | | | | | | | | $ | 494 | | | | | $ | 474 | | |
| | |
Warrant
Liability Outstanding |
| |||
Outstanding – December 31, 2020
|
| | | $ | 474 | | |
Net increase in fair value of preferred stock warrants
|
| | | | 20 | | |
Outstanding – March 31, 2021
|
| | | $ | 494 | | |
| | |
2021
|
| |
2022
|
| |
2023
|
| |
2024 and
Thereafter |
| |
Total
|
| |||||||||||||||
Operating leases
|
| | | $ | 410 | | | | | $ | 554 | | | | | $ | — | | | | | $ | — | | | | | $ | 964 | | |
Capital leases
|
| | | | 61 | | | | | | 80 | | | | | | 55 | | | | | | — | | | | | | 196 | | |
Total
|
| | | $ | 471 | | | | | $ | 634 | | | | | $ | 55 | | | | | $ | — | | | | | $ | 1,160 | | |
| | |
Three Months Ended
March 31, |
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Net loss
|
| | | $ | (6,359) | | | | | $ | (4,696) | | |
Weighted average common stock outstanding, basic and diluted
|
| | | | 3,725,328 | | | | | | 3,171,251 | | |
Net loss per share – basic and diluted
|
| | | $ | (1.71) | | | | | $ | (1.48) | | |
| | |
March 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Junior convertible preferred stock
|
| | | | 20,889,401 | | | | | | 20,889,401 | | |
Senior convertible preferred stock
|
| | | | 22,195,278 | | | | | | 11,928,165 | | |
Shares issuable under convertible note
|
| | | | — | | | | | | 1,247,663 | | |
Warrants to purchase convertible preferred stock
|
| | | | 169,533 | | | | | | 169,533 | | |
Warrants to purchase Class A common stock
|
| | | | 5,700,270 | | | | | | 4,198,770 | | |
Options to purchase Class A common stock
|
| | | | 10,308,231 | | | | | | 8,591,168 | | |
Total
|
| | | | 59,262,713 | | | | | | 47,024,700 | | |
| Citigroup | | |
Cowen
|
| |
William Blair
|
|
| | |
Amount
|
| |||
SEC registration fee
|
| | | $ | 10,910 | | |
FINRA filing fee
|
| | | | 15,500 | | |
Nasdaq Global Market initial listing fee
|
| | | | * | | |
Blue sky qualification fees and expenses
|
| | | | * | | |
Printing and engraving expenses
|
| | | | * | | |
Legal fees and expenses
|
| | | | * | | |
Accounting fees and expenses
|
| | | | * | | |
Transfer agent and registrar fees and expenses
|
| | | | * | | |
Miscellaneous expenses
|
| | | | * | | |
Total
|
| | | $ | * | | |
Exhibit
Number |
| |
Description of Exhibit
|
|
1.1* | | | Form of Underwriting Agreement. | |
3.1 | | | | |
3.2* | | | Form of Amended and Restated Certificate of Incorporation (to be effective upon completion of the offering). | |
3.3 | | | | |
3.4* | | | Form of Amended and Restated By-Laws (to be effective upon completion of this offering). | |
4.1* | | | Specimen Common Stock Certificate. | |
4.2 | | | |
Exhibit
Number |
| |
Description of Exhibit
|
|
4.3 | | | | |
4.4 | | | | |
4.5 | | | | |
5.1* | | | Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. | |
10.1* | | | Form of Indemnification Agreement. | |
10.2+ | | | | |
10.2.1 | | | Form of Stock Option Agreement under the Registrant's 2011 Employee, Director and Consultant Equity Incentive Plan | |
10.3*+ | | | 2021 Employee, Director and Consultant Equity Incentive Plan. | |
10.4*+ | | | Form of 2021 Employee Stock Purchase Plan. | |
10.5† | | | | |
10.6† | | | | |
10.7.1† | | | | |
10.7.2† | | | | |
10.7.3 | | | | |
10.8† | | | | |
10.9+ | | | | |
10.10+ | | | | |
10.11+ | | | | |
10.12+ | | | | |
10.13+ | | | | |
10.14+ | | | | |
10.15+ | | | | |
10.16+ | | | | |
10.17+ | | | | |
10.18+ | | | | |
10.18.1+
|
| | | |
10.18.2+
|
| | | |
10.18.3+
|
| | | |
10.19+ | | | |
Exhibit
Number |
| |
Description of Exhibit
|
|
10.20 | | | | |
21.1 | | | | |
23.1 | | | | |
23.3* | | | Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (included in Exhibit 5.1). | |
24.1 | | | |
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Gregory C. Critchfield, M.D., M.S.
Gregory C. Critchfield, M.D., M.S.
|
| |
Chairman,
Chief Executive Officer, President and Director (Principal Executive Officer) |
| |
June 11, 2021
|
|
|
/s/ Jay Moyes
Jay Moyes
|
| |
Chief Financial Officer
(Principal Accounting Officer and Principal Financial Officer) |
| |
June 11, 2021
|
|
|
/s/ Dennis Farrar
Dennis Farrar
|
| |
Director
|
| |
June 11, 2021
|
|
|
/s/ Joshua Phillips
Joshua Phillips
|
| |
Director
|
| |
June 11, 2021
|
|
|
/s/ Mansoor Raza Mirza, M.D.
Mansoor Raza Mirza, M.D.
|
| |
Director
|
| |
June 11, 2021
|
|
|
Signature
|
| |
Title
|
| |
Date
|
|
|
/s/ Ryan Trimble
Ryan Trimble
|
| |
Director
|
| |
June 11, 2021
|
|
|
/s/ Kim Kamdar, Ph.D.
Kim Kamdar, Ph.D.
|
| |
Director
|
| |
June 11, 2021
|
|
|
/s/ Michael F. Minahan
Michael F. Minahan
|
| |
Director
|
| |
June 11, 2021
|
|
|
/s/ Charles D. Kennedy, M.D.
Charles D. Kennedy, M.D.
|
| |
Director
|
| |
June 11, 2021
|
|
Exhibit 3.1
SIXTH AMENDED AND RESTATED
OF
SERA PROGNOSTICS, INC.
(Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware)
Sera Prognostics, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “General Corporation Law”),
DOES HEREBY CERTIFY:
1. That the name of this corporation is Sera Prognostics, Inc., and that this corporation was originally incorporated pursuant to the General Corporation Law on January 17, 2008. An Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on February 23, 2021. Thereafter, a Certificate of Amendment to the Amended and Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on March 18, 2021.
2. That the Board of Directors (the “Board”) of this corporation duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation, declaring said amendment and restatement to be advisable and in the best interests of this corporation and its stockholders, and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor, which resolution setting forth the proposed amendment and restatement is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be amended and restated in its entirety to read as follows:
First: The name of this corporation is Sera Prognostics, Inc. (the “Corporation”).
Second: The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.
Third: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.
Fourth: The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 75,000,000 shares of Class A Common Stock, $0.0001 par value per share (“Class A Common Stock”), (ii) 3,000,000 shares of Class B Common Stock, $0.0001 par value per share (“Class B Common Stock”) and (iii) 46,543,334 shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”). The Class A Common Stock and the Class B Common Stock are referred to together as the “Common Stock.”
The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.
A. COMMON STOCK
1 Class A Common Stock. All Common Stock, whether outstanding on the date hereof or issued hereafter shall be Class A Common Stock unless specifically designated Class B Common Stock.
1.1 General. The voting, dividend and liquidation rights of the holders of the Class A Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein.
1.2 Voting. The holders of the Class A Common Stock are entitled to one vote for each share of Class A Common Stock held at all meetings of stockholders (and written actions in lieu of meetings). There shall be no cumulative voting. The number of authorized shares of Class A Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by the terms of the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”)) the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, and without a separate class vote of the holders of Class A Common Stock.
2 Class B Common Stock.
2.1 General. The voting, dividend and liquidation rights of the holders of the Class B Common Stock are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Stock set forth herein.
2.2 Voting. The Class B Common Stock shall be non-voting except as may be required by law; provided, the holders of the Class B Common Stock shall be entitled to vote, as a separate class, on any amendment to the Certificate of Incorporation that (a) modifies any powers, rights or privileges of the Class A Common Stock in a manner that differs from the powers, rights or privileges of the Class B Common Stock (other than with respect to the status of the Class B Common Stock as non-voting) or (b) modifies the non-voting status or conversion powers, rights or privileges applicable to the Class B Common Stock. The number of authorized shares of Class B Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by the terms of the Certificate of Incorporation) the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, and without a separate class vote of the holders of Class B Common Stock.
2
2.3 Conversion. Each holder of shares of Class B Common Stock shall have the right to convert each share of Class B Common Stock held by such holder into one share of Class A Common Stock at such holder’s election, which shall be made upon written notice to the Corporation delivered as provided in Section 4.3.1 of Subsection B of this Article Fourth, provided that, upon the closing of an initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, the shares of Class B Common Stock may only be converted into shares of Class A Common Stock during such time or times as immediately prior to or as a result of such conversion would not result in the holder(s) thereof beneficially owning (for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (collectively, the “Exchange Act”)), when aggregated with affiliates with whom such holder is required to aggregate beneficial ownership for purposes of Section 13(d) of the Exchange Act, in excess of the Beneficial Ownership Limitation. The “Beneficial Ownership Limitation” means initially 4.99% of any class of securities of the Corporation registered under the Exchange Act, which percentage may be increased or decreased by a holder of outstanding shares of Class B Common Stock to such other percentage as such holder may designate in writing upon 61 days’ notice (delivered as provided in Section 4.3.1 of Subsection B of this Article Fourth) to the Corporation, provided, however, that such increase or decrease shall only be applicable to such holder and provided further, however, that no holder may make such an election to change the percentage unless all holders managed by the same investment advisor as such electing holder make the same election.
3 Adjustments; Distributions. The Corporation shall not give effect to any stock split, stock dividend, stock combination or similar event affecting the Class A Common Stock or Class B Common Stock without effecting the same such stock split, stock dividend, stock combination or similar event for the Class A Common Stock or Class B Common Stock, respectively. The Corporation shall not declare, pay or set aside any dividends or distributions on shares of Class A Common Stock or Class B Common Stock unless the Corporation declares, pays or sets aside the same dividend or distribution on each share of Class A Common Stock or Class B Common Stock, provided, that dividends payable in Common Stock shall be paid in the same class.
B. PREFERRED STOCK
1,390 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series A1 Preferred Stock”, 7,941,499 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series A2 Preferred Stock”, 2,060,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series B-1 Preferred Stock”, 5,012,500 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series B-2 Preferred Stock”, 5,521,905 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series C-1 Preferred Stock”, 1,510,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series C-2 Preferred Stock”, 11,975,172 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series D Preferred Stock”, and 12,520,868 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series E Preferred Stock”, with the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. “Junior Preferred Stock” means the Series A1 Preferred Stock, the Series A2 Preferred Stock, the Series B-1 Preferred Stock, the Series B-2 Preferred Stock, the Series C-1 Preferred Stock and the Series C-2 Preferred Stock. “Senior Preferred Stock” means the Series D Preferred Stock and the Series E Preferred Stock. Unless otherwise indicated, references to “Sections” or “Subsections” in this Part B of this Article Fourth refer to sections and subsections of Part B of this Article Fourth.
3
1 Dividends.
1.1 As of the date of the effective date of the filing of the Second Amended and Restated Certificate of Incorporation of the Corporation on November 7, 2014, any and all outstanding and unpaid dividends accrued with respect to the Series A2 Preferred Stock were forfeited.
1.2 The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in the Certificate of Incorporation) the holders of the Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Preferred Stock in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Preferred Stock as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Preferred Stock determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the applicable Original Issue Price (as defined below); provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Preferred Stock pursuant to this Section 1 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Preferred Stock dividend. The “Original Issue Price” for each series of Preferred Stock shall mean:
(a) with respect to the Series A1 Preferred Stock, $1,000.00 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A1 Preferred Stock (the “Series A1 Original Issue Price”);
(b) with respect to the Series A2 Preferred Stock, $2.50 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A2 Preferred Stock (the “Series A2 Original Issue Price”);
(c) with respect to the Series B-1 Preferred Stock, $2.50 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B-1 Preferred Stock (the “Series B-1 Original Issue Price”);
4
(d) with respect to the Series B-2 Preferred Stock, $4.00 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B-2 Preferred Stock (the “Series B-2 Original Issue Price”);
(e) with respect to the Series C-1 Preferred Stock, $5.95 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C-1 Preferred Stock (the “Series C-1 Original Issue Price”);
(f) with respect to the Series C-2 Preferred Stock, $8.28 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C-2 Preferred Stock (the “Series C-2 Original Issue Price”);
(g) with respect to the Series D Preferred Stock, $4.34 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series D Preferred Stock (the “Series D Original Issue Price”); and
(h) with respect to the Series E Preferred Stock, $5.99 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series E Preferred Stock (the “Series E Original Issue Price”).
2 Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.
2.1 Preferential Payments to Holders of Senior Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event (as defined below), before any distribution or payment shall be made to the holders of any Common Stock or the holders of shares of any other series of Preferred Stock, the holders of shares of Senior Preferred Stock shall be entitled to be paid out of the assets of the Corporation legally available for distribution to its stockholders, and in the event of a Deemed Liquidation Event (as defined below), the holders of shares of Senior Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the Available Proceeds (as defined below), as applicable, before any payment shall be made to the holders of Common Stock, the Junior Preferred Stock or any other class or series of stock ranking on liquidation junior to the Senior Preferred Stock and together with any shares of Preferred Stock ranking on liquidation pari passu with the Senior Preferred Stock by reason of their ownership thereof, an amount per share equal to (i) with respect to each share of Series D Preferred Stock, the greater of (a) two times the Series D Original Issue Price of such share of Series D Preferred Stock plus all declared and unpaid dividends on such share of Series D Preferred Stock and (b) such amount per share as would have been payable had all shares of the Series D Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event, and (ii) with respect to each share of Series E Preferred Stock, the greater of (a) the Original Issue Price of such share of Series E Preferred Stock plus all declared and unpaid dividends on such share of Series E Preferred Stock and (b) such amount per share as would have been payable had all shares of Series E Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable in respect of Senior Preferred Stock pursuant to this sentence is hereinafter referred to as the “Senior Preferential Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Senior Preferred Stock or any shares of Preferred Stock ranking on liquidation pari passu with the Senior Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1, the holders of shares of Senior Preferred Stock or any shares of Preferred Stock ranking on liquidation pari passu with the Senior Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
5
2.2 After the payment of the Senior Preferential Liquidation Amount as set forth in Subsection 2.1 above upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the holders of shares of Junior Preferred Stock then outstanding, on a pari passu basis, shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, and in the event of a Deemed Liquidation Event (as defined below), the holders of shares of Junior Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the Available Proceeds (as defined below), as applicable, before any payment shall be made to the holders of Common Stock or any other class or series of stock ranking on liquidation junior to the Junior Preferred Stock by reason of their ownership thereof, an amount per share equal to the greater of (i) the sum of applicable Original Issue Price for such series of Junior Preferred Stock, plus any dividends declared but unpaid thereon and (ii) such amount per share as would have been payable had all shares of the applicable series of Junior Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event, taking into account the simultaneous application of this Subsection 2.2 to all series of Junior Preferred Stock (the amount payable pursuant to this sentence is hereinafter referred to as the “Junior Preferential Liquidation Amount” and, with the Senior Preferential Liquidation Amount, the “Preferential Liquidation Amounts”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Junior Preferred Stock the full amount to which they shall be entitled under this Subsection 2.2, the holders of shares of Junior Preferred Stock shall share ratably on a pari passu basis in any distribution of the assets available for distribution under this Subsection 2.2 in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
2.3 Distribution of Remaining Assets. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after the payment in full of all applicable Preferential Liquidation Amounts required to be paid to the holders of shares of Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Senior Preferred Stock pursuant to Subsection 2.1, the holders of shares of Junior Preferred Stock pursuant to Subsection 2.2 or the remaining Available Proceeds, as the case may be, shall be distributed among the holders of the shares of Common Stock, pro rata based on the number of shares held by each such holder. The aggregate amount that a holder of a share of Preferred Stock is entitled to receive under Subsections 2.1 and 2.2 is hereinafter referred to as the “Total Preferred Liquidation Amount”.
6
2.4 Deemed Liquidation Events.
2.4.1 Definition. Each of the following events shall be considered a “Deemed Liquidation Event” unless the holders of at least a majority of the outstanding shares of Preferred Stock, voting together as a single class on an as-converted basis, elect otherwise by written notice sent to the Corporation at least ten (10) days prior to the effective date of any such event:
(a) a merger, consolidation or reorganization in which the Corporation is a constituent party or a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (i) the surviving or resulting corporation or (ii) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation; or
(b) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole, or the sale or disposition (whether by merger, consolidation or otherwise, and whether in a single transaction or a series of related transactions) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.
2.4.2 Effecting a Deemed Liquidation Event.
(a) The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Subsection 2.4.1(a)(i) unless the agreement or plan of merger, consolidation or reorganization for such transaction (the “Merger Agreement”) provides that the consideration payable to the stockholders of the Corporation in such Deemed Liquidation Event shall be paid to the holders of capital stock of the Corporation in accordance with Subsections 2.1, 2.2 and 2.3.
7
(b) In the event of a Deemed Liquidation Event referred to in Subsection 2.4.1(a)(ii) or 2.4.1(b), if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Preferred Stock no later than the ninetieth (90th) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii) to require the redemption of such shares of Preferred Stock, and (ii) if the holders of at least a majority of the then outstanding shares of Preferred Stock, voting together as a single class on an as-converted basis, so request in a written instrument delivered to the Corporation not later than one hundred twenty (120) days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board), together with any other assets of the Corporation available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “Available Proceeds”), on the one hundred fiftieth (150th) day after such Deemed Liquidation Event, to redeem all outstanding shares of Preferred Stock at a price per share equal to the applicable Total Preferred Liquidation Amount. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Preferred Stock, the Corporation shall redeem a pro rata portion of each holder’s shares of Preferred Stock to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the remaining shares as soon as it may lawfully do so under Delaware law governing distributions to stockholders. The provisions of Section 6 shall apply, with such necessary changes in the details thereof as are necessitated by the context, to the redemption of the Preferred Stock pursuant to this Subsection 2.3.2(b). Prior to the distribution or redemption provided for in this Subsection 2.3.2(b), the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business.
2.4.3 Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities paid or distributed to such holders pursuant to such Deemed Liquidation Event by the Corporation or the acquiring person, firm, or other entity. The value of such property, rights or securities shall be determined in good faith by the Board.
3 Voting.
3.1 General. On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Certificate of Incorporation, holders of Preferred Stock shall vote together with the holders of Common Stock as a single class on an as-converted basis.
8
3.2 Election of Directors.
3.2.1 The holders of record of the shares of Preferred Stock exclusively and voting together as a single class on an as-converted basis, shall be entitled to elect nine (9) directors of the Corporation (the “Preferred Directors”). The holders of record of the shares of Common Stock and of any other class or series of voting stock (including the Preferred Stock), voting together as a single class on an as-converted basis, shall be entitled to elect the balance of the total number of directors of the Corporation. Any director elected as provided in the preceding sentence may be removed without cause by, and only by, the affirmative vote of the holders of the shares of the class or series of capital stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders. If the holders of shares of Preferred Stock or Common Stock, as the case may be, fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting exclusively and as a separate class, pursuant to the first sentence of this Subsection 3.2, then any directorship not so filled shall remain vacant until such time as the holders of the Preferred Stock, Common Stock, or the appropriate combination thereof, as the case may be, elect a person to fill such directorship by vote or written consent in lieu of a meeting; and no such directorship may be filled by stockholders of the Corporation other than by the stockholders of the Corporation that are entitled to elect a person to fill such directorship, voting exclusively and as a separate class. At any meeting held for the purpose of electing a director, the presence in person or by proxy of the holders of a majority of the outstanding shares of the class or series entitled to elect such director shall constitute a quorum for the purpose of electing such director. Except as otherwise provided in this Subsection 3.2, a vacancy in any directorship filled by the holders of any class or series shall be filled only by vote or written consent in lieu of a meeting of the holders of such class or series or by any remaining director or directors elected by the holders of such class or series pursuant to this Subsection 3.2.
3.3 Preferred Stock Protective Provisions. At any time when any shares of Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Preferred Stock, voting together as a single class, given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.
3.3.1 liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger or consolidation or any other Deemed Liquidation Event, or consent to any of the foregoing;
9
3.3.2 amend, alter or repeal any provision of the Certificate of Incorporation (a) in a manner that adversely affects the rights, preferences or privileges of any series of Preferred Stock or (b) to allow for the creation, authorization or issuance of additional shares of Other Securities (as defined below);
3.3.3 amend the Bylaws of the Corporation (the “Bylaws”);
3.3.4 create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock that is senior or pari pasu with any series of Preferred Stock (“Other Securities”), or increase the authorized number of shares of any series of Preferred Stock or increase the authorized number of shares of any Other Securities;
3.3.5 (i) reclassify, alter or amend any existing security of the Corporation that is pari passu with any series of Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to any series of Preferred Stock in respect of any such right, preference or privilege, or (ii) reclassify, alter or amend any existing security of the Corporation that is junior to any series of Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or pari passu with any series of Preferred Stock in respect of any such right, preference or privilege;
3.3.6 purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock, if otherwise expressly provided herein, and (ii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price or the then-current fair market value thereof;
3.3.7 create, or authorize the creation of, or issue, or authorize the issuance of any debt security or create any lien or security interest (except for purchase money liens or statutory liens of landlords, mechanics, materialmen, workmen, warehousemen and other similar persons arising or incurred in the ordinary course of business) or incur other indebtedness for borrowed money, including but not limited to obligations and contingent obligations under guarantees, or permit any subsidiary to take any such action with respect to any debt security lien, security interest or other indebtedness for borrowed money, if the aggregate indebtedness of the Corporation and its subsidiaries for borrowed money following such action would exceed $250,000, unless already included on the budget approved by the Board, including at least two (2) of the Preferred Directors, other than trade lines of credit in the ordinary course of business;
3.3.8 increase or decrease the size of the Board;
3.3.9 change the principal business of the Company, enter new lines of business, or exit any then-current line of business;
10
3.3.10 sell, assign, license, pledge or encumber material technology or intellectual property, other than licenses granted in the ordinary course of business;
3.3.11 amend, modify or adopt any equity incentive plan or any transfer, vesting or repurchase provisions in any stock option, restricted stock or similar agreement; or
3.3.12 change the rights, preferences or privileges of the Preferred Stock in any way; or
3.3.13 amend this Subsection 3.3.
3.4 Series E Preferred Stock Protective Provisions. At any time when any shares of Series E Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series E Preferred Stock, voting together as a single class on an as-converted basis, given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.
3.4.1 amend the Certificate of Incorporation in any way which alters or changes the powers, rights, preferences or privileges of the Series E Preferred Stock so as to affect them adversely in a manner that shall not so affect the entire class; or
3.4.2 amend the Certificate of Incorporation to increase the authorized number of shares of Series E Preferred Stock.
3.5 Series D Preferred Stock Protective Provisions. At any time when any shares of Series D Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series D Preferred Stock given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.
3.5.1 amend the Certificate of Incorporation in any way which alters or changes the powers, rights, preferences or privileges of the Series D Preferred Stock so as to affect them adversely in a manner that shall not so affect the entire class; or
3.5.2 amend the Certificate of Incorporation to increase the authorized number of shares of Series D Preferred Stock.
3.6 Series D Special Voting Investor Preferred Stock Protective Provisions. So long as the Special Voting Investor (as such term is defined in that certain Series D Purchase Agreement between the Corporation and the Purchasers listed therein, dated as of July 31, 2019, as amended), holds at least 1,843,318 shares of Series D Preferred Stock, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the Special Voting Investor, given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.
11
3.6.1 create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock that is senior to the Series D Preferred Stock (“Other Senior Securities”), or increase the authorized number of shares of any series of Preferred Stock or increase the authorized number of shares of any Other Senior Securities; and
3.6.2 amend the Certificate of Incorporation in any way which alters or changes Subsection 1.2 (or any subsection thereof) of Article FOURTH, Part B;
3.6.3 amend the Certificate of Incorporation in any way which alters or changes Subsection 2.1 of Article FOURTH, Part B, including the Senior Preferential Liquidation Amount described therein;
3.6.4 amend the Certificate of Incorporation in any way which alters or changes this Subsection 3.6 (or any subsection thereof) of Article FOURTH, Part B.
3.6.5 amend the Certificate of Incorporation in any way which alters or changes Subsection 4.4.4(a) of Article FOURTH, Part B; or
3.6.6 amend the Certificate of Incorporation in any way which alters or changes Subsection 6.1 of Article FOURTH, Part B.
3.7 Series C-1 Preferred Stock and Series C-2 Preferred Stock Protective Provisions. At any time when any shares of Series C-1 Preferred Stock or Series C-2 Preferred Stock (together, the “Series C Preferred Stock”) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series C Preferred Stock, voting together as a single class on an as-converted basis, given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.
3.7.1 amend the Certificate of Incorporation in any way which alters or changes the powers, rights, preferences or privileges of the Series C-1 Preferred Stock or the Series C-2 Preferred Stock so as to affect them adversely in a manner that shall not so affect the entire class; or
3.7.2 amend the Certificate of Incorporation to increase the authorized number of shares of Series C-1 Preferred Stock and/or Series C-2 Preferred Stock.
12
3.8 Series B-1 Preferred Stock and Series B-2 Preferred Stock Protective Provisions. At any time when any shares of Series B-1 Preferred Stock or Series B-2 Preferred Stock (together, the “Series B Preferred Stock”) are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series B Preferred Stock, voting together as a single class on an as-converted basis, given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.
3.8.1 amend the Certificate of Incorporation in any way which alters or changes the powers, rights, preferences or privileges of the Series B-1 Preferred Stock or the Series B-2 Preferred Stock so as to affect them adversely in a manner that shall not so affect the entire class; or
3.8.2 amend the Certificate of Incorporation of the Corporation to increase the authorized number of shares of Series B-1 Preferred Stock and/or Series B-2 Preferred Stock.
3.9 Series A2 Preferred Stock Protective Provisions. At any time when any shares of Series A2 Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series A2 Preferred Stock given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.
3.9.1 amend the Certificate of Incorporation in any way which alters or changes the powers, rights, preferences or privileges of the Series A2 Preferred Stock so as to affect them adversely in a manner that shall not so affect the entire class; or
3.9.2 amend the Certificate of Incorporation to increase the authorized number of shares of Series A2 Preferred Stock.
3.10 Series A1 Preferred Stock Protective Provisions. At any time when shares of Series A1 Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation) the written consent or affirmative vote of the holders of at least a majority of the then outstanding shares of Series A1 Preferred Stock given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect.
3.10.1 amend the Certificate of Incorporation in any way which alters or changes the powers, rights, preferences or privileges of the Series A1 Preferred Stock so as to affect them adversely in a manner that shall not so affect the entire class; or
3.10.2 amend the Certificate of Incorporation to increase the authorized number of shares of Series A1 Preferred Stock.
13
4 Optional Conversion.
The holders of the Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):
4.1 Right to Convert.
4.1.1 Conversion Ratio. Each share of Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Class A Common Stock as is determined by dividing the applicable Original Issue Price for each series of Preferred Stock by the applicable Conversion Price (as defined below) for each series of Preferred Stock in effect at the time of conversion. Notwithstanding the preceding sentence, each share of Preferred Stock may, at the option of the holder thereof in accordance with Subsection 4.3.1, convert, without the payment of additional consideration by the holder thereof, into such number of fully paid and non-assessable shares of Class B Common Stock as is determined by dividing such applicable Original Issue Price by such applicable Conversion Price in effect at the time of conversion of each share of Preferred Stock. The “Conversion Price” for each series of Preferred Stock is as follows: (i) for the Series A1 Preferred Stock, the Conversion Price is the “Series A1 Conversion Price,” which shall initially be $3.00, (ii) for the Series A2 Preferred Stock, the Conversion Price is the “Series A2 Conversion Price,” which shall initially be equal to the Series A2 Original Issue Price, (iii) for the Series B-1 Preferred Stock, the Conversion Price is the “Series B-1 Conversion Price,” which shall initially be equal to the Series B-1 Original Issue Price, (iv) for the Series B-2 Preferred Stock, the Conversion Price is the “Series B-2 Conversion Price,” which shall initially be equal to the Series B-2 Original Issue Price, (v) for the Series C-1 Preferred Stock, the Conversion Price is the “Series C-1 Conversion Price,” which shall initially be equal to the Series C-1 Original Issue Price, (vi) for the Series C-2 Preferred Stock, the Conversion Price is the “Series C-2 Conversion Price,” which shall initially be equal to the Series C-2 Original Issue Price, (vii) for the Series D Preferred Stock, the Conversion Price is the “Series D Conversion Price,” which shall initially be equal to the Series D Original Issue Price, and (viii) for the Series E Preferred Stock, the Conversion Price is the “Series E Conversion Price,” which shall initially be equal to the Series E Original Issue Price. Such initial Conversion Price, and the rate at which shares of Preferred Stock may be converted into shares of Class A Common Stock or Class B Common Stock, shall be subject to adjustment as provided below.
4.1.2 Termination of Conversion Rights. In the event of a notice of redemption of any shares of Preferred Stock pursuant to Section 6, the Conversion Rights of the shares designated for redemption shall terminate at the close of business on the last full day preceding the date fixed for redemption, unless the redemption price is not fully paid on such redemption date, in which case the Conversion Rights for such shares shall continue until such price is paid in full. In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Preferred Stock.
14
4.2 Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.
4.3 Mechanics of Conversion.
4.3.1 Notice of Conversion. In order for a holder of Preferred Stock to voluntarily convert shares of Preferred Stock into shares of Common Stock, such holder shall (a) provide written notice to the Corporation’s transfer agent at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent) that such holder elects to convert all or any number of such holder’s shares of Preferred Stock and, if applicable, any event on which such conversion is contingent, and the number of shares of Class A Common Stock and Class B Common Stock such series of Preferred Stock shall be converted into (in the absence of which, such shares shall be converted into Class A Common Stock) and (b), if such holder’s shares are certificated, surrender the certificate or certificates for such shares of Preferred Stock (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent). Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued. If required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such certificates (or lost certificate affidavit and agreement) and notice shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the shares represented by such certificate shall be deemed to be outstanding of record as of such date. The Corporation shall, as soon as practicable after the Conversion Time, (i) issue and deliver to such holder of Preferred Stock, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a certificate for the number (if any) of the shares of Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, (ii) pay in cash such amount as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion, and (iii) pay all declared but unpaid dividends on the shares of Preferred Stock converted.
15
4.3.2 Reservation of Shares. The Corporation shall at all times when any Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Certificate of Incorporation. Before taking any action which would cause an adjustment reducing the applicable Conversion Price of any series of Preferred Stock below the then par value of the shares of Common Stock issuable upon conversion of such series of Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted applicable Conversion Price.
4.3.3 Effect of Conversion. All shares of Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Subsection 4.2 and to receive payment of any dividends declared but unpaid thereon. Any shares of Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of the applicable series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.
4.3.4 No Further Adjustment. Upon any such conversion, no adjustment to the applicable Conversion Price shall be made for any declared but unpaid dividends on the Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.
4.3.5 Taxes. The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Preferred Stock pursuant to this Section 4. The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.
16
4.4 Adjustments to Conversion Price for Diluting Issues.
4.4.1 Special Definitions. For purposes of this Article Fourth, the following definitions shall apply:
(a) “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.
(b) “Series E Original Issue Date” shall mean the date on which the first share of Series E Preferred Stock was issued.
(c) “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.
(d) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Subsection 4.4.3 below, deemed to be issued) by the Corporation after the Series E Original Issue Date, other than (1) the following shares of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “Exempted Securities”):
(i) shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on any series of Preferred Stock;
(ii) shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Subsection 4.5, 4.6, 4.7 or 4.8;
(iii) shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board, including at least two (2) of the Preferred Directors;
(iv) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security;
(v) shares of Common Stock, Options or Convertible Securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing, real property leasing transaction or other similar transaction that is primarily of a non-equity financing nature, approved by the Board, including at least two (2) of the Preferred Directors;
(vi) shares of Common Stock, Options or Convertible Securities issued pursuant to the acquisition of another corporation by the Corporation by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided, that such issuances are approved by the Board, including at least two (2) of the Preferred Directors;
17
(vii) shares of Common Stock, Options or Convertible Securities issued in connection with a license, collaboration or strategic partnership arrangement and not principally for equity financing purposes, provided, that such issuances are approved by the Board, including at least two (2) of the Preferred Directors;
(viii) 148,880 shares of Common Stock, Options or Convertible Securities issued pursuant to that certain License Agreement between Brigham Young University and the Corporation, dated May 21, 2008, as amended;
(ix) shares of Common Stock, Options or Convertible Securities issued, or deemed issued, pursuant to (A) that certain Series C Preferred Stock Purchase Agreement dated as of January 9, 2017, between the Corporation and the Purchasers named therein, as amended, or (B) that certain Series E Preferred Stock Purchase Agreement dated as of February 23, 2021, between the Corporation and the Purchasers named therein (the “Series E Purchase Agreement”); or
(x) shares of Common Stock issued or issuable upon an IPO.
4.4.2 No Adjustment of Conversion Price. Subject to Subsection 4.4.4, no adjustment in the applicable Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from (i) the holders of at least a majority of the then outstanding shares of Preferred Stock, voting together as a single class, or (ii) notwithstanding subpart (i), if such adjustment purports to affect the Series A1 Conversion Price, Series A2 Conversion Price, Series B-1 Conversion Price, Series B-2 Conversion Price, Series C-1 Conversion Price, Series C-2 Conversion Price, Series D Conversion Price, or Series E Conversion Price alone, then the holders of at least a majority of the then outstanding shares of Series A1 Preferred Stock, Series A2 Preferred Stock, Series B-1 Preferred Stock, Series B-2 Preferred Stock, Series C-1 Preferred Stock, Series C-2 Preferred Stock, Series D Preferred Stock, or Series E Preferred Stock, as applicable, acting together as a separate class, agreeing that no such adjustment shall be made as a result of the issuance or deemed issuance of such Additional Shares of Common Stock.
4.4.3 Deemed Issue of Additional Shares of Common Stock.
(a) If the Corporation at any time or from time to time after the Series E Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.
18
(b) If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to the Conversion Price of any series of Preferred Stock pursuant to the terms of Subsection 4.4.4, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (i) any increase or decrease in the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Security or (ii) any increase or decrease in the consideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective, the adjusted Conversion Price applicable to such series of Preferred Stock computed upon the original issue of such Option or Convertible Security (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Conversion Price as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the applicable Conversion Price for such series of Preferred Stock to an amount which exceeds the lower of (1) the Conversion Price in effect for such series of Preferred Stock immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Security, or (2) the Conversion Price that would have resulted for such series of Preferred Stock from any issuances of Additional Shares of Common Stock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or Convertible Security) between the original adjustment date and such readjustment date.
(c) If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the Conversion Price for any series of Preferred Stock pursuant to the terms of Subsection 4.4.4 (either because the consideration per share (determined pursuant to Subsection 4.4.5) of the Additional Shares of Common Stock subject thereto was equal to or greater than the Conversion Price then in effect for such series of Preferred Stock, or because such Option or Convertible Security was issued before the Series E Original Issue Date), are revised after the Series E Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either (i) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (ii) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Subsection 4.4.3(a)) shall be deemed to have been issued effective upon such increase or decrease becoming effective.
19
(d) Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Security (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the applicable Conversion Price for any series of Preferred Stock pursuant to the terms of Subsection 4.4.4, the applicable Conversion Price shall be readjusted to such Conversion Price as would have obtained had such Option or Convertible Security (or portion thereof) never been issued.
(e) If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the applicable Conversion Price for any series of Preferred Stock provided for in this Subsection 4.4.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Subsection 4.4.3). If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued or amended, any adjustment to the applicable Conversion Price for any series of Preferred Stock that would result under the terms of this Subsection 4.4.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the applicable Conversion Price that such issuance or amendment took place at the time such calculation can first be made.
4.4.4 Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock.
(a) Notwithstanding anything to the contrary (including Subsection 4.4.2), in the event the Corporation shall at any time after the Series E Original Issue Date issues Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 4.4.3), without consideration or for a consideration per share less than the Series D Conversion Price in effect immediately prior to such issuance or deemed issuance, then the Series D Conversion Price shall be reduced, concurrently with such issuance or deemed issuance, to the consideration per share received by the Corporation for such issue or deemed issue of the Additional Shares of Common Stock; provided that if such issuance or deemed issuance was without consideration, then the Corporation shall be deemed to have received an aggregate of $.001 of consideration for each such Additional Share of Common Stock issued or deemed to be issued.
20
(b) In the event the Corporation shall at any time after the Series E Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 4.4.3), without consideration or for a consideration per share less than the applicable Conversion Price for any series of Junior Preferred Stock or Series E Preferred Stock in effect immediately prior to such issue, then the applicable Conversion Price for such series of Preferred Stock shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:
CP2 = CP1* (A + B) ÷ (A + C).
For purposes of the foregoing formula, the following definitions shall apply:
(i) “CP2” shall mean the Conversion Price in effect for each applicable series of Junior Preferred Stock immediately after such issuance or deemed issuance of Additional Shares of Common Stock;
(ii) “CP1” shall mean the Conversion Price in effect for each applicable series of Junior Preferred Stock immediately prior to such issuance or deemed issuance of Additional Shares of Common Stock;
(iii) “A” shall mean the number of shares of Common Stock outstanding immediately prior to such issuance or deemed issuance of Additional Shares of Common Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issuance or deemed issuance or upon conversion or exchange of Convertible Securities (including the Preferred Stock) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);
(iv) “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued or deemed issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CP1); and
(v) “C” shall mean the number of such Additional Shares of Common Stock issued in such transaction.
21
4.4.5 Determination of Consideration. For purposes of this Subsection 4.4, the consideration received by the Corporation for the issuance or deemed issuance of any Additional Shares of Common Stock shall be computed as follows:
(a) Cash and Property: Such consideration shall:
(i) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest;
(ii) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board; and
(iii) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board.
(b) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Subsection 4.4.3, relating to Options and Convertible Securities, shall be determined by dividing the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.
4.4.6 Multiple Closing Dates. In the event the Corporation shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to the applicable Conversion Price for any series of Preferred Stock pursuant to the terms of Subsection 4.4.4 then, upon the final such issuance, the applicable Conversion Price for such series of Preferred Stock shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).
22
4.5 Adjustment for Stock Splits and Combinations. If the Corporation shall at any time or from time to time after the Series E Original Issue Date effect a subdivision of the outstanding Common Stock, the applicable Conversion Price in effect for each series of Preferred Stock immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding. If the Corporation shall at any time or from time to time after the Series E Original Issue Date combine the outstanding shares of Common Stock, the applicable Conversion Price in effect for each series of Preferred Stock immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.
4.6 Adjustment for Certain Dividends and Distributions. In the event the Corporation at any time or from time to time after the Series E Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the applicable Conversion Price in effect for each series of Preferred Stock immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the applicable Conversion Price then in effect for such series of Preferred Stock by a fraction:
(a) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and
(b) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.
Notwithstanding the foregoing, (i) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the applicable Conversion Price for each series of Preferred Stock shall be recomputed accordingly as of the close of business on such record date and thereafter the applicable Conversion Price for each series of Preferred Stock shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (ii) that no such adjustment shall be made if the holders of Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.
23
4.7 Adjustments for Other Dividends and Distributions. In the event the Corporation at any time or from time to time after the Series E Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 1 do not apply to such dividend or distribution, then and in each such event the holders of Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Preferred Stock had been converted into Common Stock on the date of such event.
4.8 Adjustment for Merger or Reorganization, etc. Subject to the provisions of Subsection 2.3, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 4.4, 4.6 or 4.7), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of such series of Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the holders of the Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments to the applicable Conversion Price for such series of Preferred Stock) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of such series of Preferred Stock. For the avoidance of doubt, nothing in this Subsection 4.8 shall be construed as preventing the holders of Preferred Stock from seeking any appraisal rights to which they are otherwise entitled under the General Corporation Law in connection with a merger triggering an adjustment hereunder, nor shall this Subsection 4.8 be deemed conclusive evidence of the fair value of the shares of Preferred Stock in any such appraisal proceeding.
4.9 Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price for any series of Preferred Stock pursuant to this Section 4, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than ten (10) days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of such series of Preferred Stock a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which such series of Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Preferred Stock (but in any event not later than ten (10) days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Conversion Price then in effect for each series of Preferred Stock that is so adjusted or readjusted, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of such series of Preferred Stock.
24
4.10 Notice of Record Date. In the event:
(a) the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or
(b) of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, or any Deemed Liquidation Event; or
(c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation, then, and in each such case, the Corporation will send or cause to be sent to the holders of the Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Preferred Stock and the Common Stock. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.
5 Mandatory Conversion.
5.1 Trigger Events. Upon either (a) the closing of the sale of shares of Common Stock to the public at a price of at least 1.2 times (1.2X) the Series D Original Issue Price (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock), in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $40,000,000 of proceeds, net of the underwriting discount and commissions, to the Corporation (a “Qualified Public Offering”) or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least a majority of the then outstanding shares of Preferred Stock, voting together as a single class on an as-converted basis (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”), (i) all outstanding shares of Preferred Stock shall automatically be converted into shares of Class A Common Stock, at the then effective conversion rate as calculated pursuant to Subsection 4.1.1 and (ii) such shares may not be reissued by the Corporation; provided that, a holder of shares of Preferred Stock may elect, upon written notice to the Corporation (delivered as provided in Section 4.3.1 of Subsection B of this Article Fourth)) at least seven days prior to the closing of the Qualified Public Offering, to have all or a portion of its shares of Preferred Stock automatically convert into shares of Class B Common Stock at the then effective conversion rate as calculated pursuant to Subsection 4.1.1.
25
5.2 Procedural Requirements. All holders of record of shares of Preferred Stock shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this Section 5. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of shares of Preferred Stock in certified form shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the Preferred Stock converted pursuant to Subsection 5.1, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the Mandatory Conversion Time (notwithstanding the failure of the holder or holders thereof to surrender certificates at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the next sentence of this Subsection 5.2. As soon as practicable after the Mandatory Conversion Time and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for Preferred Stock, the Corporation shall (a) issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof and (b) pay cash as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the shares of Preferred Stock converted. Such converted Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly.
6 Redemption.
6.1 General. Unless prohibited by Delaware law governing distributions to stockholders, shares of the Preferred Stock shall be redeemed by the Corporation at a price equal to the applicable Total Preferred Liquidation Amount (the “Redemption Price”), in two (2) equal annual installments commencing not more than sixty (60) days after receipt by the Corporation at any time on or after the fifth (5th) anniversary of the Series E Original Issue Date, from the holders of at least a majority of the shares of the Senior Preferred Stock then outstanding of written notice requesting redemption of all shares of Preferred Stock (the “Redemption Request”). Upon receipt of a Redemption Request, the Corporation shall calculate the aggregate amount due to holders of the Preferred Stock if the applicable Total Preferred Liquidation Amount were distributed in full to such holders pursuant to Subsections 2.1 and 2.2 (such amount, the “Aggregate Redemption Amount”) and shall apply all of its assets to any such redemption, and to no other corporate purpose, except to the extent prohibited by Delaware law governing distributions to stockholders. The date of each such installment shall be referred to as a “Redemption Date” and the one-half of the Aggregate Redemption Amount due on each Redemption Date shall be referred to as the “Redemption Installment Amount”. On each Redemption Date, the Corporation shall use the Redemption Installment Amount to redeem all outstanding shares of Senior Preferred Stock and Junior Preferred Stock at a price per share equal to the amount that such holders would have received if the Redemption Installment Amount were distributed to such holders in connection with a Deemed Liquidation Event pursuant to Subsections 2.1 and 2.2. If on any Redemption Date Delaware law governing distributions to stockholders prevents the Corporation from redeeming all shares of Preferred Stock to be redeemed, subject to the priority of payments set forth in Subsections 2.1 and 2.2, the Corporation shall ratably redeem the maximum number of shares that it may redeem consistent with such law, and shall redeem the remaining shares as soon as it may lawfully do so under such law.
26
6.2 Redemption Notice. The Corporation shall send written notice of the mandatory redemption (the “Redemption Notice”) to each holder of record of Preferred Stock not less than ten (10) business days prior to each Redemption Date. Each Redemption Notice shall state:
(a) the number and series of shares of Preferred Stock held by the holder that the Corporation shall redeem on the Redemption Date specified in the Redemption Notice;
(b) the Redemption Date and the Redemption Price;
(c) the date upon which the holder’s right to convert such shares terminates (as determined in accordance with Subsection 4.1); and
(d) for holders of shares in certificated form, that the holder is to surrender to the Corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Preferred Stock to be redeemed.
6.3 Surrender of Certificates; Payment. On or before the applicable Redemption Date, each holder of shares of Preferred Stock to be redeemed on such Redemption Date, unless such holder has exercised his, her or its right to convert such shares as provided in Section 4, shall, if a holder of shares in certificated form, surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares of Preferred Stock represented by a certificate are redeemed, a new certificate representing the unredeemed shares of such series of Preferred Stock shall promptly be issued to such holder.
27
6.4 Rights Subsequent to Redemption. If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the Redemption Price payable upon redemption of the shares of Preferred Stock to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that any certificates evidencing any of the shares of Preferred Stock so called for redemption shall not have been surrendered, all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the Redemption Price without interest upon surrender of any such certificate or certificates therefor.
7 Redeemed or Otherwise Acquired Shares. Any shares of Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Preferred Stock following redemption.
8 Waiver. Except as otherwise set forth herein, any of the rights, powers, preferences and other terms of any series of Preferred Stock set forth herein may be waived on behalf of all holders of such series of Preferred Stock by the affirmative written consent or vote of the holders of at least a majority of the shares of such series of Preferred Stock then outstanding acting together as a separate class.
9 Notices. Any notice required or permitted by the provisions of this Article Fourth to be given to a holder of shares of Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Corporation, or given by electronic communication in compliance with the provisions of the General Corporation Law, and shall be deemed sent upon such mailing or electronic transmission.
Fifth: Subject to any additional vote required by this Sixth Amended and Restated Certificate of Incorporation or Bylaws, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the Bylaws.
Sixth: Subject to any additional vote required by this Sixth Amended and Restated Certificate of Incorporation, the number of directors of the Corporation shall be determined in the manner set forth in the Bylaws.
Seventh: Elections of directors need not be by written ballot unless the Bylaws shall so provide.
Eighth: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws.
Ninth: To the fullest extent permitted by law, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the General Corporation Law or any other law of the State of Delaware is amended after approval by the stockholders of this Article Ninth to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law as so amended.
28
Any repeal or modification of the foregoing provisions of this Article Ninth by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.
Tenth: To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which General Corporation Law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted by Section 145 of the General Corporation Law.
Any amendment, repeal or modification of the foregoing provisions of this Article Tenth shall not (a) adversely affect any right or protection of any director, officer or other agent of the Corporation existing at the time of such amendment, repeal or modification or (b) increase the liability of any director of the Corporation with respect to any acts or omissions of such director, officer or agent occurring prior to, such amendment, repeal or modification.
Eleventh: The Corporation renounces, to the fullest extent permitted by law, any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An “Excluded Opportunity” is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, employee, affiliate or agent of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (collectively, the persons in clauses (i) and (ii) are “Covered Persons”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation.
Twelfth: Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law or the Corporation’s certificate of incorporation or bylaws or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. If any provision or provisions of this Article Twelfth shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article Twelfth (including, without limitation, each portion of any sentence of this Article Twelfth containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby.
29
Thirteenth: In connection with repurchases by the Corporation of its Common Stock from employees, officers, directors, advisors, consultants or other persons performing services for the Corporation or any subsidiary pursuant to agreements under which the Corporation has the option to repurchase such shares at cost upon the occurrence of certain events, such as the termination of employment, Sections 502 and 503 of the California Corporations Code shall not apply in all or in part with respect to such repurchases.
* * *
3. Pursuant to Section 228(a) of the General Corporation Law, the holders of outstanding shares of the Corporation having no less than the minimum number of votes that would be necessary to authorize or take such actions at a meeting at which all shares entitled to vote thereon were present and voted, consented to the adoption of the aforesaid amendments without a meeting, without a vote and without prior notice and that written notice of the taking of such actions has been given in accordance with Section 228(e) of the General Corporation Law.
4. That this Sixth Amended and Restated Certificate of Incorporation, which restates and integrates and further amends the provisions of this corporation’s Certificate of Incorporation, as amended, has been duly adopted in accordance with Sections 141, 228, 242 and 245 of the General Corporation Law.
30
IN WITNESS WHEREOF, this Sixth Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on this 29th day of March 2021.
By: | /s/ Gregory C. Critchfield, M.D., M.S. | |
Gregory C. Critchfield, M.D., M.S. | ||
President and Chief Executive Officer |
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
SERA PROGNOSTICS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the “Corporation”) is Sera Prognostics, Inc. The date of filing of the Certificate of Incorporation of the Corporation with the Secretary of State of the State of Delaware was January 17, 2008. Thereafter a Restated Certificate of Incorporation was filed on March 29, 2021 (the “Restated Certificate”).
2. The Restated Certificate of Incorporation is hereby amended to change the authorized capitalization of the Corporation by striking out the first sentence of the first paragraph of Article FOURTH of the Restated Certificate in its entirety and by substituting in lieu of said first sentence of the first paragraph of Article FOURTH, the following sentence:
“The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 80,000,000 shares of Class A Common Stock, $0.0001 par value per share (“Class A Common Stock”), (ii) 3,000,000 shares of Class B Common Stock, $0.0001 par value per share (“Class B Common Stock”) and (iii) 51,551,681 shares of Preferred Stock, $0.0001 par value per share (“Preferred Stock”). ”
3. The Restated Certificate of Incorporation is hereby further amended to change the preferred stock designations of the Corporation by striking out the first paragraph of Part B of Article FOURTH of the Restated Certificate in its entirety and by substitution in lieu of said first paragraph of Part B of Article FOURTH, the following paragraph:
“1,390 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series A1 Preferred Stock”, 7,941,499 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series A2 Preferred Stock”, 2,060,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series B-1 Preferred Stock”, 5,012,500 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series B-2 Preferred Stock”, 5,521,905 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series C-1 Preferred Stock”, 1,510,000 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series C-2 Preferred Stock”, 11,975,172 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series D Preferred Stock”, and 17,529,215 shares of the authorized Preferred Stock of the Corporation are hereby designated “Series E Preferred Stock”, with the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. “Junior Preferred Stock” means the Series A1 Preferred Stock, the Series A2 Preferred Stock, the Series B-1 Preferred Stock, the Series B-2 Preferred Stock, the Series C-1 Preferred Stock and the Series C-2 Preferred Stock. “Senior Preferred Stock” means the Series D Preferred Stock and the Series E Preferred Stock. Unless otherwise indicated, references to “Sections” or “Subsections” in this Part B of this Article Fourth refer to sections and subsections of Part B of this Article Fourth.”
4. The Restated Certificate of Incorporation is hereby further amended to change the preferential payments to holders of Senior Preferred Stock of the Corporation by striking out Section 2.1 of Article FOURTH of the Restated Certificate in its entirety and by substitution in lieu of said Section 2.1 of Article FOURTH, the following Section 2.1:
“2.1 Preferential Payments to Holders of Senior Preferred Stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event (as defined below), before any distribution or payment shall be made to the holders of any Common Stock or the holders of shares of any other series of Preferred Stock, the holders of shares of Senior Preferred Stock shall be entitled to be paid out of the assets of the Corporation legally available for distribution to its stockholders, and in the event of a Deemed Liquidation Event (as defined below), the holders of shares of Senior Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the Available Proceeds (as defined below), as applicable, before any payment shall be made to the holders of Common Stock, the Junior Preferred Stock or any other class or series of stock ranking on liquidation junior to the Senior Preferred Stock and together with any shares of Preferred Stock ranking on liquidation pari passu with the Senior Preferred Stock by reason of their ownership thereof, an amount per share equal to (i) with respect to each share of Series D Preferred Stock, the greater of (a) one and one-half (1.5) times the Series D Original Issue Price of such share of Series D Preferred Stock plus all declared and unpaid dividends on such share of Series D Preferred Stock and (b) such amount per share as would have been payable had all shares of the Series D Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event, and (ii) with respect to each share of Series E Preferred Stock, the greater of (a) one and one-half (1.5) times the Original Issue Price of such share of Series E Preferred Stock plus all declared and unpaid dividends on such share of Series E Preferred Stock and (b) such amount per share as would have been payable had all shares of Series E Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable in respect of Senior Preferred Stock pursuant to this sentence is hereinafter referred to as the “Senior Preferential Liquidation Amount”). If upon any such liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Senior Preferred Stock or any shares of Preferred Stock ranking on liquidation pari passu with the Senior Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1, the holders of shares of Senior Preferred Stock or any shares of Preferred Stock ranking on liquidation pari passu with the Senior Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.”
2
5. The Restated Certificate of Incorporation is hereby further amended to change the definition of “Qualified Public Offering” by striking out Section 5.1 of Article FOURTH of the Restated Certificate in its entirety and by substitution in lieu of said Section 5.1 of Article FOURTH, the following Section 5.1:
“5.1 Trigger Events. Upon either (a) the closing of the sale of shares of Common Stock to the public at a price of at least 1.2 times (1.2X) the Series E Original Issue Price (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock), in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $40,000,000 of proceeds, net of the underwriting discount and commissions, to the Corporation (a “Qualified Public Offering”) or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least a majority of the then outstanding shares of Preferred Stock, voting together as a single class on an as-converted basis (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “Mandatory Conversion Time”), (i) all outstanding shares of Preferred Stock shall automatically be converted into shares of Class A Common Stock, at the then effective conversion rate as calculated pursuant to Subsection 4.1.1 and (ii) such shares may not be reissued by the Corporation; provided that, a holder of shares of Preferred Stock may elect, upon written notice to the Corporation (delivered as provided in Section 4.3.1 of Subsection B of this Article Fourth)) at least seven days prior to the closing of the Qualified Public Offering, to have all or a portion of its shares of Preferred Stock automatically convert into shares of Class B Common Stock at the then effective conversion rate as calculated pursuant to Subsection 4.1.1.”
6. This Certificate of Amendment to the Restated Certificate has been duly adopted in accordance with the provisions of Sections 141, 228 and 242 of the Delaware General Corporation Law.
7. Pursuant to Section 228(a) of the Delaware General Corporation Law, the holders of outstanding shares of the Corporation having no less than the minimum number of votes that would be necessary to authorize or take such actions at a meeting at which all shares entitled to vote thereon were present and voted, consented to the adoption of the aforesaid amendments without a meeting, without a vote and without prior notice and that written notice of the taking of such actions has been given in accordance with Section 228(e) of the Delaware General Corporation Law.
3
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed this 26th day of April, 2021.
SERA PROGNOSTICS, INC. | ||
By: | /s/ Gregory C. Critchfield, M.D. | |
Gregory C. Critchfield, M.D. | ||
President |
4
Exhibit 3.3
AMENDED AND RESTATED BYLAWS
OF
SERA PROGNOSTICS, INC.
(a Delaware corporation)
ARTICLE I — MEETINGS OF STOCKHOLDERS
1.1 Place of Meetings; Telephonic Meetings. Meetings of stockholders of Sera Prognostics, Inc. (the “Corporation”) shall be held at any place, within or outside the State of Delaware, designated by the Corporation’s board of directors (the “Board”). The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office. Unless otherwise restricted by the certificate of incorporation or these bylaws, the stockholders may participate in a meeting by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
1.2 Annual Meeting. An annual meeting of stockholders shall be held for the election of directors at such date and time as may be designated by resolution of the Board from time to time. Any other proper business may be transacted at the annual meeting. The Corporation shall not be required to hold an annual meeting of stockholders provided that (i) the stockholders are permitted to act by written consent under the Corporation’s certificate of incorporation and these bylaws, (ii) the stockholders take action by written consent to elect directors, and (iii) the stockholders unanimously consent to such action or, if such consent is less than unanimous, all of the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action.
1.3 Special Meeting. A special meeting of the stockholders may be called at any time by the Board, chairperson of the Board, chief executive officer or president (in the absence of a chief executive officer) or by one or more stockholders holding shares in the aggregate entitled to cast not less than ten percent (10%) of the votes at that meeting.
If any person(s) other than the Board calls a special meeting, the request shall:
(i) be in writing;
(ii) specify the time of such meeting and the general nature of the business proposed to be transacted; and
(iii) be delivered personally or sent by registered mail or by facsimile transmission to the chairperson of the Board, the chief executive officer, the president (in the absence of a chief executive officer) or the secretary of the Corporation.
The officer(s) receiving the request shall cause notice to be promptly given to the stockholders entitled to vote at such meeting, in accordance with the provisions of Sections 1.4 and 1.5 of these bylaws, that a meeting will be held at the time requested by the person or persons calling the meeting. No business may be transacted at such special meeting other than the business specified in such notice to stockholders. Nothing contained in this paragraph of this Section 1.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.
1.4 Notice of Stockholders’ Meetings. All notices of meetings of stockholders shall be sent or otherwise given in accordance with either Section 1.5 or Section 7.1 of these bylaws not less than ten (10) or more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
1.5 Manner of Giving Notice; Affidavit of Notice. Notice of any meeting of stockholders shall be given:
(i) if mailed, when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the Corporation’s records;
(ii) if transmitted by private carrier, upon the day delivery is guaranteed by the carrier;
(iii) if personally delivered, upon delivery; or
(iv) if electronically transmitted as provided in Section 7.1 of these bylaws.
An affidavit of the secretary or an assistant secretary of the Corporation or of the transfer agent or any other agent of the Corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
1.6 Quorum. Except as otherwise provided by law, the certificate of incorporation or these bylaws, at each meeting of stockholders the presence in person or by proxy of the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented.
2
1.7 Adjourned Meeting; Notice. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of the adjourned meeting if the time, place if any thereof, and the means of remote communications if any by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the continuation of the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
1.8 Conduct of Business. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in his or her absence by the Vice Chairman of the Board, if any, or in his or her absence by the President, or in his or her absence by a Vice President, or in the absence of the foregoing persons by a chairperson designated by the Board, or in the absence of such designation by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting. The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business.
1.9 Voting. The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 1.11 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.
Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. Voting at meetings of stockholders need not be by written ballot and need not be conducted by inspectors of election unless so determined by the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote thereon which are present in person or by proxy at such meeting. At all meetings of stockholders for the election of directors a plurality of the votes cast shall be sufficient to elect. All other elections and questions shall, unless otherwise provided by law, the certificate of incorporation or these bylaws, be decided by the vote of the holders of shares of stock having a majority of the votes which could be cast by the holders of all shares of stock entitled to vote thereon which are present in person or represented by proxy at the meeting.
1.10 Stockholder Action by Written Consent Without a Meeting. Unless otherwise provided in the certificate of incorporation, any action required by the DGCL to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
3
Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation as provided in Section 228 of the DGCL. In the event that the action which is consented to is such as would have required the filing of a certificate under any provision of the DGCL, if such action had been voted on by stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning any vote of stockholders, that written consent has been given in accordance with Section 228 of the DGCL.
1.11 Record Date for Stockholder Notice; Voting; Giving Consents. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which record date:
(i) in the case of determination of stockholders entitled to notice of or to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting;
(ii) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board; and
(iii) in the case of determination of stockholders for any other action, shall not be more than sixty (60) days prior to such other action.
If no record date is fixed by the Board:
(i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held;
(ii) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, or, if prior action by the Board is required by law, shall be at the close of business on the day on which the Board adopts the resolution taking such prior action; and
4
(iii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.
1.12 Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL.
1.13 List of Stockholders Entitled to Vote. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.
ARTICLE II — DIRECTORS
2.1 Powers. Subject to the provisions of the DGCL and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board.
2.2 Number of Directors. The number of directors shall be determined from time to time by resolution of the Board, provided the Board shall consist of at least one member. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
5
2.3 Election, Qualification and Term of Office of Directors. Except as provided in Section 2.4 of these bylaws, directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors. Each director, including a director elected to fill a vacancy, shall hold office until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.
2.4 Resignation and Vacancies. Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this Section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these bylaws:
(i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.
(ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.
If at any time, by reason of death or resignation or other cause, the Corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL.
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.
6
2.5 Place of Meetings; Meetings by Telephone. The Board may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
2.6 Regular Meetings. Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.
2.7 Special Meetings; Notice.
Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board, the chief executive officer, the president, the secretary or any two directors.
Notice of the time and place of special meetings shall be:
(i) delivered personally by hand, by courier or by telephone;
(ii) sent by United States first-class mail, postage prepaid;
(iii) sent by facsimile; or
(iv) sent by electronic mail,
directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Corporation’s records.
If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.
7
2.8 Quorum. At all meetings of the Board, a majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.
2.9 Board Action by Written Consent Without a Meeting. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
2.10 Fees and Compensation of Directors. Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.
2.11 Approval of Loans to Officers. The Corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiary, including any officer or employee who is a director of the Corporation or its subsidiary, whenever, in the judgment of the Board, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board shall approve, including, without limitation, a pledge of shares of stock of the Corporation.
2.12 Removal of Directors. Unless otherwise restricted by statute, the certificate of incorporation or these bylaws, any director or the entire Board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.
ARTICLE III — COMMITTEES
3.1 Committees of Directors. The Board may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation,
8
3.2 Committee Minutes. Each committee shall keep regular minutes of its meetings and report the same to the Board when required.
3.3 Meetings and Action of Committees. Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
(i) Section 2.5 (place of meetings and meetings by telephone);
(ii) Section 2.6 (regular meetings);
(iii) Section 2.7 (special meetings and notice);
(iv) Section 2.8 (quorum);
(v) Section 2.9 (action without a meeting); and
(vi) Section 6.10 (waiver of notice)
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However:
(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;
(ii) special meetings of committees may also be called by resolution of the Board; and
(iii) notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.
9
ARTICLE IV — OFFICERS
4.1 Officers. The initial officers of the Corporation shall be a Chairman of the Board, Chief Executive Officer, Vice President - Development, a Secretary and a Chief Financial Officer. The Corporation may also have, at the discretion of the Board, a chairperson, one or more vice presidents, one or more assistant vice presidents, one or more assistant treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.
4.2 Appointment of Officers. The Board shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 4.3 of these bylaws, subject to the rights, if any, of an officer under any contract of employment.
4.3 Subordinate Officers. The Board may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.
4.4 Removal and Resignation of Officers. Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.
4.5 Vacancies in Offices. Any vacancy occurring in any office of the Corporation shall be filled by the Board or as provided in Section 4.2.
4.6 Representation of Shares of Other Corporations. The chairperson of the Board, the president, any vice president, the treasurer, the secretary or assistant secretary of the Corporation, or any other person authorized by the Board or the president or a vice president, is authorized to vote, represent, and exercise on behalf of the Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
4.7 Authority and Duties of Officers. All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated from time to time by the Board or the stockholders and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.
10
4.8 Salaries. The salaries of the officers shall be fixed from time to time by the Board, and no officer shall be prevented from receiving such salary by reason of the fact that such officer is also a director of the Corporation.
ARTICLE V — RECORDS AND REPORTS
5.1 Maintenance and Inspection of Records. The Corporation shall, either at its principal executive office or at such place or places as designated by the Board, keep a record of the minutes of all meetings of its stockholders and the Board, a record of all actions taken by the stockholders and the Board without a meeting, a record of all actions taken by a committee of the Board exercising authority of the Board on behalf of the Corporation, a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent so to act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal executive office.
5.2 Inspection by Directors. Any director shall have the right to examine the Corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the Corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.
5.3 Annual Report. The Corporation shall cause an annual report to be sent to the stockholders of the Corporation to the extent required by applicable law. If and so long as there are fewer than one hundred (100) holders of record of the Corporation’s shares, the requirement of sending of an annual report to the stockholders of the Corporation is expressly waived (to the extent permitted under applicable law).
11
ARTICLE VI — GENERAL MATTERS
6.1 Stock Certificates; Partly Paid Shares. The shares of the Corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation by the chairperson or vice-chairperson of the Board, or the president or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the Corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
6.2 Special Designation on Certificates. If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
6.3 Lost Certificates. Except as provided in this Section 6.3, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
6.4 Construction; Definitions. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.
12
6.5 Dividends. The Board, subject to any restrictions contained in either (i) the DGCL, or (ii) the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the Corporation’s capital stock.
The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.
6.6 Fiscal Year. The fiscal year of the Corporation shall be the twelve (12)-month period ending December 31 in each year and may be changed by the Board.
6.7 Seal. The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
6.8 Stock Transfer Agreements. The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
6.9 Registered Stockholders. The Corporation:
(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;
(ii) shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and
(iii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
6.10 Waiver of Notice. Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.
13
ARTICLE VII — NOTICE BY ELECTRONIC TRANSMISSION
7.1 Notice by Electronic Transmission. Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the Corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if:
(i) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent; and
(ii) such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice.
However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed given:
(i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;
(ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;
(iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and
(iv) if by any other form of electronic transmission, when directed to the stockholder.
An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
7.2 Definition of Electronic Transmission. An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
7.3 Inapplicability. Notice by a form of electronic transmission shall not apply to Sections 164, 296, 311, 312 or 324 of the DGCL.
14
ARTICLE VIII — INDEMNIFICATION
8.1 Indemnification of Directors and Officers. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by the DGCL as it presently exists or may hereafter be amended, any director or officer of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding. The Corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized by the Board.
8.2 Indemnification of Others. The Corporation shall have the power to indemnify and hold harmless, to the extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding.
8.3 Prepayment of Expenses. The Corporation shall pay the expenses incurred by any officer or director of the Corporation, and may pay the expenses incurred by any employee or agent of the Corporation, in defending any Proceeding in advance of its final disposition; provided, however, that the payment of expenses incurred by a person in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article VIII or otherwise.
8.4 Determination; Claim. If a claim for indemnification or payment of expenses under this Article VIII is not paid in full within sixty days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.
8.5 Non-Exclusivity of Rights. The rights conferred on any person by this Article VIII shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the certificate of incorporation, these bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
15
8.6 Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the DGCL.
8.7 Other Indemnification. The Corporation’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.
8.8 Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article VIII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.
ARTICLE IX — AMENDMENTS
These bylaws may be adopted, amended or repealed by the stockholders entitled to vote. However, the Corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws.
16
SERA PROGNOSTICS, INC.
CERTIFICATE OF ADOPTION OF AMENDED AND RESTATED BYLAWS
The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of Sera Prognostics, Inc., a Delaware corporation (the “Corporation”), and that the foregoing Amended and Restated Bylaws, comprising 16 pages, were adopted as the Corporation’s Amended and Restated Bylaws on November 8, 2011 by the Corporation’s Board of Directors.
The undersigned has executed this Certificate effective as of November 8, 2011.
/s/ Jonathan L. Kravetz, Secretary | |
Jonathan L. Kravetz, Secretary |
Exhibit 4.2
Execution Version
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
WARRANT TO PURCHASE COMMON STOCK
Corporation: Number of Shares: Class of Stock: Initial Exercise Price: Issue Date: Expiration: |
Sera Prognostics, Inc., a Delaware corporation [__] Common Stock, $0.0001 par value per share $4.34 per share July 31, 2019 July 31, 2029 |
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the receipt of which is hereby acknowledged, [__] or its assignee or transferee (“Holder”) is entitled to purchase the number of fully paid and nonassessable shares of Common Stock, $0.0001 par value per share (the “Shares”) of Sera Prognostics, Inc. (the “Company”) at the initial exercise price per Share (the “Warrant Price”) all as set forth above and as adjusted pursuant to Article 2 of this warrant, subject to the provisions and upon the terms and conditions set forth in this warrant.
ARTICLE 1
EXERCISE
1.1 Method of Exercise. Holder may exercise this warrant by delivering this warrant, a duly executed Notice of Exercise in substantially the form attached as Appendix 1, and a duly executed Joinder to the Third Amended and Restated Investors’ Rights Agreement, dated as of July 31, 2019, between the Company and certain stockholders of the Company (as amended from time to time, the “Investors’ Rights Agreement”), and the Third Amended and Restated Voting Agreement, dated as of July 31, 2019, between the Company and certain stockholders of the Company (as amended from time to time), in substantially the form attached as Appendix 2 to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this warrant as specified in Section 1.1, Holder may from time to time convert this warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share. The fair market value of the Shares shall be determined pursuant to Section 1.3.
1.3 Fair Market Value. If the Shares are traded regularly in a public market, the fair market value of the Shares shall be the closing price of the Shares reported for the business day immediately before Holder delivers its Notice of Exercise to the Company. If the Shares are not regularly traded in a public market, the Board of Directors of the Company and the Holder shall jointly determine fair market value in their collective reasonable good faith judgment; provided, that if the Board of Directors of the Company and the Holder are unable to agree on the fair market value per share of the Shares within a reasonable period of time (not to exceed twenty days from the Company’s receipt of the Notice of Exercise), such fair market value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Board of Directors of the Company and the Holder (the “FMV Dispute Proviso”). The determination of such firm shall be final and conclusive, and the fees and expenses of such firm shall be borne equally by the Company and the Holder. In determining the Fair Market Value of the Shares, an orderly sale transaction between a willing buyer and a willing seller shall be assumed, using valuation techniques then prevailing in the securities industry without regard to the lack of liquidity of the Shares due to any restrictions (contractual or otherwise) applicable thereto or any discount for minority interests and assuming full disclosure of all relevant information and a reasonable period of time for effectuating such sale and assuming the sale of all of the issued and outstanding Common Stock (including fractional interests) calculated on a fully diluted basis to include the conversion or exchange of all securities then outstanding that are convertible into or exchangeable for Common Stock and the exercise of all rights and warrants then outstanding and exercisable to purchase shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock; provided, that such assumption shall not include those securities, rights and warrants (a) owned or held by or for the account of the Company or any of its subsidiaries, or (b) convertible or exchangeable into Common Stock where the conversion, exchange or exercise price per share is greater than the Fair Market Value.
1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or converts this warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this warrant has not been fully exercised or converted and has not expired, a new warrant representing the Shares not so acquired.
1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender and cancellation of this warrant, the Company at its expense shall execute and deliver, in lieu of this warrant, a new warrant of like tenor.
1.6 Treatment of Warrant Upon Acquisition of the Company.
1.6.1 “Acquisition.” For the purpose of this warrant, “Acquisition” means (a) merger or consolidation of the Company into or with another entity, or a plan of exchange between the Company and any other entity, or the merger or consolidation of any other entity into or with the Company (except for a merger, consolidation or exchange in which the holders of the voting power of the capital stock of the Company immediately prior to such merger, consolidation or exchange continue to hold at least 50% of the voting power of the capital stock of the Company or the surviving or acquiring entity), (b) sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company, or (c) the acquisition of ownership by any Person or group of more than 50% of the Company’s voting stock.
2
1.6.2 Exercise Upon Acquisition. Upon the closing of any Acquisition in which the consideration to be received by the Company’s stockholders consists of cash, marketable securities, or a combination of both cash and marketable securities, this warrant shall be deemed to have been automatically converted pursuant to Section 1.2, and thereafter Holder shall participate in the Acquisition on the same terms as other holders of the same class of securities of the Company.
1.6.3 Assumption of Warrant. The Company shall not effect any Acquisition not referred to in Section 1.6.2 unless, prior to the consummation thereof, the successor person or entity (if other than the Company) resulting from such transaction, shall assume, by written instrument satisfactory to the Holder, the obligations of this warrant, upon which this warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this warrant. Alternatively (and notwithstanding anything to the contrary herein), with respect to any Acquisition, Holder shall have the right to elect prior to the consummation thereof, to give effect to the exercise/ conversion rights contained in Section 1.2.
ARTICLE
2
ADJUSTMENTS TO THE SHARES
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend or any other distribution on its Common Stock payable in Common Stock, cash or other securities, or subdivides the outstanding Common Stock into a greater amount of Common Stock, then upon exercise of this warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities, cash or other property to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend, distribution or subdivision occurred (subject to further adjustment in the event the rights of any such securities or property are subsequently amended to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof).
2.2 Reclassification, Exchange or Substitution. Upon any reclassification, exchange, consolidation, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this warrant, Holder shall be entitled to receive, upon exercise or conversion of this warrant, the number and kind of securities and property that Holder would have received for the Shares if this warrant had been exercised in full immediately before such reclassification, exchange, consolidation, substitution, or other event (subject to further adjustment in the event the rights of any such securities or property are subsequently amended to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof). The Company or its successor shall promptly issue to Holder a new warrant for such new securities or other property. The new warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.
3
2.3 Adjustments for Combinations, Etc. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a greater number of shares, the Warrant Price shall be proportionately decreased.
2.4 Adjustment to Warrant Price Upon Issuance of Common Stock. Except as provided in Section 2.5 and except in the case of an event described in either Section 2.1 or Section 2.2, if the Company shall, at any time or from time to time after the Issue Date, issues Additional Shares of Common Stock (as defined in the Company’s Certificate of Incorporation) (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 4.4.3 of Section B of Article Fourth of the Company’s Certificate of Incorporation) without consideration or for consideration per share (determined in accordance with Section 4.4.5 of Section B of Article Fourth of the Company’s Certificate of Incorporation) less than the Warrant Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then immediately upon such issuance or sale (or deemed issuance or sale), the Warrant Price in effect immediately prior to such issuance or sale (or deemed issuance or sale) shall be reduced (and in no event increased) to a Warrant Price equal to 120% of the lowest price per share at which any such share of Common Stock has been issued or sold (or is deemed to have been issued or sold); provided, that if the Warrant Price as so adjusted would be less than the Adjustment Floor, then the Warrant Price shall instead be adjusted to be equal to the Adjustment Floor. The term “Adjustment Floor” shall mean $3.47, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock.
2.5 Exceptions to Adjustment Upon Issuance of Common Stock. There shall be no adjustment pursuant to Section 2.4 to the Warrant Price with respect to any Excluded Issuance. “Excluded Issuances” means any issuance or sale by the Company after the Issue Date of: (a) Shares issued upon the exercise of warrants issued pursuant to the Purchase Agreement (as defined below); and (b) “Exempted Securities” (as defined in the Company’s Certificate of Incorporation).
2.6 Effect of Certain Events on Adjustment to Warrant Price. For purposes of determining the adjusted Warrant Price under Section 2.4, the provisions of (a) clauses (b) through (e) of Subsection 4.4.3 of Section B of Article Fourth of the Company’s Certificate of Incorporation shall be incorporated herein by reference mutatis mutandis, and (b) Subsection 4.4.5 of Section B of Article Fourth of the Company’s Certificate of Incorporation shall be incorporated herein by reference mutatis mutandis
2.7 Certificate as to Adjustments. Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date thereof and the series of adjustments leading to such Warrant Price.
2.8 Fractional Shares. No fractional Shares shall be issuable upon exercise or conversion of the warrant, and the Number of Shares to be issued shall be rounded up to the nearest whole Share.
4
ARTICLE
3
REPRESENTATIONS AND COVENANTS OF THE COMPANY AND HOLDER
3.1 Representations and Warranties. The Company hereby represents and warrants to the Holder that all Shares which may be issued upon the exercise of the purchase right represented by this warrant shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, without violation of any preemptive right or similar rights, and free of any liens, taxes, and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company will pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Shares upon exercise (or conversion) of this warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.
3.2 Notice of Certain Events. The Company shall provide Holder with not less than 10 days prior written notice of, including a description of the material facts surrounding, any of the following events: (a) declaration of any dividend or distribution upon its Common Stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) offering for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) effecting any reclassification or recapitalization of Common Stock; or (d) the merger or consolidation with or into any other corporation, or sale, lease, license, or conveyance of all or substantially all of its assets, or liquidation, dissolution or winding up.
3.3 Registration Under Securities Act of 1933, as amended. The Company agrees that the Shares shall be “Registrable Securities” and Holder shall be an “Investor” and a “Holder” under the Investors’ Rights Agreement upon Holder’s due execution and delivery to the Company of a Joinder in substantially the form of Appendix 2, and the Company will use its best efforts to cause the Shares into which this warrant is exercised (or converted), immediately upon such exercise (or conversion), to be listed on any domestic securities exchange upon which shares of Common Stock or other securities constituting Shares are listed at the time of such exercise (or conversion).
5
3.4 Holder Investment Representations. Holder makes the following representations to the Company in connection with the issuance of this warrant and the Shares (collectively, the “Securities”):
(a) The Holder is aware of the Company’s business affairs and financial condition, and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. The undersigned is purchasing the Securities for its own account for investment purposes only, not as a nominee or agent, and not with a view towards, or for resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933, as amended (the “Securities Act”). The undersigned has such knowledge and experience in financial business matters and the undersigned is capable of evaluating the merits and risks of the purchase of the Securities and of protecting its interests in connection therewith.
(b) The Holder understands that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the undersigned’s investment intent as expressed herein.
(c) The Holder further understands that the Securities must be held indefinitely, and the undersigned must therefore bear the economic risk therewith, unless the Securities are subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, the undersigned understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required. Holder is aware of the provisions of Rule 144 promulgated under the Act.
(d) The Holder is familiar with the provisions of Rule 144, promulgated pursuant to the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.
(e) The Holder further understands that in the event that all of the applicable requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required.
(f) The Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
3.5 “Market Stand Off” Agreement. The Holder agrees that the Shares shall be subject to the Market Standoff provisions in Section 2.11 of Investors’ Rights Agreement.
3.6 No Voting Rights. Holder, as a Holder of this warrant, will not have any voting rights until the exercise of this warrant.
3.7 Reservation of Shares. During the period between the Issue Date and the Expiration, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Shares, solely for the purpose of issuance upon the exercise of this warrant, the maximum number of Shares issuable upon the exercise of this warrant, and the par value per Share shall at all times be less than or equal to the applicable Warrant Price. The Company shall not increase the par value of any Shares receivable upon the exercise of this warrant above the Warrant Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this warrant.
6
ARTICLE
4
MISCELLANEOUS
4.1 Term: Exercise Upon Expiration. This warrant is exercisable in whole or in part, at any time and from time to time on or before the Expiration Date set forth above. If this warrant has not been exercised prior to the Expiration Date, this warrant shall be deemed to have been automatically exercised on the Expiration Date by “cashless” conversion pursuant to Section 1.2.
4.2 Legends. This warrant shall be imprinted with a legend in substantially the following form as well as any additional legends that the Company and Holder mutually agree upon with respect to such Shares:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO HOLDER DATED FEBRUARY __, 2019, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
4.3 Compliance with Securities Laws on Transfer. This warrant and the Shares issued upon exercise of this warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to any affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act. Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act. This warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and assigns of the Holder. Subject to the foregoing, such successors and/or assigns of the Holder shall be deemed to be a Holder for all purposes hereunder. In the case of a transfer of the warrant, upon surrender and delivery by Holder, the Company shall execute and deliver a new warrant or warrants in the name of the assignee or assignees and in the denominations specified in any instrument of assignment provided to the Company by the assignor, and shall issue to the assignor a new warrant evidencing the portion of this warrant, if any, not so assigned and this warrant shall promptly be cancelled.
7
4.4 Notices. All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first-class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or such Holder from time to time. All notices to the Holder shall be addressed as provided in the Investors’ Rights Agreement.
4.5 Amendments. This warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.
4.6 Attorneys’ Fees. In the event of any dispute between the parties concerning the terms and provisions of this warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.
4.7 Governing Law. This warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its principles regarding conflicts of law.
4.8 Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for the registration of the warrant and any transfers thereof. The Company may deem and treat the person or entity in whose name the warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the warrant effected in accordance with the provisions of this warrant.
4.9 Cumulative Remedies. The rights and remedies provided in this warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.
4.10 Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.
4.11 Entire Agreement. This warrant, together with the Investors’ Rights Agreement, and that certain Stock Purchase Agreement dated July , 2019 (the “Purchase Agreement”) constitutes the sole and entire agreement of the parties to this warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this warrant, the Investors’ Rights Agreement and the Purchase Agreement, the statements in the body of this warrant shall control.
[Signature Page Follows]
8
IN WITNESS WHEREOF, the undersigned has executed this Warrant to Purchase Stock as of the date set forth above.
Sera Prognostics, Inc. | ||
By: | ||
Name: | Gregory C. Critchfield, M.D., MS | |
Title: | President and Chief Executive Officer |
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ______________ shares of Common Stock, $0.0001 par value per share of SERA PROGNOSTICS, INC. pursuant to the terms of the attached warrant, and tenders herewith payment of the purchase price of such shares in full.
1. The undersigned hereby elects to convert the attached warrant into shares in the manner specified in the warrant. This conversion is exercised with respect to _____________ of the shares covered by the warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:
(Holder’s Name) | |
(Address) |
3. The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.
Holder or Registered Assignee | |
(Signature) | |
(Date) |
APPENDIX 2
JOINDER
DATE:
The undersigned hereby agrees, effective as of the date hereof, (i) to become a party to that certain Third Amended and Restated Investors’ Rights Agreement (the “Investors’ Rights Agreement”) dated as of July __, 2019, as amended from time to time, by and among Sera Prognostics, Inc. and the other parties thereto and for all purposes of the Investors’ Rights Agreement, the undersigned shall be included within the terms “Investor” and “Holder” as defined in the Investors’ Rights Agreement, and the undersigned agrees to be bound by the terms and conditions of the Investors’ Rights Agreement as an Investor and Holder thereunder, and (ii) to become a party to that certain Third Amended and Restated Voting Agreement (the “Voting Agreement”) dated as of July __, 2019, as amended from time to time, by and among Sera Prognostics, Inc. and the other parties thereto and for all purposes of the Voting Agreement, the undersigned shall be included within the terms “Investor” and “Stockholder” as defined in the Voting Agreement, and the undersigned agrees to be bound by the terms and conditions of the Voting Agreement as an Investor and Stockholder thereunder. The address and facsimile number to which notices may be sent to the undersigned is as follows:
ADDRESS: | ||
Fax: |
By: | |||
Name: |
Exhibit 4.3
Execution Version
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
WARRANT TO PURCHASE COMMON STOCK
Corporation: Number of Shares: Class of Stock: Initial Exercise Price: Issue Date: Expiration: |
Sera Prognostics, Inc., a Delaware corporation [__] Common Stock, $0.0001 par value per share $5.21 per share July 31, 2019 July 31, 2029 |
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the receipt of which is hereby acknowledged, [__] or its assignee or transferee (“Holder”) is entitled to purchase the number of fully paid and nonassessable shares of Common Stock, $0.0001 par value per share (the “Shares”) of Sera Prognostics, Inc. (the “Company”) at the initial exercise price per Share (the “Warrant Price”) all as set forth above and as adjusted pursuant to Article 2 of this warrant, subject to the provisions and upon the terms and conditions set forth in this warrant.
ARTICLE
1
EXERCISE
1.1 Method of Exercise. Holder may exercise this warrant by delivering this warrant, a duly executed Notice of Exercise in substantially the form attached as Appendix 1, and a duly executed Joinder to the Third Amended and Restated Investors’ Rights Agreement, dated as of July 31, 2019, between the Company and certain stockholders of the Company (as amended from time to time, the “Investors’ Rights Agreement”), and the Third Amended and Restated Voting Agreement, dated as of July 31, 2019, between the Company and certain stockholders of the Company (as amended from time to time), in substantially the form attached as Appendix 2 to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this warrant as specified in Section 1.1, Holder may from time to time convert this warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share. The fair market value of the Shares shall be determined pursuant to Section 1.3.
1.3 Fair Market Value. If the Shares are traded regularly in a public market, the fair market value of the Shares shall be the closing price of the Shares reported for the business day immediately before Holder delivers its Notice of Exercise to the Company. If the Shares are not regularly traded in a public market, the Board of Directors of the Company and the Holder shall jointly determine fair market value in their collective reasonable good faith judgment; provided, that if the Board of Directors of the Company and the Holder are unable to agree on the fair market value per share of the Shares within a reasonable period of time (not to exceed twenty days from the Company’s receipt of the Notice of Exercise), such fair market value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Board of Directors of the Company and the Holder (the “FMV Dispute Proviso”). The determination of such firm shall be final and conclusive, and the fees and expenses of such firm shall be borne equally by the Company and the Holder. In determining the Fair Market Value of the Shares, an orderly sale transaction between a willing buyer and a willing seller shall be assumed, using valuation techniques then prevailing in the securities industry without regard to the lack of liquidity of the Shares due to any restrictions (contractual or otherwise) applicable thereto or any discount for minority interests and assuming full disclosure of all relevant information and a reasonable period of time for effectuating such sale and assuming the sale of all of the issued and outstanding Common Stock (including fractional interests) calculated on a fully diluted basis to include the conversion or exchange of all securities then outstanding that are convertible into or exchangeable for Common Stock and the exercise of all rights and warrants then outstanding and exercisable to purchase shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock; provided, that such assumption shall not include those securities, rights and warrants (a) owned or held by or for the account of the Company or any of its subsidiaries, or (b) convertible or exchangeable into Common Stock where the conversion, exchange or exercise price per share is greater than the Fair Market Value.
1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or converts this warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this warrant has not been fully exercised or converted and has not expired, a new warrant representing the Shares not so acquired.
1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender and cancellation of this warrant, the Company at its expense shall execute and deliver, in lieu of this warrant, a new warrant of like tenor.
1.6 Treatment of Warrant Upon Acquisition of the Company.
1.6.1 “Acquisition.” For the purpose of this warrant, “Acquisition” means (a) merger or consolidation of the Company into or with another entity, or a plan of exchange between the Company and any other entity, or the merger or consolidation of any other entity into or with the Company (except for a merger, consolidation or exchange in which the holders of the voting power of the capital stock of the Company immediately prior to such merger, consolidation or exchange continue to hold at least 50% of the voting power of the capital stock of the Company or the surviving or acquiring entity), (b) sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company, or (c) the acquisition of ownership by any Person or group of more than 50% of the Company’s voting stock.
2
1.6.2 Exercise Upon Acquisition. Upon the closing of any Acquisition in which the consideration to be received by the Company’s stockholders consists of cash, marketable securities, or a combination of both cash and marketable securities, this warrant shall be deemed to have been automatically converted pursuant to Section 1.2, and thereafter Holder shall participate in the Acquisition on the same terms as other holders of the same class of securities of the Company.
1.6.3 Assumption of Warrant. The Company shall not effect any Acquisition not referred to in Section 1.6.2 unless, prior to the consummation thereof, the successor person or entity (if other than the Company) resulting from such transaction, shall assume, by written instrument satisfactory to the Holder, the obligations of this warrant, upon which this warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this warrant. Alternatively (and notwithstanding anything to the contrary herein), with respect to any Acquisition, Holder shall have the right to elect prior to the consummation thereof, to give effect to the exercise/ conversion rights contained in Section 1.2.
ARTICLE
2
ADJUSTMENTS TO THE SHARES
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend or any other distribution on its Common Stock payable in Common Stock, cash or other securities, or subdivides the outstanding Common Stock into a greater amount of Common Stock, then upon exercise of this warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities, cash or other property to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend, distribution or subdivision occurred (subject to further adjustment in the event the rights of any such securities or property are subsequently amended to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof).
2.2 Reclassification, Exchange or Substitution. Upon any reclassification, exchange, consolidation, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this warrant, Holder shall be entitled to receive, upon exercise or conversion of this warrant, the number and kind of securities and property that Holder would have received for the Shares if this warrant had been exercised in full immediately before such reclassification, exchange, consolidation, substitution, or other event (subject to further adjustment in the event the rights of any such securities or property are subsequently amended to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof). The Company or its successor shall promptly issue to Holder a new warrant for such new securities or other property. The new warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.
3
2.3 Adjustments for Combinations, Etc. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a greater number of shares, the Warrant Price shall be proportionately decreased.
2.4 Adjustment to Warrant Price Upon Issuance of Common Stock. Except as provided in Section 2.5 and except in the case of an event described in either Section 2.1 or Section 2.2, if the Company shall, at any time or from time to time after the Issue Date, issues Additional Shares of Common Stock (as defined in the Company’s Certificate of Incorporation) (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 4.4.3 of Section B of Article Fourth of the Company’s Certificate of Incorporation) without consideration or for consideration per share (determined in accordance with Section 4.4.5 of Section B of Article Fourth of the Company’s Certificate of Incorporation) less than 83.3% of the Warrant Price in effect immediately prior to such issuance or sale (or deemed issuance or sale), then immediately upon such issuance or sale (or deemed issuance or sale), the Warrant Price in effect immediately prior to such issuance or sale (or deemed issuance or sale) shall be reduced (and in no event increased) to a Warrant Price equal to 120% of the lowest price per share at which any such share of Common Stock has been issued or sold (or is deemed to have been issued or sold); provided, that if the Warrant Price as so adjusted would be less than the Adjustment Floor, then the Warrant Price shall instead be adjusted to be equal to the Adjustment Floor. The term “Adjustment Floor” shall mean $4.17, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock.
2.5 Exceptions to Adjustment Upon Issuance of Common Stock. There shall be no adjustment pursuant to Section 2.4 to the Warrant Price with respect to any Excluded Issuance. “Excluded Issuances” means any issuance or sale by the Company after the Issue Date of: (a) Shares issued upon the exercise of warrants issued pursuant to the Purchase Agreement (as defined below); and (b) “Exempted Securities” (as defined in the Company’s Certificate of Incorporation).
2.6 Effect of Certain Events on Adjustment to Warrant Price. For purposes of determining the adjusted Warrant Price under Section 2.4, the provisions of (a) clauses (b) through (e) of Subsection 4.4.3 of Section B of Article Fourth of the Company’s Certificate of Incorporation shall be incorporated herein by reference mutatis mutandis, and (b) Subsection 4.4.5 of Section B of Article Fourth of the Company’s Certificate of Incorporation shall be incorporated herein by reference mutatis mutandis
4
2.7 Certificate as to Adjustments. Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date thereof and the series of adjustments leading to such Warrant Price.
2.8 Fractional Shares. No fractional Shares shall be issuable upon exercise or conversion of the warrant, and the Number of Shares to be issued shall be rounded up to the nearest whole Share.
ARTICLE
3
REPRESENTATIONS AND COVENANTS OF THE COMPANY AND HOLDER
3.1 Representations and Warranties. The Company hereby represents and warrants to the Holder that all Shares which may be issued upon the exercise of the purchase right represented by this warrant shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, without violation of any preemptive right or similar rights, and free of any liens, taxes, and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company will pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Shares upon exercise (or conversion) of this warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.
3.2 Notice of Certain Events. The Company shall provide Holder with not less than 10 days prior written notice of, including a description of the material facts surrounding, any of the following events: (a) declaration of any dividend or distribution upon its Common Stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) offering for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) effecting any reclassification or recapitalization of Common Stock; or (d) the merger or consolidation with or into any other corporation, or sale, lease, license, or conveyance of all or substantially all of its assets, or liquidation, dissolution or winding up.
3.3 Registration Under Securities Act of 1933, as amended. The Company agrees that the Shares shall be “Registrable Securities” and Holder shall be an “Investor” and a “Holder” under the Investors’ Rights Agreement upon Holder’s due execution and delivery to the Company of a Joinder in substantially the form of Appendix 2, and the Company will use its best efforts to cause the Shares into which this warrant is exercised (or converted), immediately upon such exercise (or conversion), to be listed on any domestic securities exchange upon which shares of Common Stock or other securities constituting Shares are listed at the time of such exercise (or conversion).
5
3.4 Holder Investment Representations. Holder makes the following representations to the Company in connection with the issuance of this warrant and the Shares (collectively, the “Securities”):
(a) The Holder is aware of the Company’s business affairs and financial condition, and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. The undersigned is purchasing the Securities for its own account for investment purposes only, not as a nominee or agent, and not with a view towards, or for resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933, as amended (the “Securities Act”). The undersigned has such knowledge and experience in financial business matters and the undersigned is capable of evaluating the merits and risks of the purchase of the Securities and of protecting its interests in connection therewith.
(b) The Holder understands that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the undersigned’s investment intent as expressed herein.
(c) The Holder further understands that the Securities must be held indefinitely, and the undersigned must therefore bear the economic risk therewith, unless the Securities are subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, the undersigned understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required. Holder is aware of the provisions of Rule 144 promulgated under the Act.
(d) The Holder is familiar with the provisions of Rule 144, promulgated pursuant to the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.
(e) The Holder further understands that in the event that all of the applicable requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required.
(f) The Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
3.5 “Market Stand Off” Agreement. The Holder agrees that the Shares shall be subject to the Market Standoff provisions in Section 2.11 of Investors’ Rights Agreement.
3.6 No Voting Rights. Holder, as a Holder of this warrant, will not have any voting rights until the exercise of this warrant.
6
3.7 Reservation of Shares. During the period between the Issue Date and the Expiration, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Shares, solely for the purpose of issuance upon the exercise of this warrant, the maximum number of Shares issuable upon the exercise of this warrant, and the par value per Share shall at all times be less than or equal to the applicable Warrant Price. The Company shall not increase the par value of any Shares receivable upon the exercise of this warrant above the Warrant Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this warrant.
ARTICLE
4
MISCELLANEOUS
4.1 Term: Exercise Upon Expiration. This warrant is exercisable in whole or in part, at any time and from time to time on or before the Expiration Date set forth above. If this warrant has not been exercised prior to the Expiration Date, this warrant shall be deemed to have been automatically exercised on the Expiration Date by “cashless” conversion pursuant to Section 1.2.
4.2 Legends. This warrant shall be imprinted with a legend in substantially the following form as well as any additional legends that the Company and Holder mutually agree upon with respect to such Shares:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO HOLDER DATED FEBRUARY __, 2019, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
4.3 Compliance with Securities Laws on Transfer. This warrant and the Shares issued upon exercise of this warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to any affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act. Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act. This warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and assigns of the Holder. Subject to the foregoing, such successors and/or assigns of the Holder shall be deemed to be a Holder for all purposes hereunder. In the case of a transfer of the warrant, upon surrender and delivery by Holder, the Company shall execute and deliver a new warrant or warrants in the name of the assignee or assignees and in the denominations specified in any instrument of assignment provided to the Company by the assignor, and shall issue to the assignor a new warrant evidencing the portion of this warrant, if any, not so assigned and this warrant shall promptly be cancelled.
7
4.4 Notices. All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first-class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or such Holder from time to time. All notices to the Holder shall be addressed as provided in the Investors’ Rights Agreement.
4.5 Amendments. This warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.
4.6 Attorneys’ Fees. In the event of any dispute between the parties concerning the terms and provisions of this warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.
4.7 Governing Law. This warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its principles regarding conflicts of law.
4.8 Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for the registration of the warrant and any transfers thereof. The Company may deem and treat the person or entity in whose name the warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the warrant effected in accordance with the provisions of this warrant.
4.9 Cumulative Remedies. The rights and remedies provided in this warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.
4.10 Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.
8
4.11 Entire Agreement. This warrant, together with the Investors’ Rights Agreement, and that certain Stock Purchase Agreement dated July , 2019 (the “Purchase Agreement”) constitutes the sole and entire agreement of the parties to this warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this warrant, the Investors’ Rights Agreement and the Purchase Agreement, the statements in the body of this warrant shall control.
[Signature Page Follows]
9
IN WITNESS WHEREOF, the undersigned has executed this Warrant to Purchase Stock as of the date set forth above.
Sera Prognostics, Inc. | ||
By: | ||
Name: | Gregory C. Critchfield, M.D., MS | |
Title: | President and Chief Executive Officer |
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ______________ shares of Common Stock, $0.0001 par value per share of SERA PROGNOSTICS, INC. pursuant to the terms of the attached warrant, and tenders herewith payment of the purchase price of such shares in full.
1. The undersigned hereby elects to convert the attached warrant into shares in the manner specified in the warrant. This conversion is exercised with respect to _____________ of the shares covered by the warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:
(Holder’s Name) |
(Address) |
3. The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.
Holder or Registered Assignee
(Signature) |
(Date) |
APPENDIX 2
JOINDER
DATE: |
The undersigned hereby agrees, effective as of the date hereof, (i) to become a party to that certain Third Amended and Restated Investors’ Rights Agreement (the “Investors’ Rights Agreement”) dated as of July __, 2019, as amended from time to time, by and among Sera Prognostics, Inc. and the other parties thereto and for all purposes of the Investors’ Rights Agreement, the undersigned shall be included within the terms “Investor” and “Holder” as defined in the Investors’ Rights Agreement, and the undersigned agrees to be bound by the terms and conditions of the Investors’ Rights Agreement as an Investor and Holder thereunder, and (ii) to become a party to that certain Third Amended and Restated Voting Agreement (the “Voting Agreement”) dated as of July __, 2019, as amended from time to time, by and among Sera Prognostics, Inc. and the other parties thereto and for all purposes of the Voting Agreement, the undersigned shall be included within the terms “Investor” and “Stockholder” as defined in the Voting Agreement, and the undersigned agrees to be bound by the terms and conditions of the Voting Agreement as an Investor and Stockholder thereunder. The address and facsimile number to which notices may be sent to the undersigned is as follows:
ADDRESS: | ||
Fax: |
|
By: |
Name: |
Exhibit 4.4
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
WARRANT TO PURCHASE COMMON STOCK
Corporation: Number of Shares: Class of Stock: Initial Exercise Price: Issue Date: Expiration: |
Sera Prognostics, Inc., a Delaware corporation [__] Common Stock, $0.0001 par value per share $9.99 per share [__], 2021 [__], 2026 |
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, the receipt of which is hereby acknowledged, [__] or its assignee or transferee (“Holder”) is entitled to purchase the number of fully paid and nonassessable shares of Common Stock, $0.0001 par value per share (the “Shares”) of Sera Prognostics, Inc. (the “Company”) at the initial exercise price per Share (the “Warrant Price”) all as set forth above and as adjusted pursuant to Article 2 of this warrant, subject to the provisions and upon the terms and conditions set forth in this warrant.
ARTICLE
1
EXERCISE
1.1 Method of Exercise. Holder may exercise this warrant by delivering this warrant, a duly executed Notice of Exercise in substantially the form attached as Appendix 1, and a duly executed Joinder to the Fourth Amended and Restated Investors’ Rights Agreement, dated as of February 23, 2021, between the Company and certain stockholders of the Company (as amended from time to time, the “Investors’ Rights Agreement”), and the Fourth Amended and Restated Voting Agreement, dated as of February 23, 2021, between the Company and certain stockholders of the Company (as amended from time to time, the “Voting Agreement”), in substantially the form attached as Appendix 2 to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this warrant as specified in Section 1.1, Holder may from time to time convert this warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share. The fair market value of the Shares shall be determined pursuant to Section 1.3.
1.3 Fair Market Value. If the Shares are traded regularly in a public market, the fair market value of the Shares shall be the closing price of the Shares reported for the business day immediately before Holder delivers its Notice of Exercise to the Company. If the Shares are not regularly traded in a public market, the Board of Directors of the Company and the Holder shall jointly determine fair market value in their collective reasonable good faith judgment; provided, that if the Board of Directors of the Company and the Holder are unable to agree on the fair market value per share of the Shares within a reasonable period of time (not to exceed twenty days from the Company’s receipt of the Notice of Exercise), such fair market value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the Board of Directors of the Company and the Holder. The determination of such firm shall be final and conclusive, and the fees and expenses of such firm shall be borne equally by the Company and the Holder. In determining the Fair Market Value of the Shares, an orderly sale transaction between a willing buyer and a willing seller shall be assumed, using valuation techniques then prevailing in the securities industry without regard to the lack of liquidity of the Shares due to any restrictions (contractual or otherwise) applicable thereto or any discount for minority interests and assuming full disclosure of all relevant information and a reasonable period of time for effectuating such sale and assuming the sale of all of the issued and outstanding Common Stock (including fractional interests) calculated on a fully diluted basis to include the conversion or exchange of all securities then outstanding that are convertible into or exchangeable for Common Stock and the exercise of all rights and warrants then outstanding and exercisable to purchase shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock; provided, that such assumption shall not include those securities, rights and warrants (a) owned or held by or for the account of the Company or any of its subsidiaries, or (b) convertible or exchangeable into Common Stock where the conversion, exchange or exercise price per share is greater than the Fair Market Value.
1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or converts this warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this warrant has not been fully exercised or converted and has not expired, a new warrant representing the Shares not so acquired.
1.5 Replacement of Warrants. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender and cancellation of this warrant, the Company at its expense shall execute and deliver, in lieu of this warrant, a new warrant of like tenor.
1.6 Treatment of Warrant Upon Acquisition of the Company.
1.6.1 “Acquisition.” For the purpose of this warrant, “Acquisition” means (a) merger or consolidation of the Company into or with another entity, or a plan of exchange between the Company and any other entity, or the merger or consolidation of any other entity into or with the Company (except for a merger, consolidation or exchange in which the holders of the voting power of the capital stock of the Company immediately prior to such merger, consolidation or exchange continue to hold at least 50% of the voting power of the capital stock of the Company or the surviving or acquiring entity), (b) sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company, or (c) the acquisition of ownership by any Person or group of more than 50% of the Company’s voting stock.
2
1.6.2 Exercise Upon Acquisition. Upon the closing of any Acquisition in which the consideration to be received by the Company’s stockholders consists of cash, marketable securities, or a combination of both cash and marketable securities, this warrant shall be deemed to have been automatically converted pursuant to Section 1.2, and thereafter Holder shall participate in the Acquisition on the same terms as other holders of the same class of securities of the Company.
1.6.3 Assumption of Warrant. The Company shall not effect any Acquisition not referred to in Section 1.6.2 unless, prior to the consummation thereof, the successor person or entity (if other than the Company) resulting from such transaction, shall assume, by written instrument satisfactory to the Holder, the obligations of this warrant, upon which this warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this warrant. Alternatively (and notwithstanding anything to the contrary herein), with respect to any Acquisition, Holder shall have the right to elect prior to the consummation thereof, to give effect to the exercise rights contained in Section 1.1 or the conversion rights contained in Section 1.2.
ARTICLE
2
ADJUSTMENTS TO THE SHARES
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend or any other distribution on its Common Stock payable in Common Stock, cash or other securities, or subdivides the outstanding Common Stock into a greater amount of Common Stock, then upon exercise of this warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities, cash or other property to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend, distribution or subdivision occurred (subject to further adjustment in the event the rights of any such securities or property are subsequently amended to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof).
2.2 Reclassification, Exchange or Substitution. Upon any reclassification, exchange, consolidation, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this warrant, Holder shall be entitled to receive, upon exercise or conversion of this warrant, the number and kind of securities and property that Holder would have received for the Shares if this warrant had been exercised in full immediately before such reclassification, exchange, consolidation, substitution, or other event (subject to further adjustment in the event the rights of any such securities or property are subsequently amended to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof). The Company or its successor shall promptly issue to Holder a new warrant for such new securities or other property. The new warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.
3
2.3 Adjustments for Combinations, Etc. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a greater number of shares, the Warrant Price shall be proportionately decreased.
2.4 Certificate as to Adjustments. Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date thereof and the series of adjustments leading to such Warrant Price.
2.5 Fractional Shares. No fractional Shares shall be issuable upon exercise or conversion of the warrant, and the Number of Shares to be issued shall be rounded up to the nearest whole Share.
ARTICLE
3
REPRESENTATIONS AND COVENANTS OF THE COMPANY AND HOLDER
3.1 Representations and Warranties. The Company hereby represents and warrants to the Holder that all Shares which may be issued upon the exercise of the purchase right represented by this warrant shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, without violation of any preemptive right or similar rights, and free of any liens, taxes, and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company will pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Shares upon exercise (or conversion) of this warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.
3.2 Notice of Certain Events. The Company shall provide Holder with not less than 10 days prior written notice of, including a description of the material facts surrounding, any of the following events: (a) declaration of any dividend or distribution upon its Common Stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) offering for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) effecting any reclassification or recapitalization of Common Stock; or (d) the merger or consolidation with or into any other corporation, or sale, lease, license, or conveyance of all or substantially all of its assets, or liquidation, dissolution or winding up.
4
3.3 Registration Under Securities Act of 1933, as amended. The Company agrees that the Shares shall be “Registrable Securities” and Holder shall be an “Investor” and a “Holder” under the Investors’ Rights Agreement upon Holder’s due execution and delivery to the Company of a Joinder in substantially the form of Appendix 2, and the Company will use its best efforts to cause the Shares into which this warrant is exercised (or converted), immediately upon such exercise (or conversion), to be listed on any domestic securities exchange upon which shares of Common Stock or other securities constituting Shares are listed at the time of such exercise (or conversion).
3.4 Holder Investment Representations. Holder makes the following representations to the Company in connection with the issuance of this warrant and the Shares (collectively, the “Securities”):
(a) The Holder is aware of the Company’s business affairs and financial condition, and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. The undersigned is purchasing the Securities for its own account for investment purposes only, not as a nominee or agent, and not with a view towards, or for resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933, as amended (the “Securities Act”). The undersigned has such knowledge and experience in financial business matters and the undersigned is capable of evaluating the merits and risks of the purchase of the Securities and of protecting its interests in connection therewith.
(b) The Holder understands that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the undersigned’s investment intent as expressed herein.
(c) The Holder further understands that the Securities must be held indefinitely, and the undersigned must therefore bear the economic risk therewith, unless the Securities are subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, the undersigned understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required. Holder is aware of the provisions of Rule 144 promulgated under the Act.
(d) The Holder is familiar with the provisions of Rule 144, promulgated pursuant to the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.
(e) The Holder further understands that in the event that all of the applicable requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required.
(f) The Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
5
3.5 “Market Stand Off” Agreement. The Holder agrees that the Shares shall be subject to the Market Standoff provisions in Section 2.11 of Investors’ Rights Agreement.
3.6 No Voting Rights. Holder, as a Holder of this warrant, will not have any voting rights until the exercise of this warrant.
3.7 Reservation of Shares. During the period between the Issue Date and the Expiration, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Shares, solely for the purpose of issuance upon the exercise of this warrant, the maximum number of Shares issuable upon the exercise of this warrant, and the par value per Share shall at all times be less than or equal to the applicable Warrant Price. The Company shall not increase the par value of any Shares receivable upon the exercise of this warrant above the Warrant Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this warrant.
ARTICLE
4
MISCELLANEOUS
4.1 Term: Exercise Upon Expiration. This warrant is exercisable in whole or in part, at any time and from time to time on or before the Expiration Date set forth above. If this warrant has not been exercised prior to the Expiration Date, this warrant shall be deemed to have been automatically exercised on the Expiration Date by “cashless” conversion pursuant to Section 1.2.
4.2 Legends. This warrant shall be imprinted with a legend in substantially the following form as well as any additional legends that the Company and Holder mutually agree upon with respect to such Shares:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO HOLDER DATED FEBRUARY __, 2021, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
6
4.3 Compliance with Securities Laws on Transfer. This warrant and the Shares issued upon exercise of this warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to any affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act. Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act. This warrant and the rights evidenced hereby shall be binding upon and shall inure to the benefit of the parties hereto and the successors of the Company and the successors and assigns of the Holder. Subject to the foregoing, such successors and/or assigns of the Holder shall be deemed to be a Holder for all purposes hereunder. In the case of a transfer of the warrant, upon surrender and delivery by Holder, the Company shall execute and deliver a new warrant or warrants in the name of the assignee or assignees and in the denominations specified in any instrument of assignment provided to the Company by the assignor, and shall issue to the assignor a new warrant evidencing the portion of this warrant, if any, not so assigned and this warrant shall promptly be cancelled.
4.4 Notices. All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first-class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or such Holder from time to time. All notices to the Holder shall be addressed as provided in the Investors’ Rights Agreement.
4.5 Amendments. This warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.
4.6 Attorneys’ Fees. In the event of any dispute between the parties concerning the terms and provisions of this warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.
4.7 Governing Law. This warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its principles regarding conflicts of law.
4.8 Warrant Register. The Company shall keep and properly maintain at its principal executive offices books for the registration of the warrant and any transfers thereof. The Company may deem and treat the person or entity in whose name the warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the warrant effected in accordance with the provisions of this warrant.
4.9 Cumulative Remedies. The rights and remedies provided in this warrant are cumulative and are not exclusive of, and are in addition to and not in substitution for, any other rights or remedies available at law, in equity or otherwise.
7
4.10 Equitable Relief. Each of the Company and the Holder acknowledges that a breach or threatened breach by such party of any of its obligations under this warrant would give rise to irreparable harm to the other party hereto for which monetary damages would not be an adequate remedy and hereby agrees that in the event of a breach or a threatened breach by such party of any such obligations, the other party hereto shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.
4.11 Entire Agreement. This warrant, together with the Investors’ Rights Agreement, the Voting Agreement and that certain Stock Purchase Agreement dated February __, 2021 (the “Purchase Agreement”), constitutes the sole and entire agreement of the parties to this warrant with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this warrant, the Investors’ Rights Agreement, the Voting Agreement and the Purchase Agreement, the statements in the body of this warrant shall control.
[Signature Page Follows]
8
IN WITNESS WHEREOF, the undersigned has executed this Warrant to Purchase Common Stock as of the date set forth above.
Sera Prognostics, Inc. | ||
By: | ||
Name: | Gregory C. Critchfield, M.D., MS | |
Title: | President and Chief Executive Officer |
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ______________ shares of Common Stock, $0.0001 par value per share of SERA PROGNOSTICS, INC. pursuant to the terms of the attached warrant, and tenders herewith payment of the purchase price of such shares in full.
1. The undersigned hereby elects to convert the attached warrant into shares in the manner specified in the warrant. This conversion is exercised with respect to _____________ of the shares covered by the warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:
(Holder’s Name) | |
(Address) |
3. The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.
Holder or Registered Assignee
(Signature) | |
(Date) |
APPENDIX 2
JOINDER
DATE:
The undersigned hereby agrees, effective as of the date hereof, (i) to become a party to that certain Fourth Amended and Restated Investors’ Rights Agreement (the “Investors’ Rights Agreement”) dated as of February __, 2021, as amended from time to time, by and among Sera Prognostics, Inc. and the other parties thereto and for all purposes of the Investors’ Rights Agreement, the undersigned shall be included within the terms “Investor” and “Holder” as defined in the Investors’ Rights Agreement, and the undersigned agrees to be bound by the terms and conditions of the Investors’ Rights Agreement as an Investor and Holder thereunder, and (ii) to become a party to that certain Third Amended and Restated Voting Agreement (the “Voting Agreement”) dated as of February __, 2021, as amended from time to time, by and among Sera Prognostics, Inc. and the other parties thereto and for all purposes of the Voting Agreement, the undersigned shall be included within the terms “Investor” and “Stockholder” as defined in the Voting Agreement, and the undersigned agrees to be bound by the terms and conditions of the Voting Agreement as an Investor and Stockholder thereunder. The address and facsimile number to which notices may be sent to the undersigned is as follows:
ADDRESS: | ||
Fax: |
By: | ||
Name: |
Exhibit 4.5
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
THIS FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is made as of the 23rd day of February, 2021, by and among Sera Prognostics, Inc., a Delaware corporation (the “Company”), each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor”, each of the stockholders listed on Schedule B hereto, each of whom is referred to herein as a “Key Holder”, and any Additional Purchaser (as defined in the Purchase Agreement (as defined below)) that becomes a party to this Agreement in accordance with Section 6.9 hereof.
RECITALS
WHEREAS, the Company, the Key Holders and certain of the Investors previously entered into the Third Amended and Restated Investors’ Rights Agreement, dated July 31, 2019 (the “Prior Agreement”), in connection with the sale of shares of the Series D Preferred Stock by certain of the Investors;
WHEREAS, the Company and the Investors are holders of shares of the Company’s Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or are parties to the Series E Preferred Stock Purchase Agreement of even date herewith (the “Purchase Agreement”); and
WHEREAS, in order to induce the Company to enter into the Purchase Agreement and to induce the Investors to invest funds in the Company pursuant to the Purchase Agreement, the Investors and the Company hereby agree to amend and restate the Prior Agreement as set forth herein, and agree that this Agreement shall govern the rights of the Investors to cause the Company to register shares of Common Stock issuable to the Investors, to receive certain information from the Company, and to participate in future equity offerings by the Company, and shall govern certain other matters as set forth in this Agreement.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement:
1.1. “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.
1.2. “ATH Holding” means ATH Holding Company, LLC, an Indiana limited liability company.
1.3. “Board” means the board of directors of the Company.
1.4. “Blue Ox” means Blue Ox Healthcare Partners SP, LLC, a Delaware limited liability company, BXHCP SP II, LLC, a Delaware limited liability company, and BXHCP SP III, LLC, a Delaware limited liability company.
1.5. “Common Stock” means shares of the Company’s common stock, par value $0.0001 per share.
1.6. “Damages” means any loss, damage, claim or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, claim or liability (or any action in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.
1.7. “Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including options and warrants.
1.8. “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
1.9. “Excluded Registration” means (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.
1.10. “Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.
1.11. “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.
1.12. “FOSUN” means Fosun Industrial Co., Limited, a corporation organized under the laws of the Hong Kong Special Administrative Region of China.
1.13. “GAAP” means generally accepted accounting principles in the United States.
2
1.14. “Holder” means any holder of Registrable Securities who is a party to this Agreement.
1.15. “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a natural person referred to herein.
1.16. “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.
1.17. “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.
1.18. “Key Employee” means any executive-level employee (including division director and vice president-level positions) as well as any employee who, either alone or in concert with others, develops, invents, programs, or designs any Company Intellectual Property (as defined in the Purchase Agreement).
1.19. “Key Holder Registrable Securities” means (i) shares of Common Stock held by the Key Holders, and (ii) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of such shares.
1.20. “Major Investor” means any Investor that, individually or together with such Investor’s Affiliates, holds at least fifteen percent (15%) of the shares of Registrable Securities (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof) originally purchased thereby.
1.21. “New Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.
1.22. “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.
1.23. “Preferred Director” means any director of the Company that the holders of record of the Preferred Stock, voting as a single class on an as-converted basis, are entitled to elect pursuant to the Restated Certificate.
1.24. “Preferred Stock” means, collectively, shares of the Company’s Series A1 Preferred Stock, Series A2 Preferred Stock, Series B-1 Preferred Stock, Series B-2 Preferred Stock, Series C-1 Preferred Stock, Series C-2 Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock.
3
1.25. “Registrable Securities” means (i) the Common Stock issuable or issued upon conversion of the Preferred Stock; (ii) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, acquired by the Investors after the date hereof; (iii) the Key Holder Registrable Securities, provided, however, that such Key Holder Registrable Securities shall not be deemed Registrable Securities and the Key Holders shall not be deemed Holders for purposes of Subsections 2.1, 2.10, 3.1, 3.2, 4.1 and 6.6; (iv) any Common Stock issuable or issued upon exercise of the Warrants (as defined in the Series D Preferred Stock Purchase Agreement between the Company and the Investors party thereto, dated as of July 31, 2019); and (v) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i), (ii), and (iv) above; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Subsection 6.1, and excluding for purposes of Section 1.44 any shares for which registration rights have terminated pursuant to Subsection 2.13 of this Agreement.
1.26. “Registrable Securities then outstanding” means the number of shares determined by adding the number of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock that are Registrable Securities issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities.
1.27. “Restated Certificate” means the Company’s Fifth Amended and Restated Certificate of Incorporation, as amended from time to time.
1.28. “Restricted Securities” means the securities of the Company required to bear the legend set forth in Subsection 2.12(b) hereof.
1.29. “SEC” means the Securities and Exchange Commission.
1.30. “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.
1.31. “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.
1.32. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.33. “Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Subsection 2.6.
1.34. “Series A Preferred Stock” means, collectively, shares of the Series A1 Preferred Stock and Series A2 Preferred Stock.
1.35. “Series A1 Preferred Stock” means shares of the Company’s Series A1 Preferred Stock, par value $0.0001 per share.
4
1.36. “Series A2 Preferred Stock” means shares of the Company’s Series A2 Preferred Stock, par value $0.0001 per share.
1.37. “Series B Preferred Stock” means, collectively, shares of the Series B-1 Preferred Stock and Series B-2 Preferred Stock.
1.38. “Series B-1 Preferred Stock” means shares of the Company’s Series B-1 Preferred Stock, par value $0.0001 per share.
1.39. “Series B-2 Preferred Stock” means shares of the Company’s Series B-2 Preferred Stock, par value $0.0001 per share.
1.40. “Series C Preferred Stock” means, collectively, shares of the Series C-1 Preferred Stock and Series C-2 Preferred Stock.
1.41. “Series C-1 Preferred Stock” means shares of the Company’s Series C-1 Preferred Stock, par value $0.0001 per share.
1.42. “Series C-2 Preferred Stock” means shares of the Company’s Series C-2 Preferred Stock, par value $0.0001 per share.
1.43. “Series D Preferred Stock” means shares of the Company’s Series D Preferred Stock, par value $0.0001 per share.
1.44. “Series E Preferred Stock” means shares of the Company’s Series E Preferred Stock, par value $0.0001 per share.
2. Registration Rights. The Company covenants and agrees as follows:
2.1. Demand Registration.
(a) Form S-1 Demand. If at any time after the earlier to occur of (i) three (3) years after the date of this Agreement; or (ii) one hundred eighty (180) days after the effective date of the registration statement for the IPO, the Company receives a request from the Holders of at least a majority of the Registrable Securities then outstanding that the Company file a Form S-1 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price of at least $5 million, then the Company shall (A) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (B) as soon as practicable, and in any event within one hundred twenty (120) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsections 2.1(c) and 2.3.
5
(b) Form S-3 Demand. If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders of at least twenty-five percent (25%) of the Registrable Securities then outstanding that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price of at least $3 million, then the Company shall (i) within twenty (20) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within ninety (90) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsections 2.1(c) and 2.3.
(c) Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Subsection 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Board it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than one hundred twenty (120) days after the request of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such one hundred twenty (120) day period other than an Excluded Registration.
(d) The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(a) (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration, provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; (ii) after the Company has effected two (2) registrations pursuant to Subsection 2.1(a); or (iii) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Subsection 2.1(b). The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(b) (A) during the period that is thirty (30) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration, provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (B) if the Company has effected two (2) registrations pursuant to Subsection 2.1(b) within the twelve (12) month period immediately preceding the date of such request. A registration shall not be counted as “effected” for purposes of this Subsection 2.1(d) until such time as the applicable registration statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one (1) demand registration statement pursuant to Subsection 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Subsection 2.1(d).
6
2.2. Company Registration. If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its Common Stock under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration. Upon the request of each Holder given within ten (10) days after such notice is given by the Company, the Company shall, subject to the provisions of Subsection 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Subsection 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Subsection 2.6.
2.3. Underwriting Requirements.
(a) If, pursuant to Subsection 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Subsection 2.1, and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Subsection 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Subsection 2.3, if the managing underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting.
7
(b) In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Subsection 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, (ii) the number of Registrable Securities included in the offering be reduced below twenty percent (20%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering, or (iii) notwithstanding (ii) above, any Registrable Securities which are not Key Holder Registrable Securities be excluded from such underwriting unless all Key Holder Registrable Securities are first excluded from such offering. For purposes of the provision in this Subsection 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.
(c) For purposes of Subsection 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Subsection 2.3(a), fewer than fifty percent (50%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.
2.4. Obligations of the Company. Whenever required under this Section 1.44 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to sixty (60) days, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;
8
(b) prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;
(c) furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;
(d) use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;
(e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;
(f) use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;
(g) provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;
(h) promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;
(i) notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and
9
(j) after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.
In addition, the Company shall ensure that, at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, its insider trading policy shall provide that the Company’s directors may implement a trading program under Rule 10b5-1 of the Exchange Act.
2.5. Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1.44 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.
2.6. Expenses of Registration. All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 1.44, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements of one (1) counsel for the selling Holders (“Selling Holder Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Subsection 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one (1) registration pursuant to Subsection 2.1(a) or Subsection 2.1(b), as the case may be; provided further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information, then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one (1) registration pursuant to Subsection 2.1(a) or Subsection 2.1(b). All Selling Expenses relating to Registrable Securities registered pursuant to this Section 1.44 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.
2.7. Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.
10
2.8. Indemnification. If any Registrable Securities are included in a registration statement under this Section 1.44:
(a) To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Subsection 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.
(b) To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Subsection 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Subsections 2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.
(c) Promptly after receipt by an indemnified party under this Subsection 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Subsection 2.8, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Subsection 2.8, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Subsection 2.8.
11
(d) To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Subsection 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Subsection 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Subsection 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Subsection 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Subsection 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.
(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
(f) Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Subsection 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 1.44, and otherwise shall survive the termination of this Agreement.
12
2.9. Reports Under Exchange Act. With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:
(a) make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;
(b) use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and
(c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company; and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).
2.10. Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (i) to include such securities in any registration unless, under the terms of such agreement, such securities are included in such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are included, except for shares that are Exempted Securities (as defined in the Company’s Certificate of Incorporation), or (ii) to initiate a demand for registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply (a) to any additional Investor who becomes a party to this Agreement in accordance with Subsection 6.9, or (b) to the issuance of a warrant to purchase securities of the Company to a bank, equipment lessor or other financial institution, or to a real property lessor, in connection with a third party bona fide loan, lease or other similar financing arrangement for the benefit of the Company.
13
2.11. “Market Stand-off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of shares of its Common Stock or any other equity securities under the Securities Act on a registration statement on Form S-1 or Form S-3 and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days in the case of the IPO, or such other period not to exceed an additional thirty-five (35) days as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (1) the publication or other distribution of research reports and (2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in applicable FINRA rules, or any successor provisions or amendments thereto), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Subsection 2.11 shall apply only to the IPO, shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, or the transfer of any shares to any trust for the direct or indirect benefit of the Holder or the immediate family of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, and shall be applicable to the Holders only if all officers and directors are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all stockholders individually owning more than one percent (1%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding Preferred Stock). The underwriters in connection with such registration are intended third-party beneficiaries of this Subsection 2.11 and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Subsection 2.11 or that are necessary to give further effect thereto. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements.
2.12. Restrictions on Transfer.
(a) The Preferred Stock and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Preferred Stock and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.
(b) Each certificate or instrument representing (i) the Preferred Stock, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Subsection 2.12(c)) be stamped or otherwise imprinted with a legend substantially in the following form:
14
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Subsection 2.12.
(c) The holder of each certificate representing Restricted Securities, by acceptance of ownership thereof, agrees to comply in all respects with the provisions of this Section 1.44. Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144 or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Subsection 2.12. Each certificate, instrument or book entry evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Subsection 2.12(b), except that such certificate, instrument or book entry shall not bear such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.
15
2.13. Termination of Registration Rights. The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Subsection 2.1 or Subsection 2.2 shall terminate upon the earlier to occur of:
(a) the closing of a Deemed Liquidation Event, as such term is defined in the Restated Certificate;
(b) such time as such Holder holds less than 1% of the Company’s outstanding Common Stock, the Company has completed an IPO and all Registrable Securities of the Company issuable or issued upon conversion of the shares held by and issuable to such Holder (and its Affiliates) may be sold pursuant to Rule 144 during any ninety (90) day period; and
(c) the five (5) year anniversary of the IPO.
3. Information.
3.1. Delivery of Financial Statements. The Company shall deliver to each Major Investor:
(a) as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such year, and (iii) a statement of stockholders’ equity as of the end of such year, all such financial statements audited and certified by independent public accountants of regionally recognized standing selected by the Company;
(b) as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income and of cash flows for such fiscal quarter, and an unaudited balance sheet and a statement of stockholders’ equity as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);
(c) as soon as practicable, but in any event within thirty (30) days after the end of each quarter, executive summaries of the Company’s financial operations and activities;
(d) as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “Budget”), approved by the Board and prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company;
(e) such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as any Major Investor may from time to time reasonably request; provided, however, that the Company shall not be obligated under this Subsection 3.1 to provide information (i) that the Company reasonably determines in good faith to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company); or (ii) the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel; and
16
(f) upon the request of any Major Investor, unaudited statements of income and of cash flows for such month, and an unaudited balance sheet and a statement of stockholders’ equity as of the end of such month, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP).
If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.
Notwithstanding anything else in this Subsection 3.1 to the contrary, the Company may cease providing the information set forth in this Subsection 3.1 during the period starting with the date sixty (60) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Subsection 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.
3.2. Inspection. The Company shall permit each Major Investor, at such Major Investor’s expense, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Major Investor; provided, however, that the Company shall not be obligated pursuant to this Subsection 3.2 to provide access to any information that it reasonably and in good faith considers to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.
3.3. Observer Rights.
(a) So long as (i) Blue Ox owns more than zero percent (0%) and less than ten percent (10%) of the shares of the Common Stock (including shares of Common Stock issued or issuable upon conversion of Preferred Stock) it has originally purchased, which number is subject to appropriate adjustment for all stock splits, dividends, combinations, recapitalizations and the like, and (ii) ATH Holding does not have the right to appoint an observer pursuant to clause (b) below, the Company shall invite a representative of Blue Ox to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence and trust all information so provided (provided, that, notwithstanding the foregoing and for the avoidance of doubt, nothing herein shall restrict such representative from disclosing such information to Blue Ox, subject to Section 3.5 below); and provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting would adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, or if such Investor or its representative is a competitor of the Company.
17
(b) So long as ATH Holding owns Preferred Stock, the Company shall invite a representative of ATH Holding to attend all meetings of the Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors; provided, however, that such representative shall agree to hold in confidence and trust all information so provided (provided, that, notwithstanding the foregoing and for the avoidance of doubt, nothing herein shall restrict such representative from disclosing such information to ATH Holding, subject to Section 3.5 below); provided further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting would adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, or if ATH Holding or its representative is a competitor of the Company.
3.4. Termination of Information and Observer Rights. The covenants set forth in Subsections 3.1, 3.2 and 3.3 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Restated Certificate, whichever event occurs first.
3.5. Confidentiality. Each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Subsection 3.5 by such Investor), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Subsection 3.5; (iii) to any existing or prospective Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, provided that the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.
18
4. Rights to Future Stock Issuances.
4.1. Right of First Offer. Subject to the terms and conditions of this Subsection 4.1 and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Investor. An Investor shall be entitled to apportion the right of first offer hereby granted to it in such proportions as it deems appropriate, among (i) itself, and (ii) its Affiliates, provided that, each such Affiliate agrees (a) to enter into this Agreement and each of the Fourth Amended and Restated Voting Agreement and Fifth Amended and Restated Right of First Refusal and Co-Sale Agreement of even date herewith among the Company, the Investors and the other parties named therein, as an “Investor” under each such agreement, and (b) agrees to purchase at least such number of New Securities as are allocable hereunder to the Investor holding the fewest number of Preferred Stock and any other Derivative Securities.
(a) The Company shall give notice (the “Offer Notice”) to each Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.
(b) By notification to the Company within twenty (20) days after the Offer Notice is given, each Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals (i) the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by such Investor bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Preferred Stock and other Derivative Securities) (the “Pro Rata Share”) plus (ii) to the extent any New Securities are not included in any Investor’s Pro Rata Share, each Investor that is a Holder of Series D Preferred Stock, an additional number of New Securities equal as nearly as possible to such Investor’s Pro Rata Share (it being the intention that Investors holding shares of Series D Preferred Stock be entitled, as nearly as possible, to 200% of their Pro Rata Share). At the expiration of such twenty (20) day period, the Company shall promptly notify each Investor that elects to purchase or acquire all the shares available to it (each, a “Fully Exercising Investor”) of any other Investor’s failure to do likewise. During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Investor may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the New Securities for which Investors were entitled to subscribe but that were not subscribed for by the Investors (“Over Allotment Securities”) which is equal to the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of Preferred Stock and any other Derivative Securities then held, by such Fully Exercising Investor bears to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by all Fully Exercising Investors who wish to purchase such unsubscribed shares; provided, however, that such Over Allotment Securities shall first be allocated to Investors holding shares of Series D Preferred Stock until such Investors shall have been given the opportunity to purchase 200% of their Pro Rata Share and thereafter to all Fully Exercising Investors. The closing of any sale pursuant to this Subsection 4.1(b) shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Subsection 4.1(c).
19
(c) If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Subsection 4.1(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Subsection 4.1(b), offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Investors in accordance with this Subsection 4.1.
(d) The right of first offer in this Subsection 4.1 shall not be applicable to (i) Exempted Securities (as defined in the Restated Certificate); (ii) shares of Common Stock issued in the IPO; and (iii) the issuance of additional shares of Preferred Stock pursuant to the Purchase Agreement.
(e) Notwithstanding any provision hereof to the contrary, in lieu of complying with the provisions of this Subsection 4.1, the Company may elect to give notice to the Investors within thirty (30) days after the issuance of New Securities. Such notice shall describe the type, price, and terms of the New Securities. Each Investor shall have twenty (20) days from the date notice is given to elect to purchase up to the number of New Securities that would, if purchased by such Investor, maintain such Investor’s percentage-ownership position, calculated as set forth in Subsection 4.1(b) before giving effect to the issuance of such New Securities. The closing of such sale shall occur within sixty (60) days of the date notice is given to the Investors.
4.2. Termination. The covenants set forth in Subsection 4.1 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Restated Certificate, whichever event occurs first and, as to each Investor, in accordance with Subsection 4.1(e).
5. Additional Covenants.
5.1. Insurance. If the Board so determines, the Company shall use its commercially reasonable efforts to obtain within ninety (90) days of the date hereof Directors and Officers liability insurance and term “key-person” insurance on such individual or individuals designated by the Board from financially sound and reputable insurers, each in an amount and on terms and conditions satisfactory to the Board, and will use commercially reasonable efforts to cause such insurance policies to be maintained until such time as the Board determines that such insurance should be discontinued.
5.2. Employee Agreements. The Company will cause (i) each person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or trade secrets to enter into a nondisclosure and proprietary rights assignment agreement and (ii) each Key Employee to enter into a one (1) year noncompetition and nonsolicitation agreement, substantially in the form attached hereto as Exhibit A. In addition, the Company shall not materially amend, modify, terminate, waive, or otherwise alter, in whole or in part, any of the above-referenced agreements or any restricted stock agreement between the Company and any employee, without the consent of at least seventy percent (70%) of the Preferred Directors.
20
5.3. Employee Stock. Unless otherwise approved by the Board , including the Preferred Directors, all future employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting following one (1) year of continued employment or service, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Subsection 2.11. In addition, unless otherwise approved by the Board, including at least seventy percent (70%) of the Preferred Directors, the Company shall retain a “right of first refusal” on employee transfers until the Company’s IPO and shall have the right to repurchase unvested shares at cost upon termination of employment of a holder of restricted stock.
5.4. Qualified Small Business Stock. The Company shall use commercially reasonable efforts to cause the shares of Preferred Stock issued pursuant to the Purchase Agreement, as well as any shares into which such shares are converted, within the meaning of Section 1202(f) of the Internal Revenue Code (the “Code”), to constitute “qualified small business stock” as defined in Section 1202(c) of the Code; provided, however, that such requirement shall not be applicable if the Board determines, in its good-faith business judgment, that such qualification is inconsistent with the best interests of the Company. The Company shall submit to its stockholders (including the Investors) and to the Internal Revenue Service any reports that may be required under Section 1202(d)(1)(C) of the Code and the regulations promulgated thereunder. In addition, within twenty (20) business days after any Investor’s written request therefor, the Company shall, at its option, either (i) deliver to such Investor a written statement indicating whether (and what portion of) such Investor’s interest in the Company constitutes “qualified small business stock” as defined in Section 1202(c) of the Code or (ii) deliver to such Investor such factual information in the Company’s possession as is reasonably necessary to enable such Investor to determine whether (and what portion of) such Investor’s interest in the Company constitutes “qualified small business stock” as defined in Section 1202(c) of the Code.
5.5. Matters Requiring Investor Director Approval. So long as the holders of Series A2 Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock are entitled to elect at least one (1) Preferred Director, the Company hereby covenants and agrees with each of the Investors that it shall not, without approval of the Board, which approval must include the affirmative vote of at least two (2) of the Preferred Directors (or if there be only one (1) Preferred Director, then the affirmative vote of the Preferred Director):
(a) enter into any corporate strategic relationship involving the payment, contribution or assignment by the Company or to the Company of assets greater than $100,000;
21
(b) approve, adopt or modify the Budget or incur expenditures or expenses (or commit the Company to incur expenditures or expenses) not reflected in the Budget for any particular fiscal year of the Company;
(c) guarantee any indebtedness except for trade accounts of the Company or any subsidiary arising in the ordinary course of business;
(d) make any investment inconsistent with any investment policy approved by the Board;
(e) make, or permit any subsidiary to make, any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is wholly owned by the Company;
(f) make, or permit any subsidiary to make, any loan or advance to any Person, including, without limitation, any employee or director of the Company or any subsidiary, except advances and similar expenditures in the ordinary course of business or under the terms of an employee stock or option plan approved by the Board;
(g) enter into or become a party to any transaction with any director, officer or employee of the Company or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such person;
(h) make any grants of equity compensation to employees or service providers of the Company; or
(i) hire or terminate any member of senior management, at the Vice President and above levels, of the Company and approve salary, bonus and other compensation or titles (or make changes thereto) for any such members of senior management.
5.6. Board Matters. Unless otherwise determined by the vote of a majority of the directors then in office, the Board shall meet at least quarterly in accordance with an agreed-upon schedule. The Company shall reimburse the nonemployee directors for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s travel policy) in connection with attending meetings of the Board.
5.7. Successor Indemnification. If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, the Restated Certificate, or elsewhere, as the case may be.
22
5.8. Indemnification Matters. The Company hereby acknowledges that one (1) or more of the directors nominated to serve on the Board by the Investors (each a “Fund Director”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Investors and certain of their affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Fund Director are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Fund Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Fund Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such Fund Director to the extent legally permitted and as required by the Restated Certificate or the Company’s Bylaws (or any agreement between the Company and such Fund Director), without regard to any rights such Fund Director may have against the Fund Indemnitors, and, (c) that it irrevocably waives, relinquishes and releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Fund Indemnitors on behalf of any such Fund Director with respect to any claim for which such Fund Director has sought indemnification from the Company shall affect the foregoing and the Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Fund Director against the Company.
5.9. Fosun Right to Conduct Activities. The Company hereby agrees and acknowledges that Fosun (together with its affiliates) invests in numerous portfolio companies, some of which may be deemed competitive with the Company’s business (as currently conducted or as currently propose to be conducted). The Company hereby agrees that, to the extent permitted under applicable law, Fosun shall not be liable to the Company for any claim arising out of, or based upon, (i) the investment by Fosun in any entity competitive with the Company, or (ii) actions taken by any partner, officer or other representative of Fosun to assist any such competitive company, whether or not such action was taken as a member of the board of directors of such competitive company or otherwise, and whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve (x) any of the Investors from liability associated with the unauthorized use or disclosure of the Company’s confidential information obtained pursuant to this Agreement, or (y) any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.
5.10. Blue Ox and ATH Holding Right to Conduct Activities. The Company hereby agrees and acknowledges that Blue Ox and ATH Holding (together with the affiliates of each) invest in numerous portfolio companies, some of which may be deemed competitive with the Company’s business (as currently conducted or as currently propose to be conducted). The Company hereby agrees that, to the extent permitted under applicable law, neither Blue Ox nor ATH Holding shall be liable to the Company for any claim arising out of, or based upon, (i) the investment by Blue Ox or ATH Holding in any entity competitive with the Company, or (ii) actions taken by any partner, officer or other representative of Blue Ox or ATH Holding to assist any such competitive company, whether or not such action was taken as a member of the board of directors of such competitive company or otherwise, and whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve (x) any of the Investors from liability associated with the unauthorized disclosure of the Company’s confidential information obtained pursuant to this Agreement, or (y) any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.
23
5.11. Termination of Covenants. The covenants set forth in this Section 5, except for Subsection 5.7, shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Restated Certificate, whichever event occurs first.
6. Miscellaneous.
6.1. Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such transfer, holds at least ten percent (10%) of the outstanding shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations) originally held by such Holder; provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Subsection 2.11. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.
6.2. Governing Law. This Agreement and any controversy arising out of or relating to this Agreement shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to its principles of conflicts of laws.
6.3. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
6.4. Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.
24
6.5. Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule A or Schedule B (as applicable) hereto, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Subsection 6.5. If notice is given to the Company, a copy shall also be sent to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, MA 02111, Attn: Jonathan L. Kravetz and if notice is given to Stockholders, a copy shall also be given to such counsel as may appear with such Investor’s address on the Schedule of Purchasers attached to the Purchase Agreement.
6.6. Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding; provided that the Company may in its sole discretion waive compliance with Subsection 2.12(c) (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Subsection 2.12(c) shall be deemed to be a waiver); and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless, other than with respect to this Section 6.6 (which shall require the consent of the holders of a majority of the Registrable Securities then outstanding, including Blue Ox so long as Blue Ox holds any Registrable Securities), such amendment, termination, or waiver applies to all Investors in the same fashion (it being agreed that (x) a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless, by agreement with the Company, purchase securities in such transaction and (y) any waiver, amendment or termination of any provision or right set forth herein that specifically references an Investor (e.g. the provisions of Section 5.9 and Section 5.10) shall not be deemed to apply to all Investors in the same fashion). Further, this Agreement may not be amended, and no provision hereof may be waived, in each case, in any way which would adversely affect the rights of the Key Holders hereunder in a manner disproportionate to any adverse effect such amendment or waiver would have on the rights of the Investors hereunder, without also the written consent of the holders of at least a majority of the Key Holder Registrable Securities held by the Key Holders. The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this Subsection 6.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.
25
6.7. Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.
6.8. Aggregation of Stock. All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.
6.9. Additional Investors. Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of Series C Preferred Stock or Series E Preferred Stock after the date hereof, any purchaser of such shares of Preferred Stock may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” for all purposes hereunder. No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor, so long as such additional Investor has agreed in writing to be bound by all of the obligations as an “Investor” hereunder.
6.10. Entire Agreement. This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled. Upon the effectiveness of this Agreement, the Prior Agreement shall be deemed amended and restated and superseded and replaced in its entirety by this Agreement, and shall be of no further force or effect.
6.11. Dispute Resolution. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this Agreement, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this Agreement except in the state courts of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court.
26
6.12. Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
6.13. Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.
6.14. Acknowledgment. The Company acknowledges that the Investors are in the business of venture capital investing and therefore review the business plans and related proprietary information of many enterprises, including enterprises which may have products or services which compete directly or indirectly with those of the Company. Nothing in this Agreement shall preclude or in any way restrict the Investors from investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company.
[Remainder of Page Intentionally Left Blank]
27
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
SERA PROGNOSTICS, INC. | ||
By: | /s/ Gregory C. Critchfield, MD, MS | |
Name: | Gregory C. Critchfield, MD, MS | |
Title: | President and Chief Executive Officer |
Address: | 2749 E Parleys Way, Suite 200 | |
Salt Lake City, UT 84109 |
SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
LEAD INVESTOR: | ||
BLUE OX HEALTHCARE | ||
PARTNERS SP, LLC | ||
By: | /s/ John A. Neczesny | |
Name: | John A. Neczesny | |
(print) | ||
Title: | Authorized Person | |
Address: | 239 Dawson Rd. | |
Hillsdale, NY 12529 | ||
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
LEAD INVESTOR: | |
BXHCP SP II, LLC |
By: | /s/ John A. Neczesny |
Name: | John A. Neczesny | |
(print) | ||
Title: | Authorized Person |
Address: | 239 Dawson Rd. | ||
Hillsdale, NY 12529 | |||
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
INVESTOR: | |
LABORATORY CORPORATION OF AMERICA HOLDINGS |
By: | /s/ Megann Vaughn Watters |
Name: | Megann Vaughn Watters | |
(print) | ||
Title: | VP |
Address: | Attn: Law Department | ||
531 S Spring St. | |||
Burlington, NC 27215 |
If notice is given, a copy should also be sent to: |
Address: | Attn: Corporate Development | ||
531 S Spring St. | |||
Burlington, NC 27215 |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
INVESTOR: | |
DOMAIN PARTNERS VIII, L.P. |
By: | One Palmer Square Associates VIII, L.L.C., its General Partner |
By: | /s/ Lisa A. Kraeutler |
Name: | Lisa A. Kraeutler | |
Title: | Attorney-in-Fact |
Address: | 202 Carnegie Center | ||
Suite 104 | |||
Princeton, NJ 08540 |
INVESTOR: | |
DP VIII ASSOCIATES, L.P. |
By: | One Palmer Square Associates VIII, L.L.C., its General Partner |
By: | /s/ Lisa A. Kraeutler |
Name: | Lisa A. Kraeutler | |
Title: | Attorney-in-Fact |
Address: | 202 Carnegie Center | ||
Suite 104 | |||
Princeton, NJ 08540 |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
INVESTOR: | |
INTERWEST PARTNERS X, L.P. |
By: InterWest Management Partners X, LLC, its General Partner |
By: | /s/ Khaled A. Nasr |
Name: | Khaled A. Nasr | |
(print) | ||
Title: | Venture Member |
Address: | 2710 Sand Hill Road | ||
Second Floor | |||
Menlo Park, CA 94025 |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
INVESTOR: | |
CATALYST HEALTH VENTURES, L.P. |
By: CHV GP, LLC, its General Partner |
By: | /s/ Joshua S. Phillips |
Name: | Joshua S. Phillips | |
Title: | Manager |
Address: | 50 Braintree Hill Office Park, | ||
Suite 301 | |||
Braintree, MA 02184 |
INVESTOR: | |
CATALYST HEALTH VENTURES (PF), L.P. |
By: CHV GP, LLC, its General Partner |
By: | /s/ Joshua S. Phillips |
Name: | Joshua S. Phillips | |
Title: | Manager |
Address: | 50 Braintree Hill Office Park, | ||
Suite 301 | |||
Braintree, MA 02184 |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
INVESTOR: | |
CATALYST HEALTH VENTURES | |
FOLLOW-ON FUND L.P. |
By: CHV GP, LLC, its General Partner |
By: | /s/ Joshua S. Phillips |
Name: | Joshua S. Phillips | |
Title: | Manager |
Address: | 50 Braintree Hill Office Park, | ||
Suite 301 | |||
Braintree, MA 02184 |
INVESTOR: | |
CHV INVESTMENTS LLC |
By: CHV III GP, LLC its Manager |
By: | /s/ Joshua S. Phillips |
Name: | Joshua S. Phillips | |
Title: | Manager |
Address: | 50 Braintree Hill Office Park, | ||
Suite 301 | |||
Braintree, MA 02184 |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
INVESTOR: | |
UPSTART LIFE SCIENCES CAPITAL, L.P. |
By: | /s/ Dennis B. Farrar |
Name: | Dennis B. Farrar | |
Title: | Managing Director |
Address: | 417 Wakara Way, Suite 3510 | ||
Salt Lake City, UT 84108 |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
INVESTOR: | |
CHIONE LTD. |
By: | /s/ Marcin Czernik |
Name: | Marcin Czernik | |
(print) | ||
Title: | Director |
Address: | Simou Menardou 5, Kifisia Court | ||
Office 225 | |||
6015 Larnaca, Cyprus |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
INVESTOR: | ||
BILL & MELINDA GATES FOUNDATION | ||
/s/ Vidya Vasu-Devan | ||
Name: | Vidya Vasu-Devan | |
Title: | Director, Strategic Investment Fund |
Address: | P.O. Box 23350 | |
Seattle, WA 98102 |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
INVESTOR: | ||
GREGORY C. CRITCHFIELD, M.D., MS | ||
/s/ Gregory C. Critchfield, M.D., MS | ||
Gregory C. Critchfield, M.D., MS | ||
Address: | 6170 Murdock Woods | |
Holladay, UT 84121 |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
INVESTOR: | ||
ATH HOLDING COMPANY, LLC | ||
/s/ Vincent Scher | ||
By: | Vincent Scher | |
Title: | Treasurer |
Address: | ATH Holding Company, LLC | |
c/o Anthem, Inc. | ||
220 Virginia Avenue | ||
Indianapolis, IN 46204 |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
KEY HOLDERS: | ||
GREGORY C. CRITCHFIELD, M.D. | ||
Signature: | /s/ Gregory C. Critchfield, M.D. |
By: | Gregory C. Critchfield, M.D. |
Address: | 6170 Murdock Woods | |
Holladay, UT 84121 |
DURLIN E. HICKOK, M.D. | ||
Signature: |
By: | Durlin E. Hickok, M.D. |
Address: | 18009 Couch Market Road | |
Bend, OR 97703 |
ANDREW A. SAUTER | ||
Signature: |
By: | Andrew A. Sauter |
Address: | 3318 Whitehaven Dr. | |
Walnut Creek, CA 94598 |
JAY BONIFACE, PhD | ||
Signature: |
By: | Jay Boniface, PhD |
Address: | 1020 South Douglas Street | |
Salt Lake City, UT 84105 |
DOUGLAS C FISHER, MD | ||
Signature: |
By: | Douglas C Fisher, MD |
Address: | 587 Patrol Road | |
Woodside CA 94062 |
SIGNATURE PAGE TO
FOURTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
SCHEDULE A
Investors
Blue Ox Healthcare Partners SP, LLC
135 East 57th St. 23rd Floor
New York, NY 10022
BXHCP SP II, LLC
135 East 57th St. 23rd Floor
New York, NY 10022
BXHCP SP III, LLC
135 East 57th St. 23rd Floor
New York, NY 10022
ATH Holding Company, LLC
c/o Anthem, Inc.
220 Virginia Avenue
Indianapolis, IN 46204
Laboratory Corporation of America Holdings
Attn: Law Department
531 S. Spring St.
Burlington, NC 27215
Vaughm2@LabCorp.com
If notice is given, a copy should also be sent to:
Attn: Corporate Development
531 S. Spring St.
Burlington, NC 27215
DP VIII Associates, L.P.
202 Carnegie Center
Suite 104
Princeton, NJ 08540
(609) 683-5656
(609) 683-4581 fax
kraeutler@domainvc.vom
Domain Partners VIII, L.P.
202 Carnegie Center
Suite 104
Princeton, NJ 08540
(609) 683-5656
(609) 683-4581 fax
kraeutler@domainvc.vom
Catalyst Health Ventures, L.P.
50 Braintree Hill Office Park, Suite 301
Braintree, MA 02184
(781) 228-5228
(781) 228-5150 fax
jphillips@catalysthealthventures.com
Catalyst Health Ventures (PF), L.P.
50 Braintree Hill Office Park, Suite 301
Braintree, MA 02184
(781) 228-5228
(781) 228-5150 fax
jphillips@catalysthealthventures.com
Catalyst Health Ventures Follow-On Fund L.P.
50 Braintree Hill Office Park, Suite 301
Braintree, MA 02184
(781) 228-5228
(781) 228-5150 fax
jphillips@catalysthealthventures.com
CHV Investments LLC
50 Braintree Hill Office Park, Suite 301
Braintree, MA 02184
(781) 228-5228
(781) 228-5150 fax
jphillips@catalysthealthventures.com
NI-LPT, LLC
1 Elm Sq., Suite 1B
Andover, MA 01810
InterWest Partners X, L.P.
2710 Sand Hill Road
Suite 200
Menlo Park, CA 94025
Chione Ltd.
Simou Menardou 5, KIFISIA COURT
2nd Floor, Office 225
6015 Larnaca, Cyprus
Osage University Partners I, L.P.
50 Monument Road, Suite 201
Bala Cynwyd, PA 19004
UpStart Life Sciences Capital, L.P.
417 Wakara Way, Suite 3510
Salt Lake City, UT 84108
(801) 505-0636
(801) 505-0631 fax
denny@upstartvc.com
Richard Novak Dynasty Trust
36 Church Street
Greenwich, CT 06830
Gregory C. Critchfield, MD, MS
6170 Murdock Woods Place
Holladay, UT 84121
The Trimble Trust
27342 Lost Colt Drive
Laguna Hills, CA 92653
Deer Ridge Consulting, LLC
P.O. Box 500
20 Johnson Drive
Raritan, NJ 08869
(908) 252-7900
(908) 252-7904
Reed Corry
3316 E Shore Drive
Seattle, WA 98112
(206) 625-1292
Email: reed@allegiant1.com
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
(617) 542-6000
(617) 542-2241 fax
jkravetz@mintz.com
Steven Robert Garen Family Trust
c/o Eric Garen
11355 W. Olympic Blvd.
Los Angeles, CA 90064
Nicole Suzanne Garen Family Trust
c/o Eric Garen
11355 W. Olympic Blvd.
Los Angeles, CA 90064
Amos Madanes
1814 North Orleans St.
Chicago, IL 60614
Deseret Foundation
c/o Lori Piscopo
5121 S. Cottonwood St.
Murray, UT 84157
Maurice J. McSweeney
c/o Foley & Lardner
777 E. Wisconsin Ave.
Milwaukee, WI 53202
Mark Fischer-Colbrie
21211 Rainbow Dr.
Cupertino, CA 95014
Bill and Melinda Gates Foundation
P.O. Box 23350
Seattle, WA 98102
2014 Exchange Place Fund A, LLC
c/o Goodwin Procter LLP
Attn: Finance Department
100 Northern Avenue
Boston, MA 02210
2014 Exchange Place Fund B, LLC
c/o Goodwin Procter LLP
Attn: Finance Department
100 Northern Avenue
Boston, MA 02210
Stephen M. Davis
115 E. 87th Street, Apt. 39F
New York, NY 10128
Kurt Fischer
4192 Bay Beach Lane #892
Fort Myers Beach, FL 33931
SCHEDULE B
Key Holders
Gregory C. Critchfield, MD, MS
6170 Murdock Woods Place
Holladay, UT 84121
Durlin E. Hickok, M.D.
18009 Couch Market Road
Bend, OR 97703
Andrew A. Sauter
3318 Whitehaven Dr.
Walnut Creek, CA 94598
Jay Boniface, PhD
1020 Douglas Street
Salt Lake City, UT 84105
Douglas C Fisher, MD
587 Patrol Road
Woodside, CA 94062
Nadia Altomare
29 Oliver Road
Belmont, MA 02478
Garrett Lam, MD
1864 Mountain Crest Drive
Draper, UT 84020
Exhibit A
Non-Solicitation Agreement
Exhibit 10.2
SERA PROGNOSTICS, INC.
2011 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLAN
(as amended March 21, 2016 and August 20, 2020)
1. | DEFINITIONS. |
Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this Sera Prognostics. Inc. 2011 Employee, Director and Consultant Equity Incentive Plan, have the following meanings:
Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator means the Committee.
Affiliate means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.
Agreement means an agreement between the Company and a Participant delivered pursuant to the Plan and pertaining to a Stock Right, in such form as the Administrator shall approve.
Board of Directors means the Board of Directors of the Company.
California Participant means a Participant who resides in the State of California.
Cause means, with respect to a Participant (a) dishonesty with respect to the Company or any Affiliate, (b) insubordination, substantial malfeasance or non-feasance of duty, (c) unauthorized disclosure of confidential information, (d) breach by a Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company or any Affiliate, and (e) conduct substantially prejudicial to the business of the Company or any Affiliate; provided, however, that any provision in an agreement between a Participant and the Company or an Affiliate, which contains a conflicting definition of Cause for termination and which is in effect at the time of such termination, shall supersede this definition with respect to that Participant. The determination of the Administrator as to the existence of Cause will be conclusive on the Participant and the Company.
Change of Control means the occurrence of any of the following events:
Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the sale or disposition by the Company of all or substantially all of the Company’s assets in a transaction requiring stockholder approval. Change of Control shall be interpreted, if applicable, in a manner, and limited to the extent necessary, so that it will not cause adverse tax consequences under Section 409A.
Code means the United States Internal Revenue Code of 1986, as amended including any successor statute, regulation and guidance thereto.
Committee means the committee of the Board of Directors to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan.
Common Stock means shares of the Company’s common stock, $0.0001 par value per share.
Company means Sera Prognostics, Inc., a Delaware corporation.
Consultant means any natural person who is an advisor or consultant that provides bona fide services to the Company or its Affiliates, provided that such services are not in connection with the offer or sale of securities in a capital raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s or its Affiliates’ securities.
Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.
Employee means any employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under the Plan.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Fair Market Value of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities exchange or traded in the over-the-counter market and sales prices are regularly reported for the Common Stock, the closing or, if not applicable, the last price of the Common Stock on the composite tape or other comparable reporting system for the trading day on the applicable date and if such applicable date is not a trading day, the last market trading day prior to such date;
(2) If the Common Stock is not traded on a national securities exchange but is traded on the over-the-counter market, if sales prices are not regularly reported for the Common Stock for the trading day referred to in clause (1), and if bid and asked prices for the Common Stock are regularly reported, the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter market for the trading day on which Common Stock was traded on the applicable date and if such applicable date is not a trading day, the last market trading day prior to such date; and
2
(3) If the Common Stock is neither listed on a national securities exchange nor traded in the over-the-counter market, such value as the Administrator, in good faith, shall determine.
ISO means an option intended to qualify as an incentive stock option under Section 422 of the Code.
Non-Qualified Option means an option which is not intended to qualify as an ISO.
Option means an ISO or Non-Qualified Option granted under the Plan.
Participant means an Employee, director or Consultant of the Company or an Affiliate to whom one or more Stock Rights are granted under the Plan. As used herein, “Participant” shall include “Participant’s Survivors” where the context requires.
Plan means this Sera Prognostics, Inc. 2011 Employee, Director and Consultant Equity Incentive Plan.
Securities Act means the Securities Act of 1933, as amended.
Shares means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.
Stock-Based Award means a grant by the Company under the Plan of an equity award or an equity based award which is not an Option or a Stock Grant.
Stock Grant means a grant by the Company of Shares under the Plan.
Stock Right means a right to Shares or the value of Shares of the Company granted pursuant to the Plan -- an ISO, a Non-Qualified Option, a Stock Grant or a Stock-Based Award.
Survivor means a deceased Participant’s legal representatives and/or any person or persons who acquired the Participant’s rights to a Stock Right by will or by the laws of descent and distribution.
3
2. | PURPOSES OF THE PLAN. |
The Plan is intended to encourage ownership of Shares by Employees and directors of and certain Consultants to the Company and its Affiliates in order to attract and retain such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards.
3. | SHARES SUBJECT TO THE PLAN. |
(a) The number of Shares which may be issued from time to time pursuant to this Plan shall be the sum of: (i) 6,190,130 shares of Common Stock and (ii) any shares of Common Stock that are represented by awards granted under the Company’s 2008 Stock Incentive Plan that are forfeited, expire or are cancelled without delivery of shares of Common Stock or which result in the forfeiture of shares of Common Stock back to the Company on or after November 8, 2011, or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 24 of this Plan; provided, however, that no more than 837 Shares shall be added to the Plan pursuant to subsection (ii).
(b) Notwithstanding Subparagraph (a) above, on the first day of each fiscal year of the Company during the period beginning in fiscal year 2021, and ending on the second day of fiscal year 2030, the number of Shares that may be issued from time to time pursuant to the Plan shall be increased by an amount equal to the lesser of (i) 4% of the number of fully diluted shares of the Company’s Common Stock on the immediately preceding December 31, and (ii) an amount determined by the Administrator. Notwithstanding the foregoing, the maximum number of Shares that may be issued as ISOs under the Plan shall be fifty million (50,000,000).
(c) If an Option ceases to be “outstanding”, in whole or in part (other than by exercise), or if the Company shall reacquire (at not more than its original issuance price) any Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right expires or is forfeited, cancelled, or otherwise terminated or results in any Shares not being issued, the unissued or reacquired Shares which were subject to such Stock Right shall again be available for issuance from time to time pursuant to this Plan. Notwithstanding the foregoing, if a Stock Right is exercised, in whole or in part, by tender of Shares or if the Company or an Affiliate’s tax withholding obligation is satisfied by withholding Shares, the number of Shares deemed to have been issued under the Plan for purposes of the limitation set forth in Paragraph 3(a) above shall be the number of Shares that were subject to the Stock Right or portion thereof, and not the net number of Shares actually issued. However, in the case of ISOs, the foregoing provisions shall be subject to any limitations under the Code.
4. | ADMINISTRATION OF THE PLAN. |
The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:
4
(a) Interpret the provisions of the Plan and all Stock Rights and to make all rules and determinations which it deems necessary or advisable for the administration of the Plan;
(b) Determine which Employees, directors and Consultants shall be granted Stock Rights;
(c) Determine the number of Shares for which a Stock Right or Stock Rights shall be granted;
(d) Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted;
(e) Amend any term or condition of any outstanding Stock Right, including, without limitation, to reduce or increase the exercise price or purchase price, accelerate the vesting schedule or extend the expiration date, provided that (i) such term or condition as amended is permitted by the Plan; (ii) any such amendment shall not impair the rights of a Participant under any Stock Right previously granted without such Participant’s consent or in the event of death of the Participant the Participant’s Survivors; and (iii) any such amendment shall be made only after the Administrator determines whether such amendment would cause any adverse tax consequences to the Participant, including, but not limited to, the annual vesting limitation contained in Section 422(d) of the Code and described in Paragraph 6(b)(iv) below with respect to ISOs and pursuant to Section 409A of the Code;
(f) Buy out for a payment in cash or Shares, a Stock Right previously granted and/or cancel any such Stock Right and grant in substitution therefor other Stock Rights, covering the same or a different number of Shares and having an exercise price or purchase price per share which may be lower or higher than the exercise price or purchase price of the cancelled Stock Right, based on such terms and conditions as the Administrator shall establish and the Participant shall accept; and
(g) Adopt any sub-plans applicable to residents of any specified jurisdiction as it deems necessary or appropriate in order to comply with or take advantage of any tax or other laws applicable to the Company, any Affiliate or to Participants or to otherwise facilitate the administration of the Plan, which sub-plans may include additional restrictions or conditions applicable to Stock Rights or Shares issuable pursuant to a Stock Right;
provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of not causing any adverse tax consequences under Section 409A of the Code and preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs. Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee. In addition, if the Administrator is the Committee, the Board of Directors may take any action under the Plan that would otherwise be the responsibility of the Committee.
To the extent permitted under applicable law, the Board of Directors or the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person selected by it. The Board of Directors or the Committee may revoke any such allocation or delegation at any time.
5
5. | ELIGIBILITY FOR PARTICIPATION. |
The Administrator will, in its sole discretion, name the Participants in the Plan; provided, however, that each Participant must be an Employee, director or Consultant of the Company or of an Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person not then an Employee, director or Consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the execution of the Agreement evidencing such Stock Right. ISOs may be granted only to Employees who are deemed to be residents of the United States for tax purposes. Non-Qualified Options, Stock Grants and Stock-Based Awards may be granted to any Employee, director or Consultant of the Company or an Affiliate. The granting of any Stock Right to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Stock Rights or any grant under any other benefit plan established by the Company or any Affiliate for Employees, directors or Consultants.
6. | TERMS AND CONDITIONS OF OPTIONS. |
Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms and conditions specifically required under this Plan, as the Administrator may deem appropriate including, without limitation, subsequent approval by the shareholders of the Company of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the following terms and conditions:
(a) Non-Qualified Options: Each Option intended to be a Non-Qualified Option shall be subject to the terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for any such Non-Qualified Option:
(i) | Exercise Price: Each Option Agreement shall state the exercise price (per share) of the Shares covered by each Option, which exercise price shall be determined by the Administrator and shall be at least equal to the Fair Market Value per share of Common Stock on the date of grant of the Option. |
(ii) | Number of Shares: Each Option Agreement shall state the number of Shares to which it pertains. |
(iii) | Option Periods: Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain conditions or the attainment of stated goals or events. For California Participants, the exercise period of the Option set forth in the Option Agreement shall not be more than 120 months from the date of grant. |
6
(iv) | Option Conditions: Exercise of any Option may be conditioned upon the Participant’s execution of a Share purchase agreement in form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements that: |
A. | The Participant’s or the Participant’s Survivors’ right to sell or transfer the Shares may be restricted; and |
B. | The Participant or the Participant’s Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions. |
(v) | Term of Option: Each Option shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide. |
(b) ISOs: Each Option intended to be an ISO shall be issued only to an Employee who is deemed to be a resident of the United States for tax purposes, and shall be subject to the following terms and conditions, with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422 of the Code and relevant regulations and rulings of the Internal Revenue Service:
(i) | Minimum standards: The ISO shall meet the minimum standards required of Non-Qualified Options, as described in Paragraph 6(a) above, except clause (i) and (v) thereunder. |
(ii) | Exercise Price: Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Section 424(d) of the Code: |
A. | 10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share of the Shares covered by each ISO shall not be less than 100% of the Fair Market Value per share of the Common Stock on the date of grant of the Option; or |
B. | More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, the exercise price per share of the Shares covered by each ISO shall not be less than 110% of the Fair Market Value per share of the Common Stock on the date of grant of the Option. |
7
(iii) | Term of Option: For Participants who own: |
A. | 10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide; or |
B. | More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than five years from the date of the grant or at such earlier time as the Option Agreement may provide. |
(iv) | Limitation on Yearly Exercise: The Option Agreements shall restrict the amount of ISOs which may become exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined on the date each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed $100,000. |
7. | TERMS AND CONDITIONS OF STOCK GRANTS. |
Each Stock Grant to a Participant shall state the principal terms in an Agreement duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. For California Participants, each Stock Grant shall be issued within ten (10) years from the earlier of the date the Plan is adopted or approved by the Company’s shareholders. The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards:
(a) Each Agreement shall state the purchase price per share, if any, of the Shares covered by each Stock Grant, which purchase price shall be determined by the Administrator but shall not be less than the minimum consideration required by the Delaware General Corporation Law, if any, on the date of the grant of the Stock Grant;
(b) Each Agreement shall state the number of Shares to which the Stock Grant pertains; and
(c) Each Agreement shall include the terms of any right of the Company to restrict or reacquire the Shares subject to the Stock Grant, including the time and events upon which such rights shall accrue and the purchase price therefor, if any.
8. | TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS. |
The Administrator shall have the right to grant other Stock-Based Awards based upon the Common Stock having such terms and conditions as the Administrator may determine, including, without limitation, the grant of Shares based upon certain conditions, the grant of securities convertible into Shares and the grant of stock appreciation rights, phantom stock awards or stock units. The principal terms of each Stock-Based Award shall be set forth in an Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company.
8
The Company intends that the Plan and any Stock-Based Awards granted hereunder be exempt from the application of Section 409A of the Code or meet the requirements of paragraphs (2), (3) and (4) of subsection (a) of Section 409A of the Code, to the extent applicable, and be operated in accordance with Section 409A so that any compensation deferred under any Stock-Based Award (and applicable investment earnings) shall not be included in income under Section 409A of the Code. Any ambiguities in the Plan shall be construed to effect the intent as described in this Paragraph 8.
9. | EXERCISE OF OPTIONS AND ISSUE OF SHARES. |
An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company or its designee (in a form acceptable to the Administrator, which may include electronic notice), together with provision for payment of the aggregate exercise price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement. Such notice shall be signed by the person exercising the Option (which signature may be provided electronically in a form acceptable to the Administrator), shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Agreement. Payment of the exercise price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months (if required to avoid negative accounting treatment) having a Fair Market Value equal as of the date of the exercise to the aggregate cash exercise price for the number of Shares as to which the Option is being exercised, or (c) at the discretion of the Administrator, by having the Company retain from the Shares otherwise issuable upon exercise of the Option, a number of Shares having a Fair Market Value equal as of the date of exercise to the aggregate exercise price for the number of Shares as to which the Option is being exercised, or (d) at the discretion of the Administrator (after consideration of applicable securities, tax and accounting implications), by delivery of the grantee’s personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (e) at the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator, or (f) at the discretion of the Administrator, by any combination of (a), (b), (c), (d) and (e) above or (g) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine. Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant’s Survivors, as the case may be). In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance. The Shares shall, upon delivery, be fully paid, non-assessable Shares.
9
10. | PAYMENT IN CONNECTION WITH THE ISSUANCE OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES. |
Any Stock Grant or Stock-Based Award requiring payment of a purchase price for the Shares as to which such Stock Grant or Stock-Based Award is being granted shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months (if required to avoid negative accounting treatment) and having a Fair Market Value equal as of the date of payment to the purchase price of the Stock Grant or Stock-Based Award, or (c) at the discretion of the Administrator (after consideration of applicable securities, tax and accounting implications), by delivery of the grantee’s personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by any combination of (a), (b) and (c) above; or (e) at the discretion of the Administrator, by payment of such other lawful consideration as the Administrator may determine.
The Company shall when required by the applicable Agreement, reasonably promptly deliver the Shares as to which such Stock Grant or Stock-Based Award was made to the Participant (or to the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in the applicable Agreement. In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance.
11. | RIGHTS AS A SHAREHOLDER. |
No Participant to whom a Stock Right has been granted shall have rights as a shareholder with respect to any Shares covered by such Stock Right except after due exercise of an Option or issuance of Shares as set forth in any Agreement, tender of the aggregate exercise or purchase price, if any, for the Shares being purchased and registration of the Shares in the Company’s share register in the name of the Participant.
12. | ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS. |
By its terms, a Stock Right granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved by the Administrator in its discretion and set forth in the applicable Agreement provided that no Stock Right may be transferred by a Participant for value. For California Participants, Stock Rights shall not be transferable by the Participant other than by will or by the laws of descent and distribution, to a revocable trust, or as permitted by Rule 701 of the Securities Act. Notwithstanding the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer qualify as an ISO. The designation of a beneficiary of a Stock Right by a Participant, with the prior approval of the Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except as provided above during the Participant’s lifetime a Stock Right shall only be exercisable by or issued to such Participant (or his or her legal representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock Right, shall be null and void.
10
13. | EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY. |
Except as otherwise provided in a Participant’s Option Agreement, in the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate before the Participant has exercised an Option, the following rules apply:
(a) A Participant who ceases to be an Employee, director or Consultant of the Company or of an Affiliate (for any reason other than termination for Cause, Disability, or death for which events there are special rules in Paragraphs 14, 15, and 16, respectively), may exercise any Option granted to him or her to the extent that the Option is exercisable on the date of such termination of service, but only within such term as the Administrator has designated in a Participant’s Option Agreement.
(b) Except as provided in Subparagraph (c) below, or Paragraph 15 or 16, in no event may an Option intended to be an ISO, be exercised later than three months after the Participant’s termination of employment. For Options granted to California Participants, an Option must be exercisable for at least thirty (30) days from the date of a Participant’s termination of employment.
(c) The provisions of this Paragraph, and not the provisions of Paragraph 15 or 16, shall apply to a Participant who subsequently becomes Disabled or dies after the termination of employment, director status or consultancy; provided, however, in the case of a Participant’s Disability or death within three months after the termination of employment, director status or consultancy, the Participant or the Participant’s Survivors may exercise the Option within one year after the date of the Participant’s termination of service, but in no event after the date of expiration of the term of the Option.
(d) Notwithstanding anything herein to the contrary, if subsequent to a Participant’s termination of employment, termination of director status or termination of consultancy, but prior to the exercise of an Option, the Administrator determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute Cause, then such Participant shall forthwith cease to have any right to exercise any Option.
11
(e) A Participant to whom an Option has been granted under the Plan who is absent from the Company or an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide; provided, however, that, for ISOs, any leave of absence granted by the Administrator of greater than ninety days, unless pursuant to a contract or statute that guarantees the right to reemployment, shall cause such ISO to become a Non-Qualified Option on the 181st day following such leave of absence.
(f) Except as required by law or as set forth in a Participant’s Option Agreement, Options granted under the Plan shall not be affected by any change of a Participant’s status within or among the Company and any Affiliates, so long as the Participant continues to be an Employee, director or Consultant of the Company or any Affiliate.
14. | EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE. |
Except as otherwise provided in a Participant’s Option Agreement, the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an Affiliate is terminated for Cause prior to the time that all his or her outstanding Options have been exercised:
(a) All outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated for Cause will immediately be forfeited.
(b) Cause is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of Cause occur prior to termination. If the Administrator determines, subsequent to a Participant’s termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute Cause, then the right to exercise any Option is forfeited.
15. | EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY. |
Except as otherwise provided in a Participant’s Option Agreement:
(a) A Participant who ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant:
12
(i) | To the extent that the Option has become exercisable but has not been exercised on the date of the Participant’s termination of service due to Disability; and |
(ii) | In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of the Participant’s termination of service due to Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of the Participant’s termination of service due to Disability. |
(b) A Disabled Participant may exercise the Option only within the period ending one year after the date of the Participant’s termination of service due to Disability, notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant had not been terminated due to Disability and had continued to be an Employee, director or Consultant or, if earlier, within the originally prescribed term of the Option. For Options granted to California Participants, a Participant may exercise such rights for at least six (6) months from the date of termination of service due to Disability.
(c) The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.
16. | EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT. |
Except as otherwise provided in a Participant’s Option Agreement:
(a) In the event of the death of a Participant while the Participant is an Employee, director or Consultant of the Company or of an Affiliate, such Option may be exercised by the Participant’s Survivors:
(i) | To the extent that the Option has become exercisable but has not been exercised on the date of death; and |
(ii) | In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s date of death. |
(b) If the Participant’s Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not died and had continued to be an Employee, director or Consultant or, if earlier, within the originally prescribed term of the Option. For Options granted to California Participants, the Participant’s Survivors must be allowed to take all necessary steps to exercise the Option for at least six (6) months from the date of death of such Participant.
13
17. | EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS AND STOCK-BASED AWARDS. |
In the event of a termination of service (whether as an Employee, director or Consultant) with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant or a Stock-Based Award and paid the purchase price, if required, such grant shall terminate.
For purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom a Stock Grant has been issued under the Plan who is absent from work with the Company or with an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.
In addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change of employment or other service within or among the Company and any Affiliates shall not be treated as a termination of employment, director status or consultancy so long as the Participant continues to be an Employee, director or Consultant of the Company or any Affiliate.
18. | EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR DISABILITY. |
Except as otherwise provided in a Participant’s Stock Grant Agreement, in the event of a termination of service (whether as an Employee, director or Consultant), other than termination for Cause, Disability, or death for which events there are special rules in Paragraphs 19, 20, and 21, respectively, before all forfeiture provisions or Company rights of repurchase shall have lapsed, then the Company shall have the right to cancel or repurchase that number of Shares subject to a Stock Grant as to which the Company’s forfeiture or repurchase rights have not lapsed.
19. | EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR CAUSE. |
Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply if the Participant’s service (whether as an Employee, director or Consultant) with the Company or an Affiliate is terminated for Cause:
14
(a) All Shares subject to any Stock Grant that remain subject to forfeiture provisions or as to which the Company shall have a repurchase right shall be immediately forfeited to the Company as of the time the Participant is notified his or her service is terminated for Cause.
(b) Cause is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of Cause occur prior to termination. If the Administrator determines, subsequent to a Participant’s termination of service, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute Cause, then all Shares subject to any Stock Grant that remained subject to forfeiture provisions or as to which the Company had a repurchase right on the date of termination shall be immediately forfeited to the Company.
20. | EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY. |
Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply if a Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate by reason of Disability: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant through the date of Disability as would have lapsed had the Participant not become Disabled. The proration shall be based upon the number of days accrued prior to the date of Disability.
The Administrator shall make the determination both as to whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.
21. | EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT. |
Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply in the event of the death of a Participant while the Participant is an Employee, director or Consultant of the Company or of an Affiliate: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of death, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant through the date of death as would have lapsed had the Participant not died. The proration shall be based upon the number of days accrued prior to the Participant’s date of death.
15
22. | PURCHASE FOR INVESTMENT. |
Unless the offering and sale of the Shares shall have been effectively registered under the Securities Act, the Company shall be under no obligation to issue Shares under the Plan unless and until the following conditions have been fulfilled:
(a) The person who receives a Stock Right shall warrant to the Company, prior to the receipt of Shares, that such person is acquiring such Shares for his or her own account, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person acquiring such Shares shall be bound by the provisions of the following legend (or a legend in substantially similar form) which shall be endorsed upon the certificate evidencing the Shares issued pursuant to such exercise or such grant:
“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”
(b) At the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued in compliance with the Securities Act without registration thereunder.
23. | DISSOLUTION OR LIQUIDATION OF THE COMPANY. |
Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which have not been accepted, to the extent required under the applicable Agreement, will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant or the Participant’s Survivors will have the right immediately prior to such dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right is exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation. Upon the dissolution or liquidation of the Company, any outstanding Stock-Based Awards shall immediately terminate unless otherwise determined by the Administrator or specifically provided in the applicable Agreement.
24. | ADJUSTMENTS. |
Upon the occurrence of any of the following events, a Participant’s rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in a Participant’s Agreement:
16
(a) Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock, each Stock Right and the number of shares of Common Stock deliverable thereunder shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made including, in the exercise or purchase price per share, to reflect such events. The number of Shares subject to the limitations in Paragraph 3(a) shall also be proportionately adjusted upon the occurrence of such events.
(b) Corporate Transactions. If the Company is to be consolidated with or acquired by another entity in a merger, consolidation, or sale of all or substantially all of the Company’s assets other than a transaction to merely change the state of incorporation (a “Corporate Transaction”), the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Board”), shall, as to outstanding Options, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration payable with respect to the outstanding shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that such Options must be exercised (either (A) to the extent then exercisable or, (B) at the discretion of the Administrator, any such Options being made partially or fully exercisable for purposes of this Subparagraph), within a specified number of days of the date of such notice, at the end of which period such Options which have not been exercised shall terminate; or (iii) terminate such Options in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of the number of shares of Common Stock into which such Option would have been exercisable (either (A) to the extent then exercisable or, (B) at the discretion of the Administrator, any such Options being made partially or fully exercisable for purposes of this Subparagraph) less the aggregate exercise price thereof. For purposes of determining the payments to be made pursuant to Subclause (iii) above, in the case of a Corporate Transaction the consideration for which, in whole or in part, is other than cash, the consideration other than cash shall be valued at the fair value thereof as determined in good faith by the Board of Directors.
With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall make appropriate provision for the continuation of such Stock Grants on the same terms and conditions by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable with respect to the outstanding Shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity. In lieu of the foregoing, in connection with any Corporate Transaction, the Administrator may provide that, upon consummation of the Corporate Transaction, each outstanding Stock Grant shall be terminated in exchange for payment of an amount equal to the consideration payable upon consummation of such Corporate Transaction to a holder of the number of shares of Common Stock comprising such Stock Grant (to the extent such Stock Grant is no longer subject to any forfeiture or repurchase rights then in effect or, at the discretion of the Administrator, all forfeiture and repurchase rights being waived upon such Corporate Transaction).
17
In taking any of the actions permitted under this Paragraph 24(b), the Administrator shall not be obligated by the Plan to treat all Stock Rights, all Stock Rights held by a Participant, or all Stock Rights of the same type, identically.
(c) Recapitalization or Reorganization. In the event of a recapitalization or reorganization of the Company other than a Corporate Transaction pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising an Option or accepting a Stock Grant after the recapitalization or reorganization shall be entitled to receive for the price paid upon such exercise or acceptance if any, the number of replacement securities which would have been received if such Option had been exercised or Stock Grant accepted prior to such recapitalization or reorganization.
(d) Adjustments to Stock-Based Awards. Upon the happening of any of the events described in Subparagraphs (a), (b) or (c) above, any outstanding Stock-Based Award shall be appropriately adjusted to reflect the events described in such Subparagraphs. The Administrator or the Successor Board shall determine the specific adjustments to be made under this Paragraph 24, including, but not limited to the effect of any, Corporate Transaction and, subject to Paragraph 4, its determination shall be conclusive.
(e) Modification of Options. Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph (a), (b) or (c) above with respect to Options shall be made only after the Administrator determines whether such adjustments would (i) constitute a “modification” of any ISOs (as that term is defined in Section 424(h) of the Code) or (ii) cause any adverse tax consequences for the holders of Options, including, but not limited to, pursuant to Section 409A of the Code. If the Administrator determines that such adjustments made with respect to Options would constitute a modification or other adverse tax consequence, it may refrain from making such adjustments, unless the holder of an Option specifically agrees in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such “modification” on his or her income tax treatment with respect to the Option. This paragraph shall not apply to the acceleration of the vesting of any ISO that would cause any portion of the ISO to violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph 6(b)(iv).
25. | ISSUANCES OF SECURITIES. |
Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Stock Rights. Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance of Shares pursuant to a Stock Right.
18
26. | FRACTIONAL SHARES. |
No fractional shares shall be issued under the Plan and the person exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof.
27. | CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs. |
The Administrator, at the written request of any Participant, may in its discretion take such actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Participant is an Employee of the Company or an Affiliate at the time of such conversion. At the time of such conversion, the Administrator (with the consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Administrator in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Administrator takes appropriate action. The Administrator, with the consent of the Participant, may also terminate any portion of any ISO that has not been exercised at the time of such conversion.
28. | WITHHOLDING. |
In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable law or governmental regulation to be withheld from the Participant’s salary, wages or other remuneration in connection with the issuance of a Stock Right or Shares under the Plan or for any other reason required by law, the Company may withhold from the Participant’s compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the Participant, the statutory minimum amount of such withholdings unless a different withholding arrangement, including the use of shares of the Company’s Common Stock or a promissory note, is authorized by the Administrator (and permitted by law). For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner set forth under the definition of Fair Market Value provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise. If the Fair Market Value of the shares withheld is less than the amount of payroll withholdings required, the Participant may be required to advance the difference in cash to the Company or the Affiliate employer. The Administrator in its discretion may condition the exercise of an Option for less than the then Fair Market Value on the Participant’s payment of such additional withholding.
29. | NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. |
Each Employee who receives an ISO must agree to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any Shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale or gift) of such Shares before the later of (a) two years after the date the Employee was granted the ISO, or (b) one year after the date the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the Employee has died before such Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.
19
30. | TERMINATION OF THE PLAN. |
The Plan will terminate on November 8, 2021, the date which is ten years from the earlier of the date of its adoption by the Board of Directors and the date of its approval by the shareholders of the Company. The Plan may be terminated at an earlier date by vote of the shareholders or the Board of Directors of the Company; provided, however, that any such earlier termination shall not affect any Agreements executed prior to the effective date of such termination. Termination of the Plan shall not affect any Stock Rights theretofore granted.
31. | AMENDMENT OF THE PLAN AND AGREEMENTS. |
The Plan may be amended by the shareholders of the Company. The Plan may also be amended by the Administrator, including, without limitation, to the extent necessary to qualify any or all outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for favorable federal income tax treatment as may be afforded incentive stock options under Section 422 of the Code (including deferral of taxation upon exercise), and to the extent necessary to qualify the Shares issuable under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers. Any amendment approved by the Administrator which the Administrator determines is of a scope that requires shareholder approval shall be subject to obtaining such shareholder approval. Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely affect his or her rights under a Stock Right previously granted to him or her. With the consent of the Participant affected, the Administrator may amend outstanding Agreements in a manner which may be adverse to the Participant but which is not inconsistent with the Plan. In the discretion of the Administrator, outstanding Agreements may be amended by the Administrator in a manner which is not adverse to the Participant.
32. | EMPLOYMENT OR OTHER RELATIONSHIP. |
Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to prevent a Participant from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time.
33. | GOVERNING LAW. |
This Plan shall be construed and enforced in accordance with the law of the State of Delaware.
20
Exhibit 10.2.1
Option No.________
SERA PROGNOSTICS, INC.
Stock Option Grant Notice
Stock Option Grant under the Company’s
2011 Employee, Director and Consultant Equity Incentive Plan
1. | Name and Address of Participant: | |
2. | Date of Option Grant: |
3. | Type of Grant: |
4. | Maximum Number of Shares for which this Option is exercisable: |
5. | Exercise (purchase) price per share: |
6. | Option Expiration Date: |
7. | Vesting Start Date1: |
8. | Vesting Schedule: This Option shall become exercisable (and the Shares issued upon exercise shall be vested) as follows provided the Participant is an Employee, director or Consultant of the Company or of an Affiliate on the applicable vesting date: |
[Insert Vesting Schedule - sample below]
[On the first anniversary of the Vesting Start Date | up to ____________ Shares2 |
1 This date is only necessary if a company has decided to trigger vesting from a date that is different from the date of option grant such as a hire date and is to be used a point of reference for future vesting only.
2 If the agreement does not set forth a vesting schedule as to a specific number of shares and a % is used instead consider adding the following to the end of the vesting schedule to address the potential vesting of fractional shares:
“provided that the number of shares vesting on each date shall be rounded down to the nearest whole number, whilst the number of shares vesting on the final date shall be the remaining unvested balance of the Shares.”
On the second anniversary of the Vesting Start Date | an additional __________ Shares | |
On the third anniversary of the Vesting Start Date | an additional __________ Shares] |
The foregoing rights are cumulative and are subject to the other terms and conditions of this Agreement and the Plan.
The Company and the Participant acknowledge receipt of this Stock Option Grant Notice and agree to the terms of the Stock Option Agreement attached hereto and incorporated by reference herein, the Company’s 2011 Employee, Director and Consultant Equity Incentive Plan and the terms of this Option Grant as set forth above.
SERA PROGNOSTICS, INC. | |||
By: | |||
Name: | |||
Title: | |||
Participant |
2
SERA PROGNOSTICS, INC.
STOCK OPTION AGREEMENT - INCORPORATED TERMS AND CONDITIONS
AGREEMENT made as of the date of grant set forth in the Stock Option Grant Notice by and between Sera Prognostics, Inc. (the “Company”), a Delaware corporation, and the individual whose name appears on the Stock Option Grant Notice (the “Participant”).
WHEREAS, the Company desires to grant to the Participant an Option to purchase shares of its common stock, $0.0001 par value per share (the “Shares”), under and for the purposes set forth in the Company’s 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”);
WHEREAS, the Company and the Participant understand and agree that any terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Participant each intend that the Option granted herein shall be of the type set forth in the Stock Option Grant Notice.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows:
1. | GRANT OF OPTION. |
The Company hereby grants to the Participant the right and option to purchase all or any part of an aggregate of the number of Shares set forth in the Stock Option Grant Notice, on the terms and conditions and subject to all the limitations set forth herein, under United States securities and tax laws, and in the Plan, which is incorporated herein by reference. The Participant acknowledges receipt of a copy of the Plan.
2. | EXERCISE PRICE. |
The exercise price of the Shares covered by the Option shall be the amount per Share set forth in the Stock Option Grant Notice, subject to adjustment, as provided in the Plan, in the event of a stock split, reverse stock split or other events affecting the holders of Shares after the date hereof (the “Exercise Price”). Payment shall be made in accordance with Paragraph 9 of the Plan.
3. | EXERCISABILITY OF OPTION. |
Subject to the terms and conditions set forth in this Agreement and the Plan, the Option granted hereby shall become vested and exercisable as set forth in the Stock Option Grant Notice and is subject to the other terms and conditions of this Agreement and the Plan.
3
4. | TERM OF OPTION. |
This Option shall terminate on the Option Expiration Date as specified in the Stock Option Grant Notice and, if this Option is designated in the Stock Option Grant Notice as an ISO and the Participant owns as of the date hereof more than 10% of the total combined voting power of all classes of capital stock of the Company or an Affiliate, such date may not be more than five years from the date of this Agreement, but shall be subject to earlier termination as provided herein or in the Plan.
If the Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate for any reason other than the death or Disability of the Participant, or termination of the Participant for Cause (the “Termination Date”), the Option to the extent then vested and exercisable pursuant to Section 3 hereof as of the Termination Date, and not previously terminated in accordance with this Agreement, may be exercised within three months after the Termination Date, or on or prior to the Option Expiration Date as specified in the Stock Option Grant Notice, whichever is earlier, but may not be exercised thereafter except as set forth below. In such event, the unvested portion of the Option shall not be exercisable and shall expire and be cancelled on the Termination Date.
If this Option is designated in the Stock Option Grant Notice as an ISO and the Participant ceases to be an Employee of the Company or of an Affiliate but continues after termination of employment to provide service to the Company or an Affiliate as a director or Consultant, this Option shall continue to vest in accordance with Section 3 above as if this Option had not terminated until the Participant is no longer providing services to the Company. In such case, this Option shall automatically convert and be deemed a Non-Qualified Option as of the date that is three months from termination of the Participant's employment and this Option shall continue on the same terms and conditions set forth herein until such Participant is no longer providing service to the Company or an Affiliate.
Notwithstanding the foregoing, in the event of the Participant’s Disability or death within three months after the Termination Date, the Participant or the Participant’s Survivors may exercise the Option within one year after the Termination Date, but in no event after the Option Expiration Date as specified in the Stock Option Grant Notice.
In the event the Participant’s service is terminated by the Company or an Affiliate for Cause, the Participant’s right to exercise any unexercised portion of this Option even if vested shall cease immediately as of the time the Participant is notified his or her service is terminated for Cause, and this Option shall thereupon terminate. Notwithstanding anything herein to the contrary, if subsequent to the Participant’s termination, but prior to the exercise of the Option, the Administrator determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute Cause, then the Participant shall immediately cease to have any right to exercise the Option and this Option shall thereupon terminate.
4
In the event of the Disability of the Participant, as determined in accordance with the Plan, the Option shall be exercisable within one year after the Participant’s termination of service due to Disability or, if earlier, on or prior to the Option Expiration Date as specified in the Stock Option Grant Notice. In such event, the Option shall be exercisable:
(a) | to the extent that the Option has become exercisable but has not been exercised as of the date of the Participant’s termination of service due to Disability; and |
(b) | in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of the Participant’s termination of service due to Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of the Participant’s termination of service due to Disability. |
In the event of the death of the Participant while an Employee, director or Consultant of the Company or of an Affiliate, the Option shall be exercisable by the Participant’s Survivors within one year after the date of death of the Participant or, if earlier, on or prior to the Option Expiration Date as specified in the Stock Option Grant Notice. In such event, the Option shall be exercisable:
(x) | to the extent that the Option has become exercisable but has not been exercised as of the date of death; and |
(y) | in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s date of death. |
5. | METHOD OF EXERCISING OPTION. |
Subject to the terms and conditions of this Agreement, the Option may be exercised by written notice to the Company or its designee, in substantially the form of Exhibit A attached hereto (or in such other form acceptable to the Company, which may include electronic notice). Such notice shall state the number of Shares with respect to which the Option is being exercised and shall be signed by the person exercising the Option (which signature may be provided electronically in a form acceptable to the Company). Payment of the Exercise Price for such Shares shall be made in accordance with Paragraph 9 of the Plan. The Company shall deliver such Shares as soon as practicable after the notice shall be received, provided, however, that the Company may delay issuance of such Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including, without limitation, state securities or “blue sky” laws). The Shares as to which the Option shall have been so exercised shall be registered in the Company’s share register in the name of the person so exercising the Option (or, if the Option shall be exercised by the Participant and if the Participant shall so request in the notice exercising the Option, shall be registered in the Company’s share register in the name of the Participant and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person exercising the Option. In the event the Option shall be exercised, pursuant to Section 4 hereof, by any person other than the Participant, such notice shall be accompanied by appropriate proof of the right of such person to exercise the Option. All Shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable.
5
6. | PARTIAL EXERCISE. |
Exercise of this Option to the extent above stated may be made in part at any time and from time to time within the above limits, except that no fractional share shall be issued pursuant to this Option.
7. | NON-ASSIGNABILITY. |
The Option shall not be transferable by the Participant otherwise than by will or by the laws of descent and distribution. For California Participants, the Option shall not be transferable other than by will, by the laws of descent and distribution, to a revocable trust or as permitted by Rule 701 of the Securities Act of 1933. If this Option is a Non-Qualified Option then it may also be transferred pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act or the rules thereunder. Except as provided above in this paragraph, the Option shall be exercisable, during the Participant’s lifetime, only by the Participant (or, in the event of legal incapacity or incompetency, by the Participant’s guardian or representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of the Option or of any rights granted hereunder contrary to the provisions of this Section 7, or the levy of any attachment or similar process upon the Option shall be null and void.
8. | NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. |
The Participant shall have no rights as a stockholder with respect to Shares subject to this Agreement until registration of the Shares in the Company’s share register in the name of the Participant. Except as is expressly provided in the Plan with respect to certain changes in the capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to the date of such registration.
9. | ADJUSTMENTS. |
The Plan contains provisions covering the treatment of Options in a number of contingencies such as stock splits and mergers. Provisions in the Plan for adjustment with respect to stock subject to Options and the related provisions with respect to successors to the business of the Company are hereby made applicable hereunder and are incorporated herein by reference.
6
10. | TAXES. |
The Participant acknowledges and agrees that (i) any income or other taxes due from the Participant with respect to this Option or the Shares issuable upon exercise of this Option shall be the Participant’s responsibility; (ii) the Participant was free to use professional advisors of his or her choice in connection with this Agreement, has received advice from his or her professional advisors in connection with this Agreement, understands its meaning and import, and is entering into this Agreement freely and without coercion or duress; (iii) the Participant has not received and is not relying upon any advice, representations or assurances made by or on behalf of the Company or any Affiliate or any Employee of or counsel to the Company or any Affiliate regarding any tax or other effects or implications of the Option, the Shares or other matters contemplated by this Agreement and (iv) neither the Administrator, the Company, its Affiliates, nor any of its officers or directors, shall be held liable for any applicable costs, taxes, or penalties associated with the Option if, in fact, the Internal Revenue Service were to determine that the Option constitutes deferred compensation under Section 409A of the Code.
If this Option is designated in the Stock Option Grant Notice as a Non-Qualified Option or if the Option is an ISO and is converted into a Non-Qualified Option and such Non-Qualified Option is exercised, the Participant agrees that the Company may withhold from the Participant’s remuneration, if any, the minimum statutory amount of federal, state and local withholding taxes attributable to such amount that is considered compensation includable in such person’s gross income. At the Company’s discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Participant on exercise of the Option. The Participant further agrees that, if the Company does not withhold an amount from the Participant’s remuneration sufficient to satisfy the Company’s income tax withholding obligation, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld.
11. | PURCHASE FOR INVESTMENT. |
Unless the offering and sale of the Shares to be issued upon the particular exercise of the Option shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares covered by such exercise unless the Company has determined that such exercise and issuance would be exempt from the registration requirements of the 1933 Act and until the following conditions have been fulfilled:
(a) | The person(s) who exercise the Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon any certificate(s) evidencing the Shares issued pursuant to such exercise: |
“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws;” and
7
(b) If the Company so requires, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the 1933 Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or “blue sky” laws).
12. | RESTRICTIONS ON TRANSFER OF SHARES. |
12.1 The Shares acquired by the Participant pursuant to the exercise of the Option granted hereby shall not be transferred by the Participant except as permitted herein and, if the Participant becomes a party thereto, as set forth in the Right of First Refusal and Co-Sale Agreement, by and among the Company, the Investors and the Key Holders (each as defined therein) dated November 8, 2011, as may be amended from time to time (the “Co-Sale Agreement”). If the Participant becomes a party to the Co-Sale Agreement by executing a signature page thereto and the terms of this Agreement and the Co-Sale Agreement conflict, the terms contained in the Co-Sale Agreement shall govern and supersede any conflicting provision contained in this Section 12.
12.2 In the event of the Participant’s termination of service for any reason, the Company shall have the option, but not the obligation, to repurchase all or any part of the Shares issued pursuant to this Agreement (including, without limitation, Shares purchased after termination of service, Disability or death in accordance with Section 4 hereof). In the event the Company does not, upon the termination of service of the Participant (as described above), exercise its option pursuant to this Section 12.2, the restrictions set forth in the balance of this Agreement shall not thereby lapse, and the Participant for himself or herself, his or her heirs, legatees, executors, administrators and other successors in interest, agrees that the Shares shall remain subject to such restrictions. The following provisions shall apply to a repurchase under this Section 12.2:
(i) | The per share repurchase price of the Shares to be sold to the Company upon exercise of its option under this Section 12.2 shall be equal to the Fair Market Value of each such Share determined in accordance with the Plan as of the date of repurchase provided, however, in the event of a termination by the Company for Cause, the per share repurchase price of the Shares to be sold to the Company upon exercise of its option under this Section 12.2 shall be equal to the lesser of the Exercise Price and the Fair Market Value on the date of the repurchase. |
8
(ii) | The Company’s option to repurchase the Participant’s Shares in the event of termination of service shall be valid for a period of 12 months commencing with the date of such termination of service. |
(iii) | In the event the Company shall be entitled to and shall elect to exercise its option to repurchase the Participant’s Shares under this Section 12.2, the Company shall notify the Participant, or in case of death, his or her Survivor, in writing of its intent to repurchase the Shares. Such written notice may be mailed by the Company up to and including the last day of the time period provided for in Section 12.2(ii) for exercise of the Company’s option to repurchase. |
(iv) | The written notice to the Participant shall specify the address at, and the time and date on, which payment of the repurchase price is to be made (the “Closing”). The date specified shall not be less than ten days nor more than 60 days from the date of the mailing of the notice, and the Participant or his or her successor in interest with respect to the Shares shall have no further rights as the owner thereof from and after the date specified in the notice. At the Closing, the repurchase price shall be delivered to the Participant or his or her successor in interest and the Shares being purchased, duly endorsed for transfer, shall, to the extent that they are not then in the possession of the Company, be delivered to the Company by the Participant or his or her successor in interest. |
12.3 As a condition precedent to the exercise of the Option, the Participant agrees that the Shares acquired pursuant to the exercise of the Option may be subject to the Co-Sale Agreement and that certain Voting Agreement, by and among the Company, the Investors and the Key Holders (each as defined therein), dated November 8, 2011, as may be amended from time to time (the “Voting Agreement”) and agrees to sign a counterpart signature page to the Co-Sale Agreement and the Voting Agreement if so requested by the Company. In addition, it shall be a condition precedent to the validity of any sale or other transfer of any Shares by the Participant that the following restrictions be complied with (except as otherwise set forth in this Section 12):
(i) | No Shares owned by the Participant may be sold, pledged or otherwise transferred (including by gift or devise) to any person or entity, voluntarily, or by operation of law, except in accordance with the terms and conditions hereinafter set forth. |
9
(ii) | Before selling or otherwise transferring all or part of the Shares, the Participant shall give written notice of such intention to the Company, which notice shall include the name of the proposed transferee, the proposed purchase price per share, the terms of payment of such purchase price and all other matters relating to such sale or transfer and shall be accompanied by a copy of the binding written agreement of the proposed transferee to purchase the Shares of the Participant. Such notice shall constitute a binding offer by the Participant to sell to the Company such number of the Shares then held by the Participant as are proposed to be sold in the notice at the monetary price per share designated in such notice, payable on the terms offered to the Participant by the proposed transferee (provided, however, that the Company shall not be required to meet any non-monetary terms of the proposed transfer, including, without limitation, delivery of other securities in exchange for the Shares proposed to be sold). The Company shall give written notice to the Participant as to whether such offer has been accepted in whole by the Company within 60 days after its receipt of written notice from the Participant. The Company may only accept such offer in whole and may not accept such offer in part. Such acceptance notice shall fix a time, location and date for the Closing on such purchase (“Closing Date”) which shall not be less than ten nor more than sixty days after the giving of the acceptance notice, provided, however, if any of the Shares to be sold pursuant to this Section 12.3 have been held by the Participant for less than six months, then the Closing Date may be extended by the Company until no more than ten days after such Shares have been held by the Participant for six months if required under applicable accounting rules in effect at the time. The place for such Closing shall be at the Company’s principal office. At such Closing, the Participant shall accept payment as set forth herein and shall deliver to the Company in exchange therefor certificates for the number of Shares stated in the notice accompanied by duly executed instruments of transfer. |
(iii) | If the Company shall fail to accept any such offer, the Participant shall be free to sell all, but not less than all, of the Shares set forth in his or her notice to the designated transferee at the price and terms designated in the Participant’s notice, provided that (i) such sale is consummated within six months after the giving of notice by the Participant to the Company as aforesaid, and (ii) the transferee first agrees in writing to be bound by the provisions of this Section 12 so that such transferee (and all subsequent transferees) shall thereafter only be permitted to sell or transfer the Shares in accordance with the terms hereof. After the expiration of such six months, the provisions of this Section 12.3 shall again apply with respect to any proposed voluntary transfer of the Participant’s Shares. |
(iv) | The restrictions on transfer contained in this Section 12.3 shall not apply to (a) transfers by the Participant to his or her spouse or children or to a trust for the benefit of his or her spouse or children, (b) transfers by the Participant to his or her guardian or conservator, and (c) transfers by the Participant, in the event of his or her death, to his or her executor(s) or administrator(s) or to trustee(s) under his or her will (collectively, “Permitted Transferees”); provided however, that in any such event the Shares so transferred in the hands of each such Permitted Transferee shall remain subject to this Agreement, and each such Permitted Transferee shall so acknowledge in writing as a condition precedent to the effectiveness of such transfer. |
10
(v) | The provisions of this Section 12.3 may be waived by the Company. Any such waiver may be unconditional or based upon such conditions as the Company may impose. |
12.4 In the event that the Participant or his or her successor in interest fails to deliver the Shares to be repurchased by the Company under this Agreement, the Company may elect (a) to establish a segregated account in the amount of the repurchase price, such account to be turned over to the Participant or his or her successor in interest upon delivery of such Shares, and (b) immediately to take such action as is appropriate to transfer record title of such Shares from the Participant to the Company and to treat the Participant and such Shares in all respects as if delivery of such Shares had been made as required by this Agreement. The Participant hereby irrevocably grants the Company a power of attorney which shall be coupled with an interest for the purpose of effectuating the preceding sentence.
12.5 If the Company shall pay a stock dividend or declare a stock split on or with respect to any of its Common Stock, or otherwise distribute securities of the Company to the holders of its Common Stock, the number of shares of stock or other securities of the Company issued with respect to the shares then subject to the restrictions contained in this Agreement shall be added to the Shares subject to the Company’s rights to repurchase pursuant to this Agreement. If the Company shall distribute to its stockholders shares of stock of another corporation, the shares of stock of such other corporation, distributed with respect to the Shares then subject to the restrictions contained in this Agreement, shall be added to the Shares subject to the Company’s rights to repurchase pursuant to this Agreement.
12.6 If the outstanding shares of Common Stock of the Company shall be subdivided into a greater number of shares or combined into a smaller number of shares, or in the event of a reclassification of the outstanding shares of Common Stock of the Company, or if the Company shall be a party to a merger, consolidation or capital reorganization, there shall be substituted for the Shares then subject to the restrictions contained in this Agreement such amount and kind of securities as are issued in such subdivision, combination, reclassification, merger, consolidation or capital reorganization in respect of the Shares subject immediately prior thereto to the Company’s rights to repurchase pursuant to this Agreement.
12.7 The Company shall not be required to transfer any Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Agreement, or to treat as owner of such Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Shares shall have been so sold, assigned or otherwise transferred, in violation of this Agreement.
12.8 The provisions of Sections 12.1, 12.2 and 12.3 shall terminate upon the effective date of the registration of the Shares pursuant to the Securities Exchange Act of 1934.
12.9 The Participant agrees that in the event the Company proposes to offer for sale to the public any of its equity securities and such Participant is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or other transfer of Shares, then it will promptly sign such agreement and will not transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Shares or other securities of the Company held by him or her during such period as is determined by the Company and the underwriters, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with NASD Rule 2711 or similar rules thereto (such period, the “Lock-Up Period”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Participant has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Shares or other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period.
11
12.10 The Participant acknowledges and agrees that neither the Company, its shareholders nor its directors and officers, has any duty or obligation to disclose to the Participant any material information regarding the business of the Company or affecting the value of the Shares before, at the time of, or following a termination of the service of the Participant by the Company, including, without limitation, any information concerning plans for the Company to make a public offering of its securities or to be acquired by or merged with or into another firm or entity.
12.11 All certificates representing the Shares to be issued to the Participant pursuant to this Agreement shall have endorsed thereon a legend substantially as follows: “The shares represented by this certificate are subject to restrictions set forth in a Stock Option Agreement dated _________, 201__ with this Company, a copy of which Agreement is available for inspection at the offices of the Company or will be made available upon request.”
13. | NO OBLIGATION TO MAINTAIN RELATIONSHIP. |
The Participant acknowledges that: (i) the Company is not by the Plan or this Option obligated to continue the Participant as an Employee, director or Consultant of the Company or an Affiliate; (ii) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (iii) the grant of the Option is a one-time benefit which does not create any contractual or other right to receive future grants of options, or benefits in lieu of options; (iv) all determinations with respect to any such future grants, including, but not limited to, the times when options shall be granted, the number of shares subject to each option, the option price, and the time or times when each option shall be exercisable, will be at the sole discretion of the Company; (v) the Participant’s participation in the Plan is voluntary; (vi) the value of the Option is an extraordinary item of compensation which is outside the scope of the Participant’s employment or consulting contract, if any; and (vii) the Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.
12
14. | IF OPTION IS INTENDED TO BE AN ISO. |
If this Option is designated in the Stock Option Grant Notice as an ISO so that the Participant (or the Participant’s Survivors) may qualify for the favorable tax treatment provided to holders of Options that meet the standards of Section 422 of the Code then any provision of this Agreement or the Plan which conflicts with the Code so that this Option would not be deemed an ISO is null and void and any ambiguities shall be resolved so that the Option qualifies as an ISO. The Participant should consult with the Participant’s own tax advisors regarding the tax effects of the Option and the requirements necessary to obtain favorable tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements.
Notwithstanding the foregoing, to the extent that the Option is designated in the Stock Option Grant Notice as an ISO and is not deemed to be an ISO pursuant to Section 422(d) of the Code because the aggregate Fair Market Value (determined as of the Date of Option Grant) of any of the Shares with respect to which this ISO is granted becomes exercisable for the first time during any calendar year in excess of $100,000, the portion of the Option representing such excess value shall be treated as a Non-Qualified Option and the Participant shall be deemed to have taxable income measured by the difference between the then Fair Market Value of the Shares received upon exercise and the price paid for such Shares pursuant to this Agreement.
Neither the Company nor any Affiliate shall have any liability to the Participant, or any other party, if the Option (or any part thereof) that is intended to be an ISO is not an ISO or for any action taken by the Administrator, including without limitation the conversion of an ISO to a Non-Qualified Option.
15. | NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION OF AN ISO. |
If this Option is designated in the Stock Option Grant Notice as an ISO then the Participant agrees to notify the Company in writing immediately after the Participant makes a Disqualifying Disposition of any of the Shares acquired pursuant to the exercise of the ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale) of such Shares before the later of (a) two years after the date the Participant was granted the ISO or (b) one year after the date the Participant acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the Participant has died before the Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.
16. | NOTICES. |
Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:
If to the Company:
Sera Prognostics, Inc.
417 Wakara Way, Suite 3510
Salt Lake City, UT 84108
Attention: Chief Financial Officer
If to the Participant at the address set forth on the Stock Option Grant Notice
or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail.
13
17. | GOVERNING LAW. |
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction in Utah and agree that such litigation shall be conducted in the state courts of Salt Lake City, Utah or the federal courts of the United States for the District of Utah.
18. | BENEFIT OF AGREEMENT. |
Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.
19. | ENTIRE AGREEMENT. |
This Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict, the express terms and provisions of this Agreement, provided, however, in any event, this Agreement shall be subject to and governed by the Plan.
20. | MODIFICATIONS AND AMENDMENTS. |
The terms and provisions of this Agreement may be modified or amended as provided in the Plan.
21. | WAIVERS AND CONSENTS. |
Except as provided in the Plan, the terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.
14
22. | DATA PRIVACY. |
By entering into this Agreement, the Participant: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of options and the administration of the Plan; and (ii) authorizes the Company and each Affiliate to store and transmit such information in electronic form for the purposes set forth in this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
Exhibit A
NOTICE OF EXERCISE OF STOCK OPTION
[Form for Unregistered Shares]
To: | Sera Prognostics, Inc. |
Ladies and Gentlemen:
I hereby exercise my Stock Option to purchase __________ shares (the “Shares”) of the common stock, $0.0001 par value, of Sera Prognostics, Inc. (the “Company”), at the exercise price of $_____ per share, pursuant to and subject to the terms of that certain Stock Option Agreement between the undersigned and the Company dated ________, 201_.
I am aware that the Shares have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), or any state securities laws. I understand that the reliance by the Company on exemptions under the 1933 Act is predicated in part upon the truth and accuracy of the statements by me in this Notice of Exercise.
I hereby represent and warrant that (1) I have been furnished with all information which I deem necessary to evaluate the merits and risks of the purchase of the Shares; (2) I have had the opportunity to ask questions concerning the Shares and the Company and all questions posed have been answered to my satisfaction; (3) I have been given the opportunity to obtain any additional information I deem necessary to verify the accuracy of any information obtained concerning the Shares and the Company; and (4) I have such knowledge and experience in financial and business matters that I am able to evaluate the merits and risks of purchasing the Shares and to make an informed investment decision relating thereto.
I hereby represent and warrant that I am purchasing the Shares for my own personal account for investment and not with a view to the sale or distribution of all or any part of the Shares.
I understand that because the Shares have not been registered under the 1933 Act, I must continue to bear the economic risk of the investment for an indefinite time and the Shares cannot be sold unless the Shares are subsequently registered under applicable federal and state securities laws or an exemption from such registration requirements is available.
I agree that I will in no event sell or distribute or otherwise dispose of all or any part of the Shares unless (1) there is an effective registration statement under the 1933 Act and applicable state securities laws covering any such transaction involving the Shares or (2) the Company receives an opinion of my legal counsel (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration.
Exhibit A-1
I consent to the placing of a legend on my certificate for the Shares stating that the Shares have not been registered and setting forth the restriction on transfer contemplated hereby and to the placing of a stop transfer order on the books of the Company and with any transfer agents against the Shares until the Shares may be legally resold or distributed without restriction.
I understand that at the present time Rule 144 of the Securities and Exchange Commission (the “SEC”) may not be relied on for the resale or distribution of the Shares by me. I understand that the Company has no obligation to me to register the sale of the Shares with the SEC and has not represented to me that it will register the sale of the Shares.
I understand the terms and restrictions on the right to dispose of the Shares set forth in the 2011 Employee, Director and Consultant Equity Incentive Plan and the Stock Option Agreement, both of which I have carefully reviewed. I consent to the placing of a legend on my certificate for the Shares referring to such restriction and the placing of stop transfer orders until the Shares may be transferred in accordance with the terms of such restrictions.
I understand and agree that the Shares may be subject to that certain Voting Agreement, by and among the Company, the Investors and the Key Holders (each as defined therein), dated November 8, 2011, as may be amended from time to time (the “Voting Agreement”) and that certain Right of First Refusal and Co-Sale Agreement, by and among the Company, the Investors and the Key Holders (each as defined therein) dated November 8, 2011, as may be amended from time to time (the “Co-Sale Agreement”), and if I am not already a party to the Voting Agreement and or the Co-Sale Agreement and if the Company so requests, I agree to become a party to such agreements by execution of the counterpart signature pages enclosed herewith. I acknowledge that I have read and understand the Voting Agreement and the Co-Sale Agreement which sets forth certain restrictions and limitations on the Shares, including the ability to transfer or sell them in the future. I further acknowledge and agree that to the extent the terms of Section 12 of the Option Agreement conflict with the Co-Sale Agreement, the terms contained in the Co-Sale Agreement shall govern.
I have considered the Federal, state and local income tax implications of the exercise of my Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
Please issue the Shares (check one):
¨ to me; or
¨ to me and ________________, as joint tenants with right of survivorship
and mail the certificate to me at the following address:
Exhibit A-2
My mailing address for shareholder communications, if different from the address listed above is:
Very truly yours, | |
Participant (signature) | |
Print Name | |
Date | |
Social Security Number |
Exhibit A-3
Exhibit B
NOTICE OF EXERCISE OF STOCK OPTION
[Form for Shares Registered in the United States]
To: | Sera Prognostics, Inc. |
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time as the Company has filed a Registration Statement with the Securities and Exchange Commission under which the issuance of the Shares for which this exercise is being made is registered and such Registration Statement remains effective.
Ladies and Gentlemen:
I hereby exercise my Stock Option to purchase _________ shares (the “Shares”) of the common stock, $0.0001 par value, of Sera Prognostics, Inc. (the “Company”), at the exercise price of $________ per share, pursuant to and subject to the terms of that Stock Option Grant Notice dated _______________, 201_.
I understand the nature of the investment I am making and the financial risks thereof. I am aware that it is my responsibility to have consulted with competent tax and legal advisors about the relevant national, state and local income tax and securities laws affecting the exercise of the Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
Please issue the Shares (check one):
¨ to me; or
¨ to me and ____________________________, as joint tenants with right of survivorship,
at the following address:
Exhibit B-1
My mailing address for shareholder communications, if different from the address listed above, is:
Very truly yours, | |
Participant (signature) | |
Print Name | |
Date | |
Social Security Number |
Exhibit B-2
Exhibit 10.5
Execution Version
COMMERCIAL COLLABORATION AGREEMENT
This Commercial Collaboration Agreement (this “Agreement”), dated as of February 17, 2021 (the “Effective Date”), is made by and between Anthem, Inc. and its Affiliates (as defined below) (collectively, “Anthem”) on the one hand, and Sera Prognostics, Inc. (“Company”) on the other hand.
WHEREAS, Anthem currently participates in Company's PRIME study, the goal of which is to determine the clinical validity of the PreTRM® test;
WHEREAS, at the conclusion of the PRIME study, Anthem and Company will enter into Anthem's standard lab provider agreement, substantially in the form attached hereto as Exhibit C (the “Lab Agreement”); and
WHEREAS, Anthem and Company desire to enter into this Agreement relating to the delivery of, and compensation for, Testing Services (as defined below).
NOW THEREFORE, the parties agree as follows:
ARTICLE
1
ARTICLE 1 DEFINITIONS
1.1 | “Affiliate” means, with respect to any person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlled” and “controlling” have correlative meanings. |
1.2 | “BCBS Licensee” means any organization licensed by the Blue Cross Blue Shield Association to use the Blue Cross and Blue Shield trademarks and names. |
1.3 | “Member” means any individual enrolled in, or serviced or covered by, the health benefits products of Anthem. A “Member” does not include an individual participating in the PRIME study being sponsored by Anthem. |
1.4 | “Ordering Clinician” means a duly licensed physician specializing in obstetrics and gynecology (OB/GYN) or family medicine (FM), or a licensed Certified Nurse Midwife (CNM). |
1.5 | “Payor” means any party that has contracted with Anthem to access the terms and conditions of this Agreement, and which is responsible for payment pursuant to the terms of this Agreement. |
1.6 | “Policies and Procedures” means the rules, policies, and procedures adopted by Anthem. |
[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED BECAUSE THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
1.7 | “Testing Services” means the offering of the PreTRM® proteomic test to identify singleton pregnant women at increased risk of spontaneous preterm birth developed by Company. |
ARTICLE
2
COMPANY RESPONSIBILITIES
2.1 | Testing Services Capacity. Company shall perform Testing Services ordered by an Ordering Clinician and provide results in a timely manner that complies with the service level standards as set forth in the Lab Agreement, industry practices standards, as well as all applicable laws, rules, and regulations. |
2.2 | Services and Supplies. Company will arrange for the provision of limited, non-standard, specialty supplies, at no additional cost to Anthem, as may be necessary or desirable to facilitate the collection, transfer, and transport of specimens from Members to Company, including but not limited to, supplies required for specimen management. |
2.3 | Company Non-discrimination. Company shall provide Testing Services to Members in a manner similar to, and within the same time availability in which, Company provides Testing Services to any other individual, and Company will not differentiate in the performance of Testing Services based on a Member's race, color, creed, national origin, ancestry, religion, sex, marital status, age, disability, payment source, state of health, military service, need for health services, status as a Medicare or Medicaid beneficiary, sexual orientation, or any other basis prohibited by law. Company shall not be required to provide any type or kind of health service to Members that it does not customarily provide to other individuals, unless such is required by applicable law. |
2.4 | Inability to Perform. Company shall provide prompt notice to Anthem of its knowledge of any action to restrict, suspend, or revoke Company's CLIA certification from the Centers for Medicare & Medicaid Services. Additionally, Company shall send prompt written notice to Anthem of its knowledge of any other legal, governmental, or other action involving Company which could reasonably materially impair the ability of Company to carry out any of its obligations under this Agreement. |
2.5 | Marketing and Training. Company shall develop a sales, marketing, and customer service program and provide such training and marketing to Ordering Clinicians at the reasonable request of Anthem. Such program will include physician office training, education, fulfillment, and support. |
2.6 | Subcontractors. Company shall give Anthem no less than 30 days' prior written notice of any subcontractors which Company engages to assist in the offering of Testing Services. Company shall require such subcontractors to abide by the terms and conditions of this Agreement and shall indemnify Anthem and Members for any failure of such subcontractor to comply with this Agreement. |
2.7 | Policies and Procedures. Company agrees to abide by the terms of the Policies and Procedures and to participate in, and comply with, Anthem's credentialing standards. In the event of a conflict between the terms of this Agreement and the Policies and Procedures, the terms of this Agreement will control. Anthem shall give Company no less than 30 days' prior written notice of any material change to the Policies and Procedures. |
2.8 | Credentialing. Company represents and warrants that it has all licenses required to provide Testing Services in accordance with applicable laws and regulations. Company shall cooperate fully with Anthem's credentialing and recredentialing procedures, as set forth in the Policies and Procedures. Company expressly authorizes Anthem to solicit any information regarding licensures, registrations, certifications or accreditations, qualifications, and liability or negligence history from any source in connection with such credentialing and recredentialing procedures for the duration of this Agreement. |
2.9. [***].
ARTICLE
3
ANTHEM RESPONSIBILITIES
3.1 | Purchase of Tests. Anthem shall purchase the minimum number of tests as set forth in Exhibit A, subject to earlier termination of the Agreement pursuant to Section 10.2. |
3.2 | Implementation of Care Management Program. Anthem shall, in its sole discretion, develop appropriate care management programs which incorporate the use of Testing Services and is targeted to patients who are stratified through use of the PreTRM® test as high risk for pre-term births. Anthem shall, in its sole discretion, implement any such care management program with applicable Ordering Clinicians. |
3.3 | [***]. |
3.4 | Inability to Perform. Anthem shall provide prompt notice to Company of its knowledge of any legal, governmental, or other action involving Anthem which Anthem reasonably believes could materially impair the ability of Anthem to carry out some or all of its material duties and obligations under this Agreement. |
3.5 | [***]. |
3.6 | [***]. |
ARTICLE
4
COMPENSATION AND BILLING
4.1 | Submission and Payment. Except as otherwise provided herein, Company will submit monthly invoices to Anthem for Testing Services at the rate per test set forth in Exhibit A (or other mutually agreed upon and documented rate) on the 5th day of each month following the month in which such services were performed. Anthem shall pay all invoices for Testing Services submitted by Company within 45 days of receipt of the applicable invoice. |
4.2 | Guarantee of Payment. Provided that Company is not in material breach of this Agreement, and subject to the terms and conditions herein, Anthem shall pay to Company for each of the first three ears f the Term a minimum amount per annum equal to [***]. |
ARTICLE
5
JOINT OPERATING COMMITTEE
5.1 | Joint Operating Committee. A Joint Operating Committee (“JOC”) will be formed, pursuant to the terms of this Article 5 and the provisions set forth in Exhibit B, by two voting members each from Anthem and Company. The JOC will have a chairperson. The initial chairperson shall be Nadia Altomare, to serve in such role until such time as Ms. Altomare is no longer employed by the Company or is otherwise unable to continue in such role at any point during the term of this Agreement, in which such case the JOC shall designate a replacement chairperson. During the term of this Agreement, Dr. Charles Kennedy, as long as employed by or affiliated with Blue Ox, will be an ex-officio, non-voting member of the JOC. The JOC will determine details of Anthem's and Company's collaboration, including, but not limited to: |
1. | Overall program management; |
2. | Anthem provider contracting support and coordination needs; |
3. | Company's testing capacity and ramp up to meet Anthem's needs; |
4. | Anthem care management programs, utilization management programs, analytic support, and marketing support; |
5. | Company IT readiness to ensure operational capacity for the anticipated growth of the program; |
6. | Approach to the physician offices and other end user support; |
7. | Staffing and resources by both parties; |
8. | Building and sharing enhanced data and analytics for current and future products and services; |
9. | Billing process; |
10. | [***]; and |
11. | Definition of success metrics and performance monitoring. |
5.2 | Meetings of the JOC. The JOC will establish and hold regular meetings, and any member of the JOC may request a special meeting of the JOC in his or her discretion. Any meeting of the JOC may be held in person or via telephone or video conference. Each member appointed by Anthem and Company will be a voting member of the JOC entitled to one vote on any matter up for a vote at meetings of the JOC. |
5.3 | Dispute Resolutions. If the JOC reaches a deadlock on a specific issue, one executive at each of the parties shall meet to resolve the issue in good faith. Such meeting shall occur no less than seven business days following the occurrence of a deadlock on the JOC which at least two JOC members agree needs escalation to be resolved. Either party may take an unresolved issue to binding arbitration pursuant to the arbitration procedures in Article 11 to resolve a deadlock if the parties have failed to resolve the deadlock for at least 45 days following the initial meeting of the two executives. The initial executives for purposes of the dispute resolution under this Section 5.3 shall be Elizabeth Canis, Anthem Vice President, Emerging Business and Partnerships, and Gregory Critchfield, CEO of Sera Prognostics, Inc. Either party may replace such named executive for purposes of the dispute resolution under this Section 5.3 by written notice to the other party. |
ARTICLE
6
CONFIDENTIALITY
6.1 | Proprietary Information. The parties agree that all proprietary information that either party may receive from the other party in the performance of this Agreement is the sole property of the disclosing party. The party receiving such information agrees to keep the information strictly confidential. Anthem specifically acknowledges and agrees that the PreTRM® test is proprietary to Company, and nothing in this Agreement construes any title, license, interest, or any other right to Anthem in or relating to the PreTRM® test. For the avoidance of doubt, the foregoing shall not be applicable to the results of the PreTRM® tests, which shall be jointly owned by the applicable Member and Anthem. Company specifically acknowledges and agrees that Anthem's Provider Agreements, Anthem's care management program and Anthem's Policies and Procedures are proprietary to Anthem, and nothing in this Agreement construes any title, license, interest, or any other right to Company in or relating to such. Furthermore, nothing in this Agreement confers any title, license, interest or any other right in or to a Member's personally identifiable information (“PII”) or personal health information (“PHI”) to Company. |
6.2 | Confidentiality of Personally Identifiable Information. Company and Anthem agree that all PII and PHI related to Members is privileged and confidential. To the extent as necessary for the purposes of fulfilling the obligations set forth in this agreement provided by law, rule, or regulation, the parties agree to keep confidential and not to disclose such information to any third party without the prior consent of the Member. |
6.3 | Transfer of Medical Records. At the direction of Anthem, to the extent permitted by law, rule, and regulation, Company shall share a Member's medical records with other health care providers treating the Member in a timely manner at no cost to Anthem, the Member, or other health care provider. |
6.4 | Survival. This Article 6 survives the termination of this Agreement. |
ARTICLE
7
INSURANCE
7.1 | Anthem Insurance. Anthem shall self-insure or maintain insurance coverage or comprehensive general liability and other insurances necessary and customary to insure Anthem, its agents, servants, and employees, acting within the scope of their duties, against any claim(s) for damages arising in connection with the performance or non-performance of this Agreement by Anthem, its agents, servants, or employees. |
7.2 | Company Insurance. Company shall self-insure or maintain general and professional liability insurance including coverage for product liability in the amount of $[***] per occurrence and $[***] annual aggregate or such higher coverage as may be required by law. Evidence of such coverage shall be provided to Anthem upon its prior written request. Company shall notify Anthem no less than 10 days in advance of such policy being reduced, terminated, cancelled, or the occurrence of a lapse in coverage. Company shall maintain such insurance for the duration of this Agreement, and thereafter, as necessary to maintain coverage for events occurring during the term of this Agreement. |
ARTICLE
8
INDEMNIFICATION
8.1 | Indemnification by Anthem. Anthem agrees to indemnify Company and to hold Company harmless against any third-party claim, action, liability, damage, and loss, including reasonable attorneys' fees and costs which arise from Anthem's fraud, willful misconduct, or grossly negligent performance or failure to perform duties or obligations which are the responsibility of it, its agents, employees, or representatives under this Agreement. |
8.2 | Indemnification by Company. Company agrees to indemnify Anthem and to hold Anthem harmless against any third-party claim, action, liability, damage, and loss, including reasonable attorneys' fees and costs which arise from Company's fraud, willful misconduct, or grossly negligent performance or failure to perform duties or obligations which are the responsibility of it, its agents, employees, or representatives under this Agreement. |
ARTICLE
9
RECORD ACCESS
9.1 | Utilization Review. Company will make the Member's medical records and other PII and PHI available to Anthem for all lawful purposes. Company will also make such records available to federal or state authorities as required by applicable law, rule, or regulation. |
9.2 | Books and Records. Anthem shall have the right to access the books and records of Company other than those set forth in Section 9.1 upon no less than 30 days' prior written notice to Company. Anthem shall have the right to inspect such books and records during normal business hours and with minimum disruption to Company's business operations. Such inspection shall not occur more frequently than once per calendar year unless otherwise required as a result of regulatory requirements or under applicable law. Any expenses out of the ordinary course incurred by Company in such audit shall be reimbursed by Anthem. If requested by Company, Anthem shall give Company a summary of all findings of such audit, including any underpayments identified by the audit, within 30 days of the completion of such audit. |
9.3 | Retention of Records. Company shall maintain medical records for a period of (a) six years from the applicable date of service, (b) in the case, of a minor, for three years after the minor achieves the age of majority or six years from the applicable date of service, whichever is later, or (c) such longer period as required by applicable law, rule, or regulation. This provision will survive the termination of this Agreement. |
ARTICLE
10
TERM AND TERMINATION
10.1 | Term. The initial term of this Agreement shall commence on the Effective Date and, unless earlier terminated pursuant to Section 10.2, remain in effect until the later of (a) the third anniversary of the Effective Date or (b) the date on which Anthem has consumed [***] of the PreTRM® tests. |
10.2 | Termination. |
1. | This Agreement may be terminated at any time by the mutual written consent of Anthem and Company. |
2. | Termination for Cause. This Agreement may be terminated for cause as follows: |
(a) | If either party fails to comply with or perform when due any material term or condition of this Agreement, the other party shall notify the defaulting arty of the default in writing, and the defaulting party will have [***] days from the date of such notice to cure the default. If the default is not cured to the reasonable satisfaction of the non-defaulting party within such period, the non-defaulting party may terminate this Agreement at the conclusion of the cure period. |
(b) | Upon notice b Anthem to Company with no further obligations of either party: [***]. |
(c) | [***], Company shall notify Anthem of such in reasonable detail in writing, and Anthem will have 60 days from the date of receipt of such notice to cure such impact. If the impact is not cured to the reasonable satisfaction of Company within such period, the Company may terminate this Agreement at the conclusion of the cure period. |
10.3 | Continuation of Care. Unless otherwise set forth in this Agreement or required by applicable law or regulation, Company shall, upon termination of this Agreement (for any reason other than those set forth in Section 10.2.3(b)), continue to provide Testing Services to any Member who has, as of the date of termination, provided a specimen for a PreTRM® test. Company shall be reimbursed for such Testing Services pursuant to the terms and conditions of this Agreement. |
ARTICLE
11
DISPUTE RESOLUTION
11.1 | Dispute Resolution. If any dispute arises out of or relates to this Agreement, the aggrieved party shall provide notice to the other party of such dispute. Company and Anthem shall meet to attempt to resolve the dispute. Any dispute shall first be submitted to (a) the JOC for resolution and then (b) the process under Section 5.3 of this Agreement prior to submission to binding arbitration pursuant to this Section 11.1. If such efforts are unsuccessful, either party may commence arbitration by filing an arbitration demand with the American Arbitration Association (“AAA”) within 30 days of the date of the notice of dispute. The dispute will be resolved through binding arbitration as set forth in this Article 11 in New York, New York, or another location as mutually agreed to by the parties. |
11.2 | Arbitration. The arbitrator's ruling on any dispute that is brought to arbitration shall be final and binding on the parties. The Commercial Rules relating to Payor-Provider Disputes issued by AAA will apply to any arbitration between the parties. The cost of any arbitration will be equally borne by the parties unless the arbitrator(s) specifically instruct otherwise. The result of any arbitration may be entered into and enforced by a court of competent jurisdiction. |
11.3 | Survival. This Article 11 survives the termination of this Agreement. |
ARTICLE
12
MISCELLANEOUS
12.1 | Amendment. This Agreement may be amended only by a written instrument duly executed by the parties hereto. Notwithstanding the foregoing, Anthem may reasonably amend this Agreement to comply with an applicable law, rule, or regulation. If the amendment would impose a material adverse impact on Company, then Company may terminate this Agreement on sixty (60) days' prior written notice to Anthem by sending a termination notice within thirty (30) days after receipt of the amendment. |
12.2 | Assignment. Neither party may assign or delegate this Agreement or any part thereof (except as otherwise expressly set forth herein) without the prior written consent of the other party. |
12.3 | Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. |
12.4 | Notice. Any notice required or permitted under this Agreement must be made in writing and delivered to the address(es) set forth below (a) by hand, (b) via nationally-recognized overnight courier with proof of delivery, (c) via certified mail, return receipt requested, or (d) via email with delivery and read receipts requested. Notice will be deemed delivered as of the date of verified delivery. Each party may update its address(es) for notice set forth below by providing notice to the other party of the new address. |
if to Anthem: | 1155 Elm Street |
Manchester, NH 03101 | |
Attn: Paul Eisenstat, VP Networks | |
if to Company: | 2749 E Parleys Way, Suite 200 |
Salt Lake City, UT 84109 | |
Attn: Jay Moyes, Chief Financial Officer |
12.5 | Relationship of the Parties. For the purposes of this Agreement, Anthem and Company are, and will act at all times, as independent contractors. None of the provisions of this Agreement is intended to create, nor will be deemed or construed to create, any relationship other than that of independent entities contracting with each other for the purposes of effectuating this Agreement. The provisions of this Agreement will not be deemed to establish or be deemed or construed to establish any partnership, agency, employment, agreement, or joint venture between the parties. Neither of the parties, nor any of their respective officers, directors, employees, authorized agents, or representatives shall be construed to be the agent, employee, or representative of the other. |
12.6 | Survival. Provisions of this Agreement which, either explicitly or implicitly, apply to a party following the termination of this Agreement will survive such termination for all purposes. |
12.7 | Severability. If any term or provision of this Agreement shall be found to be illegal, invalid or unenforceable under applicable law, then, notwithstanding such illegality, invalidity or unenforceability, this Agreement shall remain in full force and effect and the illegal, invalid or unenforceable term or provision shall be deemed to be deleted. |
12.8 | Governing Law. This Agreement shall be governed in all respects by the laws of the State of New York without giving effect to the principles of conflicts of law thereof. |
12.9 | Section Headings. Section headings contained in this Agreement are inserted for convenience of reference only, will not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction, or scope of any of the provisions hereof. |
12.10 | No Third-Party Beneficiaries. It is the explicit intention of the parties hereto that no person or entity other than the parties hereto is or shall be entitled to bring any action to enforce any provision of this Agreement against either party hereto, and that the covenants, undertakings, and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the parties hereto and their respective successors and assigns as permitted hereunder. |
12.11 | Force Majeure. Each party shall use all commercially reasonable efforts to perform its obligations under this Agreement but shall be excused for failure to perform or for delay in performance hereunder due to unforeseeable circumstances beyond its reasonable control, or which could not have been prevented by it, including, but not limited to, floods, hurricanes, earthquakes, acts of war or terrorism, civil unrest, or embargoes. |
12.12 | No waiver. No waiver hereunder will be binding unless set forth in writing and duly executed by the party against whom enforcement of the waiver is sought. Neither the waiver by either of the parties hereto or a breach of, or a default under any of the provisions of this Agreement, nor the failure of either party, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any of such provisions, rights, or privileges hereunder. |
12.13 | Compliance with Law. Each party represents and warrants to the other party that it is in material compliance with all applicable laws, rules, and regulations as respects its performance hereunder, and covenants that, for the duration of this Agreement, such party will remain in material compliance with all applicable laws, rules, and regulations as respects its performance hereunder. |
12.14 | Cumulative Remedies. The remedies provided herein are cumulative and do not preclude one party from asserting any other rights or seeking any other remedies against the other party, or its successors or permitted assigns, pursuant to this Agreement or as provided by applicable law. Nothing contained herein precludes a party from seeking equitable relief, where appropriate. |
12.15 | Execution. This Agreement may be executed in one or more counterparts, each of which is to be deemed an original, and all of which, when taken together, are to be deemed one and the same instrument. Signatures to this Agreement may be made and/or transmitted electronically, and each such signature is to be deemed an original signature for all purposes. |
12.16 | Entire Agreement. Except as expressly set forth herein, this Agreement, together with all exhibits and appendices hereto, constitute the entire agreement between the parties hereto with respect to the subject matter contained herein and supersedes all prior oral or written agreements, representations, statements, negotiations, understandings, and undertakings with respect to the matters provided for herein. |
12.17 | BCBSA Affiliation. Company hereby expressly acknowledges its understanding that this Agreement constitutes a contract between Company and Anthem, that Anthem is an independent entity operating under a license from the Blue Cross Blue Shield Association, an Association of independent Blue Cross and Blue Shield plans (the “Association”), permitting Anthem to use the Blue Cross and Blue Shield Service Marks, and that Anthem is not contracting as the agent of the Association. Company acknowledges that it has no license to use the Blue Cross and/or Blue Shield names, symbols, or derivative marks (the “Brands”) and nothing in this Agreement is to be deemed to grant a license to Company to use the Brands. Any references to the Brands made by Company in its own materials are subject to the review and approval by Anthem pursuant to the terms of this Agreement. Company further acknowledges and agrees that it has not entered into this Agreement based upon representations by any person other than Anthem, and that no person, entity, or organization other than Anthem will be held accountable or liable to Company for any of Anthem's obligations to Company created under this Agreement. This section does not create any additional obligations whatsoever on the part of Anthem other than those obligations otherwise created under this Agreement. |
12.18 | Publicity. Anthem and Company shall mutually agree on any press releases, communications, media outreach, or similar public statements made by either party in regards to the existence and terms of this Agreement. Neither party shall make any such public statement regarding this Agreement prior to the mutual agreement of the parties. |
[Signatures appear on the following page]
The parties have executed this Commercial Collaboration Agreement as of the date set forth below.
ANTHEM, INC. | SERA PROGNOSTICS, INC. | |||
By: | /s/ Paul Marchetti | By: | /s/ Gregory C. Critchfield | |
Name: Paul Marchetti | Name: Gregory C. Critchfield | |||
Title: SVP Health Care Management | Title: Chief Executive Officer | |||
Date: February 17, 2021 | Date: February 17, 2021 |
Exhibit A
PER TEST RATES AND NUMBER OF TESTS
1. | Rates: Anthem shall pay Company an amount per PRETRM® test control to a Member equal to [***]. |
2. | Guaranteed Tests per Year: Anthem shall purchase a minimum of [***] PreTRM® tests during the term of this Agreement. The annual amounts are as follows: |
a. | Year 1 - [***] tests |
b. | Year 2 - [***] tests |
c. | Year 3 - [***] tests |
In the event that Anthem purchases fewer than the foregoing amount in either Year 1 or Year 2, the difference between the amount actually ordered and the guaranteed number of tests will carry-over to the following year. For example, if Anthem orders only [***] tests in Year 1, then the guaranteed number of tests for Year 2 will be [***].
3. | Affiliates and BCBS Licensees. Any purchases made on behalf of, or distributed to, Anthem's Affiliates or any other BCBS Licensee or one of their respective Affiliates will be credited against the guaranteed payment terms of Section 4.2 of the Agreement and guaranteed test volumes in Section 2 of this Exhibit A. |
EXHIBIT B
[***]
EXHIBIT C
[***]
Exhibit 10.6
LABORATORY SERVICES AGREEMENT
PRIMESTUDY
This Laboratory Services Agreement (“Agreement”) is made and entered into effective as of November 10, 2020 (“Effective Date”) by and between Anthem Health Insurance and Amerigroup Corporation, whose principal place of business is 4425 Corporation Lane Virginia Beach, VA 23462 (hereinafter referred to collectively as “Anthem”), and Sera Prognostics, Inc., whose principal place of business is 2749 East Parleys Way, Suite 200, Salt Lake City, UT 84109 (“Laboratory”).
Background and Recitals
Anthem is a sponsor and administrator of health insurance plans that provide benefits for, among other things, laboratory analyses of samples collected from insured individuals among the services that are covered under its plans;
Laboratory has developed the PreTRM® proteomic screening test to identify increased risks of adverse outcomes among pregnant women;
Laboratory has designed and is sponsoring the Prematurity Risk Assessment combined with clinical Interventions for improving neonatal outcoMEs study to evaluate the PreTRM® test (the “PRIME” study);
Anthem and Laboratory have agreed to collaborate on the conduct of the PRIME study, and Laboratory has entered into a Work Order with HealthCore, Inc. for the purpose of managing the conduct of the PRIME study;
Anthem has agreed to compensate Laboratory for the PreTRM® tests performed pursuant to the PRIME study;
NOW, subject to the terms and conditions of this Agreement, the parties desire that Anthem engage Laboratory to provide certain clinical laboratory services and related services to support Anthem’s health insurance plans.
NOW, THEREFORE, for and in consideration of the mutual promises and covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Laboratory Responsibilities
1.1 Services. Subject to the terms and conditions of this Agreement, Laboratory shall provide the clinical laboratory services listed on Exhibit A, attached hereto and incorporated herein by this reference, (the “Services”) as specifically requested by the treating physicians or other qualified health care professionals from time-to-time for subjects enrolled in the PRIME study. All Services shall be provided in accordance with all applicable federal, state and local laws, rules, and regulations, ordinances and licensure requirements, and all requirements of third-party reimbursement sources (public or private), or other reimbursement sources covering laboratory services. Laboratory shall use personnel properly licensed and qualified to perform laboratory services and shall maintain evidence of such compliance.
[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED BECAUSE THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
1.2 Pricing. The fee for each PreTRM® test performed by Laboratory in accordance with the PRIME study is set out in the fee schedule attached as Exhibit A, which is fully incorporated by reference into this Agreement.
1.3 Results. Laboratory shall provide all results of Services (“Results”) in the form of a written report delivered to the physician or other qualified health care professional ordering each test in accordance with the PRIME study.
1.4 Processing. Laboratory shall maintain a record of the daily intake of specimens and a system for identification of each specimen.
1.5 Support. Laboratory shall make personnel available by telephone or electronic mail during normal business hours to review Results, arrange for special tests as mutually agreed by the parties, and promptly communicate any new laboratory test requisition processes to the ordering physician or other qualified health care professional.
1.6 Written Policies. Laboratory has established written policies and procedures for detecting and preventing fraud, waste, and abuse, and has also implemented a comprehensive compliance program and code of conduct, which complies with the standards set forth in the OIG Compliance Program Guidance for Clinical Laboratories. Laboratory shall conduct its activities under this Agreement, including all test orders, Services, supplies or materials provided under this Agreement, in accordance with the requirements of the applicable federal and state laws, including those governing transportation of hazardous materials and record retention requirements.
1.7 Standards, Qualifications, and Licensure. Laboratory represents and warrants that it is, and throughout the term of this Agreement shall remain, CLIA certified. Laboratory shall provide immediate written notice of any change to its licensure, certification or accreditation status. Laboratory represents and warrants that any pathologist providing Services under this Agreement is qualified, credentialed, and licensed to practice medicine as shall be required to perform Services hereunder. Laboratory represents and warrants that it and its employees and agents who perform the Services, possess the necessary skill, education, and training, and maintain all necessary federal and state licenses and/or certifications required to perform such Services hereunder. The Services performed hereunder shall be performed at testing facilities that remain duly licensed clinical laboratories under applicable federal, state and local law, and are accredited by an accrediting organization. Laboratory will provide documentation of all credentials, licenses, qualifications and accreditation required in this Agreement to Anthem upon request.
1.8 Waste. Laboratory will be solely responsible for the disposal of any medical or other waste generated in the performance of the Services. Laboratory shall comply with all laws and regulations applicable to such disposal.
1.9 Credentialing. Laboratory represents that it meets all applicable Anthem credentialing standards.
2 |
2. Billing and Compensation by Anthem
2.1 List Bill Submission and Payment. Except as otherwise provided herein, Laboratory will submit monthly invoices to Anthem for Services at the rate per test conducted in the intervention arm of the PRIME Study (not the control arm), up to a [***] tests, as set forth in Exhibit A (or other mutually acceptable and documented rate) within 15 days following the month in which such services were performed. Laboratory agrees to accept the payments at the agreed upon rate as payment in full. Each invoice shall be in the form reasonably requested by Anthem, and include all information necessary for Anthem to process payments to Laboratory . Anthem agrees to pay Laboratory undisputed amounts within forty-five (45) days of the receipt of any invoice; provided, however, that Anthem shall have no obligation to pay for any Services that are not timely invoiced.
2.2 Hold Harmless. Laboratory shall not, under any circumstance, including: (i) nonpayment of moneys due Laboratory by Anthem, (ii) insolvency of Anthem, or (iii) breach of this Agreement, bill, charge, collect a deposit, seek compensation, remuneration, or reimbursement from, or have any recourse against an enrolled subject, dependent of an enrolled subject, or any persons acting on their behalf, for Services.
2.3 Basis of Pricing. The parties acknowledge and agree that the pricing set out in this Agreement is limited to the tests performed under the PRIME study protocol, and may not be used to set any future reimbursement amounts for the PreTRM® test. The parties further acknowledge and agree that the aggregate services hereunder do not exceed those that are reasonable and necessary for a legitimate business purpose, and that the compensation to be provided hereunder has not been determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties.
3. Term & Termination
3.1 Term. This Agreement shall commence on the Effective Date and remain in effect until the conclusion of the PRIME study, unless otherwise terminated as provided herein. Thereafter, this Agreement may be renewed for additional terms of one (1) year each upon mutual agreement of the parties.
3.2 Termination. Notwithstanding anything herein to the contrary, this Agreement may be terminated as follows: (i) by cause by either party upon the default by the other party of any term, covenant or condition of this Agreement, where such default continues for a period of ten (10) days after the defaulting party receives written notice thereof from the other party such default; (ii) without cause by either party effective at any time after at least thirty (30) days prior written notice to the other party in which case the Agreement shall terminate on the future date specified in such notice, except that no such termination without cause shall take effect prior to the first annual anniversary of the Effective Date; (iii) by either party upon notice to the other party following the filing of voluntary or involuntary bankruptcy by either party; or (iv) by either party immediately upon notice to the other party in the event of either party’s loss of license, accreditation, or certification necessary for its performance hereunder.
4. Record Retention. Laboratory agrees to keep and maintain any and all records, including but not limited to medical and financial records, for services rendered by Laboratory to Anthem as may be required by federal, state, or local government laws and Anthem policies. Laboratory shall provide a copy of such records to Anthem upon request.
3 |
5. Confidential Information.
a) Confidential Information is any information provided pursuant to or in furtherance of this Agreement by a Disclosing Party to a Receiving Party that is clearly marked as “confidential” or that a reasonable person in like circumstances would understand to be confidential or proprietary. “Confidential Information” does not include Protected Health Information, as that term is defined at 45 C.F.R. § 160.103 and shall not apply to information that:
(i) | was known to Receiving Party at the time of disclosure hereunder, as evidenced by Receiving Party’s contemporaneous written or electronic records; |
(ii) | becomes generally known to the public through no fault of Receiving Party or anyone doing work under its direction pursuant to the terms of this Agreement; |
(iii) | is disclosed to Receiving Party by a third person who has a right to make such disclosure without an obligation of confidentiality to Disclosing Party; or |
(iv) | is developed independently by Receiving Party without use of the Disclosing party’s Confidential Information, as evidenced by Receiving Party’s contemporaneous written or electronic records. |
b) Receiving Party shall not use Confidential Information, except in furtherance of this Agreement, or disclose Confidential Information to third parties in a manner that is inconsistent with the terms of this Section. Except as stated herein, a Receiving Party shall restrict access to Disclosing Party’s Confidential Information to Receiving Party’s employees and contractors with a need to know for the purpose of administering or implementing this Agreement or for the purpose of providing legal, actuarial, or accounting services to Receiving Party, and only to the extent such employees and contractors agree to be bound by confidentiality and use restrictions at least as restrictive as those set forth herein. Receiving Party shall be responsible for any unauthorized use or disclosure of the Disclosing Party’s Confidential Information by any person or entity to which the Receiving Party discloses such Confidential Information.
c) Upon termination of this Agreement, Receiving Party shall return to Disclosing Party all documents or other materials that contain Disclosing Party’s Confidential Information or destroy all copies thereof.
d) If the Receiving Party is required under a final judicial or governmental order to disclose any Confidential Information received from the Disclosing Party, the Receiving Party may disclose the Confidential Information, provided that the Receiving Party gives the Disclosing Party sufficient prior notice to contest such order and the Receiving Party discloses only such portions of the Confidential Information as is required by such order.
4 |
6. HIPAA Requirements. Without limiting the foregoing, the parties acknowledge that each party is a “covered entity” as that term is defined at 45 C.F.R. § 160.103. As such, the parties agree to comply with applicable requirements of the Health Insurance Portability and Accountability Act of 1996, as codified at 42 U.S.C. § 1320d et seq. (“HIPAA”), the Health Information Technology for Economic and Clinical Health Act, as each may be amended from time to time, and any current and future regulations promulgated thereunder, including without limitation the federal privacy regulations contained at 45 C.F.R. Part 160 and Part 164, Subpts. A and E (the “Federal Privacy Regulations”), the federal security standards contained at 45 C.F.R. Part 160 and Part 164, Subpts. A and C, the federal breach notification rules contained at 45 C.F.R. Part 160 and Part 164, Subpts. A and D, and the federal standards for electronic transactions contained at 45 C.F.R. Parts 160 and 162, all collectively referred to herein as “HIPAA Requirements.” The parties agree not to use or further disclose any Protected Health Information, as defined in the Federal Privacy Regulations, other than as permitted by HIPAA Requirements.
7. Insurance Coverage. During the term of this Agreement, Laboratory shall maintain general and professional liability insurance including coverage for product liability and clinical trials liability in the amount of $[***] per occurrence and $[***] annual aggregate or such higher coverage as may be required by law. Proof of said insurance coverage shall be supplied to Anthem upon request.
8. Indemnification. Laboratory shall indemnify, defend, and hold Anthem, its directors, officers, agents, and employees, harmless from and against any judgments, damages, losses, costs, and expenses (including, without limitation, reasonable attorneys’ fees) arising from, or related to, any allegation, demand, claim, action or proceeding to the extent arising out of the Services, or Laboratory’s breach of this Agreement or applicable law, or Laboratory’s negligent acts or omissions.
Anthem shall indemnify, defend, and hold Laboratory, its directors, officers, agents, and employees, harmless from and against any judgments, damages, losses, costs, and expenses (including, without limitation, reasonable attorneys’ fees) arising from, or related to, any allegation, demand, claim, action or proceeding to the extent arising out of the Services, or Anthem’s breach of this Agreement or applicable law, or Anthem’s negligent acts or omissions, except to the extent that such judgments, damages, losses, costs and expenses were caused by Laboratory’s negligence, willful misconduct or failure to comply with its obligations under this Agreement.
9. Fraud and Abuse. The parties expressly acknowledge that the compensation payable hereunder is fair market value for the items purchased and/or the services rendered, and that nothing contained herein shall require referrals for items or services between the parties. Neither party will knowingly or intentionally conduct itself in such a manner as to violate any federal or state law, rule or regulation applicable to the items purchased or the services rendered hereunder, including but not limited to any fraud and abuse provisions relating to the Medicare and Medicaid Programs. The parties also agree that the benefits to either party hereunder do not require, are not payment for, and are not in any way contingent upon the admission, referral, or other arrangement for the provision of any item or service reimbursed under any federal or state health care program, including, without limitation, Medicare or Medicaid.
5 |
10. Miscellaneous
10.1 Assignment. Laboratory may not assign this Agreement, or any rights or obligations hereunder, without Anthem’s prior written consent, which consent shall not be unreasonably withheld, delayed, or conditioned. Subject to the foregoing, this Agreement shall inure to the benefit and be binding upon Anthem and its successors and assigns and Laboratory and its successors and assigns.
10.2 Changes in Law. This Agreement shall be construed to be in accordance with applicable federal and state laws. In the event there is a change in such laws, whether by statute, regulation, agency, or judicial decision that has any material effect on any term of this Agreement, then the applicable term(s) of the Agreement shall be subject to renegotiation and any affected party may request renegotiation of the affected term or terms of this Agreement, upon written notice to the other party, to remedy such condition.
The parties expressly recognize that upon request for renegotiation, each party has a duty and obligation to the other only to renegotiate the affected term(s) in good faith and, further, each party expressly agrees that its consent to proposals submitted by the other party during renegotiation efforts shall not be unreasonably withheld.
Should the parties be unable to renegotiate the term or terms so affected so as to bring it/them into compliance with the statute, regulation, or judicial opinion that rendered it/them unlawful or unenforceable within ten (10) days of the date on which notice of a desired renegotiation is given, then either party shall be entitled, after the expiration of said ten (10) day period, to terminate this Agreement upon ten (10) additional days written notice to the other party.
10.3 Compliance with Laws. Laboratory warrants that it is and shall remain in compliance with all applicable federal, state, and local laws, regulations, and standards relating, including but not limited to all laws and regulations related to health, safety, and environmental standards, and (ii) all such laws related to the provision of Services purchased pursuant to this Agreement.
10.4 Enforceability. In the event any provision of this Agreement is found to be unenforceable or invalid, such provision shall be severable from this Agreement and shall not
affect the enforceability or validity of any other provision contained in this Agreement.
10.5 Entire Agreement. This Agreement may be executed in one or more counterparts, all of which together shall constitute only one Agreement. This Agreement contains the entire understanding between the parties and supersedes and terminates any prior agreement(s) between the parties hereto. No amendments or additions to this Agreement shall be binding unless such amendments or additions are in writing and signed by the parties, except as herein otherwise provided.
10.6 Force Majeure. Neither party shall be liable for a delay in its performance of its obligations and responsibilities under this Agreement due to extraordinary causes beyond its control, including, but not limited to, war, act of terrorism, pandemics, embargo, national emergency, insurrection or riot, acts of the public enemy, fire, flood, or other natural disaster (“Force Majeure Event”); provided that said party has taken reasonable measures to notify the other, in writing, of the delay. Further, in the event either party is unable to meet its obligations hereunder because of such force majeure, and such inability continues for a period of thirty (30) days or more, then either party may terminate this Agreement effective immediately without further obligation to the other except as to delivery of and payment for the Services consistent with the terms of this Agreement.
6 |
10.7 Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed by and construed and enforced in accordance with the substantive laws of the State of Utah, without regard to its principles of conflicts of laws.
10.8 Independent Contractors. Each party shall be considered to be an independent party and shall not be construed to be an agent or representative of the other party, and therefore, has no liability for the acts or omissions of the other party. In addition, neither party, nor any of its employees, agents, or subcontractors, shall be deemed to be employees or agents of the other party. Therefore, neither party nor any of its employees, agents, or subcontractors, shall be entitled to compensation, workers compensation, or employee benefits of the other party by virtue of this Agreement.
10.9 Non-Solicitation. No party may, directly or indirectly, solicit, recruit, or otherwise encourage any employee of the other party to leave his or her employment with that other party for any reason. This restriction applies during the term and for a period of twelve (12) months after the termination or expiration of this Agreement. The preceding sentence does not, however, prohibit either party from: (i) soliciting employment by placement of general advertisements for employees on any internet site, in newspapers, or via other media of general circulation not specifically directed at the employees of the other party; (ii) soliciting persons identified through employment search firms that are not specifically directed at the employees of the other party; or (iii) soliciting or hiring any person who contacts the hiring party on his or her own initiative without any prior solicitation or recruitment (other than advertisements of the type contemplated by the preceding clauses).
10.10 Remedies. In addition to those remedies provided herein, each party shall have available all remedies provided by law.
10.11 Section and Other Headings. The article and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
10.12 Waiver. The waiver of a breach of this Agreement or the failure of a party to exercise any right under this Agreement shall in no event constitute a waiver as to any other breach, whether similar or dissimilar in nature, or prevent the exercise of any right under this Agreement.
10.13 Audit. Anthem may, upon reasonable notice, audit any and all work or expense records of Laboratory relating to the Services provided hereunder. Laboratory shall have the right to exclude from such inspection any of its confidential or proprietary information that is unrelated to this Agreement, which was not otherwise provided to Anthem as a part of this Agreement. Laboratory further agrees to maintain its books and records relating to System provided hereunder for a period of two (2) years from the date such work was completed, and to make such books and records available to Anthem, during normal business hours, at any time or times within the two-year period. Any such audit will be at Anthem’s expense.
7 |
10.14 Notice. This Agreement, including any attachments, may be amended or modified only by an instrument of equal formality signed by duly authorized representatives of the respective parties. All notices, requests, demands, or other communications hereunder other than day-to-day communications within the duties of the representatives shall be in writing and shall be deemed given if personally delivered or mailed to the address set forth below:
Laboratory: | Sera Prognostics, Inc. |
2749 East Parleys Way
Suite 200
Salt Lake City, UT 84109
Anthem: | Anthem Inc. |
4425 Corporation Lane
Virginia Beach, VA 23462
Any changes in the above addresses for notice shall be provided to the other party to this Agreement within five (5) days of such change.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
Anthem Inc. | Sera Prognostics, Inc. | |||
By: | /s/ Michael Hodgins | By: | /s/ Gregory Critchfield | |
Title: | Director, Strategic Sourcing | Title: | President and CEO | |
Date: | 1/8/2021 | Date: | 11/11/2020 |
8 |
Exhibit A
Laboratory Services Fee Schedule
[***]
9 |
Exhibit 10.7.1
Confidential
COMMERCIALIZATION AGREEMENT
This Commercialization Agreement (“Agreement”) is effective as of January 9, 2017 (“Effective Date”) and is entered into by and between Sera Prognostics, Inc. (“Sera”), a Delaware corporation with its principal place of business at 2749 East Parleys Way, Suite 200, Salt Lake City, Utah 84109, and Laboratory Corporation of America Holdings (“LabCorp”), a Delaware corporation with its principal place of business at 531 South Spring Street, Burlington, North Carolina 27215. Each of Sera and LabCorp is referred to herein as a “Party” and together as the “Parties.”
BACKGROUND
A. | Sera is a diagnostics company that develops, commercializes, and performs a prognostic test in its CLIA-certified laboratory referred to as the PreTRM® test, which is a clinical blood test for early individualized risk assessment of spontaneous premature birth (the “Test”). |
B. | LabCorp provides leading-edge medical laboratory tests and services through a national network of primary clinical laboratories and specialty testing laboratories. |
C. | [***]. |
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows.
1. | DEFINITIONS |
Capitalized terms used herein shall have the definitions set forth in this Article 1 or elsewhere herein.
1.1 “Affiliate” means, with respect to a Party to this Agreement, any current or future Entity which controls, is controlled by, or is under common control with such Party, but only for so long as such control exists. For purposes of this definition only, “control” means direct or indirect ownership of at least fifty percent (50%) of the shares or other equity interests of the subject Entity entitled to vote in the election of directors (or, in the case of an Entity that is not a corporation, for the election of the corresponding managing authority).
1.2 “Commercialize” means to advertise, market, promote, offer for sale, sell and distribute, and to accept orders, collect fees and book revenue for sales of Tests (and “Commercialization” shall have the correlative meaning).
1.3 “Commercially Reasonable Efforts” means the carrying out of activities using good faith commercially reasonable and diligent efforts to achieve a goal, and using the efforts that a similarly situated company would reasonably devote to a product of similar market potential or profit potential at a similar stage in development or product life resulting from its own research efforts, based on conditions then prevailing and taking into account, without limitation, issues of safety and efficacy, product profile, the competitiveness of alternative products in the marketplace, the likely timing of the product’s entry into the market, the patent and other proprietary position, and the status of the approval process, the commercial potential and profitability, and other relevant scientific, medical, technical and commercial factors.
[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED BECAUSE THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
1.4 “Control” or “Controlled” means the possession by Sera of the ability to grant a license or sublicense of intellectual property rights as provided for herein without violating the terms of any arrangement or agreements between it and any third party.
1.5 “Entity” means a person, corporation, partnership, association, limited liability company, unincorporated organization, firm, or other entity.
1.6 “Field” means the prediction of a patient’s likelihood to deliver a baby at less than thirty seven (37) weeks of gestation. For clarity, pharmaceutical collaborations and clinical trials are outside the Field.
1.7 [***].
1.8 “Legal Requirements” means any applicable national, federal, state or local law, rule, ordinance or regulation, or formal administrative agency final guidance or published final interpretation, in the Territory.
1.9 “Provider” means a healthcare provider authorized and licensed to provide obstetrics services to patients within the Territory.
1.10 [***].
1.11 “Sample” means any fluid sample extracted from a Provider’s patient as necessary to perform the Test.
1.12 “Territory” means the United States.
1.13 [***].
2. | DISTRIBUTION RIGHTS AND OBLIGATIONS |
2.1 [***].
2.2 [***].
2.3 [***].
2.4 [***].
2.5 [***].
2.6 [***].
2
2.7 Independent Contractor. Each Party shall perform its services under this Agreement as an independent contractor and not as an employee or agent of the other Party or any of its parents, subsidiaries, or affiliates. Neither Party is authorized to assume or create any obligation or responsibility, express or implied, on behalf of, or in the name of, the other Party or to bind the other Party in any manner, except that Sera will perform all Tests that are ordered in compliance with the process described in Section 3. Without limiting the generality of the foregoing, neither Party (a) shall have the right to enter into any contracts or commitments in the name of, or on behalf of, the other Party, and (b) shall obligate or purport to obligate the other Party by issuing or making any warranties or guaranties with respect to Tests to any third party that are not provided or approved in writing in advance by the other Party. Neither Party shall be entitled to any benefits, coverages or privileges, including, without limitation, social security, unemployment, medical or pension payments, made available to employees of the other Party.
2.8 [***].
2.9 [***].
2.10 [***].
2.11 [***].
2.12 [***].
2.13 [***].
2.14 [***].
2.15 [***].
2.16 [***].
3. | SAMPLE PROCESSING AND TESTING |
3.1 SOPs. Sera and LabCorp shall use diligent and good faith efforts to agree upon standard operating procedures for LabCorp’s acceptance of orders for Tests, collection, processing and shipment of Samples to Sera, and Sera’s provision of Sera Results Reports (defined below) (“Intercompany SOPs”) for each Test within thirty (30) days of the Effective Date. Sera acknowledges that LabCorp is not responsible for ensuring that the collection, preservation, shipping and handling specifications established in the Intercompany SOPs are sufficient to ensure the viability of Samples for performance of the Test. Each Intercompany SOP may only be amended by the Parties in writing. Neither Party shall change nor deviate from an Intercompany SOP without the other Party’s prior written approval of the proposed change or deviation. Sera shall maintain written documentation of its own technical standard operating procedures for its performance of the Tests (“Sera SOPs”), which shall constitute Sera’s Confidential Information. For clarity, the Sera SOPs shall not form part of the Intercompany SOPs.
3
3.2 Sample Collection, Processing and Shipment by LabCorp. LabCorp agrees that it will be responsible for (a) collecting Samples at LabCorp facilities from customers who have ordered the Test; (b) procuring the supplies needed for each patient draw; (c) labeling and processing such Samples (whether ordered in connection with other testing to be performed by LabCorp or as a standalone test); (d) packaging the Samples; and (e) shipping the Samples to Sera’s CLIA-certified, licensed laboratories located at 2749 Parleys Way, Suite 200, Salt Lake City, UT 84109 (the “Licensed Facilities”) for performance of the Tests, all in accordance with the Intercompany SOPs. Sera acknowledges that LabCorp may route samples through its regional laboratories, so long as such routing complies with the Sera SOPs. LabCorp shall not deliver any Samples to Sera that LabCorp knows is insufficient for purposes of performing a Test.
3.3 [***].
3.4 [***].
3.5 Performance of Tests. Sera will perform Tests on Samples received from LabCorp at the Licensed Facilities in accordance with (i) the analytical, clinical and performance standards set forth on Exhibit E attached hereto and (ii) the Intercompany SOPs. [***].
3.6 [***].
3.7 [***].
3.8 [***].
3.9 Licensed Facilities. Sera shall perform the Services only at its Licensed Facilities and Sera may change the location of the Licensed Facilities to substantially equivalent and appropriately certified, accredited, licensed laboratory facilities within the USA upon sixty (60) days’ prior written notice to LabCorp. LabCorp’s designated representatives may visit the Licensed Facilities upon reasonable advance notice and during Sera’s normal business hours to observe the performance of the Services and to verify compliance with the Intercompany SOPs, subject to compliance with Sera’s onsite policies and processes.
3.10 Governmental Permits and Approvals. Each Party will obtain and maintain all applicable professional licenses, permits, certifications, authorizations, and approvals as may be required for the performance of its hereunder, and each Party will be solely responsible for any fees associated with any licenses, permits, certifications, authorizations, or approvals. Sera will use commercially reasonable efforts to obtain and receive New York Approval as soon as practicable, and will notify LabCorp promptly upon the occurrence of New York Approval.
3.11 Retention of Records and Samples. Sera and LabCorp shall retain and preserve accurate and complete records and pertinent Samples related to any Tests performed by Sera under this Agreement in conformity with company policies and consistent with applicable Legal Requirements. Upon written request, each Party shall make available for review by the other all such records and preserved materials as may be reasonably required or requested.
3.12 [***].
4
4. | COMPENSATION |
4.1 [***].
4.2 [***].
4.3 [***].
4.4 [***].
4.5 [***].
4.6 [***].
4.7 [***].
5. | CLINICAL STUDIES AND COMPLIANCE |
5.1 [***].
5.2 Compliance with Laws. LabCorp and Sera each agree to perform their respective obligations under this Agreement in compliance with all Legal Requirements and all applicable regulations, rules, and policies of third party payors that pay for the Tests. The terms of this Agreement are intended to be in compliance with Legal Requirements applicable on the Effective Date, including, but not limited to the federal health care anti-kickback statute (42 U.S.C. § 1320a-7b), and applicable state law equivalents, as well as applicable state law prohibitions on professional fee splitting. Should legal counsel for either Party reasonably conclude that any portion of this Agreement is or may be in violation of such Legal Requirements, or subsequent enactments by any governmental authorities, that Party shall give written notice and the Parties will negotiate in good faith to amend this Agreement to comply with such Legal Requirements. In the event that the Parties are unable to agree upon such an amendment, either Party may terminate this Agreement.
5.3 Privacy. LabCorp and Sera each agree to protect the privacy and provide for the security of any information that relates to a patient’s past, present, or future physical or mental health or condition in accordance with the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, and all regulations promulgated thereunder at 45 C.F.R. parts 160 through 164, as amended by the federal Health Information Technology for Economic and Clinical Health Act (“HITECH Act”) and its implementing regulations, as may be modified or amended (collectively “HIPAA”), and any other applicable federal and state laws and regulations. The Parties acknowledge and agree that they are both “covered entities” providing “treatment” for patients as those terms are defined under HIPAA. Both parties acknowledge that they have developed and implemented policies, procedures, and training programs reasonably designed to protect the privacy and security of patient information in accordance with HIPAA’s privacy, security, and breach notification regulations. Sera shall not use any information received from LabCorp to contact a patient directly without LabCorp’s prior written consent.
5
5.4 Participation in Federal Health Care Programs. LabCorp and Sera respectively represent, warrant and covenant to the other that:
5.4.1 It, and its owners, directors, officers, agents, or employees are, as of the Effective Date, and for the remainder of the term of this Agreement, will be, eligible to participate in the federal health care programs as defined in Section 1128B of the Social Security Act (42 U.S.C. 1320a-7b(f)) or any state health care program as defined in Section 1128B of the Social Security Act (42 U.S.C. 1320a-7b(h)).
5.4.2 Neither it, nor any of its owners, directors, officers, agents, or employees has been, as of the Effective Date, nor during the term of this Agreement, will be, sanctioned by the DHHS Office of the Inspector General as set forth in the List of Excluded Individuals/Entities Database or excluded by the General Services Administration as set forth in Excluded Parties List System.
5.4.3 It shall notify the other Party promptly in the event of any adverse action relating to its license, permit, certification or right to receive reimbursement from any federally funded health care program.
5.5 Non-Discrimination. Each Party will perform its obligations hereunder in compliance with all federal and state laws prohibiting discrimination on the basis of race, color, religion, sex, national origin, handicap, or veteran status.
6. | INVESTMENT |
[***].
7. | INDEMNIFICATION; LIMITATION OF LIABILITY AND INSURANCE. |
7.1 Indemnification.
7.1.1 LabCorp will defend, indemnify and hold harmless Sera and its Affiliates, and their respective shareholders, members, partners, directors, officers, employees, and agents (“Sera Indemnified Parties”) from and against any and all third party claims, actions, and proceedings alleging damages, liabilities, losses, costs and/or expenses and brought against any of the Sera Indemnified Parties to the extent arising from (a) LabCorp’s violation of a Legal Requirement in connection with its performance of this Agreement; (b) any negligent act or omission or intentional misconduct or omission of LabCorp in relation to its obligations under this Agreement; (c) the breach of Section 9 by LabCorp; (d) any representations or warranties made by LabCorp in respect of Tests that are inconsistent with, or broader than, the then-current representations and warranties published, provided, or approved by Sera in writing; (e) any deviation from the results included in the Sera Results Report as compared to the results actually reported by LabCorp to the customer (including, without limitation, any errors in reproducing the results or any information relating to the results or use or interpretation thereof which was not included in the Sera Results Report as provided to LabCorp); (f) any Test results which are incorrect as a result of procedures or processes or other activities within LabCorp’s control; and (g) personal injury caused by LabCorp personnel in their drawing, handling, storing and shipping of Samples and related patient information.
6
7.1.2 Sera will defend, indemnify and hold harmless LabCorp and its Affiliates, and their respective shareholders, members, partners, directors, officers, employees, and agents (“LabCorp Indemnified Parties”) from and against any and all third party claims, actions, and proceedings alleging damages, liabilities, losses, costs and/or expenses and brought against any of the LabCorp Indemnified Parties to the extent arising from (a) Sera’s violation of a Legal Requirement in connection with its performance of this Agreement; (b) any negligent act or omission or intentional misconduct or omission of Sera in relation to its obligations under this Agreement; (c) the breach of Section 9 by Sera; (d) any Test results (as provided by Sera to LabCorp hereunder) which (1) are incorrect as a result of laboratory procedures or processes or other activities within Sera’s control, or (2) are performed by Sera outside the standards as set forth in Exhibit E or otherwise not in conformance with the sensitivity or specificity standards set by Sera for the Test as of the time the Test is performed; (e) any Test tests that were not performed by Sera in accordance with Sera SOPs in effect as of the time the test was performed; (f) any incomplete Test results as provided by Sera to LabCorp hereunder; and (g) any actual or alleged infringement (including direct or indirect, joint or divided infringement, as the case may be) or misappropriation of any patent or other intellectual property rights based upon the performance of the Test or based upon the Sera Mark (unless used by LabCorp other than in strict accordance with this Agreement).
7.1.3 A Party’s obligations to indemnify the other Party pursuant to this Section 7.1 is conditioned upon the indemnified Party: (i) providing the indemnifying Party with prompt written notice of such claim, action, or proceeding (although failure to provide notice promptly shall not relieve the indemnifying Party of its obligations unless such failure materially prejudices the indemnifying Party’s ability to defend such claim, action or proceeding); (ii) permitting the indemnifying Party to assume and solely control the defense of such claim, action, or proceeding and all related settlement negotiations, with counsel chosen by the indemnifying Party; and (iii) cooperating at the indemnifying Party’s request and expense with the defense or settlement of such claim, action, or proceeding which cooperation must include providing reasonable assistance and information. No indemnified Party will enter into any settlement agreement for which it will seek indemnification under this Agreement from the indemnifying Party without the prior written consent of the indemnifying Party. Nothing herein restricts the right of a Party to participate in a claim, action, or proceeding through its own counsel and at its own expense.
7.2 Limitation of Liability. EXCEPT WITH RESPECT TO DAMAGES CAUSED BY FRAUD, INTENTIONAL MISCONDUCT, A BREACH OF SECTION 8 (CONFIDENTIALITY) OR BY A PARTY’S VIOLATION OF APPLICABLE LEGAL REQUIREMENTS, AND EXCEPT FOR AMOUNTS OWED BY A PARTY PURSUANT TO ITS INDEMNIFICATION OBLIGATIONS IN SECTION 7.1, NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, OR SIMILAR LOSSES OR DAMAGES SUFFERED BY SUCH PARTY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
7.3 Insurance. Each Party shall maintain in full force and effect from a third party that is rated “A” or “A-” in Best’s Insurance Guide, or is otherwise reasonably acceptable to the other Party, at a minimum the following insurance coverage for its operations in the Territory:
7
(i) Automobile liability covering all vehicles owned, non-owned, hired and leased in an amount not less than $[***] per claim (combined single limit for bodily injury and property damage).
(ii) Commercial general liability insuring against bodily injury, property damage, contractors’ completed operations and contractual liability with a combined single limit of not less than $[***] per claim and $[***] in the aggregate.
(iii) Umbrella/Excess Liability coverage of not less than $[***].
Insurance carried on a claims made basis shall have a reporting tail of at least three years after the expiration or termination of this Agreement to cover all claims. This can be purchased at termination of the Agreement. For the avoidance of doubt, any policy amounts or limitations shall not in any event be construed as limitations on a Party’s liability under the Agreement. After receipt of written request, each Party shall furnish the other Party with certificates of insurance evidencing the above coverages.
8. | CONFIDENTIALITY |
8.1 Confidentiality. The Parties acknowledge that they may exchange confidential or proprietary information pursuant to this Agreement (“Confidential Information”), whether written, verbal, or tangible. Confidential Information shall not include information that the receiving Party can demonstrate (a) is or becomes a part of the public domain through no wrongful act or omission of the receiving Party, (b) is or was in the receiving Party’s lawful possession prior to receipt from the disclosing Party, as evidenced by the receiving Party’s records kept in the ordinary course of its business, (c) is disclosed to the receiving Party by a third party entitled to disclose such Confidential Information, other than disclosure on behalf of the disclosing Party, or (d) was independently developed by the receiving Party without use of or access or reference to the Confidential Information of the disclosing Party, as evidenced by the receiving Party’s records kept in the ordinary course of its business. Each Party agrees that, during the term of this Agreement and thereafter, it shall not, directly or indirectly, (i) use the other Party’s Confidential Information for any reason other than to perform its obligations or exercise its rights under this Agreement, or (ii) disclose or otherwise make available the other Party’s Confidential Information to any third parties, except in either case (A) as authorized by such other Party in writing, (B) as expressly permitted herein, or (C) to the extent required by applicable Legal Requirements, in which case it shall promptly notify the other Party in writing of the requirement so that the other Party may seek a protective order or confidentiality treatment, and it shall cooperate with the other Party, at the other Party’s request and expense, in any such efforts. In no event shall Sera use any Confidential Information of LabCorp to solicit any customers of LabCorp inside or outside the Territory during or after the term of this Agreement.
8.2 Terms of Agreement. Each of the Parties shall not disclose to any third party the terms of this Agreement without the prior written consent of the other Party, except in confidence to its business or legal advisors, investors, and sources of financing, in each case on a need-to-know basis under circumstances that reasonably ensure the confidentiality thereof, or to the extent required by law, rule, regulation or governmental authority, including applicable rules of any securities exchange. If the terms of this Agreement are required to be publicly disclosed by applicable Legal Requirements, the disclosing Party shall seek confidential treatment for the terms and conditions of this Agreement to the fullest extent permitted by applicable laws, rules and regulations. Prior to seeking such confidential treatment, the disclosing Party shall provide the other Party with a copy of the proposed disclosure showing the disclosing Party’s proposed redactions of the document, and shall consult with the other Party and the other Party’s counsel and provide them with a reasonable opportunity to request the inclusion of specified provisions or redactions in any request for confidential treatment.
8
9. | REPRESENTATIONS AND WARRANTIES |
9.1 By Sera. Sera represents, warrants and covenants to LabCorp that:
9.1.1 This Agreement is a legal and valid obligation binding upon Sera and enforceable in accordance with its terms, subject to generally applicable Legal Requirements, and the execution, delivery and performance of this Agreement by Sera does not conflict with any agreement, instrument or understanding to which Sera is a party or by which it is bound.
9.1.2 No consent of, or payment to, any third party is required for Sera to grant the rights and licenses to LabCorp as set forth herein, or for Sera to enter into this Agreement.
9.1.3 Sera’s employees who will be performing the Tests hereunder are qualified to do so, and possess the necessary skill, education, training, and where required by any applicable Legal Requirements, Sera and its employees have the necessary federal and state licenses or certificates, to perform such testing services. Copies of such licenses or certificates shall be provided to LabCorp upon written request, in addition to such quality assessment information as reasonably requested by LabCorp.
9.1.4 Sera shall comply with current good laboratory practice as required by the Clinical Laboratory Improvement Amendments of 1988 under 42 USC 263a (CLIA’88), FDA regulations for Protection of Human Subjects in Research as published in 21 CFR Parts 50, 56 and 812 and all applicable College of American Pathologists rules, regulations, orders and guidances, and the requirements with respect to current good laboratory practices prescribed by other similar authorities in the Territory, and shall perform all its obligations under this Agreement in a professional and workmanlike manner.
9.1.5 Sera shall maintain an adequate and appropriate disaster recovery plan for performance of Tests hereunder.
9.1.6 All information and other content Sera provides to LabCorp for use in the sales, marketing and promotion of the Test shall be accurate and not deceptive or fraudulent.
9.1.7 As of the Effective Date, neither Sera nor any of its officers, directors, employees or owners have been debarred, suspended, declared ineligible or excluded from participation in any federal or state healthcare program and during the term of this Agreement no officer, director or employee that has been debarred, suspended, declared ineligible or excluded from participation in any federal or state healthcare program shall perform any services under this Agreement.
9
9.1.8 To Sera’s knowledge, as of the Effective Date, there is no unauthorized use, infringement or misappropriation by any third parties of the intellectual property Controlled by Sera and used in its performance of this Agreement.
9.1.9 To Sera’s knowledge, as of the Effective Date, there is no pending or threatened litigation which alleges that Test infringes upon any third party rights.
9.1.10 To Sera’s knowledge, as of the Effective Date, there are no valid patent claims or other intellectual property rights of a third party that would be infringed by Sera’s performance of the Test.
9.1.11 As of the Effective Date, Sera has not granted any licenses, authorizations or covenants-not-to-sue to any third parties with respect to the Test in the Field in the Territory, or granted any third party the right to market, offer, perform, sell or distribute testing services based on use of the Test in the Field in the Territory
9.2 By LabCorp. LabCorp represents, warrants and covenants to Sera that:
9.2.1 This Agreement is a legal and valid obligation binding upon LabCorp and enforceable in accordance with its terms, subject to generally applicable Legal Requirements, and the execution, delivery and performance of this Agreement by LabCorp does not conflict with any agreement, instrument or understanding to which LabCorp is a party or by which it is bound.
9.2.2 LabCorp will perform this Agreement and Commercialize Tests in compliance with all applicable federal, state, and local laws, rules, and regulations and all applicable regulations, rules, and policies of third party payors that pay for the Tests.
9.2.3 LabCorp’s employees who will be performing work under this Agreement are qualified to do so, and possess the necessary skill, education, training, and where required by any applicable Legal Requirements, Sera and its employees have the necessary federal and state licenses or certificates, to perform such work.
9.2.4 As of the Effective Date, neither LabCorp nor any of its Affiliates or its or their officers, directors, employees or owners have been debarred, suspended, declared ineligible or excluded from participation in any federal or state healthcare program and during the term of this Agreement no officer, director or employee that has been debarred, suspended, declared ineligible or excluded from participation in any federal or state healthcare program shall perform any services under this Agreement.
9.3 Disclaimer. EXCEPT AS SPECIFIED IN THIS AGREEMENT, EACH PARTY DISCLAIMS ALL WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE SERVICES, TESTS, THE MARKETING MATERIALS AND ITS TRADEMARKS, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NON-INFRINGEMENT.
10
10. | TERM AND TERMINATION |
10.1 [***].
10.2 Termination.
(a) [***].
(b) [***].
(c) [***].
(d) Each Party may terminate this Agreement upon notice if the other Party: (i) makes an assignment or other arrangement for the benefit of creditors, appoints or suffers appointment of a receiver or trustee over its property, (ii) files a petition under any bankruptcy or insolvency act or has any such petition filed against it which is not discharged within one hundred twenty (120) days of the filing thereof, (iii) discontinues or suspends its operations for any reason whatsoever, including loss or suspension of license or accreditation, or (iv) is sanctioned, debarred, suspended, or excluded from any federal health care program as defined under applicable Legal Requirements.
(e) [***].
10.3 Effects of Expiration or Termination. All licenses granted hereunder to LabCorp shall automatically terminate upon expiration or termination of this Agreement. Upon termination of this Agreement, each Party shall immediately return to the other party all of the other Party’s Confidential Information in its possession or control, and LabCorp shall immediately return, at LabCorp’s cost, all demonstration Tests that have been provided to LabCorp by or on behalf of Sera. Notwithstanding the foregoing, each Party may retain one copy of the Confidential Information of the other Party in its Law Department for archive purposes, and neither Party shall be required to destroy or delete copies that have become embedded in its electronic storage systems through routine backup processes. Upon termination or expiration of this Agreement, LabCorp agrees to cooperate with Sera in order to effect an orderly transition of LabCorp’s responsibilities hereunder to Sera. Upon expiration or termination of this Agreement, Sera shall complete the performance of any Tests ordered by LabCorp prior to the date of notice of termination, and Sera shall pay LabCorp all Subcontract Fees due and payable under this Agreement.
10.4 Survival. All rights of a Party that accrued prior to the date of expiration or termination of this Agreement shall be unaffected by this Agreement’s expiration or termination. Sections 2.10, 2.13, 3.11, 7.1, 7.2, 7.3, 8, 10.3, 10.4 and 11 shall survive the termination or expiration of this Agreement.
11. | GENERAL PROVISIONS |
11.1 Affiliates. LabCorp’s Affiliates shall be permitted to exercise any of LabCorp’s rights under this Agreement, including without limitation, LabCorp’s rights to accept orders for, sell, and market the Test in the Territory. In addition, Sera is permitted to perform its obligations and exercise its rights hereunder through one or more Sera Affiliates, including, without limitation, to perform the Test on Samples delivered hereunder. Each Party is responsible for ensuring that any Affiliates performing obligations or exercising rights under this Agreement comply with all applicable provisions hereof, and will be fully liable for any actions or omissions of any such Affiliates in connection therewith, including, without limitation, for any breach of any provision of this Agreement by any such Affiliate.
11
11.2 Force Majeure. If either Party is impeded in fulfilling its undertakings in accordance with this Agreement by circumstances beyond its reasonable control, including labor conflict, acts of God, earthquake, fire, war or terrorist attack, the impediment shall be considered a “Force Majeure” condition and the Party shall be excused from liability for delays due to such reasons; provided, however, that it notifies the other Party thereof without undue delay after such a circumstance has occurred. Upon such notification, the Parties shall agree upon a reasonable extension of the time for performance, not to exceed an extension equal to the period the Force Majeure condition continues to exist and a reasonable period of time thereafter.
11.3 Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes any and all other agreements, either oral or written, between the Parties with respect to the subject matter hereof.
11.4 Publicity. The Parties shall, upon the Effective Date, work together diligently and in good faith to prepare a joint press release disclosing their relationship under this Agreement, and each Party may release such press release at any time after thirty (30) days from the Effective Date. Except for such press release, and except with respect to matters disclosed therein, neither Party shall make any media releases, public announcements and/or public disclosures relating to this Agreement or the subject matter hereof, including, without limitation, promotional or marketing material referring to the other Party, without the other Party’s prior written consent, except as required by Legal Requirements.
11.5 No Implied Licenses or Rights. Except as expressly set forth herein, neither Party shall have the right to use any name, trademark or service mark of the other Party. Except as expressly set forth herein, nothing in this Agreement shall imply that either Party has any license or right under the other Party’s Patent Rights or other intellectual property or other propriety rights.
11.6 Assignment. Neither Party may assign, delegate, subcontract or otherwise transfer this Agreement or any right or obligation hereunder, in whole or part, without the prior express written consent of the other Party, except that Affiliates may exercise rights or fulfill obligations under this Agreement as provided in Section 11.1. In addition, Sera may assign this Agreement in connection with the sale or transfer of all or substantially all of its assets to which this Agreement relates upon written notice to LabCorp, subject to LabCorp’s rights under Section 10.2(e) in the event of an assignment to a competitor of LabCorp.
11.7 Notice. All notices, requests, and other formal or legal communications to any Party hereto must be in writing and addressed to the receiving Party’s address set forth below or to any other address as a Party may designate by notice hereunder, and will either be: (i) delivered by hand, (ii) sent by recognized overnight courier, or (iii) by certified mail, return receipt requested, postage prepaid.
12
If to Sera: | Sera Prognostics, Inc. |
2749 East Parleys Way, Suite 200 | |
Salt Lake City, Utah 84109 | |
Attention: Chief Financial Officer or | |
Chief Executive Officer | |
If to LabCorp: | Laboratory Corporation of America Holdings |
531 South Spring Street | |
Burlington, NC 27215 | |
Attention: Law Department | |
with a copy sent to: | Laboratory Corporation of America Holdings |
531 South Spring Street | |
Burlington, NC 27215 | |
Attention: Licensing/Corporate Development |
All notices, requests, and other communication hereunder will be deemed effective: (a) if by hand, at the time of the delivery thereof to the receiving Party at the address of such Party set forth above, (b) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (c) if sent by certified mail, five (5) business days following the day such mailing is made.
11.8 Amendment/Waiver. The failure of either Party to enforce any term or condition of this Agreement may not be construed as a waiver by such Party of such term or condition, nor will a waiver of any breach of a term or condition of this Agreement on any one occasion constitute a waiver of any subsequent breach of the same or similar term or condition. No term or provision of this Agreement may be changed, waived, amended, or terminated except by a written agreement signed by both Parties.
11.9 Governing Law. This Agreement is governed by the laws of the State of Delaware, without regard to any conflict of laws provisions contained therein.
11.10 Enforceability/Severability. If any provision of this Agreement is determined to be invalid or unenforceable, such provision will be deemed severable from the remainder of this Agreement and will not cause the invalidity or unenforceability of the remainder of this Agreement.
11.11 Headings. The article, section and exhibit headings used herein are for convenience and reference only and may not be used in the interpretation of this Agreement.
11.12 Counterparts. This Agreement may be executed in one or more counterparts, each of which are be deemed an original, but all of which together constitute one and the same instrument. Copies of signatures sent by facsimile transmission or in a fixed electronic format (such as a PDF file) will be deemed to be originals.
11.13 Interpretation. Words such as “herein,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to an Article, Section or paragraph in which such words appear, unless the context otherwise requires. The singular shall include the plural, and each masculine, feminine and neuter reference shall include and refer also to the others, unless the context otherwise requires. The word “or” is used in the inclusive sense typically associated with the phrase “and/or”. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation” and shall not be construed to limit any general statement which it follows to the specific or similar items or matters immediately following it. The word “will” shall be construed to have the same meaning and effect as the word “shall.” All references herein to Articles, Sections or Exhibits shall be construed to refer to Articles, Sections and Exhibits of this Agreement, and references to this Agreement include all Exhibits hereto.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
13
IN WITNESS WHEREOF, the duly authorized representatives of the Parties have executed this Agreement effective as of the Effective Date.
SERA PROGNOSTICS, INC. | LABORATORY CORPORATION OF AMERICA HOLDINGS | |||
By: | /s/ Gregory C. Critchfield, M.D.,MS | By: | /s/ Eric Lindblom | |
Name: Gregory C. Critchfield, M.D., MS | Name: Eric Lindblom | |||
Its: President and Chief Executive Officer | Its: SVP |
EXHIBIT A
[***]
EXHIBIT B
[***]
EXHIBIT C
[***]
EXHIBIT D
[***]
EXHIBIT E
[***]
Exhibit 10.7.2
First Amendment to Commercialization Agreement
This First Amendment to Commercialization Agreement (“Amendment”) is made and shall be effective upon the date this Amendment is signed by both Parties (“Amendment Date”) by and between Sera Prognostics, Inc. (“Sera”), a Delaware corporation with its principal place of business at 2749 East Parleys Way, Suite 200, Salt Lake City, Utah 84109, and Laboratory Corporation of America Holdings (“LabCorp”), a Delaware corporation with its principal place of business at 531 South Spring Street, Burlington, North Carolina 27215. Each of Sera and LabCorp is referred to herein as a “Party” and together as the “Parties.”
BACKGROUND
A. Sera and LabCorp entered into that certain Commercialization Agreement effective January 9, 2017 (“Agreement”) [***].
B. The Parties wish to amend the Agreement to (i) [***], and (ii) provide for Sera to engage LabCorp to perform certain Sample collection, processing, and shipment services; all pursuant to the terms of this Amendment.
C. Capitalized terms used but not defined in this Amendment have the meanings ascribed to them in the Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows, all of which is effective as of the Amendment Date:
1. | Definition of Tests. Paragraph A of the section entitled “Background” in the Agreement is deleted in its entirety and replaced with the following: |
A | Sera is a diagnostics company that develops, commercializes, and performs a prognostic test in its CLIA-certified laboratory referred to as the PreTRM® test, which is a clinical blood test for early individualized risk assessment of spontaneous premature birth (as such test is currently made available by Sera and also any modified or improved versions of the test, the “Test”). |
2. | [***]: |
C | [***], and LabCorp wishes to accept such appointment, all as further set forth herein |
Also, Section 2.1, Section 2.2, and Section 2.11 of the Agreement are deleted in their entirety and replaced with the following:
2.1 | [***]. |
2.2 | [***]. |
[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED BECAUSE THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
2.11 | [***]. |
3. | [***]. |
4. | [***]. |
5. | Deletion of LabCorp Duties. Sections 2.12, 2.14 and 2.15 of the Agreement are deleted in their entirety. |
6. | LabCorp Services. New Section 2.17 is added to the Agreement as follows: |
2.17 | LabCorp Services. LabCorp shall perform Sample collection, processing, and shipment services in support of PreTRM® tests as may be requested by Sera and its other distributors from time to time in accordance with the LabCorp terms and conditions attached hereto as Schedule 1, and Sera shall pay LabCorp for such services as set forth therein. [***]. |
7. | [***]. |
8. | [***]. |
9. | Miscellaneous. This Amendment shall be effective from the Amendment Date and in full force and effect until the expiration or termination of Agreement. Except as expressly provided in this Amendment, the Agreement remain unmodified and in full force and effect. |
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be signed in duplicate by their duly authorized representatives as of the dates indicated below, to be effective on the Amendment Date. One original of each official text of this Amendment shall be held by the parties hereto.
SERA PROGNOSTICS, INC. | LABORATORY CORPORATION OF AMERICA HOLDINGS | |||
By: | /s/ Douglas Fisher | By: | /s/ Michael Minahan | |
Name: | Douglas Fisher | Name: | Michael Minahan | |
Title: | Chief Business Officer Title: | Title: | SVP | |
Date: | 6/14/2018 | Date: | 6/25/18 |
2
SCHEDULE 1
LABCORP TERMS AND CONDITIONS
1. [***].
2. Sample Collection, Processing and Shipment by LabCorp. For Non-LabCorp Test Orders, LabCorp agrees that it will (a) collect Samples at LabCorp PSCs (defined below) from customers who have ordered the Test; (b) procure the supplies needed for each patient draw; (c) label and process such Samples; (d) package the Samples; and (e) ship the Samples to Sera’s Licensed Facilities for performance of such Tests, all in accordance with the applicable portions of the Intercompany SOPs and all applicable laws, rules and regulations (the “Collection and Processing Services”). If requested by Sera from time to time, the Parties shall review the foregoing process, and shall work together diligently and in good faith to revise it as necessary to ensure best practices and optimal patient service. LabCorp will also provide a test requisition form (as supplied by Sera or the applicable distributor) for each Sample. Sera acknowledges that LabCorp may route samples through its regional laboratories, so long as such routing complies with the Sera SOPs. LabCorp shall not deliver any Samples to Sera that LabCorp knows are insufficient for purposes of performing a Test. [***].
3. Obligations of Sera. For Non-LabCorp Test Orders, Sera agrees that it will be responsible for (a) accessioning the Samples upon receipt; (b) performing the Test; (c) reporting the results of the Test to the applicable ordering physician; and (d) billing the client, patient or third party payer for the Test, and collecting payment. Sera acknowledges and agrees that LabCorp does not have any obligations with respect to any of the foregoing.
4. LabCorp PSCs. The Collection and Processing Services may be performed by LabCorp for Non-LabCorp Test Orders at any LabCorp patient service centers (“LabCorp PSCs”). LabCorp may modify its list of LabCorp PSCs from time to time by adding or removing LabCorp PSCs from the listings posted when a search is conducted on the “Find your nearest lab” locator tool within LabCorp’s website, at https://www.labcorp.com/labs-and-appointments (or any successor listing, locator tool or website). For purposes of clarification, the LabCorp PSCs covered by this Schedule 1 will not include any third party sites that have a specimen collection relationship with LabCorp, even if included in the listing in the link above.
5. [***].
6. [***].
7. Limitation of Liability. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, AND EXCEPT FOR CLAIMS OR DAMAGES CAUSED BY LABCORP’S GROSS NEGLIGENCE, INTENTIONAL MISCONDUCT OR VIOLATION OF APPLICABLE LAWS, RULES OR REGULATIONS, AND EXCEPT FOR PERSONAL INJURY CAUSED BY LABCORP, THE LIABILITY AND OBLIGATIONS OF LABCORP, AND THE REMEDIES OF SERA, UNDER OR IN CONNECTION WITH THE COLLECTION AND PROCESSING SERVICES MADE PURSUANT TO THIS SCHEDULE 1, SHALL BE LIMITED TO REPEATING ANY DEFECTIVE SERVICES OR, AT THE SOLE OPTION OF LABCORP, REFUNDING THE FEES PAID WITH RESPECT TO SUCH SERVICES.
Exhibit 10.7.3
CONFIDENTIAL |
SECOND AMENDMENT TO
COMMERCIALIZATION AGREEMENT
THIS Second Amendment to the January 9, 2017 Commercialization Agreement (“Second Amendment”), effective as of the date this Second Amendment is signed by both parties (the “Effective Date”), is made by and between Sera Prognostics, Inc. (“Sera”) and Laboratory Corporation of America Holdings (“Labcorp”). Sera and Labcorp may be referred to herein each as a “Party” or collectively as “Parties.”
RECITALS
A. Sera and Labcorp entered into a Commercialization Agreement having an effective date of January 9, 2017, as amended June 25, 2018 (the “Agreement”); and,
B. The Parties now wish to amend the Agreement in accordance with the terms of this Second Amendment.
TERMS
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, and the mutual covenants set forth herein, the Parties agree as follows:
1. Section 10.1 of the Agreement is hereby amended and restated as follows:
10.1 Term. This Agreement will commence on the Effective Date and, unless terminated pursuant to the terms hereof, will automatically renew on each anniversary of the Effective Date.
2. All capitalized terms used in this Second Amendment and not otherwise defined herein shall have the meanings assigned them in the Agreement. Except as expressly stated in this Second Amendment, the Agreement remains unchanged and in full force and effect.
IN WITNESS WHEREOF, the Parties hereto have executed this Second Amendment through their authorized representatives signing below.
LABORATORY CORPORATION OF AMERICA HOLDINGS
|
SERA PROGNOSTICS, INC. | |||
By: | /s/ Michael F. Minahan | By: | /s/ Douglas Fisher, MD | |
Name: | Michael F. Minahan | Name: | Douglas Fisher, MD | |
Title: | SVP & General Manager | Title: | Chief Business Officer | |
Date: | 1/26/2021 | Date: | 1/25/2021 |
Exhibit 10.8
April 29, 2021
c/o Baker Bros. Advisors LP
860 Washington St. – 3rd fl.
New York, NY 10014
Re: IPO Participation, Board, Observer and [***] Rights
Ladies and Gentlemen:
Subject to and in consideration of the purchase of shares of Series E Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), of Sera Prognostics, Inc., a Delaware corporation (the “Company”), by Baker Bros. Advisors LP (“BBA”) and/or one or more of its Affiliates (as defined below) (each, an “Investor” and together, the “Investors”) pursuant to the terms and conditions of that certain Series E Preferred Stock Purchase Agreement, by and among the Company, the Investors and the other parties named therein, dated as of February 23, 2021 (the “Purchase Agreement”), the parties to this letter hereby agree as follows:
1. Public Offering Participation.
a. In the event that any Investor indicates an interest to purchase shares of the Company’s Common Stock, par value $0.0001 per share (the “Common Stock”) in any firm commitment underwritten public offering (each, an “Offering”) of the Company’s capital stock prior to and including an initial public offering resulting in the listing of the Company’s Common Stock on a national securities exchange (a “Qualified IPO”), then, subject to compliance with all applicable securities laws and regulations, the Company will use its commercially reasonable efforts (which must include at least three attempts, on three dates, with at least two representatives of the managing underwriter, including the most senior underwriter personnel devoting substantial time to the applicable Offering, both orally and in writing) to cause the managing underwriter(s) of such Offering to provide to the Investors, on the same terms, including the price per share, and subject to the same conditions, as are applicable to the public in such Offering, the opportunity to purchase that number of shares of capital stock of the Company being issued in such Offering equal to their aggregate Pro Rata Share (as defined below) of the total number of shares offered for sale in such Offering (excluding shares issuable to the underwriter(s) of the Offering upon exercise of an overallotment option to purchase additional shares) (such aggregate Pro Rata Share, the “New Shares”). The Investors may apportion such New Shares in such proportion as they deem appropriate among themselves and any Affiliate.
b. The rights of the Investors to purchase shares in an Offering will be conditioned upon the completion of such Offering. The Company may withdraw its registration statement for an Offering at any time without incurring any liability under this letter to the Investors or any of its Affiliates. Without limiting the foregoing, the rights of the Investors described in clauses (a) through (c) of this Section 1, will terminate and be of no further force or effect upon the earliest to occur of the following: (i) the closing of a Qualified IPO; (ii) such time as the Investors and/or their Affiliates cease to beneficially own (in the aggregate) (A) at least 75% of the Preferred Stock purchased by the Investors (as adjusted for stock splits, recapitalizations and other similar events and including all shares of Common Stock issued upon the conversion of the Preferred Stock to the extent still beneficially owned by the Investors), or (B) shares or other equity securities of the Company representing at least 4% of the Company’s outstanding voting power in an election of directors; and (iii) the closing of a Deemed Liquidation Event (as such term is defined in the Fifth Amended and Restated Certificate of Incorporation of the Company (the “Company Charter”).
[***] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED BECAUSE THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
2749 East Parleys Way - Suite 200 | Salt Lake City, Utah 84109 | Phone 801.990.0520 | Fax 801.990.0640
c. The Investors hereby acknowledge that, despite the Company’s use of its commercially reasonable efforts, the underwriter(s) for the applicable Offering may determine in its or their sole discretion that it is not advisable to designate the maximum number of shares being issued and sold in such Offering as New Shares, in which case the number of New Shares may be reduced or no New Shares may be designated. The Investors also acknowledge that notwithstanding the terms hereof, the sale of any New Shares to any Person will only be made in compliance with FINRA Rules 5110 and 5130 and applicable federal, state, and local laws, rules, and regulations and stock exchange rules, regulations and listing requirements. The Company hereby acknowledges that nothing in this letter constitutes an offer or the commitment by any Person to purchase any New Shares in any Offering. The Company and the Investors further acknowledge and agree that any New Shares shall be excluded from and shall not be subject to the “Market Stand-Off Agreement” as provided in Section 2.11 of the Investor Rights Agreement (defined below).
d. The Company shall not, either directly or indirectly or by amendment, merger, consolidation or otherwise, authorize, approve, or adopt any “evergreen” option plan or other equity incentive plan of the Company or any of its subsidiaries pursuant to which the number of shares of Common Stock of the Company available for equity awards thereunder would increase automatically (without further stockholder approval) on an annual basis by an amount that exceeds 4% of the total number of shares of Common Stock then issued and outstanding (calculated on a fully diluted basis). The rights set forth in this clause (d) of Section 1 shall terminate and be of no further force or effect immediately upon such time as the Investors and/or their Affiliates cease to collectively own beneficially (i) whether prior to or after a Qualified IPO, at least 75% of the aggregate number of shares of the Preferred Stock purchased by the Investors (as adjusted for stock splits, recapitalizations and other similar events and including all shares of Common Stock issued upon the conversion of the Preferred Stock to the extent still beneficially owned by the Investors) or (ii) if after a Qualified IPO, at least 4% of the then-outstanding total voting power of the Company.
2. Registration Rights. [***].
2
3. Board Rights.
a. From and after the closing of a Qualified IPO, at any time (and from time to time) that the Investors and/or their Affiliates collectively own beneficially shares or other equity securities of the Company representing at least 4% of the then-outstanding total voting power of the Company, the Investors shall collectively be entitled to nominate one individual (an “Investor Designee”) to serve as a director on the Board of Directors of the Company (the “Board”) provided, in the event that the Investors do not exercise such right such that they nominate an Investor Designee to serve as a director immediately following the closing of the Qualified IPO (which right must be exercised not less than twenty-one (21) days in advance of the closing of the Qualified IPO), the Investors shall not exercise such right until after the 90th day following the closing date of the Qualified IPO). The Company shall include the Investor Designee in the slate of nominees recommended to the Company’s stockholders for election as directors of the Company at each annual or special meeting of the Company’s stockholders at which directors are to be elected and every adjournment or postponement thereof (including, for the avoidance of doubt, every action or approval by written consent of the stockholders of the Company or the Board in lieu of such meeting) (an “Election Meeting”). The Company will recommend, support and solicit proxies for the election of the Investor Designee in the same manner as for all other Board members nominated for election. The Investors will provide to the Company, in writing, the information about the Investor Designee that is reasonably required by applicable law for inclusion in the Company’s proxy materials for Election Meetings promptly after the Company requests such information from the Investors, and will cause such Investor Designee to submit on a timely basis to the Company a completed and executed questionnaire in the form that the Company provides to its outside directors generally.
b. In the event that an Investor Designee fails to be elected for any reason, or resigns from his or her seat on the Board or is removed or otherwise ceases to be a director (whether as a result of his or her death, disability, disqualification, or otherwise), the Investors shall be entitled to promptly designate another Investor Designee and the Company will take all necessary and desirable actions within its control such that (i) the resulting vacancy on the Board shall not be filled pending such designation or (ii) the size of the Board shall be increased by one and the Company will, as promptly as practicable but in no event more ten days following such designation, take all necessary and desirable actions within its control such that such vacancy shall be filled with such successor Investor Designee.
c. For so long as the Investors’ rights under this Section 3 remain in effect, the Board will not create any “executive committee” of the Board, or delegate to any existing committee or subsidiary’s governing body, responsibilities substantially similar to those of an executive committee, without including the then-current Investor Designee, if any, thereon.
d. Notwithstanding the provisions of Section 3(a), the Investors shall not be entitled to designate any individual as a nominee to the Board if a majority of the disinterested members of the Board (or the nominating committee thereof) reasonably and in good faith determine, (i) after consultation with the Company’s outside legal counsel and upon written advice of such counsel, that such person would not be qualified to serve as a director of the Company under any applicable law (including requirements of fiduciary duties under applicable law), rule or regulation, rule of the stock exchange on which the Company’s shares are listed, the organizational documents of the Company, or any policy, or guidelines previously approved by the Board, but only if a direct or indirect purpose of any such policy or guideline is not to obstruct the Investors’ right to designate an individual as a nominee to the Board or its rights under this letter, or (ii) that such person is an employee or director of a competitor of the Company (provided, no senior employee of BBA or its Affiliates shall be subject to exclusion pursuant to this clause (ii) as a result of such person’s participation on any board of directors in connection with investments by BBA or its Affiliates). Notwithstanding anything set forth herein to the contrary, a person’s status as a director, officer, employee or affiliate of any Investor or such person’s service on the board of any other company shall not cause such person to be deemed not qualified to serve as a director of the Company, except as required by applicable law or regulation pursuant to clause (i) of the preceding sentence. In the event the Board (or the nominating committee thereof) does not accept an Investor Designee as a result of such Investor Designee failing to meet the requirements set forth in this Section 3(d), the Investors shall have the right to recommend another Investor Designee in accordance with Section 3(a). The Company shall notify the Investors of any objection to an Investor Designee pursuant to this Section 3(d) sufficiently in advance of the date on which the proxy materials related to any such designee are to be mailed by the Company in connection with such election of directors so as to enable the Investor to propose a replacement Investor Designee in accordance with the terms of this letter.
3
e. The rights set forth in this Section 3 shall terminate and be of no further force or effect immediately upon such time as the Investors and/or their Affiliates cease to collectively own beneficially at least 75% of the aggregate number of shares of the Preferred Stock purchased by the Investors (as adjusted for stock splits, recapitalizations and other similar events and including all shares of Common Stock issued upon the conversion of the Preferred Stock to the extent still beneficially owned by the Investors).
4. Observer Rights.
a. At any time prior to or after a Qualified IPO that an Investor Designee is not a member of the Board, the Company shall invite a single representative of the Investors (a “BBA Observer”), as designated by the Investors from time to time, to attend and participate in all meetings of the Board, in a nonvoting observer capacity. In this respect, the Company shall give the BBA Observer (i) written notice of, agendas and participation details for such meetings and (ii) copies of all notices, minutes, consents, and other materials, in each case, that it provides to the members of the Board, as applicable, at the same time and in the same manner as provided to such members; provided, however, that the Company reserves the right to withhold any information and to exclude the BBA Observer from any meeting or portion thereof if (1) the Board determines in good faith and based upon the advice of outside counsel that access to such information or attendance at such meeting could (x) adversely affect the attorney-client privilege between the Company and its counsel or (y) result in a conflict of interest, or (2) the Board of Directors reasonably determines in good faith that the BBA Observer or an Affiliate of such BBA Observer is a competitor of the Company (provided, no senior employee of BBA or its Affiliates shall be subject to exclusion pursuant to this clause (2) as a result of such person’s participation on any board of directors in connection with investments by BBA or its Affiliates) and the Board of Directors provides the BBA Observer advanced written notice that access to such information or attendance at such meeting are being withheld or denied, as the case may be, pursuant to this Section 4(a) (and the reason therefore).
b. Except as provided in Section 4(c) below, the BBA Observer shall not, by virtue of his or her capacity as such, have or be deemed to have, or otherwise be subject to, any duties (fiduciary or otherwise) to the Company or any of its Affiliates or subsidiaries or its or their respective equityholders or any other Person or any duties (fiduciary or otherwise) otherwise applicable to the members of the Board.
4
c. With respect to the BBA Observer, the Company’s obligations under this Section 4 are contingent upon such BBA Observer’s (i) entering into a confidentiality agreement with the Company and BBA in the form attached hereto as Exhibit B and (ii) agreeing, solely in such individual’s capacity as a BBA Observer, to be bound by the Company’s insider trading and window policies then in effect and applicable to members of the Board.
d. The rights set forth in this Section 4 shall terminate and be of no further force or effect immediately upon such time as the Investors and/or their Affiliates cease to collectively own beneficially (i) whether prior to or after a Qualified IPO, at least 75% of the aggregate number of shares of the Preferred Stock purchased by the Investors (as adjusted for stock splits, recapitalizations and other similar events and including all shares of Common Stock issued upon the conversion of the Preferred Stock to the extent still beneficially owned by the Investors) or (ii) if after a Qualified IPO, at least 4% of the then-outstanding total voting power of the Company.
5. No Publicity. [***], except that the Company may make any such disclosure if, upon the advice of counsel, there is no alternative to such disclosure because it is required by applicable law, rule or regulation (including the rules of the SEC, FINRA or the stock exchange on which the Common Stock is listed) [***]. [***]; provided, however, that the Company may disclose the name of the Investors in connection with the provision of any details regarding the Purchase Agreement and the other agreements executed by Company and the Investors in connection with the Preferred Stock financing and the transactions contemplated thereby, and to any of its executive officers, directors, accountants, counsel, underwriters, and financial advisors with a need to know such information, provided that such recipient agrees to abide by the foregoing confidentiality obligations or is subject to confidentiality obligations that are substantially at least as restrictive. [***].
6. Indemnification. The Company shall enter into a customary indemnification agreement with any Investor Designee that is elected a member of the Board, in substantially the form as entered into between the Company and the other members of the Board in the ordinary course of business.
7. [***].
8. Definitions. When used in this letter, the following terms shall have the meanings assigned to them in this Section 8:
a. “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities or otherwise.
b. “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder from time to time.
c. “Person” means any individual, corporation, partnership, limited liability company, trust, unincorporated association, governmental entity or other legal entity.
5
d. “Pro Rata Share” means the greater of (i) 10% and (ii) the percentage determined by dividing (A) the number of shares of Common Stock (including all shares of Common Stock issuable or issued upon conversion of the shares of the Preferred Stock and any other outstanding securities of the Company convertible or exercisable in exchange for shares of Common Stock) collectively owned beneficially by such Investors immediately prior to the Offering by (B) the total number of shares of outstanding Common Stock (including all shares of Common Stock issued or issuable upon conversion of all outstanding shares of Preferred Stock, any other outstanding securities of the Company convertible or exercisable in exchange for shares of Common Stock and all shares reserved for future issuance pursuant to any equity incentive or similar plan) immediately prior to the Offering, in each case, excluding shares issuable to the underwriter(s) of the Offering upon exercise of an overallotment option to purchase additional shares.
9. Amendments; Waiver; Entire Agreement. This letter may not be amended or modified in any manner except by a written instrument signed by the Investors and the Company. Any waiver of any term or condition shall be in writing executed by the party entitled to waive such term or condition. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this letter. The failure of either party to assert any of its rights hereunder shall not constitute a waiver of such rights. This letter (including the Exhibits hereto), together with the Purchase Agreement and the other transaction documents entered into in connection therewith (including, for the avoidance of doubt, the Investor Rights Agreement and the Fourth Amended and Restated Voting Agreement, dated as of February 23, 2021, by and between the Company, the Investors, and the other Investors party thereto), constitutes the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled. This letter amends, restates and supersedes in all respects the letter agreement, dated as of March 29, 2021, by and between the Company and BBA.
10. Assignment. No party may assign this letter or any of its rights, interests or obligations hereunder without the prior written consent of the other parties, and any purported assignment by a party without prior written consent of the other parties will be null and void and not binding on such other party; provided, however, that notwithstanding the foregoing, an Investor may assign this letter or any of its rights, interests or obligations hereunder to its Affiliates. Subject to the preceding sentence, all of the terms, agreements, covenants, representations, warranties and obligations of this letter are binding upon, and inure to the benefit of and are enforceable by, the parties and their respective successors and assigns.
11. Governing Law; Jurisdiction. This letter shall be governed by the laws of the State of Delaware, without regard to conflict of law principles. The parties (a) hereby irrevocably and unconditionally submit to the jurisdiction of the state courts of the State of Delaware and to the jurisdiction of the United States District Court for the District of Delaware for the purpose of any suit, action or other proceeding arising out of or based upon this letter, (b) agree not to commence any suit, action or other proceeding arising out of or based upon this letter except in the state courts of the State of Delaware or the United States District Court for the District of Delaware, and (c) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this letter or the subject matter hereof may not be enforced in or by such court.
6
12. WAIVER OF JURY TRIAL. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS LETTER OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS LETTER, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION 12 HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
13. Notices. All notices under this letter must be in writing and given by personal delivery, by United States Express Mail or a nationally recognized overnight delivery service for next day delivery, or by electronic mail, as follows (or to such other Person or address as any party may give in a notice given in accordance with the provisions hereof):
If to the Company:
Sera Prognostics, Inc.
2749 E Parleys Way, Suite 200
Salt Lake City, UT 84109
Attn: Gregory C. Critchfield, M.D., M.S.
Email: gcritchfield@seraprognostics.com
with a copy (which shall not constitute notice) to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Attn: Jonathan L. Kravetz
Email: JLKravetz@mintz.com
If to the Investors:
c/o Baker Bros. Advisors LP
860 Washington St. – 3rd fl.
New York, NY 10014
Email: [***]
with a copy (which shall not constitute notice) to:
[***]
7
Notice will be effective and deemed given only as follows: (a) if given by personal delivery, up-on such personal delivery, (b) if sent for next day delivery by United States Express Mail or overnight delivery service, on the date of delivery as confirmed by written confirmation of delivery, or (c) if sent by electronic mail, upon acknowledgement of receipt other than by automatic means.
14. Equitable Relief; Remedies. The Company acknowledges and agrees that the Investors may be damaged irreparably and may not have an adequate remedy at law if any provision of this letter is not performed in accordance with its specific terms or is otherwise breached. Accordingly, in addition to any other remedy to which the Investors may be entitled, at law or in equity, the Investors will be entitled to seek an injunction or injunctions to prevent breaches or threatened breaches of the provisions of this letter and to seek to enforce specifically this letter and its provisions, without bond or other security being required and without any proof of actual damages. The rights, obligations and remedies created by this letter are cumulative and in addition to any other rights, obligations or remedies otherwise available at law or in equity. Nothing herein will be considered an election of remedies or a waiver of the right to pursue any other right or remedy to which the Investors may be entitled.
15. Headings; Construction. The section headings contained in this letter are inserted for convenience only and will not affect in any way the meaning or interpretation of this letter. Except as otherwise expressly provided herein, the following rules of interpretation apply hereto: (i) the singular includes the plural and vice versa; (ii) “or” and “any” are not exclusive; (iii) “includes,” “include,” “included” and “including” are deemed to be followed by “without limitation”; and (iv) the words “hereby,” “herein,” “hereunder,” “hereof” and words of similar import refer to this letter as a whole and not merely to the specific section or clause in which any such word appears. No presumption or burden of proof shall arise favoring or disfavoring a party by virtue of the authorship of any provision of this letter.
16. Counterparts. This letter may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. This letter will become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. The exchange of copies of this letter and of executed signature pages by facsimile transmission or by electronic mail in “portable document format” (“.pdf”) or by a combination of such means, will constitute effective execution and delivery of this letter as to the parties and may be used in lieu of an original letter for all purposes. Signatures of the parties transmitted by facsimile or by .pdf shall be deemed to be their original signatures for all purposes.
17. Severability. The provisions of this letter will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof.
[Signature Page Follows]
8
Very truly yours, | ||
SERA PROGNOSTICS, INC. | ||
By: | /s/ Gregory C. Critchfield, M.D., M.S. | |
Name: Gregory C. Critchfield, M.D., M.S. | ||
Title: President and Chief Executive Officer |
AGREED AND ACCEPTED: | |
Baker Bros. Advisors LP | |
By:
[***]
Name: [***] Title: [***] |
Exhibit A
[***]
Exhibit B
[***]
Exhibit 10.9
SERA PROGNOSTICS, INC. EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is effective for all purposes as of November 8, 2011 (the “Effective Date”), by and between Sera Prognostics, Inc., a Delaware corporation (the “Company”), and Gregory C. Critchfield, M.D (the “Employee”).
NOW, THEREFORE, in consideration of the mutual covenants, conditions and undertakings set forth herein, the parties hereto hereby agree as follows:
1. Employment and Duties. Subject to the terms and conditions set forth in this Agreement, the Company shall employ Employee, and Employee hereby accepts employment, as the Chairman and Chief Executive Officer of the Company, with those duties and responsibilities which are appropriate and customary for a chief executive officer of a company similar to the Company. In such capacity, the Employee shall report to the Company’s Board of Directors (the “Board”) and will be elected a member of the Board. During the term of this Agreement, the Employee shall faithfully perform the Employee’s duties, responsibilities and obligations hereunder; subject to the understanding that the Employee may continue to provide time to Outside Interests (as defined below), consistent with past practices, as well as additional Outside Interests not disclosed on Exhibit A hereto with the Board’s consent. The Company acknowledges that the Employee has certain outside interests, as set forth on Exhibit A (the “Outside Interests”), and agrees that the Outside Interests shall not constitute a breach of this Agreement to the extent such interests do not materially interfere with the performance of Employee’s duties, responsibilities and obligations under this Agreement.
2. Base Compensation and Related Matters.
(a) Salary. In consideration for the services rendered by the Employee to the Company as provided herein, the Company shall pay the Employee an annual base salary of $300,000.00 per year (the “Base Salary”). The Base Salary shall be paid according to the Company’s standard payroll policy and will be subject to applicable federal and state tax withholdings as required by applicable law. The Base Salary may be increased but not decreased at any time by the Company’s Board or the Compensation Committee of the Board (the “Compensation Committee”), in its sole discretion and the Board or the Compensation Committee will reassess the Employee’s Base Salary annually.
(b) Equity Grants. The Employee shall be granted as soon as practicable on or after the Effective Date, a stock option to purchase 734,900 shares of the Company’s common stock (the “Option”) (which option shall be issued as an incentive stock option to the maximum extent allowed under Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”)) pursuant to the Company’s 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”). The Option shall be granted with an exercise price equal to the fair market value of the Company’s common stock on the date of grant. Twenty-Five percent (25%) of the Option shall be vested one year from the Effective Date and the remaining portion of such Option shall vest in equal monthly installments over a thirty-six (36) month period commencing on the first day of the month one year following the Effective Date, subject to continued employment by the Company. Notwithstanding the foregoing, in connection with a Change of Control (as defined in the Plan) or if a termination of the Employee occurs within two (2) months prior thereto, then the vesting of all equity then owned by the Employee shall accelerate with respect to one hundred percent (100%) of the unvested shares. In lieu of the Option at the request of the Employee, the Company shall issue restricted common stock. Restricted common stock will be issued at par value. If the equity to be issued is restricted common stock and not stock options, the number of shares of restricted common stock to be issued shall be calculated by determining the black scholes value of the grant as if it had been issued solely as stock options and dividing such number by the then current fair market value of the Company’s common stock so as to provide no additional benefit to the Employee for the non-payment of the exercise price.
The Employee acknowledges and agrees that effective as of the date of the grant of the equity as set forth in the preceding paragraph, option agreement No. SP-0040 granted by the Company to the Employee as of April 30, 2011 shall be terminated and of no further force and effect. The Company acknowledges that any other options previously granted to the Employee that vest based upon the Employee providing consulting services to the Company shall continue to vest upon its terms as long as the Employee is providing services as a director, consultant or employee of the Company and that the definition of “cause” applicable to all such option agreements shall be the definition set forth herein and not as set forth in the 2008 Stock Incentive Plan.
(c) Expenses. The Employee will be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee (which are eligible for reimbursement under the Code) actually incurred by him in performing his duties; provided; however, that such expenses are approved in accordance with the Company’s then-current policies and procedures applicable to the most senior-level executive employees of the Company, other than the Employee, or if such policies and procedures are not in place, then as determined in the sole discretion of the Board.
(d) Employee Benefits. The Company shall reimburse the Employee for the premium costs incurred by the Employee in maintaining medical and dental insurance coverage for the Employee and his family until such time that the Company sponsors a group insurance plan providing medical and dental insurance coverage for Company employees (the “Health Insurance Reimbursement”). The Health Insurance Reimbursement will be paid to the Employee on the last day of each month, provided the Employee has submitted to the Company documentary evidence establishing the Employee’s payment of such premiums to the health insurance provider. The Health Insurance Reimbursement is intended to be provided on a qualified, tax free basis in accordance with Section 106 of the Code. In addition, the Employee is entitled to participate in any employee benefit plans that the Company may make available to its most senior-level executive employees generally, which may include, but not be limited to, profit sharing plans, 401(k) and cafeteria plans, or life, hospitalization, optical, disability or other insurance plans as may be in effect, from time to time, and in accordance with rules established, from time to time, for individual participation in such plans.
(e) Vacation Days and Paid Leave. The Employee will be entitled to take four (4) weeks of vacation days and paid leave and such additional days as are provided to other senior-level executive employees of the Company, and shall be entitled to compensation in connection therewith, in accordance with Company policy applicable to senior-level executive employees of the Company.
2
3. Facilities and Services Furnished. The Company will furnish the Employee with office space and such other facilities, furniture, equipment and services as it may determine to be reasonably necessary for the performance of the Employee’s duties as set forth herein. It is acknowledged that as of the Effective Date, the Company is “virtual” and the Employee is using his own home or other business office for the Company office at no expense to the Company.
4. Termination.
(a) Termination by the Company. The Employee’s employment hereunder may be terminated by the Company under any of the following circumstances:
(i) Death. This Agreement shall automatically terminate upon the Employee’s death.
(ii) Disability. The Board may elect to terminate the Employee’s employment in the event of Employee’s Disability upon delivery of written notice to the Employee. For purposes of this Agreement, “Disability” shall mean any condition that, in the reasonable, good faith judgment of a licensed physician selected by the Board, causes the Employee to be unable, after any accommodation required by applicable law, to perform his duties, responsibilities and obligations under this Agreement for a period of at least twelve (12) months.
(iii) Cause. The Board may terminate the Employee’s employment hereunder for Cause (as defined below) at any time upon delivery of written notice to the Employee. For purposes of this Agreement, “Cause” shall mean (a) the conviction of the Employee by a court of competent jurisdiction of any felony involving dishonesty, breach of trust or misappropriation or the entering of a plea by the Employee of nolo contendre thereto; (b) the Employee’s willful failure or refusal to follow reasonable and lawful directives of the Board, provided such failure or refusal continues after the Employee’s receipt of reasonable notice in writing of such failure or refusal and an opportunity of not less than thirty (30) days to correct the problem; (c) a material breach by the Employee of any of the provisions of this Agreement; or (d) the Employee’s commission of any immoral or illegal act or any gross or willful misconduct, where a majority of the non-employee members of the Board reasonably determines that such act or misconduct has (A) seriously undermined the ability of the Board to entrust Employee with important matters or otherwise work effectively with Employee, (B) contributed to the Company's loss of significant revenues or business opportunities, or (C) significantly and detrimentally affected the business or reputation of the Company or any of its subsidiaries.
(iv) Other Termination. The Board may terminate Employee's employment with the Company at any time and for any reason, with or without cause, subject to the provisions hereof. Employee acknowledges that Employee is, and at all times shall be, an employee at will of the Company and nothing contained herein shall be construed to alter or affect such employee at-will status. Employee may terminate his employment with the Company at any time, for any or no reason, subject to the provisions hereof. Inclusion under any benefit plan or compensation arrangement will not give Employee any right or claim to any benefit hereunder except to the extent such right has become fixed under the express terms of this Agreement.
3
(b) Termination by the Employee. The Employee may terminate the Employee’s employment with the Company under the following circumstances:
(i) Voluntary Termination. Employee may terminate his employment with the Company for any reason or no reason, upon delivery of written notice to the Board at least fifteen (15) days prior to the specified termination date.
(ii) Termination for Good Reason. The Employee also may terminate the Employee’s employment with the Company for “Good Reason,” which shall mean for purposes of this Agreement (A) a material breach by the Company of any of the provisions of this Agreement; (B) assignment of Employee to a role, duties or responsibilities materially inconsistent with that of a Chief Executive Officer; (C) any circumstances caused by the Company that would require Employee to move his principal location of employment in excess of forty-five (45) miles from Company’s current offices in Salt Lake City, Utah; or (D) an involuntary material reduction of Employee’s then current Base Salary other than a reduction proportionately affecting all of the Company’s other senior-level executive employees. The Employee must provide the Board with a written Notice of Termination that describes the existence of the condition the Employee believes gives rise to Good Reason under this Section 4(b) within thirty (30) days following the initial existence of the condition. The Company may elect to cure any condition giving rise to Good Reason within thirty (30) days of receipt of notice. The Employee’s termination for Good Reason must, in any event, occur within the six (6) month period immediately following the initial existence of the condition giving rise to Good Reason.
(c) Effect of Termination. In the event the Employee’s employment is terminated, all obligations of the Company and the Employee under this Agreement shall cease, except that the accelerated vesting of Options set forth in Section 2(b) and the terms of Section 5 through Section 9 shall survive such termination. Upon such termination, the Employee or the Employee’s representative or estate shall be entitled to receive the applicable compensation, benefits and reimbursements set forth in Section 5. The Employee acknowledges that, upon termination of the Employee’s employment, the Employee is entitled to no other compensation, severance or other benefits other than those specifically set forth in Section 5.
5. Compensation and Benefits Upon Termination of Employment. At all times after the Effective Date, the Employee shall be entitled to receive additional compensation and benefits upon a termination of Employee’s employment as follows:
(a) Severance Pay. If, either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason; then, on the sixtieth (60th) day following the termination of employment, the Company shall pay the Employee a lump sum amount equal to (i) twelve (12) months of the Base Salary at the rate in effect at the time of the termination of employment; and (ii) a pro-rata bonus for the year in which the Employee’s employment is terminated provided that the Company has in place a bonus plan; and (iii) any unvested equity will immediately be forfeited and any vested stock options will be exercisable for the balance of the remaining term of the original option grant. If, the Company terminates the Employee’s employment due to death or Disability then, on the sixtieth (60th) day following the termination of employment due to death or Disability, the Company shall (i) pay the Employee a lump sum amount equal to a pro-rata bonus for the year in which the Employee’s employment is terminated provided that the Company has in place a bonus plan; (ii) any unvested equity will immediately be forfeited and any vested stock options will be exercisable for the balance of the remaining term of the original option grant; and (iii) if the Company does not provide any insurance benefits payable to the Employee or his beneficiaries, as applicable, upon his death or Disability and the Company has previously, but not necessarily in the then applicable calendar year, achieved Ten Million Dollars in annual gross revenue in a calendar year, then the Company shall pay the Employee a lump sum amount equal to twelve (12) months of the Base Salary at the rate in effect at the time of the termination of employment.
4
(b) Health Insurance. If either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason, the Company will continue to provide the Health Insurance Reimbursement until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, and (y) the date when the Employee becomes eligible to receive health insurance coverage in connection with new employment or self-employment. If, as of the termination date, the Company sponsors a group insurance plan providing medical and dental insurance coverage for Company employees, and if the Employee elects to continue his health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of his employment, then the Company shall pay the Employee’s monthly premium under COBRA until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, (y) the expiration of the Employee’s continuation coverage under COBRA, and (z) the date when the Employee becomes eligible to receive health insurance coverage in connection with new employment or self-employment. If the payment of any COBRA or health insurance premiums would otherwise violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code.
(c) General Release. Any other provision of this Agreement notwithstanding, subsections (a) and (b) above shall not apply unless the Employee has (i) executed a general release of all claims (in a form prescribed by the Company), which must be effective and irrevocable prior to the sixtieth (60th) day following the termination of employment, (ii) returned all property of the Company in the Employee’s possession and (iii) cooperated in good faith with the Company for a transition period not to exceed sixty (60) days to ensure an efficient transfer of the Employee’s duties and responsibilities.
6. Non-Competition; Non-Solicitation. The Employee and the Company hereby acknowledge and agree that in connection with the employment of the Employee, the Employee has been and will be provided with trade secrets of the Company and that the Employee and the Company are entering into this Agreement for the protection of such trade secrets. The Employee agrees to abide by the provisions set forth in this Section 6.
(a) Non-Competition. The Employee shall not, during his employment with the Company and during the one (1) year period following the termination of his employment with the Company (the “Restrictive Period”), directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of his consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party:
5
(i) anywhere in the United States (the “Restricted Area”) compete with or own, manage, operate or control any business that directly competes in the Company’s field of interest or products in the active development pipeline of the Company (for purposes of this paragraph, ownership of securities of not in excess of one percent (1%) of the outstanding capital stock of a public company shall not be considered to be competition with the Company); or
(ii) anywhere in the Restricted Area, act as an employee, director, officer, manager, member, advisor, consultant, representative or agent for any business of the type and character engaged in and competitive with the Company.
(b) Non-Solicitation. The Employee shall not, during the Restrictive Period directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of his consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party, solicit the employment of or hire any current employee of the Company, or solicit a relationship with any customer of the Company, located anywhere in the Restricted Area.
(c) Definitions. For purposes of this Section 6, the terms “compete with the Company,” “competitive with the Company,” “field of interest” and similar terms referring to competition with the Company shall mean any business that is engaged in identifying and commercializing biomarkers in blood samples of pregnant women which are predictive of preterm birth and other pregnancy complications or any other anticipated business ventures of the Company which have been discussed with the Board or amongst the senior-level executive employees as of the date of Employee’s termination.
7. Maintaining Confidential Information.
(a) Company Confidential Information. The Employee hereby agrees at all times during which he provides services as a director, officer, employee or consultant of the Company (“Employee’s Service”), and thereafter to hold in strictest confidence, and not to use, except for the benefit of the Company, any trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, formulas, developmental or experimental work, computer lists, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its clients, consultants or licensees (collectively, “Confidential Information”).
Notwithstanding the above, Employee shall not have liability to the Company with regard to any Confidential Information which Employee can prove:
(i) was in the public domain at the time it was disclosed by the Company or has entered the public domain through no fault of Employee;
6
(ii) was known to the Employee without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of the Company;
(iv) becomes known to Employee, without restriction, from a source other than the Company without breach of this Agreement by Employee and otherwise not in violation of the Company’s rights; or
(v) is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, however, that Employee shall provide prompt notice of such court order or requirement to the Company to enable the Company to seek a protective order or otherwise prevent such disclosure.
(b) Former Employer Information. The Employee hereby agrees that he will not, during Employee’s Service, improperly use or disclose any proprietary information or trade secrets of his former or concurrent employers or companies, if any, and that he will not make available to the Company any unpublished document or any property belonging to his former or concurrent employers or companies, if any, unless consented to in writing by said employers or companies.
(c) Third-Party Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee hereby agrees, during Employee’s Service and thereafter, to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such third party) or to use it for the benefit of anyone other than the Company or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of the Board.
8. Availability of Equitable Remedies. The Employee hereby acknowledges and agrees that a breach of Section 6 or Section 7 will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of Section 6 or Section 7 will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company will be entitled to injunctive relief for any breach or threatened breach of Section 6 or Section 7.
9. Miscellaneous
(a) Notification of New Employer. In the event that the Employee leaves the employ of the Company, he hereby grants consent to notification by the Company to his new employer about his rights and obligations under this Agreement.
(b) Severability. In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken. All portions of this Agreement which do not violate any statute or public policy shall continue in full force and effect. Further, any court order striking any portion of this Agreement shall modify the stricken terms to give as much effect as possible to the intentions of the parties under this Agreement.
7
(c) Notices. Any notices, requests or consents hereunder shall be deemed given, and any instrument delivered, three (3) days after they have been mailed by first class mail, postage prepaid, one (1) day after they have been delivered by overnight courier, twelve (12) hours after such notice has been sent by facsimile, or upon receipt if delivered personally, as follows:
To the Company:
417 Wakara Way, Suite 3510
Salt Lake City, UT 84108
To the Employee:
6170 Murdock Woods Place
Holladay, UT 84121
except that any of the foregoing may, from time to time, by written notice to the others, designate another address or fax number which shall thereupon become his or its effective address for the purposes of this Section 9(c).
(d) Governing Law. This Agreement shall be governed by the laws of the State of Utah, without giving effect to its conflict of laws principles.
(e) Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. This Agreement is for the unique personal services of the Employee, and the Employee shall not be entitled to assign any of the Employee’s rights or obligations hereunder.
(f) Entire Agreement: Amendment. This Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter of this Agreement, and supersedes all other prior agreements and understandings with respect thereto including, but not limited to, the Consulting Agreement dated May 1, 2011 previously entered into by and between the Company and the Employee. This Agreement can be amended or modified only in a writing signed by the Employee and the Company.
(g) No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.
(h) Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
8
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(j) Costs and Expenses. The Company shall reimburse all of the Employee’s reasonable costs and expenses (including, without limitation, attorneys’ fees), incurred in connection with the negotiation and preparation of this Agreement.
(k) Attorneys’ Fees. In the event of any action at law, equity or under this Agreement to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and court costs in addition to any other relief to which such party may be entitled, unless the action is one in which only a prevailing plaintiff is entitled to prevailing party fees and costs (such as a Title VII action).
(l) Section 409A. The Company intends that the cash severance payments to which the Employee is entitled on his termination of employment pursuant to Section 5 are payable on the Employee’s Separation from Service (as defined below) and are exempt from, or are otherwise payable in compliance with, Section 409A. The Company intends that the Company’s continued payment for the cost of the Employee’s welfare benefits (including the payment of all COBRA administrative costs and expenses) provided by Section 5 will comply with the exception to Section 409A for reimbursements and certain other separation payments, as described in Treas. Reg. § 1.409A-1(b)(9)(v)(B), to the extent such costs are taxable and subject to imputed income treatment.
(i) Separation from Service Defined. For purposes of this Agreement, the term “termination of employment” means the Employee’s “Separation from Service.” The term “Separation from Service” means (i) the termination of the Employee’s employment with the Company and all affiliates for any reason or (ii) a permanent reduction in the level of bona fide services the Employee provides to the Company and all affiliates to an amount that is twenty percent (20%) or less of the average level of bona fide services the Employee provided to the Company and all affiliates in the immediately preceding thirty-six (36) months (or the entire time period during which the Employee provided services to the Company and all affiliates if the Employee has been providing such services for less than thirty-six (36) months), with the level of bona fide service calculated in accordance with Treas. Reg. § 1.409A-1(h)(1)(ii). Solely for purposes of determining whether an organization is an “affiliate” of the Company, the Company will follow the rules set forth in Treas. Reg. § 1.409A-1(h)(3) (which generally requires fifty percent (50%) common ownership or control). The Employee’s employment relationship is treated as continuing while the Employee is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six (6) months; or, if longer, so long as the Employee’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Employee’s period of leave exceeds six (6) months and his right to re-employment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6) month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
9
(ii) Delay in Payments. Notwithstanding any provision of this Agreement to the contrary, if any of the severance payments are subject to Section 409A and the Employee is a “Specified Employee” at the time of his Separation from Service, no payments shall be made to the Employee prior to the first business day following the date which is six (6) months after the Employee’s Separation from Service. Any amounts that would have been paid during the six (6) months following the Employee’s Separation from Service will be paid on the first business day following the expiration of the six (6) month period without interest thereon. The Employee may not elect the taxable year of such payment. The six (6) month delay for a Specified Employee does not apply if the Employee dies.
(iii) Specified Employee Defined. For purposes of this Agreement, the term “Specified Employee” means certain officers and highly-compensated employees of the Company as defined in Treas. Reg. § 1.409A-1(i), and as determined in accordance with such procedures as may be adopted from time to time by the Company.
(iv) Miscellaneous Payment Provisions. If payment is not made, in whole or in part, due to a dispute between the Employee and the Company, the payments shall be made in accordance with Treas. Reg. § 1.409A-3(g), as applicable. It is intended that each installment of the payments and benefits provided under Section 5 of this Agreement shall be treated as a separate “payment” for purposes of Section 409A. If an expense reimbursement or provision of in-kind benefit provided pursuant to this Agreement is not exempt from Section 409A of the Code, the following rules apply: (i) in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred; (ii) the amount of reimbursable expenses incurred or provision of in-kind benefits in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other tax year; and (iii) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation or exchange for any other benefit.
(v) Ban on Acceleration or Deferral. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral, except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code.
(vi) No Elections. The Employee does not have any right to make any election regarding the time or form of any payment due under this Agreement.
(vii) Compliant Operation and Interpretation. This Agreement shall be operated in compliance with the requirements of Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an exception thereto.
10
(m) Dispute Resolution; Venue. The Company and the Employee shall use reasonable, good faith efforts to settle any dispute through non-binding mediation before a mutually acceptable, neutral, third-party mediator. The mediation shall be held in Salt Lake City, Utah and administered by the CPR Institute for Dispute Resolution (the “CPR Institute”) under the CPR Mediation Procedure then in effect. Unless otherwise agreed, the parties shall jointly select a single mediator from the CPR Panels of Distinguished Neutrals based on a list of mediator candidates supplied by the CPR Institute. If, within fourteen (14) days after either party makes a written request for mediation under this Section 9(m)(i), the parties have not reached agreement on the selection of a mediator, the mediator shall be selected in accordance with the CPR Mediation Procedure currently in effect. A good faith attempt at mediation shall be a condition precedent to the commencement of litigation, but nothing in this Agreement, including, but not limited to paragraph (ii) below, shall be deemed a condition precedent to any court action for injunction or other interim relief pending the outcome of mediation. If the parties are unable to resolve the dispute by mediation in a timely manner (which, in any case, shall not exceed sixty (60) days from the first notice of mediation), either party may attempt to resolve the dispute by commencing an action (or defending or responding to such action) exclusively in the jurisdiction and venue of the courts, whether federal or state, located in Salt Lake County, Utah.
(n) Indemnification. During the period of his employment hereunder, the Company agrees to indemnify the Employee in his capacity as an officer and Director of the Company and, to the extent applicable, each subsidiary of the Company, all to the maximum extent permitted under Section 145 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective for all purposes as of the Effective Date.
THE COMPANY: | ||
SERA PROGNOSTICS, INC. | ||
By: | /s/ Mark J. Ostrowski | |
Name: Mark J. Ostrowski | ||
Title: President | ||
THE EMPLOYEE: | ||
/s/ Gregory C. Critchfield, M.D. | ||
Name: Gregory C. Critchfield, M.D |
11
EXHIBIT A
OUTSIDE INTERESTS
Member of the Board of Directors of the following corporations:
Integrated Diagnostics, Inc.
Nodality, Inc.
Metamark Genetics, Inc.
Saladax Biomedical, Inc. (Chairman)
Board member of Bear Lake Watch, a non-profit corporation
In addition, the Employee will, from time to time, advise various venture capital firms on discreet, short term projects with respect to companies that are not in competition with the Company.
12
Exhibit 10.10
SERA PROGNOSTICS, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is effective for all purposes as of March 24, 2020 (the “Effective Date”), by and between Sera Prognostics, Inc., a Delaware corporation (the “Company”), and Jay M. Moyes (the “Employee”).
NOW, THEREFORE, in consideration of the mutual covenants, conditions and undertakings set forth herein, the parties hereto hereby agree as follows:
1. Employment and Duties. Subject to the terms and conditions set forth in this Agreement, the Company shall employ Employee, and Employee hereby accepts employment, as the Chief Financial Officer of the Company, with those duties and responsibilities which are appropriate and customary for a chief financial officer of a company similar to the Company. In such capacity, the Employee shall report to the Company’s Chief Executive Officer. During the term of this Agreement, the Employee shall faithfully perform the Employee’s duties, responsibilities and obligations hereunder.
2. Base Compensation and Related Matters.
(a) Salary. In consideration for the services rendered by the Employee to the Company as provided herein, the Company shall pay the Employee an annual base salary of $355,000 per year (the “Base Salary”), provided that the Employee’s employment with the Company remains active at a full-time rate. The Base Salary shall be paid according to the Company’s standard payroll policy and will be subject to applicable federal and state tax withholdings as required by applicable law. The Base Salary may be increased or decreased at any time by the Company’s Board of Directors (the “Board”) or the Compensation Committee of the Board in its sole discretion.
(b) Stock Option Grant(s) and Bonuses. Subject to Board of Directors approval, the Employee shall be granted on or within thirty (30) days after the Effective Date a hiring option to purchase 575,511 shares of the Company’s common stock (the “Option”) (which option shall be issued as an incentive stock option to the maximum extent allowed under Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”)) pursuant to the Company’s 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”). The Option shall vest as to twenty-five percent (25%) of the shares subject thereto one (1) year from the Effective Date (“Vesting Start Date”), and shall vest with respect to the remaining shares subject thereto in equal monthly installments over an additional thirty-six (36) months thereafter commencing on the first day of the month following the Vesting Start Date, subject to continued employment by the Company. In addition, the Option shall accelerate with respect to thirty-seven and one-half percent (37.5%) of the outstanding unvested shares at that time then subject thereto upon a Change of Control (as defined in the Plan) pursuant to which the Option is terminated pursuant to Section 24(b)(ii) of the Plan or cashed out pursuant to Section 24(b)(iii) of the Plan. The Employee shall be eligible, after the Effective Date, to receive (i) additional stock options pursuant to the Plan, and (ii) additional bonus compensation, as determined by the Board, in its sole discretion; it being the intention of the Board to maintain Employee’s aggregate compensation at levels appropriate and customary to those of companies similar in industry, stage and circumstances to that of the Company. Unless otherwise approved by the Board, all future options granted to the Employee after the Effective Date shall vest in equal monthly installments over a period of forty-eight (48) months from the date of grant. Notwithstanding the foregoing, in the event that the Employee’s employment with the Company is terminated by the Company without Cause (as defined in Section 5(a)(iii) below) or by the Employee for Good Reason (as defined in Section 5(b)(ii) below), then the vesting of all options held by the Employee at the time of the termination shall accelerate (i) with respect to thirty-seven and one-half percent (37.5%) of the unvested shares subject thereto, or (ii) if such termination occurs within 30 days prior to or within 12 months after a Change of Control (as defined in the Plan), with respect to one hundred percent (100%) of the unvested shares subject thereto. You will be eligible to participate in the Company’s Annual Incentive Plan, which currently provides for a bonus target of 35% of your base salary, prorated for time of service, and with respect to the calendar year ending December 31, 2020, payment will be contingent based on achievements mutually agreed by you and your supervisor.
(c) Expenses. The Employee will be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee (which are eligible for reimbursement under the Code) actually incurred by him in performing his duties; provided; however, that such expenses are approved in accordance with the Company’s then-current policies and procedures applicable to the most senior-level executive employees of the Company, other than the Employee, or if such policies and procedures are not in place, then as determined in the sole discretion of the Board.
(d) Employee Benefits. Upon beginning his employment with the Company, the Employee will be entitled to participate in the group health, dental, vision, and group life insurance benefit plans, as well as the Company’s 401(k) and Flexible Spending Account Plans available to all Company employees. In addition, the Employee is entitled to participate in any employee benefit plans that the Company may make available to its most senior-level executive employees generally, which may include but not be limited to, profit sharing plans, 401(k) and cafeteria plans, or life, hospitalization, optical, disability, or other insurance plans as may be in effect, from time to time, and in accordance with rules established, from time to time, for individual participation in such plans.
(e) Transition Support. In the event that Employee relocates to the greater Salt Lake City, UT Wasatch Front area within twenty-four (24) months following the Effective Date, which time period may be extended by mutual, written agreement of the parties:
(i) The Company shall provide temporary housing support of up to $4,000 per month for six (6) months following such relocation. This temporary housing support shall begin within a reasonable time of Employee’s written request for temporary housing support reimbursement and will be payable on a monthly basis thereafter in accordance with the Company’s payroll practices; and
(ii) The Company shall will reimburse up to $30,000.00 in Employee’s relocation costs for such relocation. Should Employee’s documented relocation costs exceed $30,000.00, the Company may - but is not required to - reimburse those additional amounts, with said additional reimbursement to be confirmed, in writing, by the parties.
2
3. Paid Time Off. Upon beginning his employment with the Company, the Employee will be entitled to take five (5) weeks of paid time off per calendar year, three (3) additional paid sick leave days per year, and shall be entitled to compensation in connection therewith, in accordance with Company policy applicable to senior-level executive employees of the Company, as approved by the Chief Executive Officer in its sole discretion. Neither vacation days nor paid sick leave days will roll over to the next calendar year. The Company will pay out all unused, accrued vacation upon the Employee’s separation from the Company. Unused, accrued paid sick leave will not be paid out.
4. Facilities and Services Furnished. The Company will furnish the Employee with office space at its headquarters in Salt Lake City, Utah, and such other facilities, furniture, equipment and services as it may determine to be reasonably necessary for the performance of the Employee’s duties as set forth herein.
5. Termination.
(a) Termination by the Company. The Employee’s employment hereunder may be terminated by the Company under any of the following circumstances:
(i) Death. This Agreement shall automatically terminate upon the Employee’s death.
(ii) Disability. The Company or the Employee may elect to terminate the Employee’s employment in the event of Employee’s Disability upon delivery of written notice to the Employee. For purposes of this Agreement, “Disability” shall mean any condition that, in the reasonable, good faith judgment of a licensed physician selected by the Company, causes the Employee to be unable, after any accommodation required by applicable law, to perform his duties, responsibilities and obligations under this Agreement for a period of at least twelve (12) months.
(iii) Cause. The Company may terminate the Employee’s employment hereunder for Cause (as defined below) at any time upon delivery of written notice to the Employee. For purposes of this Agreement, “Cause” shall mean (A) the conviction of the Employee by a court of competent jurisdiction of any felony involving dishonesty, breach of trust or misappropriation or the entering of a plea by the Employee of nolo contendere thereto; (B) the Employee’s willful failure or refusal to follow reasonable and lawful directives of the Board or the Company’s Chief Executive Officer, provided such failure or refusal continues after the Employee’s receipt of reasonable notice in writing of such failure or refusal and an opportunity of not less than thirty (30) days to correct the problem; (C) a material breach by the Employee of any of the provisions of this Agreement, with notification of such breach by the process outlined Section 5(a)(iii)(B) above; or (D) the Employee’s commission of any illegal act or any gross or willful misconduct, where a majority of the non-employee members of the Board reasonably determines that such act or misconduct has (1) contributed to the Company’s loss of significant revenues or business opportunities, or (2) significantly and detrimentally affected the business or reputation of the Company or any of its subsidiaries.
3
(iv) Other Termination. The Company may terminate Employee’s employment with the Company at any time and for any reason, with or without cause, subject to the provisions hereof. Employee acknowledges that Employee is, and at all times shall be, an employee at will of the Company and nothing contained herein shall be construed to alter or affect such employee at-will status. Employee may terminate his employment with the Company at any time, for any or no reason, subject to the provisions hereof. Inclusion under any benefit plan or compensation arrangement will not give Employee any right or claim to any benefit hereunder except to the extent such right has become fixed under the express terms of this Agreement.
(b) Termination by the Employee. The Employee may terminate the Employee’s employment with the Company under the following circumstances:
(i) Voluntary Termination. Employee may terminate his employment with the Company for any reason or no reason, upon delivery of written notice to the Company at least fifteen (15) days prior to the specified termination date.
(ii) Termination for Good Reason. The Employee also may terminate the Employee’s employment with the Company for “Good Reason,” which shall mean for purposes of this Agreement (A) a material breach by the Company of any of the provisions of this Agreement; (B) assignment of Employee to a role, duties or responsibilities materially inconsistent with that of a chief financial officer; (C) any circumstances caused by the Company that would require Employee to move his principal location of employment in excess of fifty (50) miles from the Company’s principal business location in Salt Lake City, Utah; or (D) an involuntary material reduction of Employee’s then current Base Salary or target bonus opportunity other than a reduction proportionately affecting all of the Company’s other senior-level executive employees. The Employee must provide the Company with a written Notice of Termination that describes the existence of the condition the Employee believes gives rise to Good Reason under this Section 5(b)(ii) within thirty (30) days following the date on which the Employee knows or should reasonably have known of the initial existence of the condition. The Company may elect to cure any condition giving rise to Good Reason within thirty (30) days of receipt of notice. The Employee’s termination for Good Reason must, in any event, occur within the six (6) month period immediately following the date on which the Employee knows or should reasonably have known of the initial existence of the condition giving rise to Good Reason.
(c) Effect of Termination. In the event the Employee’s employment is terminated, all obligations of the Company and the Employee under this Agreement shall cease, except that the accelerated vesting of Options set forth in Section 2(b) and the terms of Section 5 through Section 9 shall survive such termination. Upon such termination, the Employee or the Employee’s representative or estate shall be entitled to receive the applicable compensation, benefits and reimbursements set forth in Section 5. The Employee acknowledges that, upon termination of the Employee’s employment, the Employee is entitled to no other compensation, severance or other benefits other than (i) those specifically set forth in Section 6, (ii) the aggregate amount of the Employee’s earned but unpaid Base Salary and accrued but unpaid vacation pay through the date of such termination, (iii) any vested amounts due to the Employee pursuant to the applicable terms of any plan, program or policy of the Company (including any life insurance or long-term disability plan) and (iv) reimbursement of any business expenses incurred by the Employee prior to the date of termination.
4
6. Compensation and Benefits Upon Termination of Employment. At all times after the Effective Date, the Employee shall be entitled to receive additional compensation and benefits upon a termination of Employee’s employment as follows:
(a) Severance Pay. If either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason; then, on the sixtieth (60th) day following the termination of employment, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment. If the Company terminates the Employee’s employment due to death or Disability and (y) the Company does not provide any disability or life, as applicable, insurance benefits payable to the Employee or his beneficiaries, as applicable, upon his death or Disability and (z) the Company has previously, but not necessarily in the then applicable calendar year, achieved Ten Million Dollars in annual gross revenue in a calendar year, then, on the sixtieth (60th) day following the termination of employment due to death or Disability, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment.
(b) Health Insurance. If, while participating in the Company’s group health insurance plan(s), either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason, and if the Employee elects to continue his health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of his employment, then the Company shall pay the portion of the Employee’s monthly premium under COBRA until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, (y) the expiration of the Employee’s continuation coverage under COBRA or (z) the date when the Employee receives health insurance coverage in connection with new employment. If the payment of any COBRA or health insurance premiums would otherwise violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code.
(c) General Release. Any other provision of this Agreement notwithstanding, subsections (a) and (b) above shall not apply unless the Employee has (i) executed a general release of all claims (in a form prescribed by the Company), which must be effective and irrevocable prior to the sixtieth (60th) day following the termination of employment, (ii) returned all property of the Company in the Employee’s possession and (iii) cooperated in good faith with the Company for a transition period not to exceed sixty (60) days to ensure an efficient transfer of the Employee’s duties and responsibilities.
7. Maintaining Confidential Information.
(a) Company Confidential Information. The Employee hereby agrees at all times during which he provides services as a director, officer, employee or consultant of the Company (“Employee’s Service”), and thereafter to hold in strictest confidence, and not to use, except for the benefit of the Company, any trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, formulas, developmental or experimental work, computer lists, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its clients, consultants or licensees (collectively “Confidential Information”).
5
Notwithstanding the above, Employee shall not have liability to the Company with regard to any Confidential Information which Employee can prove:
(i) was in the public domain at the time it was disclosed by the Company or has entered the public domain through no fault of Employee;
(ii) was known to the Employee without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of the Company;
(iv) becomes known to Employee, without restriction, from a source other than the Company without breach of this Agreement by Employee and otherwise not in violation of the Company’s rights; or
(v) is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, however, that Employee shall provide prompt notice of such court order or requirement to the Company to enable the Company to seek a protective order or otherwise prevent such disclosure.
(b) Former Employer Information. The Employee hereby agrees that he will not, during Employee’s Service, improperly use or disclose any proprietary information or trade secrets of his former or concurrent employers or companies, if any, and that he will not make available to the Company any unpublished document or any property belonging to his former or concurrent employers or companies, if any, unless consented to in writing by said employers or companies.
(c) Third-Party Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee hereby agrees, during Employee’s Service and thereafter, to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such third party) or to use it for the benefit of anyone other than the Company or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of the Board.
(d) Outside Activities. During the Employee’s employment with the Company, the Employee shall not perform consulting/business activities beyond those disclosed in Exhibit A, without prior written consent of the Company’s Board of Directors Compensation Committee.
6
8. Availability of Equitable Remedies. The Employee hereby acknowledges and agrees that a breach of Section 7 will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of Section 7 will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company will be entitled to injunctive relief for any breach or threatened breach of Section 7.
9. Miscellaneous.
(a) Notification of New Employer. In the event that the Employee leaves the employ of the Company, he hereby grants consent to notification by the Company to his new employer about his rights and obligations under this Agreement.
(b) Severability. In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken. All portions of this Agreement which do not violate any statute or public policy shall continue in full force and effect. Further, any court order striking any portion of this Agreement shall modify the stricken terms to give as much effect as possible to the intentions of the parties under this Agreement.
(c) Notices. Any notices, requests or consents hereunder shall be deemed given, and any instrument delivered, three (3) days after they have been mailed by first class mail, postage prepaid, one (1) day after they have been delivered by overnight courier, twelve (12) hours after such notice has been sent by facsimile, or upon receipt if delivered personally, as follows:
To the Company:
2749 Parleys Way, Suite 200
Salt Lake City, UT 84109
To the Employee:
1181 E. Woodcrest Lane
North Salt Lake, UT 84054
except that any of the foregoing may, from time to time, by written notice to the others, designate another address or fax number which shall thereupon become his or its effective address for the purposes of this Section 9(c).
(d) Governing Law. This Agreement shall be governed by the laws of the State of Utah, without giving effect to its conflict of laws principles.
(e) Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. This Agreement is for the unique personal services of the Employee, and the Employee shall not be entitled to assign any of the Employee’s rights or obligations hereunder.
7
(f) Entire Agreement; Amendment. This Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter of this Agreement, and supersedes all other prior agreements and understandings with respect thereto. This Agreement can be amended or modified only in a writing signed by the Employee and the Company.
(g) No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.
(h) Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(j) Costs and Expenses. The Company shall reimburse all of the Employee’s reasonable costs and expenses (including, without limitation, attorneys’ fees), incurred in connection with the negotiation and preparation of this Agreement.
(k) Attorneys’ Fees. In the event of any action at law, equity or under this Agreement to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and court costs in addition to any other relief to which such party may be entitled, unless the action is one in which only a prevailing plaintiff is entitled to prevailing party fees and costs (such as a Title VII action).
(l) Section 409A. The Company intends that the cash severance payments to which the Employee is entitled on his termination of employment pursuant to Section 6 are payable on the Employee’s Separation from Service (as defined below) and are exempt from, or are otherwise payable in compliance with Section 409A. The Company intends that the Company’s continued payment for the cost of the Employee’s welfare benefits (including the payment of all COBRA administrative costs and expenses) provided by Section 6 will comply with the exception to Section 409A for reimbursements and certain other separation payments, as described in Treas. Reg. § 1.409A-1(b)(9)(v)(B), to the extent such costs are taxable and subject to imputed income treatment.
(i) Separation from Service Defined. For purposes of all payments of nonqualified deferred compensation subject to Section 409A to be made upon a termination of employment under this Agreement, the term “termination of employment” means the Employee’s “Separation from Service.” The term “Separation from Service” means (A) the termination of the Employee’s employment with the Company and all affiliates for any reason or (B) a permanent reduction in the level of bona fide services the Employee provides to the Company and all affiliates to an amount that is twenty percent (20%) or less of the average level of bona fide services the Employee provided to the Company and all affiliates in the immediately preceding thirty-six (36) months (or the entire time period during which the Employee provided services to the Company and all affiliates if the Employee has been providing such services for less than thirty-six (36) months), with the level of bona fide service calculated in accordance with Treas. Reg. § 1.409A-1(h)(1)(ii). Solely for purposes of determining whether an organization is an “affiliate” of the Company, the Company will follow the rules set forth in Treas. Reg. § 1.409A-1(h)(3) (which generally requires fifty percent (50%) common ownership or control). The Employee’s employment relationship is treated as continuing while the Employee is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six (6) months; or, if longer, so long as the Employee’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Employee’s period of leave exceeds six (6) months and his right to re-employment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6) month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
8
(ii) Delay in Payments. Notwithstanding any provision of this Agreement to the contrary, if any of the severance payments are subject to Section 409A and the Employee is a “Specified Employee” at the time of his Separation from Service, no payments shall be made to the Employee prior to the first business day following the date which is six (6) months after the Employee’s Separation from Service. Any amounts that would have been paid during the six (6) months following the Employee’s Separation from Service will be paid on the first business day following the expiration of the six (6) month period without interest thereon. The Employee may not elect the taxable year of such payment. The six (6) month delay for a Specified Employee does not apply if the Employee dies.
(iii) Specified Employee Defined. For purposes of this Agreement, the term “Specified Employee” means certain officers and highly-compensated employees of the Company as defined in Treas. Reg. 1.409A-1(i), and as determined in accordance with such procedures as may be adopted from time to time by the Company.
(iv) Miscellaneous Payment Provisions. If payment is not made, in whole or in part, due to a dispute between the Employee and the Company, the payments shall be made in accordance with Treas. Reg. § 1.409A-3(g), as applicable. It is intended that each installment of the payments and benefits provided under Section 6 of this Agreement shall be treated as a separate “payment” for purposes of Section 409A. If an expense reimbursement or provision of in-kind benefit provided pursuant to this Agreement is not exempt from Section 409A of the Code, the following rules apply: (A) in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred; (B) the amount of reimbursable expenses incurred or provision of in-kind benefits in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other tax year; and (C) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation or exchange for any other benefit.
(v) Ban on Acceleration or Deferral. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral, except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code.
9
(vi) No Elections. The Employee does not have any right to make any election regarding the time or form of any payment due under this Agreement.
(vii) Compliant Operation and Interpretation. This Agreement shall be operated in compliance with the requirements of Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an exception thereto.
(m) Dispute Resolution; Venue.
(i) The Company and the Employee shall use reasonable, good faith efforts to settle any dispute through non-binding mediation before a mutually-acceptable, neutral, third-party mediator. The mediation shall be held in Salt Lake City, Utah and administered by the CPR Institute for Dispute Resolution (the “CPR Institute”) under the CPR Mediation Procedure then in effect. Unless otherwise agreed, the parties shall jointly select a single mediator from the CPR Panels of Distinguished Neutrals based on a list of mediator candidates supplied by the CPR Institute. If, within fourteen (14) days after either party makes a written request for mediation under this Section 9(m)(i), the parties have not reached agreement on the selection of a mediator, the mediator shall be selected in accordance with the CPR Mediation Procedure currently in effect. A good faith attempt at mediation shall be a condition precedent to the commencement of litigation, but nothing in this Agreement, including, but not limited to paragraph (ii) below, shall be deemed a condition precedent to any court action for injunction or other interim relief pending the outcome of mediation.
(ii) If the parties are unable to resolve the dispute by mediation in a timely manner (which, in any case, shall not exceed sixty (60) days from the first notice of mediation), either party may attempt to resolve the dispute by commencing an action (or defending or responding to such action) exclusively in the jurisdiction and venue of the courts, whether federal or state, located in Salt Lake County, Utah.
(n) The Company shall, at all times, maintain Directors & Officers insurance with a policy limit of least $5,000,000.00 that will cover Employee in his capacity as an officer of the Company.
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective for all purposes as of the Effective Date.
THE COMPANY: | ||
SERA PROGNOSTICS, INC. | ||
By: | /s/ Gregory C. Critchfield, M.D. | |
Name: Gregory C. Critchfield, M.D. | ||
Title: Chairman, President, and CEO | ||
THE EMPLOYEE: | ||
/s/ Jay M. Moyes | ||
Jay M. Moyes |
11
EXHIBIT A
THE OUTSIDE INTERESTS
TITLE | COMPANY NAME | HOURS PER WEEK | ACTIVITIES |
Independent Director | Puma Biotechnology | variable |
Board Member,
Compensation and Audit Committees |
Independent Director |
Achieve Live
Sciences |
variable |
Board Member,
Compensation and Audit Committees |
Independent Director | BioCardia | variable |
Board Member,
Compensation and Audit Committees |
Exhibit 10.11
SERA PROGNOSTICS, INC. EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is effective for all purposes as of January 27, 2015 (the “Effective Date”), by and between Sera Prognostics, Inc., a Delaware corporation (the “Company”), and Douglas C. Fisher (the “Employee”).
NOW, THEREFORE, in consideration of the mutual covenants, conditions and undertakings set forth herein, the parties hereto hereby agree as follows:
1. Employment and Duties. Subject to the terms and conditions set forth in this Agreement, the Company shall employ Employee, and Employee hereby accepts employment, as the Chief Business Officer of the Company, with those duties and responsibilities which are appropriate and customary for the business development leader of a company similar to the Company. In such capacity, the Employee shall report to the Company’s Chief Executive Officer. During the term of this Agreement, the Employee shall faithfully perform the Employee’s duties, responsibilities and obligations hereunder. Upon or shortly after the Effective Date, when a replacement representative to Sera’s Board of Directors is named by InterWest Partners, Inc., the Employee shall resign all duties and responsibilities as a Director of Sera Prognostics, Inc.
2. Base Compensation and Related Matters.
(a) Salary. In consideration for the services rendered by the Employee to the Company as provided herein, the Company shall pay the Employee a weekly base salary of $500.00 from the Effective Date through December 31, 2015 and shall pay the Employee an annual base salary of the average of the Company’s non-CEO C-level employees per year beginning on January 1, 2016 (the “Base Salary”), provided that the Employee’s employment with the Company remains active at a full-time rate. The Base Salary shall be paid according to the Company’s standard payroll policy and will be subject to applicable federal and state tax withholdings as required by applicable law. The Base Salary may be increased or decreased at any time by the Company’s Board of Directors (the “Board”) or the Compensation Committee of the Board in its sole discretion.
(b) Stock Option Grant(s) and Bonuses. The Employee shall be granted as soon as practicable on or after the Effective Date an option to purchase 348,693 shares of the Company’s common stock (the “Option”) (which option shall be issued as an incentive stock option to the maximum extent allowed under Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”)) pursuant to the Company’s 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”). The Option shall vest in equal monthly installments over a period of forty-eight (48) months from the Effective Date, subject to continued employment by the Company. In addition, the Option shall accelerate with respect to thirty-seven and one-half percent (37.5%) of the unvested shares then subject thereto upon a Change of Control (as defined in the Plan) pursuant to which the Option is terminated pursuant to Section 24(b)(ii) of the Plan or cashed out pursuant to Section 24(b)(iii) of the Plan. The Employee shall be eligible, after the Effective Date, to receive (i) additional stock options pursuant to the Plan and (ii) additional bonus compensation, as determined by the Board, in its sole discretion; it being the intention of the Board to maintain Employee’s aggregate compensation at levels appropriate and customary to those of companies similar in industry, stage and circumstances to that of the Company. Unless otherwise approved by the Board, all future options granted to the Employee after the Effective Date shall vest in equal monthly installments over a period of forty-eight (48) months from the date of grant. Notwithstanding the foregoing, in the event that the Employee’s employment with the Company is terminated by the Company without Cause (as defined in Section 4(a)(iii) below) or by the Employee for Good Reason (as defined in Section 4(b)(ii) below), then the vesting of all options held by the Employee at the time of the termination shall accelerate (i) with respect to thirty-seven and one-half percent (37.5%) of the unvested shares subject thereto, or (ii) if such termination occurs within 30 days prior to or within 12 months after a Change of Control (as defined in the Plan), with respect to one hundred percent (100%) of the unvested shares subject thereto. You will be eligible to participate in the Company’s Annual Incentive Plan, which currently provides for a bonus target of 30% of your base salary, and with respect to the calendar year ending December 31, 2015, you will be provided a bonus target of the average of all non-CEO C-level bonus targets, whichever is higher.
(c) Expenses. The Employee will be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee (which are eligible for reimbursement under the Code) actually incurred by him in performing his duties; provided; however, that such expenses are approved in accordance with the Company’s then-current policies and procedures applicable to the most senior-level executive employees of the Company, other than the Employee, or if such policies and procedures are not in place, then as determined in the sole discretion of the Board.
(d) Employee Benefits. Upon classification as a full-time employee, the Employee will be entitled to participate in the group health, dental, vision, and group life insurance benefit plans, as well as the Company’s 401(k) and Flexible Spending Account Plans available to all Company employees. In addition, the Employee is entitled to participate in any employee benefit plans that the Company may make available to its most senior-level executive employees generally, which may include, but not be limited to, profit sharing plans, 401(k) and cafeteria plans, or life, hospitalization, optical, disability or other insurance plans as may be in effect, from time to time, and in accordance with rules established, from time to time, for individual participation in such plans.
(e) Vacation Days and Paid Leave. Upon classification as a full-time employee, the Employee will be entitled to take four (4) weeks of vacation days, three additional personal time off days, and shall be entitled to compensation in connection therewith, in accordance with Company policy applicable to senior-level executive employees of the Company, as approved by the Chief Executive Officer in its sole discretion.
3. Facilities and Services Furnished. The Company will furnish the Employee with office space and such other facilities, furniture, equipment and services as it may determine to be reasonably necessary for the performance of the Employee’s duties as set forth herein. It is acknowledged that as of the Effective Date, the Company is “virtual” and the Employee is using his own home for the Company office at no expense to the Company.
4. Termination.
(a) Termination by the Company. The Employee’s employment hereunder may be terminated by the Company under any of the following circumstances:
2
(i) Death. This Agreement shall automatically terminate upon the Employee’s death.
(ii) Disability. The Company may elect to terminate the Employee’s employment in the event of Employee’s Disability upon delivery of written notice to the Employee. For purposes of this Agreement, “Disability” shall mean any condition that, in the reasonable, good faith judgment of a licensed physician selected by the Company, causes the Employee to be unable, after any accommodation required by applicable law, to perform his duties, responsibilities and obligations under this Agreement for a period of at least twelve (12) months.
(iii) Cause. The Company may terminate the Employee’s employment hereunder for Cause (as defined below) at any time upon delivery of written notice to the Employee. For purposes of this Agreement, “Cause” shall mean (A) the conviction of the Employee by a court of competent jurisdiction of any felony involving dishonesty, breach of trust or misappropriation or the entering of a plea by the Employee of nolo contendre thereto; (B) the Employee’s willful failure or refusal to follow reasonable and lawful directives of the Board or the Company’s Chief Executive Officer, provided such failure or refusal continues after the Employee’s receipt of reasonable notice in writing of such failure or refusal and an opportunity of not less than thirty (30) days to correct the problem; (C) a material breach by the Employee of any of the provisions of this Agreement; or (D) the Employee’s commission of any immoral or illegal act or any gross or willful misconduct, where a majority of the non-employee members of the Board reasonably determines that such act or misconduct has (1) seriously undermined the ability of the Board to entrust Employee with important matters or otherwise work effectively with Employee, (2) contributed to the Company’s loss of significant revenues or business opportunities, or (3) significantly and detrimentally affected the business or reputation of the Company or any of its subsidiaries.
(iv) Other Termination. The Company may terminate Employee’s employment with the Company at any time and for any reason, with or without cause, subject to the provisions hereof. Employee acknowledges that Employee is, and at all times shall be, an employee at will of the Company and nothing contained herein shall be construed to alter or affect such employee at-will status. Employee may terminate his employment with the Company at any time, for any or no reason, subject to the provisions hereof. Inclusion under any benefit plan or compensation arrangement will not give Employee any right or claim to any benefit hereunder except to the extent such right has become fixed under the express terms of this Agreement.
(b) Termination by the Employee. The Employee may terminate the Employee’s employment with the Company under the following circumstances:
(i) Voluntary Termination. Employee may terminate his employment with the Company for any reason or no reason, upon delivery of written notice to the Company at least fifteen (15) days prior to the specified termination date.
(ii) Termination for Good Reason. The Employee also may terminate the Employee’s employment with the Company for “Good Reason,” which shall mean for purposes of this Agreement (A) a material breach by the Company of any of the provisions of this Agreement; (B) assignment of Employee to a role, duties or responsibilities materially inconsistent with that of senior executive management; (C) any circumstances caused by the Company that would require Employee to move his principal location of employment in excess of one hundred (100) miles from the Company’s principal business location in Salt Lake City, Utah; or (D) an involuntary material reduction of Employee’s then current Base Salary other than a reduction proportionately affecting all of the Company’s other senior-level executive employees. The Employee must provide the Company with a written Notice of Termination that describes the existence of the condition the Employee believes gives rise to Good Reason under this Section 4(b) within thirty (30) days following the initial existence of the condition. The Company may elect to cure any condition giving rise to Good Reason within thirty (30) days of receipt of notice. The Employee’s termination for Good Reason must, in any event, occur within the six (6) month period immediately following the initial existence of the condition giving rise to Good Reason.
3
(c) Effect of Termination. In the event the Employee’s employment is terminated, all obligations of the Company and the Employee under this Agreement shall cease, except that the accelerated vesting of Options set forth in Section 2(b) and the terms of Section 5 through Section 9 shall survive such termination. Upon such termination, the Employee or the Employee’s representative or estate shall be entitled to receive the applicable compensation, benefits and reimbursements set forth in Section 5. The Employee acknowledges that, upon termination of the Employee’s employment, the Employee is entitled to no other compensation, severance or other benefits other than those specifically set forth in Section 5.
5. Compensation and Benefits Upon Termination of Employment. At all times after the Effective Date, the Employee shall be entitled to receive additional compensation and benefits upon a termination of Employee’s employment as follows:
(a) Severance Pay. If either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason; then, on the sixtieth (60th) day following the termination of employment, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment. If the Company terminates the Employee’s employment due to death or Disability and (y) the Company does not provide any insurance benefits payable to the Employee or his beneficiaries, as applicable, upon his death or Disability and (z) the Company has previously, but not necessarily in the then applicable calendar year, achieved Ten Million Dollars in annual gross revenue in a calendar year, then, on the sixtieth (60th) day following the termination of employment due to death or Disability, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment.
(b) Health Insurance. If, while eligible to participate in the Company’s health benefit plans, either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason, the Company will provide Health Insurance Reimbursement until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, and (y) the date when the Employee becomes eligible to receive health insurance coverage in connection with new employment or self-employment. If, as of the termination date, the Company continues to sponsor a group insurance plan providing medical and dental insurance coverage for Company employees, and if the Employee elects to continue his health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of his employment, then the Company shall pay the portion of the Employee’s monthly premium under COBRA until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, (y) the expiration of the Employee’s continuation coverage under COBRA or (z) the date when the Employee becomes eligible to receive health insurance coverage in connection with new employment or self-employment. If the payment of any COBRA or health insurance premiums would otherwise violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code.
4
(c) General Release. Any other provision of this Agreement notwithstanding, subsections (a) and (b) above shall not apply unless the Employee has (i) executed a general release of all claims (in a form prescribed by the Company), which must be effective and irrevocable prior to the sixtieth (60th) day following the termination of employment, (ii) returned all property of the Company in the Employee’s possession and (iii) cooperated in good faith with the Company for a transition period not to exceed sixty (60) days to ensure an efficient transfer of the Employee’s duties and responsibilities.
6. Non-Competition; Non-Solicitation. The Employee and the Company hereby acknowledge and agree that in connection with the employment of the Employee, the Employee has been and will be provided with trade secrets of the Company and that the Employee and the Company are entering into this Agreement for the protection of such trade secrets. The Employee agrees to abide by the provisions set forth in this Section 6.
(a) Non-Competition. The Employee shall not, during his employment with the Company and during the one (1) year period following the termination of his employment with the Company (the “Restrictive Period”), directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of his consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party:
(i) anywhere in the world (the “Restricted Area”) compete with or own, manage, operate or control any business that directly competes in the Company’s field of interest or products in the active development pipeline of the Company (for purposes of this paragraph, ownership of securities of not in excess of one percent (1%) of the outstanding capital stock of a public company shall not be considered to be competition with the Company); or
(ii) anywhere in the Restricted Area, act as an employee, director, officer, manager, member, advisor, consultant, representative or agent for any business of the type and character engaged in and competitive with the Company.
(b) Non-Solicitation. The Employee shall not, during the Restrictive Period directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of his consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party, solicit the employment of or hire any current employee of the Company, or solicit a relationship with any customer of the Company, located anywhere in the Restricted Area.
5
(c) Definitions. For purposes of this Section 6, the terms “compete with the Company,” “competitive with the Company,” “field of interest” and similar terms referring to competition with the Company shall mean any business that is engaged in identifying and commercializing biomarkers in blood samples of pregnant women which are predictive of preterm birth and other pregnancy complications or any other anticipated business ventures of the Company which have been discussed with the Board or amongst the senior-level executive employees as of the date of Employee’s termination.
7. Maintaining Confidential Information.
(a) Company Confidential Information. The Employee hereby agrees at all times during which he provides services as a director, officer, employee or consultant of the Company (“Employee’s Service”), and thereafter to hold in strictest confidence, and not to use, except for the benefit of the Company, any trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, formulas, developmental or experimental work, computer lists, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its clients, consultants or licensees (collectively “Confidential Information”).
Notwithstanding the above, Employee shall not have liability to the Company with regard to any Confidential Information which Employee can prove:
(i) was in the public domain at the time it was disclosed by the Company or has entered the public domain through no fault of Employee;
(ii) was known to the Employee without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of the Company;
(iv) becomes known to Employee, without restriction, from a source other than the Company without breach of this Agreement by Employee and otherwise not in violation of the Company’s rights; or
(v) is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, however, that Employee shall provide prompt notice of such court order or requirement to the Company to enable the Company to seek a protective order or otherwise prevent such disclosure.
(b) Former Employer Information. The Employee hereby agrees that he will not, during Employee’s Service, improperly use or disclose any proprietary information or trade secrets of his former or concurrent employers or companies, if any, and that he will not make available to the Company any unpublished document or any property belonging to his former or concurrent employers or companies, if any, unless consented to in writing by said employers or companies.
6
(c) Third-Party Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee hereby agrees, during Employee’s Service and thereafter, to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such third party) or to use it for the benefit of anyone other than the Company or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of the Board.
(d) Outside Activities. The Employee shall not perform consulting/business activities beyond those disclosed in Exhibit A, without prior written consent of the Company’s Board of Directors Compensation Committee. Following clinical validation of the Company’s commercial preterm predictor, the Employee shall resign his seat as a director of Sera Prognostics, Inc.
8. Availability of Equitable Remedies. The Employee hereby acknowledges and agrees that a breach of Section 6 or Section 7 will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of Section 6 or Section 7 will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company will be entitled to injunctive relief for any breach or threatened breach of Section 6 or Section 7.
9. Miscellaneous.
(a) Notification of New Employer. In the event that the Employee leaves the employ of the Company, he hereby grants consent to notification by the Company to his new employer about his rights and obligations under this Agreement.
(b) Severability. In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken. All portions of this Agreement which do not violate any statute or public policy shall continue in full force and effect. Further, any court order striking any portion of this Agreement shall modify the stricken terms to give as much effect as possible to the intentions of the parties under this Agreement.
(c) Notices. Any notices, requests or consents hereunder shall be deemed given, and any instrument delivered, three (3) days after they have been mailed by first class mail, postage prepaid, one (1) day after they have been delivered by overnight courier, twelve (12) hours after such notice has been sent by facsimile, or upon receipt if delivered personally, as follows:
7
To the Company:
2749 East Parleys Way, Suite 200
Salt Lake City, UT 84109
To the Employee:
587 Patrol Road
Woodside, CA 94062
except that any of the foregoing may, from time to time, by written notice to the others, designate another address or fax number which shall thereupon become his or its effective address for the purposes of this Section 9(c).
(d) Governing Law. This Agreement shall be governed by the laws of the State of Utah, without giving effect to its conflict of laws principles.
(e) Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. This Agreement is for the unique personal services of the Employee, and the Employee shall not be entitled to assign any of the Employee’s rights or obligations hereunder.
(f) Entire Agreement; Amendment. This Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter of this Agreement, and supersedes all other prior agreements and understandings with respect thereto, including, but not limited to, the Prior Agreement. This Agreement can be amended or modified only in a writing signed by the Employee and the Company.
(g) No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.
(h) Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(j) Costs and Expenses. The Company shall reimburse all of the Employee’s reasonable costs and expenses (including, without limitation, attorneys’ fees), incurred in connection with the negotiation and preparation of this Agreement.
(k) Attorneys’ Fees. In the event of any action at law, equity or under this Agreement to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and court costs in addition to any other relief to which such party may be entitled, unless the action is one in which only a prevailing plaintiff is entitled to prevailing party fees and costs (such as a Title VII action).
8
(l) Section 409A. The Company intends that the cash severance payments to which the Employee is entitled on his termination of employment pursuant to Section 5 are payable on the Employee’s Separation from Service (as defined below) and are exempt from, or are otherwise payable in compliance with Section 409A. The Company intends that the Company’s continued payment for the cost of the Employee’s welfare benefits (including the payment of all COBRA administrative costs and expenses) provided by Section 5 will comply with the exception to Section 409A for reimbursements and certain other separation payments, as described in Treas. Reg. § 1.409A-1(b)(9)(v)(B), to the extent such costs are taxable and subject to imputed income treatment.
(i) Separation from Service Defined. For purposes of this Agreement, the term “termination of employment” means the Employee’s “Separation from Service.” The term “Separation from Service” means (A) the termination of the Employee’s employment with the Company and all affiliates for any reason or (B) a permanent reduction in the level of bona fide services the Employee provides to the Company and all affiliates to an amount that is twenty percent (20%) or less of the average level of bona fide services the Employee provided to the Company and all affiliates in the immediately preceding thirty-six (36) months (or the entire time period during which the Employee provided services to the Company and all affiliates if the Employee has been providing such services for less than thirty-six (36) months), with the level of bona fide service calculated in accordance with Treas. Reg. § 1.409A-1(h)(1)(ii). Solely for purposes of determining whether an organization is an “affiliate” of the Company, the Company will follow the rules set forth in Treas. Reg. § 1.409A-1(h)(3) (which generally requires fifty percent (50%) common ownership or control). The Employee’s employment relationship is treated as continuing while the Employee is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six (6) months; or, if longer, so long as the Employee’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Employee’s period of leave exceeds six (6) months and his right to re-employment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6) month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
(ii) Delay in Payments. Notwithstanding any provision of this Agreement to the contrary, if any of the severance payments are subject to Section 409A and the Employee is a “Specified Employee” at the time of his Separation from Service, no payments shall be made to the Employee prior to the first business day following the date which is six (6) months after the Employee’s Separation from Service. Any amounts that would have been paid during the six (6) months following the Employee’s Separation from Service will be paid on the first business day following the expiration of the six (6) month period without interest thereon. The Employee may not elect the taxable year of such payment. The six (6) month delay for a Specified Employee does not apply if the Employee dies.
(iii) Specified Employee Defined. For purposes of this Agreement, the term “Specified Employee” means certain officers and highly-compensated employees of the Company as defined in Treas. Reg. § 1.409A-1(i), and as determined in accordance with such procedures as may be adopted from time to time by the Company.
9
(iv) Miscellaneous Payment Provisions. If payment is not made, in whole or in part, due to a dispute between the Employee and the Company, the payments shall be made in accordance with Treas. Reg. § 1.409A-3(g), as applicable. It is intended that each installment of the payments and benefits provided under Section 5 of this Agreement shall be treated as a separate “payment” for purposes of Section 409A. If an expense reimbursement or provision of in-kind benefit provided pursuant to this Agreement is not exempt from Section 409A of the Code, the following rules apply: (A) in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred; (B) the amount of reimbursable expenses incurred or provision of in-kind benefits in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other tax year; and (C) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation or exchange for any other benefit.
(v) Ban on Acceleration or Deferral. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral, except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code.
(vi) No Elections. The Employee does not have any right to make any election regarding the time or form of any payment due under this Agreement.
(vii) Compliant Operation and Interpretation. This Agreement shall be operated in compliance with the requirements of Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an exception thereto.
(m) Dispute Resolution; Venue.
(i) The Company and the Employee shall use reasonable, good faith efforts to settle any dispute through non-binding mediation before a mutually-acceptable, neutral, third-party mediator. The mediation shall be held in Salt Lake City, Utah and administered by the CPR Institute for Dispute Resolution (the “CPR Institute”) under the CPR Mediation Procedure then in effect. Unless otherwise agreed, the parties shall jointly select a single mediator from the CPR Panels of Distinguished Neutrals based on a list of mediator candidates supplied by the CPR Institute. If, within fourteen (14) days after either party makes a written request for mediation under this Section 9(m)(i), the parties have not reached agreement on the selection of a mediator, the mediator shall be selected in accordance with the CPR Mediation Procedure currently in effect. A good faith attempt at mediation shall be a condition precedent to the commencement of litigation, but nothing in this Agreement, including, but not limited to paragraph (ii) below, shall be deemed a condition precedent to any court action for injunction or other interim relief pending the outcome of mediation.
(ii) If the parties are unable to resolve the dispute by mediation in a timely manner (which, in any case, shall not exceed sixty (60) days from the first notice of mediation), either party may attempt to resolve the dispute by commencing an action (or defending or responding to such action) exclusively in the jurisdiction and venue of the courts, whether federal or state, located in Salt Lake County, Utah.
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective for all purposes as of the Effective Date.
THE COMPANY: | ||
SERA PROGNOSTICS, INC. | ||
By: | /s/ Gregory C. Critchfield, M.D. | |
Gregory C. Critchfield, M.D. | ||
Chairman, President and CEO | ||
THE EMPLOYEE: | ||
/s/ Douglas C. Fisher | ||
Douglas C. Fisher, M.D. |
11
Exhibit A: Outside Activities
1. Consulting with InterWest Partners involving:
a. Board seats at 2 companies: Obalon and Gynesonics
b. Board observer roles at 3 companies: Integrated Diagnostics, PMV Pharma, and Potenza Therapeutics
2. | Consulting for Integrated Diagnostics as their part time SVP of Corporate Development and limited time with Indi Molecular |
3. | Consulting and board member for PMDI, a seed stage company developing diagnostics for prostate cancer. This will take less than 1 day per month and is primarily a non-profit entity. |
Exhibit 10.12
SERA PROGNOSTICS, INC. EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is effective for all purposes as of May 15, 2017 (the “Effective Date”), by and between Sera Prognostics, Inc., a Delaware corporation (the “Company”), and Nadia Altomare (the “Employee”).
NOW, THEREFORE, in consideration of the mutual covenants, conditions and undertakings set forth herein, the parties hereto hereby agree as follows:
1. Employment and Duties. Subject to the terms and conditions set forth in this Agreement, the Company shall employ Employee, and Employee hereby accepts employment, as the Chief Commercial Officer of the Company, with those duties and responsibilities which are appropriate and customary for the commercial leader of a company similar to the Company. In such capacity, the Employee shall report to the Company’s Chief Executive Officer. During the term of this Agreement, the Employee shall faithfully perform the Employee’s duties, responsibilities and obligations hereunder.
2. Base Compensation and Related Matters.
(a) Salary. In consideration for the services rendered by the Employee to the Company as provided herein, the Company shall pay the Employee an annual base salary of $320,000, provided that the Employee’s employment with the Company remains active at a full-time rate. The Base Salary shall be paid according to the Company’s standard payroll policy and will be subject to applicable federal and state tax withholdings as required by applicable law. The Base Salary may be increased or decreased at any time by the Company’s Board of Directors (the “Board”) or the Compensation Committee of the Board in its sole discretion.
(b) Stock Option Grant(s) and Bonuses. The Employee shall be granted as soon as practicable on or after the Effective Date an option to purchase 450,000 shares of the Company’s common stock (the “Option”) (which option shall be issued as an incentive stock option to the maximum extent allowed under Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”)) pursuant to the Company’s 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”). The Option shall vest as to twenty-five percent (25%) of the shares subject thereto one (1) year from May 15, 2017 (“Vesting Start Date”), and shall vest with respect to the remaining shares subject thereto in equal monthly installments over an additional thirty-six (36) months thereafter commencing on the one year anniversary following the Vesting Start Date, subject to continued employment by the Company. In addition, the Option shall accelerate with respect to thirty-seven and one-half percent (37.5%) of the unvested shares at that time then subject thereto upon a Change of Control (as defined in the Plan) pursuant to which the Option is terminated pursuant to Section 24(b)(ii) of the Plan or cashed out pursuant to Section 24(b)(iii) of the Plan. The Employee shall be eligible, after the Effective Date, to receive (i) additional stock options pursuant to the Plan and (ii) additional bonus compensation, as determined by the Board, in its sole discretion; it being the intention of the Board to maintain Employee’s aggregate compensation at levels appropriate and customary to those of companies similar in industry, stage and circumstances to that of the Company. Unless otherwise approved by the Board, all future options granted to the Employee after the Effective Date shall vest in equal monthly installments over a period of forty-eight (48) months from the date of grant. Notwithstanding the foregoing, in the event that the Employee’s employment with the Company is terminated by the Company without Cause (as defined in Section 4(a)(iii) below) or by the Employee for Good Reason (as defined in Section 4(b)(ii) below), then the vesting of all options held by the Employee at the time of the termination shall accelerate (i) with respect to thirty-seven and one-half percent (37.5%) of the unvested shares subject thereto, or (ii) if such termination occurs within 30 days prior to or within 12 months after a Change of Control (as defined in the Plan), with respect to one hundred percent (100%) of the unvested shares subject thereto. You will be eligible to participate in the Company’s Annual Incentive Plan, which currently provides for a bonus target of 40% of your base salary, prorated for time of service, and with respect to the calendar year ending December 31, 2017, one-half of your bonus (equal to 20% of your annual base salary earned) will be guaranteed and the remaining one-half will be contingent based upon achievements mutually agreed upon by you and your supervisor.
(c) Expenses. The Employee will be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee (which are eligible for reimbursement under the Code) actually incurred by her in performing her duties; provided; however, that such expenses are approved in accordance with the Company’s then-current policies and procedures applicable to the most senior-level executive employees of the Company, other than the Employee, or if such policies and procedures are not in place, then as determined in the sole discretion of the Board.
(d) Employee Benefits. Upon classification as a full-time employee, the Employee will be entitled to participate in the group health, dental, vision, and group life insurance benefit plans, as well as the Company’s 401(k) and Flexible Spending Account Plans available to all Company employees. In addition, the Employee is entitled to participate in any employee benefit plans that the Company may make available to its most senior-level executive employees generally, which may include, but not be limited to, profit sharing plans, 401(k) and cafeteria plans, or life, hospitalization, optical, disability or other insurance plans as may be in effect, from time to time, and in accordance with rules established, from time to time, for individual participation in such plans.
(e) Vacation Days and Paid Leave. Upon classification as a full-time employee, the Employee will be entitled to take four (4) weeks of vacation days, three (3) additional personal time off days, and shall be entitled to compensation in connection therewith, in accordance with Company policy applicable to senior-level executive employees of the Company, as approved by the Chief Executive Officer in its sole discretion.
3. Facilities and Services Furnished. The Company will furnish the Employee with office space at its headquarters in Salt Lake City, Utah, and such other facilities, furniture, equipment and services as it may determine to be reasonably necessary for the performance of the Employee’s duties as set forth herein. It is acknowledged that as of the Effective Date, the Employee is using her own home for a Company office at no expense to the Company.
4. Termination.
(a) Termination by the Company. The Employee’s employment hereunder may be terminated by the Company under any of the following circumstances:
(i) Death. This Agreement shall automatically terminate upon the Employee’s death.
(ii) Disability. The Company may elect to terminate the Employee’s employment in the event of Employee’s Disability upon delivery of written notice to the Employee. For purposes of this Agreement, “Disability” shall mean any condition that, in the reasonable, good faith judgment of a licensed physician selected by the Company, causes the Employee to be unable, after any accommodation required by applicable law, to perform her duties, responsibilities and obligations under this Agreement for a period of at least twelve (12) months.
(iii) Cause. The Company may terminate the Employee’s employment hereunder for Cause (as defined below) at any time upon delivery of written notice to the Employee. For purposes of this Agreement, “Cause” shall mean (A) the conviction of the Employee by a court of competent jurisdiction of any felony involving dishonesty, breach of trust or misappropriation or the entering of a plea by the Employee of nolo contendre thereto; (B) the Employee’s willful failure or refusal to follow reasonable and lawful directives of the Board or the Company’s Chief Executive Officer, provided such failure or refusal continues after the Employee’s receipt of reasonable notice in writing of such failure or refusal and an opportunity of not less than thirty (30) days to correct the problem; (C) a material breach by the Employee of any of the provisions of this Agreement; or (D) the Employee’s commission of any immoral or illegal act or any gross or willful misconduct, where a majority of the non-employee members of the Board reasonably determines that such act or misconduct has (1) seriously undermined the ability of the Board to entrust Employee with important matters or otherwise work effectively with Employee, (2) contributed to the Company’s loss of significant revenues or business opportunities, or (3) significantly and detrimentally affected the business or reputation of the Company or any of its subsidiaries.
(iv) Other Termination. The Company may terminate Employee’s employment with the Company at any time and for any reason, with or without cause, subject to the provisions hereof. Employee acknowledges that Employee is, and at all times shall be, an employee at will of the Company and nothing contained herein shall be construed to alter or affect such employee at-will status. Employee may terminate her employment with the Company at any time, for any or no reason, subject to the provisions hereof. Inclusion under any benefit plan or compensation arrangement will not give Employee any right or claim to any benefit hereunder except to the extent such right has become fixed under the express terms of this Agreement.
2
(b) Termination by the Employee. The Employee may terminate the Employee’s employment with the Company under the following circumstances:
(i) Voluntary Termination. Employee may terminate her employment with the Company for any reason or no reason, upon delivery of written notice to the Company at least fifteen (15) days prior to the specified termination date.
(ii) Termination for Good Reason. The Employee also may terminate the Employee’s employment with the Company for “Good Reason,” which shall mean for purposes of this Agreement (A) a material breach by the Company of any of the provisions of this Agreement; (B) assignment of Employee to a role, duties or responsibilities materially inconsistent with that of senior executive management; (C) any circumstances caused by the Company that would require Employee to move her principal location of employment in excess of one hundred (100) miles from the Company’s principal business location in Salt Lake City, Utah; or (D) an involuntary material reduction of Employee’s then current Base Salary other than a reduction proportionately affecting all of the Company’s other senior-level executive employees. The Employee must provide the Company with a written Notice of Termination that describes the existence of the condition the Employee believes gives rise to Good Reason under this Section 4(b) within thirty (30) days following the initial existence of the condition. The Company may elect to cure any condition giving rise to Good Reason within thirty (30) days of receipt of notice. The Employee’s termination for Good Reason must, in any event, occur within the six (6) month period immediately following the initial existence of the condition giving rise to Good Reason.
(c) Effect of Termination. In the event the Employee’s employment is terminated, all obligations of the Company and the Employee under this Agreement shall cease, except that the accelerated vesting of Options set forth in Section 2(b) and the terms of Section 5 through Section 9 shall survive such termination. Upon such termination, the Employee or the Employee’s representative or estate shall be entitled to receive the applicable compensation, benefits and reimbursements set forth in Section 5. The Employee acknowledges that, upon termination of the Employee’s employment, the Employee is entitled to no other compensation, severance or other benefits other than those specifically set forth in Section 5.
5. Compensation and Benefits Upon Termination of Employment. At all times after the Effective Date, the Employee shall be entitled to receive additional compensation and benefits upon a termination of Employee’s employment as follows:
(a) Severance Pay. If either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates her employment for Good Reason; then, on the sixtieth (60th) day following the termination of employment, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment. If the Company terminates the Employee’s employment due to death or Disability and (y) the Company does not provide any insurance benefits payable to the Employee or her beneficiaries, as applicable, upon her death or Disability and (z) the Company has previously, but not necessarily in the then applicable calendar year, achieved Ten Million Dollars in annual gross revenue in a calendar year, then, on the sixtieth (60th) day following the termination of employment due to death or Disability, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment.
(b) Health Insurance. If, while eligible to participate in the Company’s health benefit plans, either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates her employment for Good Reason, the Company will provide Health Insurance Reimbursement until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, and (y) the date when the Employee becomes eligible to receive health insurance coverage in connection with new employment or self-employment. If, as of the termination date, the Company continues to sponsor a group insurance plan providing medical and dental insurance coverage for Company employees, and if the Employee elects to continue her health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of her employment, then the Company shall pay the portion of the Employee’s monthly premium under COBRA until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, (y) the expiration of the Employee’s continuation coverage under COBRA or (z) the date when the Employee becomes eligible to receive health insurance coverage in connection with new employment or self-employment. If the payment of any COBRA or health insurance premiums would otherwise violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code.
(c) General Release. Any other provision of this Agreement notwithstanding, subsections (a) and (b) above shall not apply unless the Employee has (i) executed a general release of all claims (in a form prescribed by the Company), which must be effective and irrevocable prior to the sixtieth (60th) day following the termination of employment, (ii) returned all property of the Company in the Employee’s possession and (iii) cooperated in good faith with the Company for a transition period not to exceed sixty (60) days to ensure an efficient transfer of the Employee’s duties and responsibilities.
3
6. Non-Competition; Non-Solicitation. The Employee and the Company hereby acknowledge and agree that in connection with the employment of the Employee, the Employee has been and will be provided with trade secrets of the Company and that the Employee and the Company are entering into this Agreement for the protection of such trade secrets. The Employee agrees to abide by the provisions set forth in this Section 6.
(a) Non-Competition. The Employee shall not, during her employment with the Company and during the one (1) year period following the termination of her employment with the Company (the “Restrictive Period”), directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of her consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party:
(i) anywhere in the world (the “Restricted Area”) compete with or own, manage, operate or control any business that directly competes in the Company’s field of interest or products in the active development pipeline of the Company (for purposes of this paragraph, ownership of securities of not in excess of one percent (1%) of the outstanding capital stock of a public company shall not be considered to be competition with the Company); or
(ii) anywhere in the Restricted Area, act as an employee, director, officer, manager, member, advisor, consultant, representative or agent for any business of the type and character engaged in and competitive with the Company.
(b) Non-Solicitation. The Employee shall not, during the Restrictive Period directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of her consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party, solicit the employment of or hire any current employee of the Company, or solicit a relationship with any customer of the Company, located anywhere in the Restricted Area.
(c) Definitions. For purposes of this Section 6, the terms “compete with the Company,” “competitive with the Company,” “field of interest” and similar terms referring to competition with the Company shall mean any business that is engaged in identifying and commercializing biomarkers in blood samples of pregnant women which are predictive of preterm birth and other pregnancy complications or any other anticipated business ventures of the Company which have been discussed with the Board or amongst the senior-level executive employees as of the date of Employee’s termination.
4
7. Maintaining Confidential Information.
(a) Company Confidential Information. The Employee hereby agrees at all times during which she provides services as a director, officer, employee or consultant of the Company (“Employee’s Service”), and thereafter to hold in strictest confidence, and not to use, except for the benefit of the Company, any trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, formulas, developmental or experimental work, computer lists, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its clients, consultants or licensees (collectively “Confidential Information”).
Notwithstanding the above, Employee shall not have liability to the Company with regard to any Confidential Information which Employee can prove:
(i) was in the public domain at the time it was disclosed by the Company or has entered the public domain through no fault of Employee;
(ii) was known to the Employee without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of the Company;
(iv) becomes known to Employee, without restriction, from a source other than the Company without breach of this Agreement by Employee and otherwise not in violation of the Company’s rights; or
(v) is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, however, that Employee shall provide prompt notice of such court order or requirement to the Company to enable the Company to seek a protective order or otherwise prevent such disclosure.
(b) Former Employer Information. The Employee hereby agrees that she will not, during Employee’s Service, improperly use or disclose any proprietary information or trade secrets of her former or concurrent employers or companies, if any, and that she will not make available to the Company any unpublished document or any property belonging to her former or concurrent employers or companies, if any, unless consented to in writing by said employers or companies.
(c) Third-Party Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee hereby agrees, during Employee’s Service and thereafter, to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out her work for the Company consistent with the Company’s agreement with such third party) or to use it for the benefit of anyone other than the Company or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of the Board.
(d) Outside Activities. The Employee shall not perform consulting/business activities beyond those disclosed in Exhibit A, without prior written consent of the Company’s Board of Directors Compensation Committee.
5
8. Availability of Equitable Remedies. The Employee hereby acknowledges and agrees that a breach of Section 6 or Section 7 will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of Section 6 or Section 7 will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company will be entitled to injunctive relief for any breach or threatened breach of Section 6 or Section 7.
9. Miscellaneous.
(a) Notification of New Employer. In the event that the Employee leaves the employ of the Company, she hereby grants consent to notification by the Company to her new employer about his rights and obligations under this Agreement.
(b) Severability. In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken. All portions of this Agreement which do not violate any statute or public policy shall continue in full force and effect. Further, any court order striking any portion of this Agreement shall modify the stricken terms to give as much effect as possible to the intentions of the parties under this Agreement.
(c) Notices. Any notices, requests or consents hereunder shall be deemed given, and any instrument delivered, three (3) days after they have been mailed by first class mail, postage prepaid, one (1) day after they have been delivered by overnight courier, twelve (12) hours after such notice has been sent by facsimile, or upon receipt if delivered personally, as follows:
To the Company:
2749 East Parleys Way, Suite 200
Salt Lake City, UT 84109
To the Employee:
29 Oliver Road
Belmont, MA 02478
except that any of the foregoing may, from time to time, by written notice to the others, designate another address or fax number which shall thereupon become her or its effective address for the purposes of this Section 9(c).
(d) Governing Law. This Agreement shall be governed by the laws of the State of Utah, without giving effect to its conflict of laws principles.
(e) Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. This Agreement is for the unique personal services of the Employee, and the Employee shall not be entitled to assign any of the Employee’s rights or obligations hereunder.
(f) Entire Agreement; Amendment. This Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter of this Agreement, and supersedes all other prior agreements and understandings with respect thereto, including, but not limited to, the Prior Agreement. This Agreement can be amended or modified only in a writing signed by the Employee and the Company.
(g) No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.
6
(h) Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(j) Costs and Expenses. The Company shall reimburse all of the Employee’s reasonable costs and expenses (including, without limitation, attorneys’ fees), incurred in connection with the negotiation and preparation of this Agreement.
(k) Attorneys’ Fees. In the event of any action at law, equity or under this Agreement to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and court costs in addition to any other relief to which such party may be entitled, unless the action is one in which only a prevailing plaintiff is entitled to prevailing party fees and costs (such as a Title VII action).
(l) Section 409A. The Company intends that the cash severance payments to which the Employee is entitled on her termination of employment pursuant to Section 5 are payable on the Employee’s Separation from Service (as defined below) and are exempt from, or are otherwise payable in compliance with Section 409A. The Company intends that the Company’s continued payment for the cost of the Employee’s welfare benefits (including the payment of all COBRA administrative costs and expenses) provided by Section 5 will comply with the exception to Section 409A for reimbursements and certain other separation payments, as described in Treas. Reg. § 1.409A-1(b)(9)(v)(B), to the extent such costs are taxable and subject to imputed income treatment.
(i) Separation from Service Defined. For purposes of this Agreement, the term “termination of employment” means the Employee’s “Separation from Service.” The term “Separation from Service” means (A) the termination of the Employee’s employment with the Company and all affiliates for any reason or (B) a permanent reduction in the level of bona fide services the Employee provides to the Company and all affiliates to an amount that is twenty percent (20%) or less of the average level of bona fide services the Employee provided to the Company and all affiliates in the immediately preceding thirty-six (36) months (or the entire time period during which the Employee provided services to the Company and all affiliates if the Employee has been providing such services for less than thirty-six (36) months), with the level of bona fide service calculated in accordance with Treas. Reg. § 1.409A-1(h)(1)(ii). Solely for purposes of determining whether an organization is an “affiliate” of the Company, the Company will follow the rules set forth in Treas. Reg. § 1.409A-1(h)(3) (which generally requires fifty percent (50%) common ownership or control). The Employee’s employment relationship is treated as continuing while the Employee is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six (6) months; or, if longer, so long as the Employee’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Employee’s period of leave exceeds six (6) months and her right to re-employment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6) month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
(ii) Delay in Payments. Notwithstanding any provision of this Agreement to the contrary, if any of the severance payments are subject to Section 409A and the Employee is a “Specified Employee” at the time of her Separation from Service, no payments shall be made to the Employee prior to the first business day following the date which is six (6) months after the Employee’s Separation from Service. Any amounts that would have been paid during the six (6) months following the Employee’s Separation from Service will be paid on the first business day following the expiration of the six (6) month period without interest thereon. The Employee may not elect the taxable year of such payment. The six (6) month delay for a Specified Employee does not apply if the Employee dies.
(iii) Specified Employee Defined. For purposes of this Agreement, the term “Specified Employee” means certain officers and highly-compensated employees of the Company as defined in Treas. Reg. § 1.409A-1(i), and as determined in accordance with such procedures as may be adopted from time to time by the Company.
7
(iv) Miscellaneous Payment Provisions. If payment is not made, in whole or in part, due to a dispute between the Employee and the Company, the payments shall be made in accordance with Treas. Reg. § 1.409A-3(g), as applicable. It is intended that each installment of the payments and benefits provided under Section 5 of this Agreement shall be treated as a separate “payment” for purposes of Section 409A. If an expense reimbursement or provision of in-kind benefit provided pursuant to this Agreement is not exempt from Section 409A of the Code, the following rules apply: (A) in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred; (B) the amount of reimbursable expenses incurred or provision of in-kind benefits in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other tax year; and (C) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation or exchange for any other benefit.
(v) Ban on Acceleration or Deferral. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral, except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code.
(vi) No Elections. The Employee does not have any right to make any election regarding the time or form of any payment due under this Agreement.
(vii) Compliant Operation and Interpretation. This Agreement shall be operated in compliance with the requirements of Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an exception thereto.
(m) Dispute Resolution; Venue.
(i) The Company and the Employee shall use reasonable, good faith efforts to settle any dispute through non-binding mediation before a mutually-acceptable, neutral, third-party mediator. The mediation shall be held in Salt Lake City, Utah and administered by the CPR Institute for Dispute Resolution (the “CPR Institute”) under the CPR Mediation Procedure then in effect. Unless otherwise agreed, the parties shall jointly select a single mediator from the CPR Panels of Distinguished Neutrals based on a list of mediator candidates supplied by the CPR Institute. If, within fourteen (14) days after either party makes a written request for mediation under this Section 9(m)(i), the parties have not reached agreement on the selection of a mediator, the mediator shall be selected in accordance with the CPR Mediation Procedure currently in effect. A good faith attempt at mediation shall be a condition precedent to the commencement of litigation, but nothing in this Agreement, including, but not limited to paragraph (ii) below, shall be deemed a condition precedent to any court action for injunction or other interim relief pending the outcome of mediation.
(ii) If the parties are unable to resolve the dispute by mediation in a timely manner (which, in any case, shall not exceed sixty (60) days from the first notice of mediation), either party may attempt to resolve the dispute by commencing an action (or defending or responding to such action) exclusively in the jurisdiction and venue of the courts, whether federal or state, located in Salt Lake County, Utah.
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective for all purposes as of the Effective Date.
THE COMPANY: | ||
SERA PROGNOSTICS, INC. | ||
By: | /s/ Gregory C. Critchfield | |
Gregory C. Critchfield, M.D. | ||
Chairman, President and CEO | ||
THE EMPLOYEE: | ||
/s/ Nadia Altomare | ||
Nadia Altomare |
9
Exhibit A: Outside Activities
1. Consulting for Abcodia as a non-executive Board Member.
2.
10
Exhibit 10.13
SERA PROGNOSTICS, INC. EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is effective for all purposes as of March 14, 2012 (the “Effective Date”), by and between Sera Prognostics, Inc., a Delaware corporation (the “Company”), and John J. Boniface, Ph.D. (the “Employee”).
NOW, THEREFORE, in consideration of the mutual covenants, conditions and undertakings set forth herein, the parties hereto hereby agree as follows:
1. Employment and Duties. Subject to the terms and conditions set forth in this Agreement, the Company shall employ Employee, and Employee hereby accepts employment, as the Chief Scientific Officer of the Company, with those duties and responsibilities which are appropriate and customary for a chief scientific officer of a company similar to the Company. In such capacity, the Employee shall report to the Company’s Chief Executive Officer. During the term of this Agreement, the Employee shall faithfully perform the Employee’s duties, responsibilities and obligations hereunder.
2. Base Compensation and Related Matters.
(a) Salary. In consideration for the services rendered by the Employee to the Company as provided herein, the Company shall pay the Employee an annual base salary of $225,000 per year (the “Base Salary”). The Base Salary shall be paid according to the Company’s standard payroll policy and will be subject to applicable federal and state tax withholdings as required by applicable law. The Base Salary may be increased or decreased at any time by the Company’s Board of Directors (the “Board”) or the Compensation Committee of the Board in its sole discretion.
(b) Stock Option Grant(s) and Bonuses. The Employee shall be granted as soon as practicable on or after the Effective Date an option to purchase 158,000 shares of the Company’s common stock (the “Option”) (which option shall be issued as an incentive stock option to the maximum extent allowed under Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”)) pursuant to the Company’s 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”). The Option shall vest as to twenty-five percent (25%) of the shares subject thereto one (1) year from November 8, 2011 (“Vesting Start Date”), and shall vest with respect to the remaining shares subject thereto in equal monthly installments over an additional three (3) years thereafter commencing on the first day of the month one year following the Vesting Start Date, subject to continued employment by the Company. In addition, the Option shall accelerate with respect to thirty-seven and one-half percent (37.5%) of the unvested shares then subject thereto upon a Change of Control (as defined in the Plan) pursuant to which the Option is terminated pursuant to Section 24(b)(ii) of the Plan or cashed out pursuant to Section 24(b)(iii) of the Plan. The Employee shall be eligible, after the Effective Date, to receive (i) additional stock options pursuant to the Plan, (ii) a bonus of $50,000, or such greater amount as determined by the Board in its sole discretion, which amount shall be paid to the Employee within 15 days of the date that the Company achieves the second tranche milestone as set forth on Exhibit A hereto as determined by the purchasers of the Series A2 Preferred Stock pursuant to Section 1.2(b) of the Series A2 Purchase Agreement provided that the Employee is employed by the Company on the date the milestone is achieved and (iii) additional bonus compensation, as determined by the Board, in its sole discretion; it being the intention of the Board to maintain Employee’s aggregate compensation at levels appropriate and customary to those of companies similar in industry, stage and circumstances to that of the Company. Unless otherwise approved by the Board, all future options granted to the Employee after the Effective Date shall vest with respect to twenty-five percent (25%) of the shares subject thereto upon the completion of one (1) year of continuous service to the Company from the date of grant, and shall vest with respect to the remaining shares subject thereto in equal monthly installments over an additional three (3) years thereafter. Notwithstanding the foregoing, in the event that the Employee’s employment with the Company is terminated by the Company without Cause (as defined in Section 4(a)(iii) below) or by the Employee for Good Reason (as defined in Section 4(b)(ii) below), then the vesting of all options held by the Employee at the time of the termination shall accelerate (i) with respect to thirty-seven and one-half percent (37.5%) of the unvested shares subject thereto, or (ii) if such termination occurs within 30 days prior to or within 12 months after a Change of Control (as defined in the Plan), with respect to one hundred percent (100%) of the unvested shares subject thereto.
1
(c) Expenses. The Employee will be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee (which are eligible for reimbursement under the Code) actually incurred by him in performing his duties; provided; however, that such expenses are approved in accordance with the Company’s then-current policies and procedures applicable to the most senior-level executive employees of the Company, other than the Employee, or if such policies and procedures are not in place, then as determined in the sole discretion of the Board.
(d) Employee Benefits. The Company shall reimburse the Employee for the premium costs incurred by the Employee in maintaining medical and dental insurance coverage for the Employee and his family until such time that the Company sponsors a group insurance plan providing medical and dental insurance coverage for Company employees (the “Health Insurance Reimbursement”). The Health Insurance Reimbursement will be paid to the Employee on the last day of each month, provided the Employee has submitted to the Company documentary evidence establishing the Employee’s payment of such premiums to the health insurance provider. The Health Insurance Reimbursement is intended to be provided on a qualified, tax free basis in accordance with Section 106 of the Code. In addition, the Employee is entitled to participate in any employee benefit plans that the Company may make available to its most senior-level executive employees generally, which may include, but not be limited to, profit sharing plans, 401(k) and cafeteria plans, or life, hospitalization, optical, disability or other insurance plans as may be in effect, from time to time, and in accordance with rules established, from time to time, for individual participation in such plans.
(e) Vacation Days and Paid Leave. The Employee will be entitled to take four (4) weeks of vacation days and paid leave, and shall be entitled to compensation in connection therewith, in accordance with Company policy applicable to senior-level executive employees of the Company, as approved by the Chief Executive Officer in its sole discretion.
3. Facilities and Services Furnished. The Company will furnish the Employee with office space and such other facilities, furniture, equipment and services as it may determine to be reasonably necessary for the performance of the Employee’s duties as set forth herein. It is acknowledged that as of the Effective Date, the Company is “virtual” and the Employee is using his own home for the Company office at no expense to the Company.
4. Termination.
(a) Termination by the Company. The Employee’s employment hereunder may be terminated by the Company under any of the following circumstances:
(i) Death. This Agreement shall automatically terminate upon the Employee’s death.
(ii) Disability. The Company may elect to terminate the Employee’s employment in the event of Employee’s Disability upon delivery of written notice to the Employee. For purposes of this Agreement, “Disability” shall mean any condition that, in the reasonable, good faith judgment of a licensed physician selected by the Company, causes the Employee to be unable, after any accommodation required by applicable law, to perform his duties, responsibilities and obligations under this Agreement for a period of at least twelve (12) months.
(iii) Cause. The Company may terminate the Employee’s employment hereunder for Cause (as defined below) at any time upon delivery of written notice to the Employee. For purposes of this Agreement, “Cause” shall mean (A) the conviction of the Employee by a court of competent jurisdiction of any felony involving dishonesty, breach of trust or misappropriation or the entering of a plea by the Employee of nolo contendre thereto; (B) the Employee’s willful failure or refusal to follow reasonable and lawful directives of the Board or the Company’s Chief Executive Officer, provided such failure or refusal continues after the Employee’s receipt of reasonable notice in writing of such failure or refusal and an opportunity of not less than thirty (30) days to correct the problem; (C) a material breach by the Employee of any of the provisions of this Agreement; or (D) the Employee’s commission of any immoral or illegal act or any gross or willful misconduct, where a majority of the non-employee members of the Board reasonably determines that such act or misconduct has (1) seriously undermined the ability of the Board to entrust Employee with important matters or otherwise work effectively with Employee, (2) contributed to the Company’s loss of significant revenues or business opportunities, or (3) significantly and detrimentally affected the business or reputation of the Company or any of its subsidiaries.
(iv) Other Termination. The Company may terminate Employee’s employment with the Company at any time and for any reason, with or without cause, subject to the provisions hereof. Employee acknowledges that Employee is, and at all times shall be, an employee at will of the Company and nothing contained herein shall be construed to alter or affect such employee at-will status. Employee may terminate his employment with the Company at any time, for any or no reason, subject to the provisions hereof. Inclusion under any benefit plan or compensation arrangement will not give Employee any right or claim to any benefit hereunder except to the extent such right has become fixed under the express terms of this Agreement.
2
(b) Termination by the Employee. The Employee may terminate the Employee’s employment with the Company under the following circumstances:
(i) Voluntary Termination. Employee may terminate his employment with the Company for any reason or no reason, upon delivery of written notice to the Company at least fifteen (15) days prior to the specified termination date.
(ii) Termination for Good Reason. The Employee also may terminate the Employee’s employment with the Company for “Good Reason,” which shall mean for purposes of this Agreement (A) a material breach by the Company of any of the provisions of this Agreement; (B) assignment of Employee to a role, duties or responsibilities materially inconsistent with that of senior executive management; (C) any circumstances caused by the Company that would require Employee to move his principal location of employment in excess of one hundred (100) miles from the Company’s principal business location in Salt Lake City, Utah; or (D) an involuntary material reduction of Employee’s then current Base Salary other than a reduction proportionately affecting all of the Company’s other senior-level executive employees. The Employee must provide the Company with a written Notice of Termination that describes the existence of the condition the Employee believes gives rise to Good Reason under this Section 4(b) within thirty (30) days following the initial existence of the condition. The Company may elect to cure any condition giving rise to Good Reason within thirty (30) days of receipt of notice. The Employee’s termination for Good Reason must, in any event, occur within the six (6) month period immediately following the initial existence of the condition giving rise to Good Reason.
(c) Effect of Termination. In the event the Employee’s employment is terminated, all obligations of the Company and the Employee under this Agreement shall cease, except that the accelerated vesting of Options set forth in Section 2(b) and the terms of Section 5 through Section 9 shall survive such termination. Upon such termination, the Employee or the Employee’s representative or estate shall be entitled to receive the applicable compensation, benefits and reimbursements set forth in Section 5. The Employee acknowledges that, upon termination of the Employee’s employment, the Employee is entitled to no other compensation, severance or other benefits other than those specifically set forth in Section 5.
5. Compensation and Benefits Upon Termination of Employment. At all times after the Effective Date, the Employee shall be entitled to receive additional compensation and benefits upon a termination of Employee’s employment as follows:
(a) Severance Pay. If either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason; then, on the sixtieth (60th) day following the termination of employment, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment. If the Company terminates the Employee’s employment due to death or Disability and (y) the Company does not provide any insurance benefits payable to the Employee or his beneficiaries, as applicable, upon his death or Disability and (z) the Company has previously, but not necessarily in the then applicable calendar year, achieved Ten Million Dollars in annual gross revenue in a calendar year, then, on the sixtieth (60th) day following the termination of employment due to death or Disability, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment.
(b) Health Insurance. If either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason, the Company will provide Health Insurance Reimbursement until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, and (y) the date when the Employee becomes eligible to receive health insurance coverage in connection with new employment or self-employment. If, as of the termination date, the Company continues to sponsor a group insurance plan providing medical and dental insurance coverage for Company employees, and if the Employee elects to continue his health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of his employment, then the Company shall pay the portion of the Employee’s monthly premium under COBRA until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, (y) the expiration of the Employee’s continuation coverage under COBRA or (z) the date when the Employee becomes eligible to receive health insurance coverage in connection with new employment or self-employment. If the payment of any COBRA or health insurance premiums would otherwise violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code.
(c) General Release. Any other provision of this Agreement notwithstanding, subsections (a) and (b) above shall not apply unless the Employee has (i) executed a general release of all claims (in a form prescribed by the Company), which must be effective and irrevocable prior to the sixtieth (60th) day following the termination of employment, (ii) returned all property of the Company in the Employee’s possession and (iii) cooperated in good faith with the Company for a transition period not to exceed sixty (60) days to ensure an efficient transfer of the Employee’s duties and responsibilities.
3
6. Non-Competition; Non-Solicitation. The Employee and the Company hereby acknowledge and agree that in connection with the employment of the Employee, the Employee has been and will be provided with trade secrets of the Company and that the Employee and the Company are entering into this Agreement for the protection of such trade secrets. The Employee agrees to abide by the provisions set forth in this Section 6.
(a) Non-Competition. The Employee shall not, during his employment with the Company and during the one (1) year period following the termination of his employment with the Company (the “Restrictive Period”), directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of his consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party:
(i) anywhere in the United States (the “Restricted Area”) compete with or own, manage, operate or control any business that directly competes in the Company’s field of interest or products in the active development pipeline of the Company (for purposes of this paragraph, ownership of securities of not in excess of one percent (1%) of the outstanding capital stock of a public company shall not be considered to be competition with the Company); or
(ii) anywhere in the Restricted Area, act as an employee, director, officer, manager, member, advisor, consultant, representative or agent for any business of the type and character engaged in and competitive with the Company.
(b) Non-Solicitation. The Employee shall not, during the Restrictive Period directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of his consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party, solicit the employment of or hire any current employee of the Company, or solicit a relationship with any customer of the Company, located anywhere in the Restricted Area.
(c) Definitions. For purposes of this Section 6, the terms “compete with the Company,” “competitive with the Company,” “field of interest” and similar terms referring to competition with the Company shall mean any business that is engaged in identifying and commercializing biomarkers in blood samples of pregnant women which are predictive of preterm birth and other pregnancy complications or any other anticipated business ventures of the Company which have been discussed with the Board or amongst the senior-level executive employees as of the date of Employee’s termination.
7. Maintaining Confidential Information.
(a) Company Confidential Information. The Employee hereby agrees at all times during which he provides services as a director, officer, employee or consultant of the Company (“Employee’s Service”), and thereafter to hold in strictest confidence, and not to use, except for the benefit of the Company, any trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, formulas, developmental or experimental work, computer lists, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its clients, consultants or licensees (collectively “Confidential Information”).
Notwithstanding the above, Employee shall not have liability to the Company with regard to any Confidential Information which Employee can prove:
(i) was in the public domain at the time it was disclosed by the Company or has entered the public domain through no fault of Employee;
(ii) was known to the Employee without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of the Company;
(iv) becomes known to Employee, without restriction, from a source other than the Company without breach of this Agreement by Employee and otherwise not in violation of the Company’s rights; or
(v) is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, however, that Employee shall provide prompt notice of such court order or requirement to the Company to enable the Company to seek a protective order or otherwise prevent such disclosure.
4
(b) Former Employer Information. The Employee hereby agrees that he will not, during Employee’s Service, improperly use or disclose any proprietary information or trade secrets of his former or concurrent employers or companies, if any, and that he will not make available to the Company any unpublished document or any property belonging to his former or concurrent employers or companies, if any, unless consented to in writing by said employers or companies.
(c) Third-Party Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee hereby agrees, during Employee’s Service and thereafter, to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such third party) or to use it for the benefit of anyone other than the Company or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of the Board.
8. Availability of Equitable Remedies. The Employee hereby acknowledges and agrees that a breach of Section 6 or Section 7 will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of Section 6 or Section 7 will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company will be entitled to injunctive relief for any breach or threatened breach of Section 6 or Section 7.
9. Miscellaneous.
(a) Notification of New Employer. In the event that the Employee leaves the employ of the Company, he hereby grants consent to notification by the Company to his new employer about his rights and obligations under this Agreement.
(b) Severability. In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken. All portions of this Agreement which do not violate any statute or public policy shall continue in full force and effect. Further, any court order striking any portion of this Agreement shall modify the stricken terms to give as much effect as possible to the intentions of the parties under this Agreement.
(c) Notices. Any notices, requests or consents hereunder shall be deemed given, and any instrument delivered, three (3) days after they have been mailed by first class mail, postage prepaid, one (1) day after they have been delivered by overnight courier, twelve (12) hours after such notice has been sent by facsimile, or upon receipt if delivered personally, as follows:
To the Company:
2749 East Parleys Way, Suite 200
Salt Lake City, UT 84109
To the Employee:
1020 Douglas St
SLC, UT 84105
except that any of the foregoing may, from time to time, by written notice to the others, designate another address or fax number which shall thereupon become his or its effective address for the purposes of this Section 9(c).
5
(d) Governing Law. This Agreement shall be governed by the laws of the State of Utah, without giving effect to its conflict of laws principles.
(e) Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. This Agreement is for the unique personal services of the Employee, and the Employee shall not be entitled to assign any of the Employee’s rights or obligations hereunder.
(f) Entire Agreement; Amendment. This Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter of this Agreement, and supersedes all other prior agreements and understandings with respect thereto, including, but not limited to, the Prior Agreement. This Agreement can be amended or modified only in a writing signed by the Employee and the Company.
(g) No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.
(h) Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(j) Costs and Expenses. The Company shall reimburse all of the Employee’s reasonable costs and expenses (including, without limitation, attorneys’ fees), incurred in connection with the negotiation and preparation of this Agreement.
(k) Attorneys’ Fees. In the event of any action at law, equity or under this Agreement to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and court costs in addition to any other relief to which such party may be entitled, unless the action is one in which only a prevailing plaintiff is entitled to prevailing party fees and costs (such as a Title VII action).
(l) Section 409A. The Company intends that the cash severance payments to which the Employee is entitled on his termination of employment pursuant to Section 5 are payable on the Employee’s Separation from Service (as defined below) and are exempt from, or are otherwise payable in compliance with Section 409A. The Company intends that the Company’s continued payment for the cost of the Employee’s welfare benefits (including the payment of all COBRA administrative costs and expenses) provided by Section 5 will comply with the exception to Section 409A for reimbursements and certain other separation payments, as described in Treas. Reg. § 1.409A-1(b)(9)(v)(B), to the extent such costs are taxable and subject to imputed income treatment.
(i) Separation from Service Defined. For purposes of this Agreement, the term “termination of employment” means the Employee’s “Separation from Service.” The term “Separation from Service” means (A) the termination of the Employee’s employment with the Company and all affiliates for any reason or (B) a permanent reduction in the level of bona fide services the Employee provides to the Company and all affiliates to an amount that is twenty percent (20%) or less of the average level of bona fide services the Employee provided to the Company and all affiliates in the immediately preceding thirty-six (36) months (or the entire time period during which the Employee provided services to the Company and all affiliates if the Employee has been providing such services for less than thirty-six (36) months), with the level of bona fide service calculated in accordance with Treas. Reg. § 1.409A-1(h)(1)(ii). Solely for purposes of determining whether an organization is an “affiliate” of the Company, the Company will follow the rules set forth in Treas. Reg. § 1.409A-1(h)(3) (which generally requires fifty percent (50%) common ownership or control). The Employee’s employment relationship is treated as continuing while the Employee is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six (6) months; or, if longer, so long as the Employee’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Employee’s period of leave exceeds six (6) months and his right to re-employment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6) month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
6
(ii) Delay in Payments. Notwithstanding any provision of this Agreement to the contrary, if any of the severance payments are subject to Section 409A and the Employee is a “Specified Employee” at the time of his Separation from Service, no payments shall be made to the Employee prior to the first business day following the date which is six (6) months after the Employee’s Separation from Service. Any amounts that would have been paid during the six (6) months following the Employee’s Separation from Service will be paid on the first business day following the expiration of the six (6) month period without interest thereon. The Employee may not elect the taxable year of such payment. The six (6) month delay for a Specified Employee does not apply if the Employee dies.
(iii) Specified Employee Defined. For purposes of this Agreement, the term “Specified Employee” means certain officers and highly-compensated employees of the Company as defined in Treas. Reg. § 1.409A-1(i), and as determined in accordance with such procedures as may be adopted from time to time by the Company.
(iv) Miscellaneous Payment Provisions. If payment is not made, in whole or in part, due to a dispute between the Employee and the Company, the payments shall be made in accordance with Treas. Reg. § 1.409A-3(g), as applicable. It is intended that each installment of the payments and benefits provided under Section 5 of this Agreement shall be treated as a separate “payment” for purposes of Section 409A. If an expense reimbursement or provision of in-kind benefit provided pursuant to this Agreement is not exempt from Section 409A of the Code, the following rules apply: (A) in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred; (B) the amount of reimbursable expenses incurred or provision of in-kind benefits in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other tax year; and (C) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation or exchange for any other benefit.
(v) Ban on Acceleration or Deferral. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral, except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code.
(vi) No Elections. The Employee does not have any right to make any election regarding the time or form of any payment due under this Agreement.
(vii) Compliant Operation and Interpretation. This Agreement shall be operated in compliance with the requirements of Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an exception thereto.
(m) Dispute Resolution; Venue.
(i) The Company and the Employee shall use reasonable, good faith efforts to settle any dispute through non-binding mediation before a mutually-acceptable, neutral, third-party mediator. The mediation shall be held in Salt Lake City, Utah and administered by the CPR Institute for Dispute Resolution (the “CPR Institute”) under the CPR Mediation Procedure then in effect. Unless otherwise agreed, the parties shall jointly select a single mediator from the CPR Panels of Distinguished Neutrals based on a list of mediator candidates supplied by the CPR Institute. If, within fourteen (14) days after either party makes a written request for mediation under this Section 9(m)(i), the parties have not reached agreement on the selection of a mediator, the mediator shall be selected in accordance with the CPR Mediation Procedure currently in effect. A good faith attempt at mediation shall be a condition precedent to the commencement of litigation, but nothing in this Agreement, including, but not limited to paragraph (ii) below, shall be deemed a condition precedent to any court action for injunction or other interim relief pending the outcome of mediation.
(ii) If the parties are unable to resolve the dispute by mediation in a timely manner (which, in any case, shall not exceed sixty (60) days from the first notice of mediation), either party may attempt to resolve the dispute by commencing an action (or defending or responding to such action) exclusively in the jurisdiction and venue of the courts, whether federal or state, located in Salt Lake County, Utah.
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective for all purposes as of the Effective Date.
THE COMPANY: |
SERA PROGNOSTICS, INC. |
By: | /s/ Gregory C. Critchfield, M.D. | |
Gregory C. Critchfield, M.D. | ||
Chairman, President and CEO |
THE EMPLOYEE: |
/s/ John J. Boniface | |
John J. Boniface, Ph.D. |
8
EXHIBIT A
SECOND TRANCHE MILESTONE
The Second Tranche Milestone shall be the occurrence of either one of the following conditions:
(1) the Area Under the Curve (AUC) of the Receiver Operator Characteristic (ROC) curve of a clinically meaningful commercial preterm birth predictor has been validated to be statistically different from 0.5;
OR
(2) the Company’s Board of Directors agrees unanimously that the commercial preterm birth predictor has been successfully validated.
9
Exhibit 10.14
SERA PROGNOSTICS, INC. EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is effective for all purposes as of the start date (the “Effective Date”) of the Offer Letter to you dated 13 June 2018, by and between Sera Prognostics, Inc., a Delaware corporation (the “Company”), and Garrett Lam (the “Employee”).
NOW, THEREFORE, in consideration of the mutual covenants, conditions and undertakings set forth herein, the parties hereto hereby agree as follows:
1. Employment and Duties. Subject to the terms and conditions set forth in this Agreement, the Company shall employ Employee, and Employee hereby accepts employment, as the Chief Medical Officer of the Company, with those duties and responsibilities which are appropriate and customary for the medical leader of a company similar to the Company. In such capacity, the Employee shall report to the Company’s Chief Executive Officer. During the term of this Agreement, the Employee shall faithfully perform the Employee’s duties, responsibilities and obligations hereunder.
2. Base Compensation and Related Matters.
(a) Salary. In consideration for the services rendered by the Employee to the Company as provided herein, the Company shall pay the Employee an annual base salary of $350,000, provided that the Employee’s employment with the Company remains active at a full-time rate. The Base Salary shall be paid according to the Company’s standard payroll policy and will be subject to applicable federal and state tax withholdings as required by applicable law. The Base Salary may be increased or decreased at any time by the Company’s Board of Directors (the “Board”) or the Compensation Committee of the Board in its sole discretion.
(b) Stock Option Grant(s) and Bonuses. The Employee shall be granted as soon as practicable on or after the Effective Date an option to purchase 375,000 shares of the Company’s common stock (the “Option”) (which option shall be issued as an incentive stock option to the maximum extent allowed under Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”)) pursuant to the Company’s 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”). The Option shall vest as to twenty-five percent (25%) of the shares subject thereto one (1) year from August 6, 2018 (“Vesting Start Date”), and shall vest with respect to the remaining shares subject thereto in equal monthly installments over an additional thirty-six (36) months thereafter commencing on the sixth (6’) day of the month one year following the Vesting Start Date, subject to continued employment by the Company. In addition, the Option shall accelerate with respect to thirty-seven and one-half percent (37.5%) of the outstanding unvested shares at that time then subject thereto upon a Change of Control (as defined in the Plan) pursuant to which the Option is terminated pursuant to Section 24(b)(ii) of the Plan or cashed out pursuant to Section 24(b)(iii) of the Plan. The Employee shall be eligible, after the Effective Date, to receive (i) additional stock options pursuant to the Plan and (ii) additional bonus compensation, as determined by the Board, in its sole discretion; it being the intention of the Board to maintain Employee’s aggregate compensation at levels appropriate and customary to those of companies similar in industry, stage and circumstances to that of the Company Unless otherwise approved by the Board, all future options granted to the Employee after the Effective Date shall vest in equal monthly installments over a period of forty-eight (48) months from the date of grant. Notwithstanding the foregoing, in the event that the Employee’s employment with the Company is terminated by the Company without Cause (as defined in Section 4(a)(iii) below) or by the Employee for Good Reason (as defined in Section 4(b)(ii) below), then the vesting of all options held by the Employee at the time of the termination shall accelerate (i) with respect to thirty-seven and one-half percent (37.5%) of the unvested shares subject thereto, or (ii) if such termination occurs within 30 days prior to or within 12 months after a Change of Control (as defined in the Plan), with respect to one hundred percent (100%) of the unvested shares subject thereto. You will be eligible to participate in the Company’s Annual Incentive Plan, which currently provides for a bonus target of 30% of your base salary, prorated for time of service, and with respect to the calendar year ending December 31, 2018, payment will be contingent based upon achievements mutually agreed upon by you and your supervisor.
1
(c) Expenses. The Employee will be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee (which are eligible for reimbursement under the Code) actually incurred by him in performing his duties; provided; however, that such expenses are approved in accordance with the Company’s then-current policies and procedures applicable to the most senior-level executive employees of the Company, other than the Employee, or if such policies and procedures are not in place, then as determined in the sole discretion of the Board. Employee Benefits. Upon classification as a full-time employee, the Employee will be entitled to participate in the group health, dental, vision, and group life insurance benefit plans, as well as the Company’s 401(k) and Flexible Spending Account Plans available to all Company employees. In addition, the Employee is entitled to participate in any employee benefit plans that the Company may make available to its most senior-level executive employees generally, which may include, but not be limited to, profit sharing plans, 401(k) and cafeteria plans, or life, hospitalization, optical, disability or other insurance plans as may be in effect, from time to time, and in accordance with rules established, from time to time, for individual participation in such plans.
(d) Vacation Days and Paid Leave. Upon classification as a full-time employee, the Employee will be entitled to take four (4) weeks of vacation days, three (3) additional personal time off days, and shall be entitled to compensation in connection therewith, in accordance with Company policy applicable to senior-level executive employees of the Company, as approved by the Chief Executive Officer in its sole discretion.
3. Facilities and Services Furnished. The Company will furnish the Employee with office space at its headquarters in Salt Lake City, Utah, and such other facilities, furniture, equipment and services as it may determine to be reasonably necessary for the performance of the Employee’s duties as set forth herein. It is acknowledged that as of the Effective Date, the Employee is using his own home for a Company office at no expense to the Company.
2
4. Termination.
(a) Termination by the Company. The Employee’s employment hereunder may be terminated by the Company under any of the following circumstances:
(i) Death. This Agreement shall automatically terminate upon the Employee’s death.
(ii) Disability. The Company may elect to terminate the Employee’s employment in the event of Employee’s Disability upon delivery of written notice to the Employee. For purposes of this Agreement, “Disability” shall mean any condition that, in the reasonable, good faith judgment of a licensed physician selected by the Company, causes the Employee to be unable, after any accommodation required by applicable law, to perform his duties, responsibilities and obligations under this Agreement for a period of at least twelve (12) consecutive months.
(iii) Cause. The Company may terminate the Employee’s employment hereunder for Cause (as defined below) at any time upon delivery of written notice to the Employee. For purposes of this Agreement, “Cause” shall mean (A) the conviction of the Employee by a court of competent jurisdiction of any felony involving dishonesty, breach of trust or misappropriation or the entering of a plea by the Employee of nolo contendre thereto; (B) the Employee’s willful failure or refusal to follow reasonable and lawful directives of the Board or the Company’s Chief Executive Officer, provided such failure or refusal continues after the Employee’s receipt of reasonable notice in writing of such failure or refusal and an opportunity of not less than thirty (30) days to correct the problem; (C) a material breach by the Employee of any of the provisions of this Agreement, with notification of such breach by the process outlined in 4.(iii).(B), above; or (D) the Employee’s commission of any immoral or illegal act or any gross or willful misconduct, where a majority of the non-employee members of the Board reasonably determines that such act or misconduct has (1) seriously undermined the ability of the Board to entrust Employee with important matters or otherwise work effectively with Employee, (2) contributed to the Company’s loss of significant revenues or business opportunities, or (3) significantly and detrimentally affected the business or reputation of the Company or any of its subsidiaries.
(iv) Other Termination. The Company may terminate Employee’s employment with the Company at any time and for any reason, with or without cause, subject to the provisions hereof. Employee acknowledges that Employee is, and at all times shall be, an employee at will of the Company and nothing contained herein shall be construed to alter or affect such employee at-will status. Employee may terminate his employment with the Company at any time, for any or no reason, subject to the provisions hereof. Inclusion under any benefit plan or compensation arrangement will not give Employee any right or claim to any benefit hereunder except to the extent such right has become fixed under the express terms of this Agreement.
(b) Termination by the Employee. The Employee may terminate the Employee’s employment with the Company under the following circumstances:
(i) Voluntary Termination. Employee may terminate his employment with the Company for any reason or no reason, upon delivery of written notice to the Company at least fifteen (15) days prior to the specified termination date.
(ii) Termination for Good Reason. The Employee also may terminate the Employee’s employment with the Company for “Good Reason,” which shall mean for purposes of this Agreement (A) a material breach by the Company of any of the provisions of this Agreement; (B) assignment of Employee to a role, duties or responsibilities materially inconsistent with that of senior executive management; (C) any circumstances caused by the Company that would require Employee to move his principal location of employment in excess of one hundred (100) miles from the Company’s principal business location in Salt Lake City, Utah; or (D) an involuntary material reduction of Employee’s then current Base Salary other than a reduction proportionately affecting all of the Company’s other senior-level executive employees. The Employee must provide the Company with a written Notice of Termination that describes the existence of the condition the Employee believes gives rise to Good Reason under this Section 4(b) within thirty (30) days following the initial existence of the condition. The Company may elect to cure any condition giving rise to Good Reason within thirty (30) days of receipt of notice. The Employee’s termination for Good Reason must, in any event, occur within the six (6) month period immediately following the initial existence of the condition giving rise to Good Reason.
(c) Effect of Termination. In the event the Employee’s employment is terminated, all obligations of the Company and the Employee under this Agreement shall cease, except that the accelerated vesting of Options set forth in Section 2(b) and the terms of Section 5 through Section 9 shall survive such termination. Upon such termination, the Employee or the Employee’s representative or estate shall be entitled to receive the applicable compensation, benefits and reimbursements set forth in Section 5. The Employee acknowledges that, upon termination of the Employee’s employment, the Employee is entitled to no other compensation, severance or other benefits other than those specifically set forth in Section 5.
3
5. Compensation and Benefits Upon Termination of Employment. At all times after the Effective Date, the Employee shall be entitled to receive additional compensation and benefits upon a termination of Employee’s employment as follows:
(a) Severance Pay. If either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason; then, on the sixtieth (60th) day following the termination of employment, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment. If the Company terminates the Employee’s employment due to death or Disability and (y) the Company does not provide any insurance benefits payable to the Employee or his beneficiaries, as applicable, upon his death or Disability and (z) the Company has previously, but not necessarily in the then applicable calendar year, achieved Ten Million Dollars in annual gross revenue in a calendar year, then, on the sixtieth (60th) day following the termination of employment due to death or Disability, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment.
(b) Health Insurance. If, while eligible to participate in the Company’s health benefit plans, either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason, the Company will provide Health Insurance Reimbursement until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, and (y) the date when the Employee becomes eligible to receive health insurance coverage in connection with new employment or self-employment. If, as of the termination date, the Company continues to sponsor a group insurance plan providing medical and dental insurance coverage for Company employees, and if the Employee elects to continue his health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of his employment, then the Company shall pay the portion of the Employee’s monthly premium under COBRA until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, (y) the expiration of the Employee’s continuation coverage under COBRA or (z) the date when the Employee becomes eligible to receive health insurance coverage in connection with new employment or self-employment. If the payment of any COBRA or health insurance premiums would otherwise violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code.
(c) General Release. Any other provision of this Agreement notwithstanding, subsections (a) and (b) above shall not apply unless the Employee has (i) executed a general release of all claims (in a form prescribed by the Company), which must be effective and irrevocable prior to the sixtieth (60th) day following the termination of employment, (ii) returned all property of the Company in the Employee’s possession and (iii) cooperated in good faith with the Company for a transition period not to exceed sixty (60) days to ensure an efficient transfer of the Employee’s duties and responsibilities.
4
6. Non-Competition; Non-Solicitation. The Employee and the Company hereby acknowledge and agree that in connection with the employment of the Employee, the Employee has been and will be provided with trade secrets of the Company and that the Employee and the Company are entering into this Agreement for the protection of such trade secrets. The Employee agrees to abide by the provisions set forth in this Section 6.
(a) Non-Competition. The Employee shall not, during his employment with the Company and during the one (1) year period following the termination of his employment with the Company (the “Restrictive Period”) directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of his consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party:
(i) anywhere in the world (the “Restricted Area”) compete with or own, manage, operate or control any business that directly competes in the Company’s field of interest or products in the active development pipeline of the Company (for purposes of this paragraph, ownership of securities of not in excess of one percent (1%) of the outstanding capital stock of a public company shall not be considered to be competition with the Company); or
(ii) anywhere in the Restricted Area, act as an employee, director, officer, manager, member, advisor, consultant, representative or agent for any business of the type and character engaged in and competitive with the Company.
(b) Non-Solicitation. The Employee shall not, during the Restrictive Period directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of his consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party, solicit the employment of or hire any current employee of the Company, or solicit a relationship with any customer of the Company, located anywhere in the Restricted Area.
(c) Definitions. For purposes of this Section 6 the terms “compete with the Company.” “competitive with the Company,” “field of interest” and similar terms referring to competition with the Company shall mean any business that is engaged in identifying and commercializing biomarkers in blood samples of pregnant women which are predictive of preterm birth and other pregnancy complications or any other anticipated business ventures of the Company which have been discussed with the Board or amongst the senior-level executive employees as of the date of Employee’s termination.
5
7. Maintaining Confidential Information.
(a) Company Confidential Information. The Employee hereby agrees at all times during which he provides services as a director, officer, employee or consultant of the Company (“Employee’s Service”), and thereafter to hold in strictest confidence, and not to use, except for the benefit of the Company, any trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, formulas, developmental or experimental work, computer lists, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its clients, consultants or licensees (collectively “Confidential Information”).
Notwithstanding the above, Employee shall not have liability to the Company with regard to any Confidential Information which Employee can prove:
(i) was in the public domain at the time it was disclosed by the Company or has entered the public domain through no fault of Employee;
(ii) was known to the Employee without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of the Company;
(iv) becomes known to Employee, without restriction, from a source other than the Company without breach of this Agreement by Employee and otherwise not in violation of the Company’s rights; or
(v) is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, however, that Employee shall provide prompt notice of such court order or requirement to the Company to enable the Company to seek a protective order or otherwise prevent such disclosure.
(b) Former Employer Information. The Employee hereby agrees that he will not, during Employee’s Service, improperly use or disclose any proprietary information or trade secrets of his former or concurrent employers or companies, if any, and that he will not make available to the Company any unpublished document or any property belonging to his former or concurrent employers or companies, if any, unless consented to in writing by said employers or companies.
(c) Third-Party Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee hereby agrees, during Employee’s Service and thereafter, to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such third party) or to use it for the benefit of anyone other than the Company or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of the Board.
(d) Outside Activities. The Employee shall not perform consulting/business activities beyond those disclosed in Exhibit A, without prior written consent of the Company’s Board of Directors Compensation Committee.
6
8. Availability of Equitable Remedies. The Employee hereby acknowledges and agrees that a breach of Section 6 or Section 7 will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of Section 6 or Section 7 will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company will be entitled to injunctive relief for any breach or threatened breach of Section 6 or Section 7.
9. Miscellaneous.
(a) Notification of New Employer. In the event that the Employee leaves the employ of the Company, he hereby grants consent to notification by the Company to his new employer about his rights and obligations under this Agreement.
(b) Severability. In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken. All portions of this Agreement which do not violate any statute or public policy shall continue in full force and effect. Further, any court order striking any portion of this Agreement shall modify the stricken terms to give as much effect as possible to the intentions of the parties under this Agreement.
(c) Notices. Any notices, requests or consents hereunder shall be deemed given, and any instrument delivered, three (3) days after they have been mailed by first class mail, postage prepaid, one (1) day after they have been delivered by overnight courier, twelve (12) hours after such notice has been sent by facsimile, or upon receipt if delivered personally, as follows:
To the Company:
2749 East Parleys Way, Suite 200
Salt Lake City, UT 84109
To the Employee:
103 South Drive
Signal Mountain, TN 37377
except that any of the foregoing may, from time to time, by written notice to the others, designate another address or fax number which shall thereupon become him or its effective address for the purposes of this Section 9(c).
(d) Governing Law. This Agreement shall be governed by the laws of the State of Utah, without giving effect to its conflict of laws principles.
(e) Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. This Agreement is for the unique personal services of the Employee, and the Employee shall not be entitled to assign any of the Employee’s rights or obligations hereunder.
(f) Entire Agreement; Amendment. This Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter of this Agreement, and supersedes all other prior agreements and understandings with respect thereto, This Agreement can be amended or modified only in a writing signed by the Employee and the Company.
(g) No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.
(h) Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(j) Costs and Expenses. The Company shall reimburse all of the Employee’s reasonable costs and expenses (including, without limitation, attorneys’ fees), incurred in connection with the negotiation and preparation of this Agreement.
(k) Attorneys’ Fees. In the event of any action at law, equity or under this Agreement to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and court costs in addition to any other relief to which such party may be entitled, unless the action is one in which only a prevailing plaintiff is entitled to prevailing party fees and costs (such as a Title VII action).
7
(l) Section 409A. The Company intends that the cash severance payments to which the Employee is entitled on his termination of employment pursuant to Section 5 are payable on the Employee’s Separation from Service (as defined below) and are exempt from, or are otherwise payable in compliance with Section 409A. The Company intends that the Company’s continued payment for the cost of the Employee’s welfare benefits (including the payment of all COBRA administrative costs and expenses) provided by Section 5 will comply with the exception to Section 409A for reimbursements and certain other separation payments, as described in Treas. Reg. § 1.409A-1(b)(9)(v)(B), to the extent such costs are taxable and subject to imputed income treatment.
(i) Separation from Service Defined. For purposes of this Agreement, the term “termination of employment” means the Employee’s “Separation From Service.” The term “Separation from Service” means (A) the termination of the Employee’s employment with the Company and all affiliates for any reason or (B) a permanent reduction in the level of bona fide services the Employee provides to the Company and all affiliates to an amount that is twenty percent (20%) or less of the average level of bona fide services the Employee provided to the Company and all affiliates in the immediately preceding thirty-six (36) months (or the entire time period during which the Employee provided services to the Company and all affiliates if the Employee has been providing such services for less than thirty-six (36) months), with the level of bona fide service calculated in accordance with Treas. Reg. § 1.409A-1(h)(l)(ii). Solely for purposes of determining whether an organization is an “affiliate” of the Company, the Company will follow the rules set forth in Treas. Reg. § 1.409A-1(h)(3) (which generally requires fifty percent (50%) common ownership or control). The Employee’s employment relationship is treated as continuing while the Employee is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six (6) months; or, if longer, so long as the Employee’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Employee’s period of leave exceeds six (6) months and his right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6) month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
(ii) Delay in Payments. Notwithstanding ally provision of this Agreement to the contrary, if any of the severance payments are subject to Section 409A and the Employee is a “Specified Employee” at the time of his Separation from Service, no payments shall be made to the Employee prior to the first business day following the date which is six (6) months after the Employee’s Separation from Service. Any amounts that would have been paid during the six (6) months following the Employee’s Separation from Service will be paid on the first business day following the expiration of the six (6) month period without interest thereon. The Employee may not elect the taxable year of such payment. The six (6) month delay for a Specified Employee does not apply if the Employee dies.
(iii) Specified Employee Defined. For purposes of this Agreement, the term “Specified Employee” means certain officers and highly-compensated employees of the Company as defined in Treas. Reg. § 1.409A-1(i), and as determined in accordance with such procedures as may be adopted from time to time by the Company.
(iv) Miscellaneous Payment Provisions. If payment is not made, in whole or in part, due to a dispute between the Employee and the Company, the payments shall be made in accordance with Treas. Reg. § 1.409A-3(g), as applicable. It is intended that each installment of the payments and benefits provided under Section 5 of this Agreement shall be treated as a separate “payment” for purposes of Section 409A. If an expense reimbursement or provision of in-kind benefit provided pursuant to this Agreement is not exempt from Section 409A of the Code, the following rules apply: (A) in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred; (B) the amount of reimbursable expenses incurred or provision of in-kind benefits in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other tax year; and (C) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation or exchange for any other benefit.
(v) Ban on Acceleration or Deferral. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral, except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code.
(vi) No Elections. The Employee does not have any right to make any election regarding the time or form of any payment due under this Agreement.
(vii) Compliant Operation and Interpretation. This Agreement shall be operated in compliance with the requirements of Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an exception thereto.
8
(m) Dispute Resolution; Venue.
(i) The Company and the Employee shall use reasonable, good faith efforts to settle any dispute through non-binding mediation before a mutually-acceptable, neutral, third-party mediator. The mediation shall be held in Salt Lake City, Utah and administered by the CPR Institute for Dispute Resolution (the “CPR institute”) under the CPR Mediation Procedure then in effect. Unless otherwise agreed, the parties shall jointly select a single mediator from the CPR Panels of Distinguished Neutrals based on a list of mediator candidates supplied by the CPR Institute. If, within fourteen (14) days after either party makes a written request for mediation under this Section 9(m)(i), the parties have not reached agreement on the selection of a mediator, the mediator shall be selected in accordance with the CPR Mediation Procedure currently in effect. A good faith attempt at mediation shall be a condition precedent to the commencement of litigation, but nothing in this Agreement, including, but not limited to paragraph (ii) below, shall be deemed a condition precedent to any court action for injunction or other interim relief pending the outcome of mediation.
(ii) If the parties are unable to resolve the dispute by mediation in a timely manner (which, in any case, shall not exceed sixty (60) days from the first notice of mediation), either party may attempt to resolve the dispute by commencing an action (or defending or responding to such action) exclusively in the jurisdiction and venue of the courts, whether federal or state, located in Salt Lake County, Utah.
==========the remainder of this page is intentionally left blank==========
9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective for all purposes as of the Effective Date.
THE COMPANY: | ||
SERA PROGNOSTICS, INC. | ||
By: | /s/ Gregory C. Critchfield, M.D. | |
Gregory C. Critchfield, M.D. | ||
Chairman, President and CEO |
THE EMPLOYEE: | |
/s/ Garrett Lam | |
Garrett Lam |
10
Exhibit A: Outside Activities
1. | Member of Clinical Innovations Medical Advisory Board |
2. | Complete current open cases of medico-legal consultation |
3. | Consulting with Illumina on NIPS |
4. | Consulting with Hologic on gynecological opportunities |
5. | Consultant for Velo biologics study on treatment of early onset preeclampsia |
11
Exhibit 10.15
June 19, 2020
Garrett Lam
1864 E. Mountain Crest Drive
Draper, UT 84020
Re: Separation Agreement
Dear Garrett:
The purpose of this letter agreement (the “Agreement”) is to set forth the terms of your separation from Sera Prognostics, Inc. (the “Company”), and the entirety of the understanding between you, Garrett Lam, on the one hand and the Company on the other, with respect thereto. This Agreement supersedes the terms of the employment agreement dated as of June 13, 2018 (the “Employment Agreement”) in all respects except as to the sections 2(b), 5, 6, 7, 8 and 9 of the Employment Agreement, to the extent that those sections do not conflict with the express terms of this Agreement (in which case the terms of this Agreement shall prevail). Payment of the Severance Pay described below is contingent on your agreement to and compliance with the terms of this Severance Agreement. Neither this offer to you nor the Company’s entering into this Severance Agreement shall constitute an admission by the Company.
Separation of Employment.
a) Your employment with the Company will end on June 19, 2020 (the “Separation Date”). You acknowledge and agree you will continue to devote your full time and attention and best efforts to performing the duties assigned to you (including the transition of your responsibilities to the individual(s) identified by the Company) and you will comply with all existing Company rules, regulations, policies and directives through the Separation Date. You further acknowledge and agree that, from and after the Separation Date, you shall have no authority to, and shall not, represent yourself as an employee of the Company.
b) Following the Separation Date, the Company will communicate your separation from the Company to internal and external parties. That communication shall consist of the following language: “Garrett Lam has resigned from Sera Prognostics to pursue other activities.” The Company’s response to inquiries regarding your separation will be consistent with Section 4(f) below.
c) Notwithstanding your separation from the Company, you will continue as a corresponding author of the Markenson et al. 2020 TREETOP publication in the American Journal of Obstetrics & Gynecology Maternal Fetal Medicine (https://doi.org/10.1016/j.ajogmf.2020.100140), and coordinate responses to queries with all the authors (Company and non-Company) of such paper.
Severance Pay.
a) In exchange for the mutual promises set forth in this Agreement, the Company agrees to provide severance pay to you in a lump sum of one hundred eighty-two thousand dollars ($182,000.00) less all applicable federal, state, local and other employment-related deductions (“the Payment”). The Company also will provide you with a monthly payment equivalent to your COBRA payment beginning on July 1, 2020 to cover the cost of the continuation of your health insurance coverage through the earlier of (1) June 30, 2021 or (2) the date when you become eligible to receive health insurance coverage in connection with new employment or self-employment (the “COBRA Payment”). You will receive a Form 1099 at each taxable year’s end for the COBRA Payments received within that taxable year. The Payment and the COBRA Payment, together, are referred to as the “Severance Pay.” The Payment and the then-due COBRA Payment(s) will be provided to you within ten (10) days of the Effective Date, which date constitutes the eighth day following the Execution Date, (as that term is defined below). The Severance Pay, including each successive COBRA Payment, will be made by check made payable to Garrett Lam, by sending the Severance Pay and/or COBRA Payment(s) to you via overnight mail at 1864 E. Mountain Crest Drive, Draper, UT 84020.
b) Regardless of whether you sign this Agreement, you will have the right to continue your medical insurance pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). You will receive your COBRA notice under separate cover. If you do not sign this agreement and do not elect COBRA, your health insurance (if applicable) will cease on June 30, 2020.
c) In addition to the Severance Pay, and regardless of whether you sign this Agreement, you will receive payment for your accrued wages through your Separation Date and your unused but accrued vacation pay through your Separation Date, less all applicable federal, state, local deductions.
d) You acknowledge and agree that the Severance Pay is not otherwise due or owing to you under any Company employment agreement (oral or written) or Company policy or practice, including the Employment Agreement, absent your execution of this Agreement. You also agree that the Severance Pay to be provided to you is not intended to and does not constitute a severance plan and does not confer a benefit on anyone other than the parties. You further acknowledge that, except for the specific financial consideration set forth in this Agreement, and your final wages, which shall be paid to you in accordance with the Company’s regular payroll practices and applicable law following the Separation Date (whether or not you sign this Agreement), you are not now owed and shall not in the future be entitled to any other compensation from the Company including, without limitation, other wages, commissions, bonuses, holiday pay, paid time off or any other form of compensation or benefit.
Equity. You acknowledge and agree that the disposition of Company equity in which you had an interest prior to the Separation Date will be fully governed by the terms of Section 2(b) of the Employment Agreement as they apply to terminations by the Company without Cause. You and the Company further acknowledge and agree that, at the time of the Separation Date, you owned 0 shares of common stock and had options to acquire an additional 490,000 shares of common stock, of which options to acquire 318,750 shares of common stock remain unvested and whose vesting will partially accelerate pursuant to Section 2(b) of the Employment Agreement.
Confidentiality. You expressly acknowledge and agree to the following:
a) that you promptly will return to the Company all Company documents (and any copies thereof) and property (including, without limitation, all cell phones, pagers, storage devices, and other Company equipment) upon request, and the Company, for its part, will make reasonable accommodations to return copies of any personal data specifically requested by you and to return your personal belongings to you within two weeks of the Separation Date;
b) that you promptly will relinquish to the Company all of the usernames, passwords, and contacts used by you to access all Sera and/or third party applications for your work with the Company;
c) that your employment with the Company created a relationship of confidence and trust between the Company and you with respect to any information: (a) applicable to the business of the Company; or (b) applicable to the business of any vendor, broker, client or customer of the Company, which was made known to you by the Company or by any vendor, broker, client or customer of the Company, or learned by you in such context during the period of your employment. All such information has commercial value in the business in which the Company is engaged and is hereinafter called “Proprietary Information.” By way of illustration, but not limitation, Proprietary Information includes any and all trade secret, and proprietary information, techniques, know-how, processes, software programs, software source documents, and formulae related to the current, future and proposed products and services of the Company, and includes, without limitation, respective information concerning research, actual and proposed products and services, development, financial information, procurement requirements, purchasing manufacturing, customer lists, customer databases, customer policy information, business forecasts, sales and marketing plans and information. “Proprietary Information” also includes proprietary or confidential information of any third party who disclosed such information to the Company or to you in the course of the Company’s business. You acknowledge and agree that all Proprietary Information is the sole property of the Company, the Company’s assigns, and the Company’s customers (as applicable), and the Company, the Company’s assigns and the Company’s customers (as applicable) are the sole and exclusive owner of all copyrights, trade secrets and other rights in the Proprietary Information. You assign and agree to assign to the Company all rights, title and interest, you may have or acquired (if any) in the Proprietary Information. At all times, both during your employment by Company and after termination of such employment, you agree that you will keep in confidence and trust all Proprietary Information, and that you will not use or disclose any Proprietary Information or anything directly relating to the Proprietary Information without the written consent of the Company. You understand and agree that the terms of this Section extend to and cover disclosures or uses made of Proprietary Information online, including but not limited to social media sites, blog posts, and any other internet-based communication or posting forum.
d) that all information relating in any way to the negotiation of this Agreement, including the terms and amount of financial consideration provided for in this Agreement, shall be held confidential by you and shall not be publicized or disclosed to any person (other than an immediate family member, legal counsel or financial advisor, provided that any such individual to whom disclosure is made agrees to be bound by these confidentiality obligations), business entity or government agency (except as mandated by state or federal law), except that nothing in this paragraph shall prohibit you from participating in an investigation with a state or federal agency if requested by the agency to do so;
e) that you will not make any statements that are professionally or personally disparaging about, or adverse to, the interests of the Company (including its former or current officers, directors, employees and consultants) including, but not limited to, any statements that disparage any person, product, service, finances, financial condition, capability or any other aspect of the business of the Company, and that you will not engage in any conduct which could reasonably be expected to harm professionally or personally the reputation of the Company (including its former or current officers, directors, employees and consultants); and
f) The Company agrees that it shall respond to third-party inquiries regarding your employment by providing only your period of employment and positions held and shall only verify your title and dates of employment and advise the requesting party that the Company has a policy of not providing any additional information regarding former employees.
Your Release of Claims. You hereby agree and acknowledge that, by signing this Agreement and accepting the Severance Pay, and for other good and valuable consideration, you are waiving your right to assert any and all forms of legal claims against the Company1 of any kind whatsoever, whether known or unknown, arising from the beginning of time through the date you execute this Agreement (the “Execution Date”). You acknowledge that as of Execution Date, you have not filed any complaints, claims, charges, actions, grievances or arbitrations against the Company or otherwise contacted any U.S. federal, state or local governmental agency or commission that has applicable jurisdiction to regulate the Company (each a “Government Agency”) regarding the Company, except to the extent you (i) have already informed the Company in writing prior to the Execution Date, or (ii) are permitted by law to opt against such disclosure; and further, you are not aware of any unlawful conduct in relation to the business of the Company, except to the extent you have already informed the Company in writing prior to the Execution Date. Except as set forth below, your waiver and release herein is intended to bar any form of legal claim, complaint or any other form of action (jointly referred to as “Claims”) against the Company seeking any form of relief including, without limitation, equitable relief (whether declaratory, injunctive or otherwise), the recovery of any damages, or any other form of monetary recovery whatsoever (including, without limitation, back pay, front pay, compensatory damages, emotional distress damages, punitive damages, attorneys’ fees and any other costs) against the Company, for any alleged action, inaction or circumstance existing or arising through the Execution Date.
1 For purposes of this Agreement, the Company includes Sera Prognostics, Inc. and any of its divisions, affiliates (which means all persons and entities directly or indirectly controlling, controlled by or under common control with the Company), parents, subsidiaries and all other related entities, and its and their former and current directors, officers, employees, trustees, agents, successors and assigns.
a) Without limiting the foregoing general waiver and release, you specifically waive and release the Company from any Claim arising from or related to your prior employment relationship with the Company or the termination thereof, including, without limitation:
(i) Claims under any state or federal discrimination, fair employment practices or other employment related statute, regulation or executive order including, but not limited to, the Utah Antidiscrimination Act, (as it may have been amended) prohibiting discrimination or harassment based upon any protected status including, without limitation, race, national origin, age, gender, marital status, disability, veteran status or sexual orientation. Without limitation, specifically included in this paragraph are any Claims arising under the federal Age Discrimination in Employment Act, the Civil Rights Acts of 1866 and 1871, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Age Discrimination in Employment Act, and any similar Utah or local statute.
(ii) Claims under any other state or federal employment related statute, regulation or executive order (as they may have been amended through the Execution Date) relating to any other terms and conditions of employment, including but not limited to the Fair Labor Standards Act and any Utah equivalent.
(iii) Claims under any state or federal common law theory including, without limitation, wrongful discharge, breach of express or implied contract, promissory estoppel, unjust enrichment, breach of a covenant of good faith and fair dealing, violation of public policy, defamation, interference with contractual relations, intentional or negligent infliction of emotional distress, invasion of privacy, misrepresentation, deceit, fraud or negligence.
(iv) Any other Claim arising under state or federal law.
b) Notwithstanding the foregoing, this section does not release the Company from any obligation expressly set forth in this Agreement or from any other claims that cannot be released by law. You acknowledge and agree that, but for providing this waiver and release, you would not be receiving the economic benefits being provided to you under the terms of this Agreement.
c) It is the Company’s desire and intent to make certain that you fully understand the provisions and effects of this Agreement. To that end, you have been encouraged and given the opportunity to consult with legal counsel for the purpose of reviewing the terms of this Agreement. Also, because you are over the age of 40 consistent with the provisions of the Age Discrimination in Employment Act (“ADEA”), which prohibits discrimination on the basis of age, the Company is providing you with twenty one (21) days in which to consider and accept the terms of this Agreement by signing below and returning it to Gregory Critchfield at the addresses and/or email provided herein for Gregory Critchfield at the Company:
Gregory Critchfield
Chairman, President, and CEO
Sera Prognostics, Inc.
2749 East Parleys Way, Suite 200
Salt Lake City, UT 84109
gcritchfield@seraprognostics.com
You may rescind your assent to this Agreement if, within seven (7) days after you sign this Agreement, you deliver by hand or send by mail (certified, return receipt and postmarked within such 7 day period) a notice of rescission to Gregory Critchfield at the Company. The eighth day following the Execution Date is the “Effective Date” of this Agreement
.
d) Consistent with the provisions of federal and state discrimination laws, nothing in this release shall be deemed to prohibit you from challenging the validity of this release under such discrimination laws (the “Discrimination Laws”) or from filing a charge or complaint of age or other employment related discrimination with the Equal Employment Opportunity Commission (“EEOC”) or state equivalent, or from participating in any investigation or proceeding conducted by the EEOC or state equivalent. Further, nothing in this release or Agreement shall be deemed to limit the Company’s right to seek immediate dismissal of such charge or complaint on the basis that your signing of this Agreement constitutes a full release of any individual rights under the Discrimination Laws, or to seek restitution to the extent permitted by law of the economic benefits provided to you under this Agreement in the event that you successfully challenge the validity of this release and prevail in any claim under the Discrimination Laws.
Entire Agreement/Modification/Waiver/Choice of Law/Enforceability. You acknowledge and agree that this Agreement supersedes any and all prior or contemporaneous oral and/or written agreements between you and the Company, and sets forth the entire agreement between you and the Company, with the exception of the sections 2(b), 5, 6, 7, 8, and 9 of the Employment Agreement shall remain in full force and effect, including the Non-Competition and Non-Solicitation provisions of Section 6. No variations or modifications hereof shall be deemed valid unless reduced to writing and signed by the parties hereto. The failure of the Company to seek enforcement of any provision of this Agreement in any instance or for any period of time shall not be construed as a waiver of such provision or of the Company’s right to seek enforcement of such provision in the future. This Agreement shall be deemed to have been made in the State of Utah and shall be construed in accordance with the laws of the State of Utah without giving effect to conflict of law principles. The venue for any dispute under or pertaining to this Agreement shall be the State or Federal Courts located in Salt Lake County. The provisions of this Agreement are severable, and if for any reason any part hereof shall be found to be unenforceable, the remaining provisions shall be enforced in full.
Cooperation. You agree that, with respect to any existing or future litigation or legal dispute (“Dispute”) involving the Company and a third party with who you had any connection whatsoever during the time of your employment with the Company, including but not limited to any Company employee or ex-employee asserting any employment-related claims, you will reasonably cooperate with the Company in the defense or prosecution of that Dispute. Reasonable cooperation shall include, without limitation, providing testimony, providing assistance to authorized Company representatives and outside counsel in preparation for trial, hearing, arbitration, mediation or any other proceeding. You understand and agree that you may be required to travel as part of this duty of reasonable cooperation. The Company shall pay all reasonable expenses associated with such travel.
No Re-hire. You agree you shall not be eligible for future employment or knowingly seek employment with the Company or any of its respective parents, subsidiaries, or any entity in which any such entities hold a controlling ownership interest, either as an employee, consultant, independent contractor, or worker of any kind paid directly by any such entity. You further agree, that upon learning that you applied for any employment with same, you shall immediately withdraw your application. Further, you agree this forbearance to seek future employment is purely contractual and is in no way involuntary, discriminatory, or retaliatory.
Tax Liabilities. You specifically acknowledge and agree that you are solely responsible for the tax designations of the Severance Pay. Each of the Parties further agrees that any and all your tax liabilities that may arise out of payment of the Severance Pay will be borne exclusively and solely by you. You further agree that, if any court, taxing authority or government entity (local, state, or federal) finds that the Severance Pay should be subject to any further applicable taxes and related withholdings, you will be solely responsible for those applicable taxes, withholdings, and any related interest, penalties or damages, unless such a finding is based on errors of the Company. You further agree to indemnify the Company or its affiliates or subsidiaries for any tax liabilities, interest, penalties, or other damages or liabilities that the Company or its affiliates or subsidiaries may be subjected to as a result of any court, taxing authority, or government entity (local, state, or federal) finding that the Severance Pay should be subject to any further taxes and related withholdings, unless such a finding is based on errors of the Company.
By executing this Agreement, you are acknowledging that: (1) you have carefully read and understand the terms and effects of this Agreement, including Section 5 entitled Release of Claims; (2) you understand that the Release of Claims in Section 5 is legally binding and by signing this Agreement, you give up certain rights, including rights and claims under the Age Discrimination in Employment Act; (3) you have been afforded sufficient time to understand the terms and effects of this Agreement; (4) your agreements and obligations hereunder are made voluntarily, knowingly and without duress; and (5) neither the Company nor its agents or representatives have made any representations inconsistent with the provisions of this Agreement.
The parties agree that the Agreement may be signed on one or more copies, each of which when signed will be deemed to be an original, and all of which together will constitute one and the same Agreement.
If the foregoing correctly sets forth our understanding, please sign, date and return the enclosed copy of this Agreement to me within 21 days.
Sincerely, | |||
Sera Prognostics, Inc. | |||
By: | /s/ Gregory Critchfield | ||
Gregory Critchfield | |||
Its: | Chairman, President, and CEO | ||
Dated: | June 19, 2020 | ||
Confirmed, Agreed and Acknowledged: | |||
/s/ Garrett Lam | |||
Garrett Lam | |||
Dated: | July 8, 2020 |
Exhibit 10.16
FINAL
SERA PROGNOSTICS, INC.
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is effective for all purposes as of April 13, 2021 (the “Effective Date”), by and between Sera Prognostics, Inc., a Delaware corporation (the “Company”), and Benjamin Jackson (the “Employee”).
NOW, THEREFORE, in consideration of the mutual covenants, conditions and undertakings set forth herein, the parties hereto hereby agree as follows:
1. Employment and Duties. Subject to the terms and conditions set forth in this Agreement, the Company shall employ Employee, and Employee hereby accepts employment, as the General Counsel of the Company, with those duties and responsibilities which are appropriate and customary for a general counsel of a company similar to the Company. In such capacity, the Employee shall report to the Company’s Chief Executive Officer. During the term of this Agreement, the Employee shall faithfully perform the Employee’s duties, responsibilities and obligations hereunder.
2. Base Compensation and Related Matters.
(a) Salary. In consideration for the services rendered by the Employee to the Company as provided herein, the Company shall pay the Employee an annual base salary of $310,000 per year (the “Base Salary”), provided that the Employee’s employment with the Company remains active at a full-time rate. The Base Salary shall be paid according to the Company’s standard payroll policy and will be subject to applicable federal and state tax withholdings as required by applicable law. The Base Salary may be increased or decreased at any time by the Company’s Board of Directors (the “Board”) or the Compensation Committee of the Board in its sole discretion.
(b) Stock Option Grant(s) and Bonuses. Subject to Board of Directors approval, the Employee shall be granted as soon as practicable on or after the Effective Date an option to purchase 404,000 shares of the Company’s common stock (the “Option”) (which option shall be issued as an incentive stock option to the maximum extent allowed under Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”)) pursuant to the Company’s 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”). The Option shall vest as to twenty-five percent (25%) of the shares subject thereto one (1) year from the Effective Date (“Vesting Start Date”), and shall vest with respect to the remaining shares subject thereto in equal monthly installments over an additional thirty-six (36) months thereafter commencing on the first day of the month following the Vesting Start Date, subject to continued employment by the Company. In addition, the Option shall accelerate with respect to thirty-seven and one-half percent (37.5%) of the outstanding unvested shares at that time then subject thereto upon a Change of Control (as defined in the Plan) pursuant to which the Option is terminated pursuant to Section 24(b)(ii) of the Plan or cashed out pursuant to Section 24(b)(iii) of the Plan. The Employee shall be eligible, after the Effective Date, to receive (i) additional stock options pursuant to the Plan, and (ii) additional bonus compensation, as determined by the Board, in its sole discretion; it being the intention of the Board to maintain Employee’s aggregate compensation at levels appropriate and customary to those of companies similar in industry, stage and circumstances to that of the Company. Unless otherwise approved by the Board, all future options granted to the Employee after the Effective Date shall vest in equal monthly installments over a period of forty-eight (48) months from the date of grant. Notwithstanding the foregoing, in the event that the Employee’s employment with the Company is terminated by the Company without Cause (as defined in Section 5(a)(iii) below) or by the Employee for Good Reason (as defined in Section 5(b)(ii) below), then the vesting of all options held by the Employee at the time of the termination shall accelerate (i) with respect to thirty-seven and one-half percent (37.5%) of the unvested shares subject thereto, or (ii) if such termination occurs within 30 days prior to or within 12 months after a Change of Control (as defined in the Plan), with respect to one hundred percent (100%) of the unvested shares subject thereto. You will be eligible to participate in the Company’s Annual Incentive Plan, which currently provides for a bonus target of 30% of your base salary, prorated for time of service, and with respect to the calendar year ending December 31, 2021, payment will be contingent based on achievements mutually agreed by you and your supervisor.
(c) Expenses. The Employee will be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee (which are eligible for reimbursement under the Code) actually incurred by him in performing his duties; provided; however, that such expenses are approved in accordance with the Company’s then-current policies and procedures applicable to the most senior-level executive employees of the Company, other than the Employee, or if such policies and procedures are not in place, then as determined in the sole discretion of the Board.
(d) Employee Benefits. Upon beginning his employment with the Company, the Employee will be entitled to participate in the group health, dental, vision, and group life insurance benefit plans, as well as the Company’s 401(k) and Flexible Spending Account Plans available to all Company employees. In addition, the Employee is entitled to participate in any employee benefit plans that the Company may make available to its most senior-level executive employees generally, which may include but not be limited to, profit sharing plans, 401(k) and cafeteria plans, or life, hospitalization, optical, disability, or other insurance plans as may be in effect, from time to time, and in accordance with rules established, from time to time, for individual participation in such plans.
(e) Paid Time Off. Upon beginning his employment with the Company, the Employee will be entitled to take five (5) weeks of paid time off per calendar year and shall be entitled to compensation in connection therewith, in accordance with Company policy applicable to senior-level executive employees of the Company, as approved by the Chief Executive Officer in its sole discretion. Paid time off accrues on a semi-monthly basis starting on date of hire. A maximum of 120 hours are allowed to roll over to the next calendar year. The Company will pay out all unused, accrued paid time off upon the Employee’s separation from the Company.
3. Facilities and Services Furnished. The Company will furnish the Employee with office space at its headquarters in Salt Lake City, Utah, and such other facilities, furniture, equipment and services as it may determine to be reasonably necessary for the performance of the Employee’s duties as set forth herein.
2
4. Termination.
(a) Termination by the Company. The Employee’s employment hereunder may be terminated by the Company under any of the following circumstances:
(i) Death. This Agreement shall automatically terminate upon the Employee’s death.
(ii) Disability. The Company may elect to terminate the Employee’s employment in the event of Employee’s Disability upon delivery of written notice to the Employee. For purposes of this Agreement, “Disability” shall mean any condition that, in the reasonable, good faith judgment of a licensed physician selected by the Company, causes the Employee to be unable, after any accommodation required by applicable law, to perform his duties, responsibilities and obligations under this Agreement for a period of at least twelve (12) months.
(iii) Cause. The Company may terminate the Employee’s employment hereunder for Cause (as defined below) at any time upon delivery of written notice to the Employee. For purposes of this Agreement, “Cause” shall mean (A) the conviction of the Employee by a court of competent jurisdiction of any felony involving dishonesty, breach of trust or misappropriation or the entering of a plea by the Employee of nolo contendre thereto; (B) the Employee’s willful failure or refusal to follow reasonable and lawful directives of the Board or the Company’s Chief Executive Officer, provided such failure or refusal continues after the Employee’s receipt of reasonable notice in writing of such failure or refusal and an opportunity of not less than thirty (30) days to correct the problem; (C) a material breach by the Employee of any of the provisions of this Agreement, with notification of such breach by the process outlined Section 5(a)(iii)(B) above; or (D) the Employee’s commission of any immoral or illegal act or any gross or willful misconduct, where a majority of the non-employee members of the Board reasonably determines that such act or misconduct has (1) seriously undermined the ability of the Board to entrust Employee with important matters or otherwise work effectively with Employee, (2) contributed to the Company’s loss of significant revenues or business opportunities, or (3) significantly and detrimentally affected the business or reputation of the Company or any of its subsidiaries.
(iv) Other Termination. The Company may terminate Employee’s employment with the Company at any time and for any reason, with or without cause, subject to the provisions hereof. Employee acknowledges that Employee is, and at all times shall be, an employee at will of the Company and nothing contained herein shall be construed to alter or affect such employee at-will status. Employee may terminate his employment with the Company at any time, for any or no reason, subject to the provisions hereof. Inclusion under any benefit plan or compensation arrangement will not give Employee any right or claim to any benefit hereunder except to the extent such right has become fixed under the express terms of this Agreement.
(b) Termination by the Employee. The Employee may terminate the Employee’s employment with the Company under the following circumstances:
(i) Voluntary Termination. Employee may terminate his employment with the Company for any reason or no reason, upon delivery of written notice to the Company at least fifteen (15) days prior to the specified termination date.
3
(ii) Termination for Good Reason. The Employee also may terminate the Employee’s employment with the Company for “Good Reason,” which shall mean for purposes of this Agreement (A) a material breach by the Company of any of the provisions of this Agreement; (B) assignment of Employee to a role, duties or responsibilities materially inconsistent with that of senior executive management; (C) any circumstances caused by the Company that would require Employee to move his principal location of employment in excess of one hundred (100) miles from the Company’s principal business location in Salt Lake City, Utah; or (D) an involuntary material reduction of Employee’s then current Base Salary other than a reduction proportionately affecting all of the Company’s other senior-level executive employees. The Employee must provide the Company with a written Notice of Termination that describes the existence of the condition the Employee believes gives rise to Good Reason under this Section 5(b)(ii) within thirty (30) days following the initial existence of the condition. The Company may elect to cure any condition giving rise to Good Reason within thirty (30) days of receipt of notice. The Employee’s termination for Good Reason must, in any event, occur within the six (6) month period immediately following the initial existence of the condition giving rise to Good Reason.
(c) Effect of Termination. In the event the Employee’s employment is terminated, all obligations of the Company and the Employee under this Agreement shall cease, except that the accelerated vesting of Options set forth in Section 2(b) and the terms of Section 6 through Section 9 shall survive such termination. Upon such termination, the Employee or the Employee’s representative or estate shall be entitled to receive the applicable compensation, benefits and reimbursements set forth in Section 5. The Employee acknowledges that, upon termination of the Employee’s employment, the Employee is entitled to no other compensation, severance or other benefits other than those specifically set forth in Section 5.
5. Compensation and Benefits Upon Termination of Employment. At all times after the Effective Date, the Employee shall be entitled to receive additional compensation and benefits upon a termination of Employee’s employment as follows:
(a) Severance Pay. If either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason; then, on the sixtieth (60th) day following the termination of employment, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment. If the Company terminates the Employee’s employment due to death or Disability and (y) the Company does not provide any disability or life, as applicable, insurance benefits payable to the Employee or his beneficiaries, as applicable, upon his death or Disability and (z) the Company has previously, but not necessarily in the then applicable calendar year, achieved Ten Million Dollars in annual gross revenue in a calendar year, then, on the sixtieth (60th) day following the termination of employment due to death or Disability, the Company shall pay the Employee a lump sum amount equal to six (6) months of the Base Salary at the rate in effect at the time of the termination of employment.
4
(b) Health Insurance. If, while participating in the Company’s group health insurance plan(s), either (i) the Company terminates the Employee’s employment for any reason other than Cause, death or Disability or (ii) the Employee terminates his employment for Good Reason, and if the Employee elects to continue his health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) following the termination of his employment, then the Company shall pay the portion of the Employee’s monthly premium under COBRA until the earliest of (x) the close of the twelve (12) month period following the Employee’s termination date, (y) the expiration of the Employee’s continuation coverage under COBRA or (z) the date when the Employee receives health insurance coverage in connection with new employment. If the payment of any COBRA or health insurance premiums would otherwise violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code.
(c) General Release. Any other provision of this Agreement notwithstanding, subsections (a) and (b) above shall not apply unless the Employee has (i) executed a general release of all claims (in a form prescribed by the Company), which must be effective and irrevocable prior to the sixtieth (60th) day following the termination of employment, (ii) returned all property of the Company in the Employee’s possession and (iii) cooperated in good faith with the Company for a transition period not to exceed sixty (60) days to ensure an efficient transfer of the Employee’s duties and responsibilities.
6. Non-Competition; Non-Solicitation. The Employee and the Company hereby acknowledge and agree that in connection with the employment of the Employee, the Employee has been and will be provided with trade secrets of the Company and that the Employee and the Company are entering into this Agreement for the protection of such trade secrets. The Employee agrees to abide by the provisions set forth in this Section 6.
(a) Non-Competition. The Employee shall not, during his employment with the Company and during the one (1) year period following the termination of his employment with the Company (the “Restrictive Period”) directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of his consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party:
(i) anywhere in the world (the “Restricted Area”) compete with or own, manage, operate or control any business that directly competes in the Company’s field of interest or products in the active development pipeline of the Company (for purposes of this paragraph, ownership of securities of not in excess of one percent (1%) of the outstanding capital stock of a public company shall not be considered to be competition with the Company); or
(ii) anywhere in the Restricted Area, act as an employee, director, officer, manager, member, advisor, consultant, representative or agent for any business of the type and character engaged in and competitive with the Company.
(b) Non-Solicitation. The Employee shall not, during the Restrictive Period directly or indirectly, as a manager, member, promoter, shareholder, agent, representative, director, officer, owner, independent contractor or otherwise, or in connection with any of his consultants, employees, agents, partners, relatives, affiliates or representatives or through any third party, solicit the employment of or hire any current employee of the Company, or solicit a relationship with any customer of the Company, located anywhere in the Restricted Area.
5
(c) Definitions. For purposes of this Section 6, the terms “compete with the Company,” “competitive with the Company,” “field of interest” and similar terms referring to competition with the Company shall mean any business that is engaged in identifying and commercializing biomarkers in blood samples of pregnant women which are predictive of preterm birth and other pregnancy complications or any other anticipated business ventures of the Company which have been discussed with the Board or amongst the senior-level executive employees as of the date of Employee’s termination.
7. Maintaining Confidential Information.
(a) Company Confidential Information. The Employee hereby agrees at all times during which he provides services as a director, officer, employee or consultant of the Company (“Employee’s Service”), and thereafter to hold in strictest confidence, and not to use, except for the benefit of the Company, any trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, formulas, developmental or experimental work, computer lists, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its clients, consultants or licensees (collectively “Confidential Information”).
Notwithstanding the above, Employee shall not have liability to the Company with regard to any Confidential Information which Employee can prove:
(i) was in the public domain at the time it was disclosed by the Company or has entered the public domain through no fault of Employee;
(ii) was known to the Employee without restriction, at the time of disclosure, as demonstrated by files in existence at the time of disclosure;
(iii) is disclosed with the prior written approval of the Company;
(iv) becomes known to Employee, without restriction, from a source other than the Company without breach of this Agreement by Employee and otherwise not in violation of the Company’s rights; or
(v) is disclosed pursuant to the order or requirement of a court, administrative agency, or other governmental body; provided, however, that Employee shall provide prompt notice of such court order or requirement to the Company to enable the Company to seek a protective order or otherwise prevent such disclosure.
(b) Former Employer Information. The Employee hereby agrees that he will not, during Employee’s Service, improperly use or disclose any proprietary information or trade secrets of his former or concurrent employers or companies, if any, and that he will not make available to the Company any unpublished document or any property belonging to his former or concurrent employers or companies, if any, unless consented to in writing by said employers or companies.
6
(c) Third-Party Information. The Employee recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Employee hereby agrees, during Employee’s Service and thereafter, to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out his work for the Company consistent with the Company’s agreement with such third party) or to use it for the benefit of anyone other than the Company or such third party (consistent with the Company’s agreement with such third party) without the express written authorization of the Board.
(d) Outside Activities. During the Employee’s employment with the Company, the Employee shall not perform consulting/business activities beyond those disclosed in Exhibit A, without prior written consent of the Company’s Board of Directors Compensation Committee.
8. Availability of Equitable Remedies. The Employee hereby acknowledges and agrees that a breach of Section 6 or Section 7 will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of Section 6 or Section 7 will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company will be entitled to injunctive relief for any breach or threatened breach of Section 6 or Section 7.
9. Miscellaneous.
(a) Notification of New Employer. In the event that the Employee leaves the employ of the Company, he hereby grants consent to notification by the Company to his new employer about his rights and obligations under this Agreement.
(b) Severability. In the event that a court of competent jurisdiction determines that any portion of this Agreement is in violation of any statute or public policy, then only the portions of this Agreement which violate such statute or public policy shall be stricken. All portions of this Agreement which do not violate any statute or public policy shall continue in full force and effect. Further, any court order striking any portion of this Agreement shall modify the stricken terms to give as much effect as possible to the intentions of the parties under this Agreement.
(c) Notices. Any notices, requests or consents hereunder shall be deemed given, and any instrument delivered, three (3) days after they have been mailed by first class mail, postage prepaid, one (1) day after they have been delivered by overnight courier, twelve (12) hours after such notice has been sent by facsimile, or upon receipt if delivered personally, as follows:
To the Company:
2749 Parleys Way, Suite 200
Salt Lake City, UT 84109
To the Employee:
2863 East Oquirrh Drive
Salt Lake City, UT 84108
except that any of the foregoing may, from time to time, by written notice to the others, designate another address or fax number which shall thereupon become his or its effective address for the purposes of this Section 9(c).
7
(d) Governing Law. This Agreement shall be governed by the laws of the State of Utah, without giving effect to its conflict of laws principles.
(e) Successors and Assigns. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. This Agreement is for the unique personal services of the Employee, and the Employee shall not be entitled to assign any of the Employee’s rights or obligations hereunder.
(f) Entire Agreement; Amendment. This Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter of this Agreement, and supersedes all other prior agreements and understandings with respect thereto. This Agreement can be amended or modified only in a writing signed by the Employee and the Company.
(g) No Waiver. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time.
(h) Headings. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.
(i) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
(j) Costs and Expenses. The Company shall reimburse all of the Employee’s reasonable costs and expenses (including, without limitation, attorneys’ fees), incurred in connection with the negotiation and preparation of this Agreement.
(k) Attorneys’ Fees. In the event of any action at law, equity or under this Agreement to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees and court costs in addition to any other relief to which such party may be entitled, unless the action is one in which only a prevailing plaintiff is entitled to prevailing party fees and costs (such as a Title VII action).
(l) Section 409A. The Company intends that the cash severance payments to which the Employee is entitled on his termination of employment pursuant to Section 5 are payable on the Employee’s Separation from Service (as defined below) and are exempt from, or are otherwise payable in compliance with Section 409A. The Company intends that the Company’s continued payment for the cost of the Employee’s welfare benefits (including the payment of all COBRA administrative costs and expenses) provided by Section 5 will comply with the exception to Section 409A for reimbursements and certain other separation payments, as described in Treas. Reg. § 1.409A-1(b)(9)(v)(B), to the extent such costs are taxable and subject to imputed income treatment.
8
(i) Separation from Service Defined. For purposes of this Agreement, the term “termination of employment” means the Employee’s “Separation from Service.” The term “Separation from Service” means (A) the termination of the Employee’s employment with the Company and all affiliates for any reason or (B) a permanent reduction in the level of bona fide services the Employee provides to the Company and all affiliates to an amount that is twenty percent (20%) or less of the average level of bona fide services the Employee provided to the Company and all affiliates in the immediately preceding thirty-six (36) months (or the entire time period during which the Employee provided services to the Company and all affiliates if the Employee has been providing such services for less than thirty-six (36) months), with the level of bona fide service calculated in accordance with Treas. Reg. § 1.409A-1(h)(1)(ii). Solely for purposes of determining whether an organization is an “affiliate” of the Company, the Company will follow the rules set forth in Treas. Reg. § 1.409A-1(h)(3) (which generally requires fifty percent (50%) common ownership or control). The Employee’s employment relationship is treated as continuing while the Employee is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six (6) months; or, if longer, so long as the Employee’s right to reemployment with the Company or an affiliate is provided either by statute or contract). If the Employee’s period of leave exceeds six (6) months and his right to re-employment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six (6) month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.
(ii) Delay in Payments. Notwithstanding any provision of this Agreement to the contrary, if any of the severance payments are subject to Section 409A and the Employee is a “Specified Employee” at the time of his Separation from Service, no payments shall be made to the Employee prior to the first business day following the date which is six (6) months after the Employee’s Separation from Service. Any amounts that would have been paid during the six (6) months following the Employee’s Separation from Service will be paid on the first business day following the expiration of the six (6) month period without interest thereon. The Employee may not elect the taxable year of such payment. The six (6) month delay for a Specified Employee does not apply if the Employee dies.
(iii) Specified Employee Defined. For purposes of this Agreement, the term “Specified Employee” means certain officers and highly-compensated employees of the Company as defined in Treas. Reg. 1.409A-1(i), and as determined in accordance with such procedures as may be adopted from time to time by the Company.
(iv) Miscellaneous Payment Provisions. If payment is not made, in whole or in part, due to a dispute between the Employee and the Company, the payments shall be made in accordance with Treas. Reg. § 1.409A-3(g), as applicable. It is intended that each installment of the payments and benefits provided under Section 5 of this Agreement shall be treated as a separate “payment” for purposes of Section 409A. If an expense reimbursement or provision of in-kind benefit provided pursuant to this Agreement is not exempt from Section 409A of the Code, the following rules apply: (A) in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred; (B) the amount of reimbursable expenses incurred or provision of in-kind benefits in one tax year shall not affect the expenses eligible for reimbursement or the provision of in-kind benefits in any other tax year; and (C) the right to reimbursement for expenses or provision of in-kind benefits is not subject to liquidation or exchange for any other benefit.
9
(v) Ban on Acceleration or Deferral. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral, except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code.
(vi) No Elections. The Employee does not have any right to make any election regarding the time or form of any payment due under this Agreement.
(vii) Compliant Operation and Interpretation. This Agreement shall be operated in compliance with the requirements of Section 409A or an exception thereto and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A or to qualify for an exception thereto.
(m) Dispute Resolution; Venue.
(i) The Company and the Employee shall use reasonable, good faith efforts to settle any dispute through non-binding mediation before a mutually-acceptable, neutral, third-party mediator. The mediation shall be held in Salt Lake City, Utah and administered by the CPR Institute for Dispute Resolution (the “CPR Institute”) under the CPR Mediation Procedure then in effect. Unless otherwise agreed, the parties shall jointly select a single mediator from the CPR Panels of Distinguished Neutrals based on a list of mediator candidates supplied by the CPR Institute. If, within fourteen (14) days after either party makes a written request for mediation under this Section 9(m)(i), the parties have not reached agreement on the selection of a mediator, the mediator shall be selected in accordance with the CPR Mediation Procedure currently in effect. A good faith attempt at mediation shall be a condition precedent to the commencement of litigation, but nothing in this Agreement, including, but not limited to paragraph (ii) below, shall be deemed a condition precedent to any court action for injunction or other interim relief pending the outcome of mediation.
(ii) If the parties are unable to resolve the dispute by mediation in a timely manner (which, in any case, shall not exceed sixty (60) days from the first notice of mediation), either party may attempt to resolve the dispute by commencing an action (or defending or responding to such action) exclusively in the jurisdiction and venue of the courts, whether federal or state, located in Salt Lake County, Utah.
(n) The Company shall, at all times, maintain Directors & Officers insurance with a policy limit of least $5,000,000.00 that will cover Employee in his capacity as an officer of the Company.
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective for all purposes as of the Effective Date.
THE COMPANY: | ||
SERA PROGNOSTICS, INC. | ||
By: | /s/ Gregory C. Critchfield, M.D. | |
Name: Gregory C. Critchfield, M.D. | ||
Title: Chairman, President, and CEO | ||
THE EMPLOYEE: | ||
/s/ Benjamin Jackson | ||
Name: Benjamin Jackson | ||
Title: General Counsel |
11
EXHIBIT A
THE OUTSIDE INTERESTS
TITLE | COMPANY NAME |
HOURS PER
WEEK |
ACTIVITIES |
Owner | TBD | ≤10 | Writing, mostly fiction |
Owner | The Ugly Dumpling | ≤10 | Home-based food business |
Exhibit 10.17
July 8, 2016
John Peltier
4 West Ledge Road
Clinton, MA 01510
(801) 651-2964
Dear John:
It has been a great pleasure for us to speak with you and to learn about your background and expertise. We are very pleased to offer you the position of Vice President of Laboratory Operations at Sera Prognostics, Inc. (“Sera”). Sera is currently focused on executing the commercial launch of PreTRM®, the Company's preterm birth diagnostic test. We are very excited about having you join our team.
So please take the next step and review the details of the verbal offer that was extended to you:
Position Details:
Job Title: | Vice President of Laboratory Operations |
Annual Salary: | $205,000, semi-monthly paychecks to be paid on the 15th & last day of each month |
Annual Incentive: | Sera's Board of Directors has adopted an annual incentive plan (“AIP”) designed to reward the achievement of corporate objectives and individual performances. Under the AIP, you will be eligible to earn a 25% annual target cash incentive, measured on a calendar year basis, to be prorated in 2016 based on time of service. |
Status: | Full-time, Exempt |
Anticipated Start Date: | Anticipated Start Date: On or before September 1, 2016 |
Reporting to: | Greg Critchfield, CEO |
Benefits: | |
Insurance: | Sera Prognostics offers major medical, dental, vision, long-term disability, term life insurance, 401(k), and a flexible spending account. You are eligible for these benefits on September 1, 2016. Benefits are effective upon your successful enrollment in the plans. |
Paid Time Off: | You are eligible for 4 weeks paid time off per year (based on calendar year and prorated for the first year of employment) plus 3 personal days per year; accruals begin with the first pay period following employment. In addition, you will receive paid time off for company recognized holidays. |
Equity: | You will be initially recommended to the Sera Board to be granted the option to purchase 175,000 shares of common stock of Sera at an exercise price equal to the fair market value of the shares on the date the option is granted, subject to final approval by the Sera Board of Directors. These granted options shall have a four-year vesting schedule as follows: 25% of the shares shall vest on the one-year anniversary of your start date with Sera, and an additional 1/36th of the total shares subject to the option shall vest each month thereafter, in each case provided that you continue to be an employee, consultant or director of Sera through each applicable vesting date. The terms of this stock option grant will be governed in all respects by the terms of the Sera Prognostics 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”) and the stock option agreement for the Plan, which will be provided to you after the effective date of the grant. Any future grant of stock options shall be governed by its respective Sera Prognostics Employee, Director and Consultant Equity Incentive Plan, which shall be provided to you after such a grant is awarded. |
Housing: | Sera will reimburse you for documented moving expenses, up to $35,000, involved in relocating to the Wasatch front metropolitan area. In addition, Sera will reimburse you up to $6,000 for documented temporary housing costs incurred in the Salt Lake City area prior to your full-time relocation. Finally, Sera will also pay for one house-hunting trip for you and your spouse to include round-trip economy airfare and lodging. |
Your employment with Sera is employment at-will. As a result, you are free to resign at any time, with or without notice and with or without cause or reason. Similarly, Sera is free to terminate its employment relationship with you at any time, with or without notice and with or without cause or reason. Sera's supervisors and managers have no actual or apparent authority to change the at-will nature of your employment unless they are expressly given that authority by Sera's CEO in writing. Any change to the at-will nature of your employment will not be valid unless it is expressed with specificity in a written contract that is signed and dated both by you (or your authorized representative) and a properly authorized Sera representative.
Your offer of employment is subject to successful completion of reference checks and a background investigation to be concluded prior to start of employment. Your employment is also contingent on your acceptance of Sera's Confidentiality, Nondisclosure, and Inventions Assignment Agreement, which will be included with your new hire paperwork, as well as your ability to show proof of your right to work in the United States. This proof must be provided on your first work day. Please see the attached “List of Acceptable Documents” for acceptable 1-9 documents. We also expect you to abide by Sera's policies and procedures as they may be adopted by Sera and in effect from time to time, and do not contradict the terms and conditions set forth in this letter. John, we are impressed with your intellect, drive and experience. We anticipate greatly the confirmation of your decision to accept this position and be a part of the exciting, ongoing developments at Sera Prognostics as a member of our team. If you have any questions, please do not hesitate to talk to me.
In accepting employment with Sera, you agree to treat the details of your compensation as sensitive and confidential information, which should be discussed within the company with only your supervisor or Sera's human resources manager.
To confirm acceptance of this offer, please return a signed copy of this letter to our attention by July 15, 2016 and confirming your start date as an employee on September 1, 2016.
Sincerely Yours, | |
/s/ Greg Critchfield | |
Greg Critchfield | |
Chief Executive Officer |
I accept employment with Sera Prognostics on the foregoing terms.
/s/ John Peltier | July/11/2016 | |
John Peltier | Date |
[Acceptance page to offer letter dated July 8, 2016]
Exhibit 10.18
June 17, 2020
Thomas Garite, MD
653 Round Tree Drive
Grand Junction, CO 81506
Dear Tom,
We have greatly appreciated the consulting services that you have provided to Sera Prognostics, Inc. (“Sera”) as an independent contractor under the Consulting Agreement between us dated December 1, 2018. As we have discussed with you, we are terminating that Agreement effective June 22, 2020 and are pleased to offer you employment at Sera in the position of Vice President, Clinical Sciences, to start on June 22, 2020. We are very excited about having you join our team in an employee capacity.
So please take the next step and review the details of this offer:
Position Details:
Job Title: | Vice President, Clinical Sciences |
Salary: | $9,600.00 per month, paid semi-monthly on the 15th & last day of each month |
Annual Incentive: | Sera’s Board of Directors has adopted an annual incentive plan (“AIP”) designed to reward the achievement of corporate objectives and individual performances. Under the AIP, you will be eligible to earn a 25% annual target cash incentive based on payments made to you as a part-time employee, and measured on a calendar year basis, to be prorated in 2020 based on time of service. |
Status: | Part-time, Exempt; Assuming an average of 48 hours’ work per month Anticipated Start Date: June 22, 2020 |
Reporting to: | Gregory Critchfield, Chairman, President & CEO |
Benefits:
Health/PTO: | Since this is a part-time position, defined as working less than 30 hours per week, you will not be eligible for health benefits or paid time off. |
Equity: | You will be initially recommended to the Sera Board to be granted the option to purchase 20,000 shares of common stock of Sera at an exercise price equal to the fair market value of the shares on the date the option is granted, subject to final approval by the Sera Board of Directors. These granted options shall have a four-year vesting schedule as follows: 25% of the shares shall vest on the one-year anniversary of your start date with Sera, and an additional 1/36th of the total shares subject to the option shall vest each month thereafter, in each case provided that you continue to be an employee, consultant or director of Sera through each applicable vesting date. The terms of this stock option grant will be governed in all respects by the 2749 East Parleys Way - Suite 200 | Salt Lake City, Utah 84109 | Phone 801.990.0520 | Fax 801.990.0640 terms of the Sera Prognostics 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”) and the stock option agreement for the Plan, which will be provided to you after the effective date of the grant. Any future grant of stock options shall be governed by its respective Sera Prognostics Employee, Director and Consultant Equity Incentive Plan, which shall be provided to you after such a grant is awarded. |
Your employment with Sera is employment at-will. As a result, you are free to resign at any time, with or without notice and with or without cause or reason. Similarly, Sera is free to terminate its employment relationship with you at any time, with or without notice and with or without cause or reason. Sera’s supervisors and managers have no actual or apparent authority to change the at-will nature of your employment unless they are expressly given that authority by Sera’s CEO in writing. Any change to the at-will nature of your employment will not be valid unless it is expressed with specificity in a written contract that is signed and dated both by you (or your authorized representative) and a properly authorized Sera representative.
Your offer of employment is subject to successful completion of reference checks and a background investigation to be concluded prior to start of employment. Your employment is also contingent on your acceptance of Sera’s Confidentiality, Nondisclosure, and Inventions Assignment Agreement, which will be included with your new hire paperwork, as well as your ability to show proof of your right to work in the United States. This proof must be provided on your first work day and consist of either a passport or driver’s license and Social Security card. We also expect you to abide by Sera’s policies and procedures as they may be adopted by Sera and in effect from time to time, and do not contradict the terms and conditions set forth in this letter.
Tom, we are impressed with your intellect, drive and experience. We anticipate greatly the confirmation of your decision to accept this position and be a part of the exciting, ongoing developments at Sera Prognostics as a member of our team. If you have any questions, please do not hesitate to contact me.
In accepting employment with Sera, you agree to treat the details of your compensation as sensitive and confidential information, not to be discussed with anyone else within the company.
To confirm acceptance of this offer, please return a signed copy of this letter to our attention by June 22, 2020 and confirming your start date as an employee.
Sincerely Yours,
/s/ Gregory C. Critchfield, MS, MD |
Gregory C. Critchfield, MS, MD
Chairman, President & CEO
I accept employment with Sera Prognostics on the foregoing terms.
/s/ Thomas Garite, MD | 6/17/20 | |
Thomas Garite, MD | Date |
Anticipated Start Date: | 6/22/20 |
[Acceptance page to offer letter dated June 17, 2020]
Exhibit 10.18.1
July 1, 2020
Thomas Garite, MD
653 Round Tree Drive
Grand Junction, CO 81506
Re: Amendment to Offer of Employment for Thomas Garite, MD dated June 17, 2020
Dear Tom:
This letter is an amendment (the “Amendment”) to the aforementioned Offer of Employment from Sera Prognostics, Inc. dated June 17, 2020 (the “Offer of Employment”).
Effective July 1, 2020, your salary will be $16,000.00 per month, paid semi-monthly on the 15th & last day of each month. This is based on an assumption of an average monthly effort of 80 hours.
All other terms, conditions and provisions of the Offer of Employment remain unchanged by this amendment and are in full force and effect.
Sincerely, | ||
Sera Prognostics, Inc. | ||
By: | /s/ Gregory Critchfield | |
Gregory Critchfield | ||
Its: | Chairman, President, and CEO |
This Amendment is accepted and agreed to as of the date hereof: | ||
/s/ Thomas Garite, MD | ||
Thomas Garite, MD | ||
Dated: | 7/1/20 |
Exhibit 10.18.2
July 30, 2020
Thomas Garite, MD
653 Round Tree Drive
Grand Junction, CO 81506
Re: 2nd Amendment to Offer of Employment for Thomas Garite, MD dated June 17, 2020
Dear Tom:
This letter is the 2nd amendment (the “2nd Amendment”) to the aforementioned Offer of Employment from Sera Prognostics, Inc. dated June 17, 2020 (the “Offer of Employment”), as amended on July 1, 2020 (the 1st Amendment) for the purpose of a change in salary.
Equity: | You will be initially recommended to the Sera Board to be granted the option to purchase 50,000 shares of common stock of Sera at an exercise price equal to the fair market value of the shares on the date the option is granted, subject to final approval by the Sera Board of Directors. These granted options shall have a four-year vesting schedule as follows: 25% of the shares shall vest on the one-year anniversary of your start date with Sera, and an additional 1/36th of the total shares subject to the option shall vest each month thereafter, in each case provided that you continue to be an employee, consultant or director of Sera through each applicable vesting date. The terms of this stock option grant will be governed in all respects by the terms of the Sera Prognostics 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”) and the stock option agreement for the Plan, which will be provided to you after the effective date of the grant. Any future grant of stock options shall be governed by its respective Sera Prognostics Employee, Director and Consultant Equity Incentive Plan, which shall be provided to you after such a grant is awarded. |
All other terms, conditions and provisions of the Offer of Employment as amended by the 1st Amendment remain unchanged by this 2nd amendment and are in full force and effect.
Sincerely, |
Sera Prognostics, Inc. |
By: | /s/ Gregory Critchfield |
Gregory Critchfield |
Its: | Chairman, President, and CEO |
This Amendment is accepted and agreed to as of the date hereof:
/s/ Thomas Garite, MD |
Thomas Garite, MD
Dated: | July 30, 2020 |
Exhibit 10.18.3
April 28, 2021
Thomas Garite, MD
653 Round Tree Drive
Grand Junction, CO 81506
Re: 3rd Amendment to Offer of Employment for Thomas Garite, MD dated June 17, 2020
Dear Tom:
This letter is the 3rd amendment (the “3rd Amendment”) to the aforementioned Offer of Employment from Sera Prognostics, Inc. dated June 17, 2020 (the “Offer of Employment”), as amended on July 1, 2020 (the 1st Amendment) for the purpose of a change in salary and on July 30, 2021 (the 2nd Amendment) for the purpose of a change in the initial number of options.
Effective date: | January 1, 2021 |
Annual Salary: | $267,000, based on an assumption of an average monthly effort of 112 hours or .65 FIE, paid semi-monthly on the 15th & last day of each month. |
Annual Incentive: | Under the annual incentive plan (“AIP”) you will be eligible to earn a 35% annual target cash incentive, measured on a calendar year basis. |
All other terms, conditions, and provisions of the Offer of Employment as amended by the 1st and 2nd Amendments remain unchanged by this 3rd amendment and are in full force and effect.
Sincerely, |
Sera Prognostics, Inc. |
By: | /s/ Gregory Critchfield |
Gregory Critchfield | ||
Its: | Chairman, President, and CEO |
This Amendment is accepted and agreed to as of the ‘hate hereof:
/s/ Thomas Garite, MD | Dated: | |
Thomas Garite, MD |
Exhibit 10.19
March 30,2020
Nichole Martin
810 Silver Charm Drive
Saline, MI 48175
Dear Nikki,
It has been a great pleasure for all of us to speak with you and to learn about your background and expertise. We are very pleased to offer you the position of Vice President of Quality/Regulatory at Sera Prognostics, Inc. (“Sera”). Sera is currently focused on executing the commercial launch of PreTRM®, the Company’s preterm birth diagnostic test, and we are very excited about having you join our team.
So please take the next step and review the detail of the verbal offer that was extended to you:
Position Details:
Job Title: | Vice President of Quality/Regulatory |
Annual Salary: | $265,000, paid semi-monthly on the 15th & last day of each month |
Annual Incentive: | Sera’s Board of Directors has adopted an annual incentive plan (“AIP”) designed to reward the achievement of corporate objectives and individual performances. Under the AIP, you will be eligible to earn a 25% annual target cash incentive, measured on a calendar year basis, to be prorated in 2020 based on time of service. |
State: | Full-time, Exempt |
Anticipated Start Date: | On or before May 26, 2020 |
Reporting to: | Gregory Critchfield, Chairman, President & CEO |
Benefits: | |
Insurance: | Sera Prognostics offers major medical, dental, vision, short and long-term disability, term life insurance, 401(k), and a flexible spending account. You are eligible for these benefits on the 1st day of the month following your hire date. |
Paid Time Off: | You are eligible for 4 weeks paid time off per year (based on calendar year and prorated for the first year of employment); accruals begin with the first pay period following employment. In addition, you will receive paid time off for 13 company recognized holidays. |
You will be initially recommended to the Sera Board to be granted the option to purchase 250,222 shares of common stock of Sera at an exercise price equal to the fair market value of the shares on the date the option is granted, subject to final approval by the Sera Board of Directors. These granted options shall have a four-year vesting schedule as follows: 25% of the shares shall vest on the one-year anniversary of you start date with Sera, and an additional 1/36th of the total share subject to the option shall vest each month thereafter, in each case provided that you continue to be an employee, consultant or director of Sera through each applicable vesting date. The terms of this stock option grant will be governed in all respects by the terms of the Sera Prognostics 2011 Employee, Director and Consultant Equity Incentive Plan (the “Plan”) and the stock option agreement for the Plan, which will be provided to you after the effective date of the grant. And future grant of stock options shall be governed by its respective Sera Prognostics Employee, Director and Consultant Equity Incentive Plan, which shall be provided to you after such a grant is awarded.
Sign-on Bonus: A one-time sign-on bonus of $5,000 shall be given to you upon your hiring at Sera.
Relocation: Sera will reimburse you for documented moving expenses, up to $30,000, involved in relocating to the Wasatch front metropolitan area. Reimbursement of moving expenses must be forfeited if you leave the company before the 12-month anniversary of your hire date, and forgiveness of this repayment obligation will accrue at a rate of 1/12th of the total amount reimbursed per month after your hire date.
Your employment with Sera is employment at-will. As a result, you are free to resign at any time, with or without notice and with or without cause or reason. Similarly, Sera is free to terminate its employment relationship with you at any time, with or without notice and with or without cause or reason. Sera's supervisors and managers have no actual or apparent authority to change the at-will nature of your employment unless they are expressly given that authority by Sera's CEO in writing. Any change to the at-will nature of your employment will not be valid unless it is expressed with specificity in a written contract that is signed and dated both by you (or your authorized representative) and a properly authorized Sera representative.
Your offer of employment is subject to successful completion of reference checks and a background investigation to be concluded prior to start of employment. Your employment is also contingent on your acceptance of Sera's Confidentiality, Nondisclosure, and Inventions Assignment Agreement, which will be included with your new hire paperwork, as well as your ability to show proof of your right to work in the United States. This proof must be provided on your first work day and consist of either a passport or driver's license and Social Security card. We also expect you to abide by Sera's policies and procedures as they may be adopted by Sera and in effect from time to time, and do not contradict the terms and conditions set forth in this letter.
Nikki, we are impressed with your intellect, drive and experience. We anticipate greatly the confirmation of your decision to accept this position and be a part of the exciting, ongoing developments at Sera Prognostics as a member of our team. If you have any questions, please do not hesitate to talk to me.
In accepting employment with Sera, you agree to treat the details of your compensation as sensitive and confidential information, which should be discussed within the company with only your supervisor or Sera's human resources manager.
To confirm acceptance of this offer, please return a signed copy of this letter to our attention by April 2, 2020 and confirming your start date as an employee.
Sincerely Yours,
/s/ Gregory C. Critchfield, MS, MD | |
Gregory C. Critchfield, MS, MD | |
Chairman, President & Chief Executive Officer |
I accept employment with Sera Prognostics on the foregoing terms.
Start date: | 20 May 2020 |
/s/ Nichole Martin | 30 March 2020 | |
Nichole Martin | Date |
[Acceptance page to offer letter dated March 30,2020]
Exhibit 10.20
LEASE
by and between
EASTLAND REGENCY, L.C.,
a Utah limited liability company,
as Landlord
and
SERA PROGNOSTICS, INC.,
a Delaware corporation,
as Tenant
REGENCY OFFICE BUILDING
2749 EAST PARLEYS WAY, SUITES 200, 210, 320, 330 & 340
SALT LAKE CITY, UTAH 84109
REGENCY OFFICE BUILDING - 2749 EAST PARLEYS
WAY
SALT LAKE CITY, UTAH
TABLE OF CONTENTS
Page | |
ARTICLE I. BASIC LEASE PROVISIONS; ENUMERATION OF EXHIBITS | 5 |
SECTION 1.01. BASIC LEASE PROVISIONS | 5 |
SECTION 1.02. SIGNIFICANCE OF A BASIC LEASE PROVISION | 10 |
SECTION 1.03. ENUMERATION OF EXHIBITS | 10 |
ARTICLE II. GRANT AND LEASED PREMISES | 10 |
SECTION 2.01. LEASED PREMISES | 10 |
SECTION 2.02. EXCUSE OF LANDLORD’S PERFORMANCE | 11 |
SECTION 2.03. REVISION OF SITE PLAN | 11 |
ARTICLE III. RENT | 11 |
SECTION 3.01. BASE MONTHLY RENT | 11 |
SECTION 3.02. ESCALATIONS IN BASE MONTHLY RENT | 11 |
SECTION 3.03. TENANT’S PRO-RATA SHARE OF OPERATING EXPENSES | 11 |
SECTION 3.04. OPERATING EXPENSE AUDIT | 14 |
SECTION 3.05. TAXES | 15 |
SECTION 3.06. PAYMENTS | 15 |
SECTION 3.07. ADDITIONAL RENT | 15 |
ARTICLE IV. RENTAL TERM, COMMENCEMENT DATE | 16 |
SECTION 4.01. RENTAL TERM | 16 |
SECTION 4.02. DEFINITION OF LEASE YEAR | 16 |
SECTION 4.03. RENTAL TERM COMMENCEMENT DATE AND TERMINATION DATE | 16 |
SECTION 4.04. Intentionally Omitted | 16 |
SECTION 4.05. END OF RENTAL TERM | 16 |
ARTICLE V. CONSTRUCTION OF LEASED PREMISES | 16 |
SECTION 5.01. CONSTRUCTION OF LEASED PREMISES BY LANDLORD | 16 |
SECTION 5.02. DELIVERY OF POSSESSION FOR TENANT’S WORK | 17 |
SECTION 5.03. CHANGES AND ADDITIONS BY LANDLORD | 17 |
ARTICLE VI. TENANT’S WORK | 17 |
SECTION 6.01. REMODEL OF LEASED PREMISES BY TENANT | 17 |
SECTION 6.02. SETTLEMENT OF DISPUTES | 18 |
SECTION 6.03. PROJECT CLOSE-OUT | 18 |
ARTICLE VII. PERMITTED USE | 20 |
SECTION 7.01. PERMITTED USE OF LEASED PREMISES | 20 |
SECTION 7.02. HAZARDOUS SUBSTANCES | 20 |
ARTICLE VIII. OPERATION AND MAINTENANCE OF COMMON AREAS | 21 |
SECTION 8.01. CONSTRUCTION AND CONTROL OF COMMON AREAS | 21 |
i |
SECTION 8.02. LICENSE | 22 |
ARTICLE IX. ALTERATIONS, SIGNS, LOCKS & KEYS | 22 |
SECTION 9.01. ALTERATIONS | 22 |
SECTION 9.02. REMOVAL BY TENANT | 22 |
SECTION 9.03. SIGNS | 23 |
SECTION 9.04. REMOVAL OF TENANT SIGNS | 23 |
SECTION 9.05. COMPUTERIZED ELECTRONIC SIGNS | 23 |
SECTION 9.06. LOCKS AND KEYS | 23 |
ARTICLE X. MAINTENANCE AND REPAIRS; ALTERATIONS; ACCESS | 24 |
SECTION 10.01. LANDLORD’S OBLIGATION FOR MAINTENANCE | 24 |
SECTION 10.02. TENANT’S OBLIGATION FOR MAINTENANCE | 25 |
SECTION 10.03. SURRENDER OF LEASED PREMISES AND RIGHTS UPON TERMINATION | 25 |
ARTICLE XI. INSURANCE AND INDEMNITY | 26 |
SECTION 11.01. TENANT’S LIABILITY INSURANCE AND INDEMNITY | 26 |
SECTION 11.02. FIRE AND CASUALTY INSURANCE | 27 |
SECTION 11.03. WAIVER OF SUBROGATION | 27 |
SECTION 11.04. INDEMNIFICATION | 28 |
ARTICLE XII. UTILITY CHARGES | 28 |
SECTION 12.01. OBLIGATION OF LANDLORD | 28 |
SECTION 12.02. OBLIGATIONS OF TENANT | 29 |
SECTION 12.03. Intentionally Omitted | 30 |
SECTION 12.04. LIMITATIONS ON LANDLORD’S LIABILITY | 30 |
ARTICLE XIII. ESTOPPEL AND OFF-SET STATEMENT, ATTORNMENT AND SUBORDINATION | 30 |
SECTION 13.01. ESTOPPEL OR OFF-SET STATEMENT | 30 |
SECTION 13.02. ATTORNMENT | 30 |
SECTION 13.03. SUBORDINATION | 31 |
SECTION 13.04. MORTGAGEE SUBORDINATION | 31 |
ARTICLE XIV. ASSIGNMENT | 31 |
SECTION 14.01. ASSIGNMENT | 31 |
SECTION 14.02. Intentionally Omitted | 31 |
SECTION 14.03. CONDITIONS OF CONSENT | 31 |
SECTION 14.04. STANDARDS OF REASONABLENESS IN WITHHOLDING CONSENT | 32 |
SECTION 14.05. DOCUMENTATION OF ASSIGNMENT | 32 |
SECTION 14.06. CONTINUING LIABILITY OF TENANT | 32 |
SECTION 14.07. VOIDABLE ASSIGNMENT | 32 |
ARTICLE XV. WASTE OR NUISANCE | 33 |
SECTION 15.01. WASTE OR NUISANCE | 33 |
ARTICLE XVI. NOTICES | 33 |
SECTION 16.01. NOTICES | 33 |
ARTICLE XVII. DESTRUCTION OF THE LEASED PREMISES | 33 |
ii |
SECTION 17.01. DESTRUCTION | 33 |
ARTICLE XVIII. CONDEMNATION | 34 |
SECTION 18.01. CONDEMNATION | 34 |
ARTICLE XIX. DEFAULT OF TENANT | 35 |
SECTION 19.01. DEFAULT - RIGHT TO RE-ENTER | 35 |
SECTION 19.02. DEFAULT - RIGHT TO RE-LET | 36 |
SECTION 19.03. LEGAL EXPENSES | 36 |
ARTICLE XX. BANKRUPTCY, INSOLVENCY OR RECEIVERSHIP | 36 |
SECTION 20.01. ACT OF INSOLVENCY, GUARDIANSHIP, ETC | 36 |
SECTION 20.02. BANKRUPTCY | 37 |
ARTICLE XXI. LANDLORD ACCESS | 37 |
SECTION 21.01. LANDLORD ACCESS | 37 |
ARTICLE XXII. TENANT’S PROPERTY AND LANDLORD’S LIEN | 38 |
SECTION 22.01. TAXES ON LEASEHOLD | 38 |
SECTION 22.02. Intentionally Omitted | 38 |
SECTION 22.03. Intentionally Omitted | 38 |
SECTION 22.04. LANDLORD’S LIEN | 38 |
SECTION 22.05. LANDLORD’S SUBORDINATION | 38 |
ARTICLE XXIII. HOLDING OVER | 38 |
SECTION 23.01. HOLDING OVER | 38 |
SECTION 23.02. SUCCESSORS | 38 |
ARTICLE XXIV. RULES AND REGULATIONS | 39 |
SECTION 24.01. RULES AND REGULATIONS | 39 |
ARTICLE XXV. QUIET ENJOYMENT | 39 |
SECTION 25.01. QUIET ENJOYMENT | 39 |
ARTICLE XXVI. SECURITY DEPOSIT | 39 |
SECTION 26.01. SECURITY DEPOSIT | 39 |
SECTION 26.02. TRANSFER OF LANDLORD’S INTEREST IN THE SECURITY DEPOSIT | 40 |
ARTICLE XXVII. MISCELLANEOUS | 40 |
SECTION 27.01. WAIVER | 40 |
SECTION 27.02. ENTIRE LEASE AGREEMENT | 40 |
SECTION 27.03. INTERPRETATION, USE OF PRONOUNS | 40 |
SECTION 27.04. FORCE MAJEURE | 41 |
SECTION 27.05. LOSS AND DAMAGE | 41 |
SECTION 27.06. CAPTIONS AND SECTION NUMBERS | 41 |
SECTION 27.07. BROKER’S COMMISSION | 41 |
SECTION 27.08. RECORDING | 41 |
SECTION 27.09. CONSENT NOT UNREASONABLY WITHHELD | 42 |
SECTION 27.10. Intentionally Omitted | 42 |
SECTION 27.11. TIME OF ESSENCE | 42 |
SECTION 27.12. ACCORD AND SATISFACTION | 42 |
iii |
SECTION 27.13. NO OPTION | 42 |
SECTION 27.14. ANTI-DISCRIMINATION | 42 |
SECTION 27.15. SEVERABILITY | 42 |
SECTION 27.16. SURVIVAL OF OBLIGATIONS | 42 |
SECTION 27.17. WARRANTY OF AUTHORITY | 43 |
SECTION 27.18. TENANT’S LIABILITY | 43 |
SECTION 27.19. LANDLORD’S LIABILITY | 43 |
SECTION 27.20. COUNTERCLAIM AND JURY TRIAL | 43 |
SECTION 27.21. TRANSFER OF LANDLORD’S INTEREST IN THE LEASED PREMISES | 43 |
SECTION 27.22. TENANT SELECTION BY LANDLORD | 43 |
SECTION 27.23. DISCLOSURE OF PARTIES | 43 |
SECTION 27.24. Intentionally Omitted | 43 |
SECTION 27.25. EXECUTIVE ORDER CERTIFICATION | 44 |
ARTICLE XXVIII. ADDITIONAL PROVISIONS | 44 |
SECTION 28.01. OPTION TO RENEW | 44 |
SECTION 28.02. PRIOR LEASES | 44 |
SECTION 28.03. FIRST RIGHT OF OFFER TO LEASE CONTIGUOUS SPACE | 45 |
SECTION 28.04. RIGHT TO TERMINATE | 46 |
EXHIBIT A SITE PLAN | 48 |
EXHIBIT A-1 LEASE PLAN | 49 |
EXHIBIT B LEGAL DESCRIPTION | 51 |
EXHIBIT C SIGN CRITERIA | 53 |
iv |
LEASE AGREEMENT
(hereinafter “Lease”)
ARTICLE I. BASIC LEASE PROVISIONS; ENUMERATION OF EXHIBITS
SECTION 1.01. BASIC LEASE PROVISIONS
(A) | EFFECTIVE DATE: August 1, 2017 (“Effective Date”) |
(B) | LANDLORD: EASTLAND REGENCY, L.C., a Utah limited liability company (“Landlord”) |
(C) | ADDRESS OF LANDLORD FOR NOTICES (Section 16.01): |
Eastland Regency, L.C. | ||
do Woodbury Corporation | ||
Attn: Lease Administration | ||
2733 East Parleys Way, Suite 300 | ||
Salt Lake City, Utah 84109 | ||
Ref: 1603 - Sera Prognostics - Suite 200 | ||
With a copy to: | Eastland Regency, L.C. | |
c/o Woodbury Corporation | ||
Attn: Legal Department | ||
2733 East Parleys Way, Suite 300 | ||
Salt Lake City, Utah 84109 | ||
Ref: 1603 - Sera Prognostics Suite 200 |
(D) | TENANT: Sera Prognostics, Inc., a Delaware corporation (“Tenant”) (Tax ID: 26-1911522) |
(E) | ADDRESS OF TENANT FOR NOTICES (Section 16.01): |
Sera Prognostics, Inc. | ||
Attn: Andy Sauter | ||
2749 East Parleys Way, Suite 200 | ||
Salt Lake City, Utah 84109 | ||
With a copy to: | Ballard Spahr LLP | |
One Utah Center, Suite 800 | ||
201 South Main Street | ||
Salt Lake City, Utah 84111 |
(F) | PERMITTED USE (Section 7.01): General office and laboratory use, including light assembly for manufacturing of general medical devices, and research and development (“Permitted Use”), and for no other use without the prior written consent of Landlord. |
(G) | TENANT’S TRADE NAME: Sera Prognostics, Inc. |
(H) | BUILDING (Section 2.01): REGENCY OFFICE BUILDING situated at 2749 East Parleys Way, in the City of Salt Lake, County of Salt Lake, State of Utah (“Building”), as substantially depicted on Exhibit “A.” |
(I) | LEASED PREMISES (Section 2.01): 2749 East Parleys Way, Suites 200, 210, 320, 330 & 340, Salt Lake City, Utah 84109 (“Leased Premises”), consisting of approximately 21,798 square feet of gross rentable area, as substantially depicted on Exhibit “A-1”. |
(J) | DELIVERY OF POSSESSION (Section 5.02): Tenant is currently in possession of Suites 200, 320 & 330 pursuant to the Prior Leases as defined in Section 28.02(a). Suite 340 and Suite 210 shall be delivered to Tenant upon substantial completion of Landlord’s Work (as defined in Section 5.01). As used herein, the term “Delivery of Possession” (as defined in Section 5.01) shall refer to the date on which Landlord’s Work is substantially completed, and confirmed at a walk-thru attended by Landlord and Tenant (“Delivery of Possession”), as certified by a notice of Delivery of Possession. |
(K) | RENTAL TERM, COMMENCEMENT AND EXPIRATION DATE (Sections 4.01 and 4.02): The term of this Lease shall retroactively commence on August 1, 2017 (“Rental Term Commencement Date”), and shall be for a period of five (5) full Lease Years (as defined in Section 4.02) and five (5) months ending December 31, 2022 (“Rental Term”), as certified by a notice of Rental Term Commencement Date. |
(L) | BASE MONTHLY RENT (Section 3.01): Retroactively commencing on August 1, 2017, Tenant shall pay monthly rent in the amount of Twenty-Nine Thousand Two Hundred Nineteen and 31/100 Dollars ($29,219.31) per month (“Base Monthly Rent”). In addition, commencing on the date Landlord commences Landlord’s Work in Suite 210 with all required permits in place, Tenant shall pay to Landlord a fee of Two Thousand Four Hundred Fifty-Five and 42/100 ($2,455.42) Dollars (“210 Fee”) per calendar month, or partial month until Delivery of Possession of Suite 210. Landlord shall provide Tenant with written notice of the date on which it commences Landlord’s Work in Suite 210 with all required permits in place. The 210 Fee shall be Additional Rent under this Lease. |
(M) | ESCALATIONS IN BASE MONTHLY RENT (Section 3.02): |
Escalation Date | Base Monthly Rent | |||
Commencing upon Delivery of Possession of Suite 210 | $ | 41,034.77 | ||
August 1, 2018 | $ | 42,265.82 | ||
August 1, 2019 | $ | 43,533.79 | ||
August 1, 2020 | $ | 44,839.80 | ||
August 1, 2021 | $ | 46,185.00 |
(N) | LANDLORD’S SHARE OF OPERATING EXPENSES (Section 3.03): Subject to Tenant’s reimbursement obligation, Landlord shall pay all Operating Expenses (as defined in Section 3.03) for the calendar year 2017 (hereinafter “Base Year”) and an amount equal to the Operating Expenses in the Base Year for each year thereafter, escalating three percent (3%) thereafter on a cumulative basis (“Landlord’s Share of Operating Expenses”). |
6
(O) | TENANT’S PRO-RATA SHARE OF OPERATING EXPENSES (Section 3.03): Sixty and nine thousand eight hundred ninety-three percent (60.9893%) of all Operating Expenses in excess of Landlord’s Share of Operating Expenses. | |
(P) | RESPONSIBILITY FOR UTILITIES AND SERVICES: Subject to the provisions of Section 3.03, this Lease provides that the utilities and services shall be paid by the party shown below: |
Heat: | Landlord | Building Insurance: | Landlord |
Water: | Landlord | Real Property Taxes: | Landlord |
Electricity: | Landlord | Common Area Maintenance: | Landlord |
Telephone: | Tenant | Personal Property Taxes: | Tenant |
Janitorial (Inside Leased Premises): | Tenant | Personal Property Insurance: | Tenant |
Trash dumpster pickup | Landlord |
None of the utilities are separately metered except that telephone and data services shall be contracted for directly by Tenant.
(Q) | EXCESS HOUR UTILITY CHARGES AND HOURS OF OPERATION (Section 12.03): Tenant shall have access to the Leased Premises twenty-four (24) hours a day, seven (7) days per week. Standard operating hours for the Building shall be 7:00 a.m. to 6:30 p.m., Monday through Friday, and 8:00 a.m. to 12:00 Noon on Saturday, excluding holidays (“Standard Operating Hours”). To the extent Tenant operates during any time in excess of Standard Operating Hours, and Tenant’s consumption of utilities increases by thirty percent (30%) or more, then Landlord reserves the right to charge Tenant an additional charge for such after hours and/or disproportionate utility usage. Such additional charges shall be determined and assessed by Landlord using its commercially reasonable judgement. |
(R) | Intentionally Omitted. |
(S) | SECURITY DEPOSIT (Section 26.01): A total of Seventy-Two Thousand Two Hundred and 00/100 Dollars ($72,200.00) (“Security Deposit”), Fifty-Seven Thousand Seven Hundred and 00/100 Dollars ($57,700.00) of which is currently held by Landlord pursuant to the Prior Leases (as defined in Section 28.02(a)) and shall now be retained as a portion of the Security Deposit for this Lease. Further, an additional amount of Fourteen Thousand Five Hundred and 00/100 Dollars ($14,500.00), is to be delivered to Landlord upon Tenant’s execution of this Lease, which amount shall be held by Landlord as a portion of the Security Deposit. |
(T) | Intentionally Omitted. |
(U) | Intentionally Omitted. |
7
(V) | LANDLORD’S WORK: Landlord shall deliver Suite 210 and Suite 340 of the Leased Premises to Tenant in “Turn-Key” condition in accordance with the final construction set documents approved by Landlord with plans and specifications agreed to by Landlord and Tenant. In addition, prior to Delivery of Possession, Landlord shall replace the windows in Suite 210 at Landlord’s sole cost and expense. Landlord shall contribute an amount up to Four Hundred Seventy-One Thousand Two Hundred Forty-Five and 62/100 Dollars ($471,245.62) (“Landlord’s Construction Cost Cap”) towards Landlord’s construction of the Leased Premises. Tenant shall pay all costs in excess of Landlord’s Construction Cost Cap within thirty (30) days of invoice from Landlord. |
(W) | TENANT’S WORK (Section 6.01): In the event Tenant wishes to remodel the Leased Premises in the future, then Tenant shall finish the Leased Premises in accordance with plans and specifications approved by Landlord. Prior to commencement of construction, Tenant shall submit an electronic copy of all plans to Landlord for review and approval as set forth in Section 6.01. |
(X) | Intentionally Omitted. |
(Y) | OPTION TO RENEW (Section 28.01): Provided Tenant is not, and has not been, in default beyond any applicable cure period under any of the terms and conditions contained herein, Tenant shall have one (1) additional consecutive five (5) year option to renew and extend the Rental Term (“Option”) as provided herein. The Option shall only be exercised by Tenant delivering written notice thereof to Landlord not less than one hundred eighty (180) days prior to the expiration of the Rental Term. Base Monthly Rent for the Option period shall be as follows: |
Option Period | Base Monthly Rent | |||
January 1, 2023 - December 31, 2023 | $ | 47,570.55 | ||
January 1, 2024 - December 31, 2024 | $ | 48,997.66 | ||
January 1, 2025 - December 31, 2025 | $ | 50,467.59 | ||
January 1, 2026 - December 31, 2026 | $ | 51,981.62 | ||
January 1, 2027 - December 31, 2027 | $ | 53,541.07 |
8
(Z) | RIGHT OF FIRST OFFER (Section 28.03): From the Effective Date of this Lease until the end of the Rental Term, Tenant shall have an ongoing right of first offer to lease space adjacent and contiguous to the Leased Premises on the second and third floors when such applicable space becomes available for lease as provided herein (hereinafter “First Offer Space”). For purposes hereof, the First Offer Space (or any applicable portion thereof) shall become available for lease by Tenant immediately prior to the first time after the Effective Date that Landlord intends to submit to a third party a bona fide proposal or letter of intent to lease such First Offer Space (or such applicable portion thereof). Landlord shall give Tenant written notice that the First Offer Space (or such applicable portion thereof) will or has become available for lease by Tenant and the terms (the “Offer”) upon which Landlord is willing to rent out the First Offer Space. Tenant shall have ten (10) business days to accept the Offer by delivering to Landlord written notice of its intent to do so. Failure of Tenant to timely deliver written notice shall be deemed a refusal by Tenant. Should Landlord thereafter intend to offer the First Offer Space to a third party of better terms than the Offer, then Tenant shall once again have a right of first offer and the process set forth in this Section 28.03 shall be repeated. Furthermore, if Tenant declines to exercise its right of first offer with regard to any First Offer Space, Landlord shall have a continuing obligation to provide Tenant with a new offer with regard to any other adjacent and continuous space during the Rental Term and with regard to the same First Offer Space if the terms of the Offer change or more than one calendar year passes since Tenant’s prior decline. |
In the event Tenant exercises its option to lease the First Offer Space, Landlord and Tenant shall endeavor to execute within thirty (30) days thereafter an amendment to this Lease for such First Offer Space upon the terms and conditions set forth in the Offer.
(AA) | RIGHT TO TERMINATE (Section 28.04): Provided Tenant is not, and has not been, in default beyond any applicable cure period under any of the terms and provisions contained herein, Tenant shall have the one (1) time right to terminate this Lease as of December 31, 2020. To exercise such right, on or before July 1, 2020, Tenant shall provide Landlord with written notice of its intent to exercise this right to terminate. In the event Tenant exercises this right, Tenant shall reimburse Landlord in full of any unamortized portion of Landlord’s Construction Cost Cap and unamortized commission payments within ten (10) days of receiving an invoice therefore from Landlord. |
[Remainder of Page Intentionally Left Blank]
9
SECTION 1.02. SIGNIFICANCE OF A BASIC LEASE PROVISION. The foregoing provisions of Section 1.01 summarize for convenience only certain fundamental terms of this Lease delineated more fully in the articles and sections referenced therein. In the event of a conflict between the provisions of Section 1.01 and the balance of this Lease, the latter shall control.
SECTION 1.03. ENUMERATION OF EXHIBITS. The exhibits enumerated in this Section 1.03 and attached to this Lease are incorporated in this Lease by this reference and are to be construed as a part of this Lease. In the event of a conflict between the body of this Lease and the exhibits, the body of this Lease shall control.
EXHIBIT “A” | - SITE PLAN |
EXHIBIT “A-1” | - LEASE PLAN |
EXHIBIT “B” | - LEGAL DESCRIPTION |
EXHIBIT “C” | - SIGN CRITERIA |
ARTICLE II. GRANT AND LEASED PREMISES
SECTION 2.01. LEASED PREMISES. In consideration for the rent to be paid and covenants to be performed by Tenant, Landlord hereby leases to Tenant, and Tenant leases from Landlord, for the Rental Term, and upon the terms and conditions herein set forth, the Leased Premises described in Section 1.01(1), located in the Building referred to in Section 1.01(H). The legal description for the property on which the Building is located is attached hereto as Exhibit “B”. Gross rentable area measurements herein specified are from the exterior of the perimeter walls of the Building to the center of the interior walls.
The exterior walls and roof of the Leased Premises and the areas beneath the Leased Premises are not demised hereunder and the use thereof, together with the right to install, maintain, use, repair, and replace pipes, ducts, conduits, and wires leading through the Leased Premises in locations which do not materially and adversely interfere with Tenant’s use thereof and serving other parts of the Building or buildings, are hereby reserved to Landlord. Landlord reserves (a) such access rights through the Leased Premises as may be reasonably necessary to enable access by Landlord to the balance of the Building and reserved areas and elements as set forth above; and (b) the right to install or maintain meters on the Leased Premises to monitor use of utilities. In exercising such rights, Landlord shall give Tenant forty-eight (48) hours prior notice (except in the case of an emergency) and shall use reasonable efforts so as to not commit waste upon the Leased Premises and as far as practicable shall not materially and adversely interfere with Tenant’s use of the Leased Premises and shall minimize annoyance, interference or damage to Tenant and the Leased Premises when making modifications, additions or repairs. Landlord shall not be responsible for any damages incurred by Tenant and/or to Tenant’s property occur during the required forty-eight (48) hour notice period.
10
Subject to the provisions of Article VIII, Tenant and its employees, contractors, customers, agents and invitees have the right to the non-exclusive use, in common with existing tenants of such unreserved automobile parking spaces, driveways, footways, and other facilities designated for common use within the Building, except that with respect to non-exclusive areas, Tenant shall cause its employees to park their cars only in areas specifically designated from time to time by Landlord for that purpose.
SECTION 2.02. EXCUSE OF LANDLORD’S PERFORMANCE. Anything in this Lease to the contrary notwithstanding, providing such cause is not due to the willful act or neglect of Landlord, Landlord shall not be deemed in default with respect to the performance of any of the terms, covenants and conditions of this Lease, if the same shall he due to any strike, lockout, civil commotion, war-like operation, invasion, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, inability to obtain any material, service or financing, act of God or other cause beyond the control of Landlord.
SECTION 2.03. REVISION OF SITE PLAN. It is expressly agreed that the depiction of the Leased Premises, the Building and the Common Areas on Exhibit “A” and Exhibit “A-1” does not constitute a representation, covenant, or warranty of any kind by Landlord, and Landlord reserves the right to change the size, location, type and number of buildings within the project, and the location, type, design and dimensions of the Common Areas; provided, however, that no such change shall materially alter the Leased Premises or access or visibility thereto.
ARTICLE III. RENT
SECTION 3.01. BASE MONTHLY RENT. Tenant agrees to pay to Landlord Base Monthly Rent in the amounts set forth in Sections 1.01(L) and 1.01(M), and 1.01(Y), if applicable, at such place as Landlord may designate, without prior demand therefor, without offset or deduction and in advance on or before the first day of each calendar month during the Rental Term, including any Rental Term extension or renewal thereof, commencing on the Rental Term Commencement Date. In the event the Rental Term Commencement Date (or Delivery of Possession date for Suite 210) occurs on a day other than the first day of a calendar month, then Base Monthly Rent to be paid on the Rental Term Commencement Date (or Delivery of Possession, as applicable) shall include both Base Monthly Rent for the first full calendar month occurring after the Rental Term Commencement Date (or Delivery of Possession, as applicable), plus Base Monthly Rent for the initial fractional calendar month pro-rated on a per-diem basis (based upon a thirty (30) day month).
SECTION 3.02. ESCALATIONS IN BASE MONTHLY RENT. As set forth in Section 1.01(M).
SECTION 3.03. TENANT’S PRO-RATA SHARE OF OPERATING EXPENSES. Tenant shall pay to Landlord as further Additional Rent (as defined in Section 3.07) the amount by which Tenant’s pro rata share of Landlord’s expenses for utilities, interior and exterior Common Area (as defined in Section 8.01) maintenance, insurance, property taxes and assessments on land and the Building, repairs, security, and Building management fees and costs (“Operating Expense(s)”) exceed Landlord’s Share of Operating Expenses set forth in Section 1.01(N) for the previous calendar year “Tenant’s Pro-Rata Share”. For avoidance of doubt: (i) Tenant shall not incur any charges for Operating Expenses for calendar year 2017; (ii) starting in January 2018 and continuing through the Rental Term, Tenant’s Pro-Rata Share of Operating Expenses shall be calculated by multiplying Tenant’s Pro-Rata Share by the difference of Operating Expenses for the given calendar year minus Landlord’s Share of Operating Expenses.
11
Landlord shall bill Tenant for Tenant’s Pro-Rata Share of Operating Expenses, if any, by April 1 of each calendar year of the Rental Term, commencing with 2019. The bill shall identify the total Operating Expenses of the immediately prior calendar year, Landlord’s Share of Operating Expenses and Tenant’s Pro-Rata Share of Operating Expenses thereof. Tenant shall pay Tenant’s Pro-Rata Share of Operating expenses annually within thirty (30) days following receipt of Landlord’s invoice therefore.
Notwithstanding anything to the contrary herein, Operating Expenses shall not include the following:
(a) costs of capital repairs, capital alterations or capital replacements (except as specifically permitted herein or as amortized in accordance with GAAP), capital improvements and equipment; except those: (i) required by laws enacted on or after the date of this Lease, with the cost of any such improvements and equipment depreciated on a straight line basis over the useful life of the improvement and/or equipment, or (ii) installed at the Building to reduce Operating Expenses and/or conserve energy, with the cost of any such improvements and equipment depreciated at an annual rate reasonably calculated to equal the amount of Operating Expenses to be saved in each calendar year throughout the Rental Term;
(b) costs incurred in connection with the original construction or design of the Building or in connection with any major change in the Building, such as adding or deleting floors or common areas, costs for the replacement of any roofs in the Building or to the correction of inherent structural defects in the Building or to the initial malfunction of operating equipment;
(c) costs of the design and construction of Tenant improvements to the Leased Premises or the premises of other tenants;
(d) depreciation, interest and principal payments on mortgages and other debt costs, if any and amounts paid as ground rental or as rental for the Building by the Landlord;
(e) marketing costs, legal fees, space planners’ fees and advertising and promotional expenses, and brokerage fees incurred in connection with the original development, subsequent improvement, or original or future leasing of the Building;
(f) costs for which any tenant directly contracts with local providers, costs for which the Landlord is reimbursed by any tenant or occupant of the Building or by insurance by its carrier or any tenant’s carrier or by anyone else and expenses in connection with services or other benefits which are not offered to the Tenant or for which the Tenant is charged directly but which are provided to another tenant or occupant of the Building without a separate charge;
(g) any bad debt loss, rent loss, or reserves for bad debts or rent loss; and reserves for capital or future operating expenses;
12
(h) Landlord’s general corporate overhead and general and administrative expenses and other costs associated with the operation of the business of the entity which constitutes the Landlord, as the same are distinguished from the costs of operation of the Building, including partnership or corporate accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of the Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of the Landlord’s interest in the Building, and costs incurred in connection with any disputes or proceedings, including but not limited to any disputes or proceedings between Landlord and its employees, between Landlord and Building management, or between Landlord and other tenants or occupants;
(i) the wages and benefits of any employee who does not devote substantially all of his or her employed time to the Building unless such wages and benefits are prorated to reflect time spent on operating and managing the Building vis-à-vis time spent on matters unrelated to operating and managing the Building; provided, that in no event shall Operating Expenses include wages and/or benefits attributable to personnel above the level of on-site Building manager or on-site Building engineer or any compensation paid to clerks, attendants or other persons in commercial concessions operated by the Landlord;
(j) costs, including permit, license and inspection costs, incurred with respect to the installation of tenant improvements made for new tenants in the Building or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Building (excluding, however, such costs relating to any common areas of the Building or parking facilities);
(k) overhead and profit increment paid to the Landlord or to subsidiaries or affiliates of the Landlord for services in the Building to the extent the same unreasonably exceeds the costs of such services rendered by qualified, first-class unaffiliated third parties on a competitive basis, which parties render services in comparable buildings;
(l) costs, other than those incurred in ordinary maintenance and repair, for sculpture, paintings, fountains or other objects of art;
(m) costs to repair or rebuild after casualty loss (excluding deductibles under insurance policies carried by Landlord, which deductibles shall be included in Operating Expenses and which deductibles shall not exceed Ten Thousand Dollars ($10,000.00) in any one Lease Year);
(n) any costs expressly excluded from Operating Expenses elsewhere in the Lease;
(o) rent for any office space occupied by Building management personnel to the extent the size or rental rate of such office space exceeds the size or fair market rental value of office space occupied by management personnel of comparable buildings in the vicinity of the Building, with adjustment where appropriate for the size of the applicable building;
13
(p) costs arising from the negligence or willful misconduct of Landlord or its agents, employees, vendors, contractors, or providers of materials or services;
(q) costs incurred to comply with federal, state, county or local laws or regulations in effect as of the date of this Lease, including but not limited to laws, regulations and building codes relating to handicap access, energy efficiency or conservation, or the removal of hazardous material (as defined under applicable law, and defined as such as of the date of this Lease), which hazardous material is in existence in the Building or on the Building prior to date of this Lease or is brought into the Building or onto the Building after the date hereof by Landlord or any other tenant of the Building (excluding Tenant), and is of such a nature that a federal, state or municipal government governmental authority, if it had knowledge of the presence of such hazardous material in the state and under the conditions that it then exists in the Building or on the Building, would require the removal of such hazardous material or would require other remedial or containment action with respect thereto pursuant to laws in effect as of the date of this Lease (in the event that such costs of compliance are not paid by Landlord and are instead charged to Tenant or directly by a governmental authority, Landlord agrees that it will reimburse Tenant for such charges);
(r) costs arising from Landlord’s charitable or political contributions;
(s) costs relating to the Building which are in a category of expense which was not included in Operating Expenses during the first year of the Rental Term or any portion thereof; and
(t) interest, fines, late fees, collection costs, legal fees or penalties assessed as a result of Landlord’s failure to make payments in a timely manner or to comply with applicable laws, including regarding the payment of taxes, or to comply with the terms of any lease, mortgage, deed of trust, ground lease, private restriction or other agreement.
SECTION 3.04. OPERATING EXPENSE AUDIT. Tenant shall have the right, not more frequently than once every two (2) calendar years, to audit Landlord’s general ledgers pertaining to Operating Expenses for the prior two (2) Lease Years (the “Operating Expense Audit”). Tenant shall not be permitted to utilize a so-called “contingent fee” Operating Expense auditor. Accordingly, any representative of Tenant conducting, assisting, or having any involvement with the Operating Expense Audit shall not be permitted to have a financial stake in the outcome of the Operating Expense Audit and Landlord shall be entitled to receive credible evidence of the same and Landlord may refuse to allow such Operating Expense Audit in the absence of such evidence. Additionally, any representative of Tenant conducting an Operating Expense Audit shall first sign a confidentiality agreement that provides that it shall not disclose the Operating Expense Audit, its conclusions or any information obtained in the course of conducting the Operating Expense Audit to anyone other than Tenant and Landlord.
14
Landlord shall retain its general ledgers regarding Operating Expenses for a period of at least two (2) years following the final billing for each calendar year during the Rental Term. At any time during such two (2) year period, upon forty-five (45) days’ advance written notice to Landlord, Tenant may conduct an Operating Expense Audit. The Operating Expense Audit shall commence on a date of which Tenant has notified Landlord not less than thirty (30) days in advance. Tenant shall in all cases share with Landlord the conclusions of the Operating Expense Audit and any Operating Expense Audit report. If the Operating Expense Audit discloses an overbilling, Landlord may, by written notice to Tenant within forty-five (45: days of Landlord’s receipt of a copy of the Operating Expense Audit, object to the conclusions or process of the Operating Expense Audit, stating its conclusions as to whether or not there was any overbilling (and if so, the amount thereof). If Tenant disputes Landlord’s conclusions, Tenant shall notify Landlord and the parties shall use good faith efforts to resolve the dispute. If Landlord agrees with the Operating Expense Audit, Landlord shall pay to Tenant the amount of the overbilling within forty-five (45) days of Landlord’s receipt of a copy of the Operating Expense Audit. If the Operating Expense Audit discloses an underbilling, Tenant shall pay to Landlord the amount of the underbilling within forty-five (45) days of Tenant’s receipt of a copy of the Operating Expense Audit or its conclusions.
SECTION 3.05. TAXES.
(a) Landlord shall pay all real property taxes and assessments which are levied against or which apply to the Building with respect to the Leased Premises, which taxes and assessments are part of the Operating Expenses set forth in Section 3.03.
(b) Tenant shall pay, prior to delinquency, all taxes, assessments, charges, and fees which during the Rental Term, or any Rental Term extension or renewal thereof, may be imposed, assessed, or levied by any governmental or public authority against or upon Tenant’s use of the Leased Premises or any inventory, personal property, fixtures or equipment kept or installed, or permitted to be located therein by Tenant.
SECTION 3.06. PAYMENTS. All payments of Base Monthly Rent, Additional Rent and other payments to be made to Landlord shall be made on a timely basis and shall be payable to Landlord or as Landlord may otherwise designate. All such payments shall be mailed or delivered to Landlord’s principal office set forth in Section 1.01(C), or at such other place as Landlord may designate from time to time in writing. If mailed, all payments shall be mailed in sufficient time and with adequate postage thereon to be received in Landlord’s account by no later than the due date for such payment. If Tenant fails to pay any Base Monthly Rent, Additional Rent or any other amounts or charges within ten (10) days of the date when due, Tenant shall pay interest from the due date of such past due amounts to the date of payment, both before and after judgment at a rate equal to the greater of twelve percent (12%) per annum or two percent (2%) over the prime rate or base rate charged by Citibank of New York at the due date of such payment; provided however, that in any case the maximum amount or rate of interest to be charged shall not exceed the maximum non-usurious rate in accordance with applicable law. In addition, Tenant shall pay a late fee equal to four percent (4%) of such past due amount to compensate Landlord for extra administrative, collection, processing, accounting and other costs incurred through Tenant’s nonpayment.
SECTION 3.07. ADDITIONAL RENT. Tenant shall pay as “Additional Rent” (in addition to the aforementioned property taxes and Operating Expenses) any and all sums of money or charges required to be paid by Tenant under this Lease whether or not the same be designated as Additional Rent. If such amounts or charges are not paid at the time provided for in this Lease, they shall nevertheless, if not paid when due, be collectible as Additional Rent with the next installment of Base Monthly Rent thereafter falling due hereunder, hut nothing herein contained shall be deemed to suspend or delay the payment of any amount of money or charge at the time the same becomes due and payable hereunder, or limit any interest, late fee or other remedy of Landlord.
15
ARTICLE IV. RENTAL TERM, COMMENCEMENT DATE
SECTION 4.01. RENTAL TERM. The initial term of this Lease shall be for the period defined as the Rental Term in Section 1.01(K), plus the partial calendar month, if any, occurring after the Rental Term Commencement Date if the Rental Term Commencement Date occurs other than on the first day of a calendar month.
SECTION 4.02. DEFINITION OF LEASE YEAR. The “Lease Year” shall include twelve (12) full calendar months of the Rental Term; except that the first Lease Year shall include such twelve (12) full calendar months after the Rental Term Commencement Date.
SECTION 4.03. RENTAL TERM COMMENCEMENT DATE AND TERMINATION DATE. The Rental Term shall commence and continue for the term set forth in Section 1.01(K). Each of the parties hereto agrees, upon demand of the other, to execute a Rental Term Commencement Date notice expressing the commencement, termination, and Delivery of Possession dates of the Rental Term as soon as such dates have been determined.
SECTION 4.04. Intentionally Omitted.
SECTION 4.05. END OF RENTAL TERM. This Lease, and the tenancy hereby created, shall terminate at the end of the Rental Term, or any Rental Term extension or renewal thereof, without the necessity of any notice from either Landlord or Tenant to terminate the same, and Tenant hereby waives notice to vacate the Leased Premises and agrees that I and lord shall he entitled to the benefit of all provisions of law respecting the summary recovery of possession of the Leased Premises from Tenant holding over to the same extent as if statutory notice has been given.
ARTICLE V. CONSTRUCTION OF LEASED PREMISES
SECTION 5.01. CONSTRUCTION OF LEASED PREMISES BY LANDLORD. Landlord has constructed the Building in which the Leased Premises is located and shall deliver Suite 210 and Suite 340 of the Leased Premises and convert the freezer room in Suite 200 to a conference room, all in accordance with the final construction set documents approved by Landlord (“Landlord’s Work”). It is understood and agreed by Tenant that no minor changes from any plans or from Landlord’s outline specifications made necessary during construction of the Leased Premises or the Building shall affect or change this Lease or invalidate same. Tenant is leasing the remainder of Leased Premises in “as is” condition. In addition, prior to the Delivery of Possession, Landlord shall replace the windows in Suite 210 at Landlord’s sole cost and expense.
16
SECTION 5.02. DELIVERY OF POSSESSION FOR TENANT’S WORK. Except as expressly stated otherwise, Landlord covenants that actual possession of Suite 210 and Suite 340 of the Leased Premises shall be delivered to Tenant, ready for Tenant’s Work, if any, (as defined in Section 6.01) and as set forth in Section 1.01(J). The Leased Premises shall be deemed as ready for Tenant’s Work when Landlord’s Work is completed in accordance with the final construction set documents approved by Landlord and Tenant. It is agreed that by taking possession of the Leased Premises as a tenant, Tenant formally accepts that portion to which it has taken possession and acknowledges that such portion of the Leased Premises is in the condition called for hereunder, except for items specifically excepted in writing at the date of occupancy as “incomplete”. Except as expressly stated in this Section 5.02 and Section 5.01, Landlord covenants that actual possession of the remainder of the Leased Premises has been delivered to Tenant in “as is” condition.
SECTION 5.03. CHANGES AND ADDITIONS BY LANDLORD. Landlord hereby reserves the right at any time, and from time to time, to make alterations or additions to, and to build additional stories on the Building in which the Leased Premises is contained and to build adjoining the same and to modify the existing parking or other Common Areas to accommodate additional buildings. Landlord also reserves the right to construct other buildings or improvements on the property from time to time, on condition that if the property is expanded so as to include any additional buildings, Landlord agrees to create or maintain a parking ratio adequate to meet local laws and ordinances, including the right to add land to the property or to erect parking structures thereon.
ARTICLE VI. TENANT’S WORK
SECTION 6.01. REMODEL OF LEASED PREMISES BY TENANT. In the event tenant desires to remodel the Leased Premises, Tenant agrees, prior to the commencement of construction, at Tenant’s sole cost and expense, to provide all work of whatsoever nature in accordance with its plans and specifications, subject to Landlord’s prior written approval (“Tenant’s Work”). Empty conduit extending to the Leased Premises for telephone and data lines, from central locations in the building, shall be provided by Landlord. All terminations, crossovers, and distribution wiring from panels to the various equipment and receptacles shall be provided by Tenant at Tenant’s sole cost and expense. Tenant agrees to furnish Landlord, within the time periods designated by Landlord and prior to Delivery of Possession, with a complete and detailed set of plans and specifications drawn by a registered architect (or by some other qualified person acceptable to Landlord) setting forth and describing Tenant’s Work in such detail as Landlord may require and in compliance with the initial permit set drawings and the final construction set documents approved by Landlord. If such plans and specifications are not so furnished by Tenant within the required time periods required by Landlord, then Landlord may, at its option, in addition to other remedies Landlord may enjoy, cancel this Lease at any time thereafter while such plans and specifications have not been so furnished. Tenant shall remit one (1) electronic copy of any and all plans and specifications to Landlord at the following email address:
drawings@woodburycorp.com.
In order for such plans and specifications to be deemed received by Landlord for Landlord’s approval, the email transmittal must include the following information in the subject line: 1603 - Sera Prognostics - 2749 East Parleys Way, Suites 200, 210, 320, 330 & 340, Salt Lake City, Utah.
17
Additional physical copies can be sent to:
Woodbury Corporation
Attn: Architecture
2733 Parleys Way, Suite 300
Salt Lake City, Utah 84109-1662
Ref: 1603 - Sera Prognostics
With a copy to:
Woodbury Corporation
Attn: Lease Administration
2733 Parleys Way, Suite 300
Salt Lake City, Utah 84109-1662
Ref: 1603 - Sera Prognostics
No material deviation from the final set of plans and specifications, once submitted to and approved by Landlord, shall be made by Tenant without Landlord’s prior written consent. Landlord shall have the right to approve or disapprove Tenant’s architect and contractor to be used in performing Tenant’s Work, and the right to require and approve insurance or bonds to be provided by Tenant or such contractors. In due course, after completion of Tenant’s Work, Tenant shall certify to Landlord the itemized cost of Tenant improvements and fixtures located upon the Leased Premises. Any design costs incurred by Landlord, including space planning, preliminary and final design and engineering costs, as well as construction permit fees, shall be part of Tenant’s Work and shall be applied to Landlord’s construction cost cap and/or any additional allowance, if any. This includes any costs incurred due to Tenant requested changes, which shall include change orders requiring extraordinary design or engineering applications. To the extent that Landlord elects to perform certain Tenant’s Work, Tenant shall pay Landlord for such work within ten (10) days of invoice by Landlord.
SECTION 6.02. SETTLEMENT OF DISPUTES. It is understood and agreed that any disagreement or dispute which may arise between Landlord and Tenant with reference to the work to be performed by Landlord shall be resolved by Landlord’s architect, whose good faith decision shall be final and binding on both Landlord and Tenant.
SECTION 6.03. PROJECT CLOSE-OUT. Where Tenant’s Work is performed in accordance with Section 6.01, the following procedures shall apply:
(a) Preconstruction. Prior to the commencement of construction, Tenant and Tenant’s contractor shall participate in a preconstruction meeting and provide all documentation requested by Landlord.
(b) Field Inspection. On completion of construction, Landlord and Tenant shall conduct an inspection of the improvements to identify whether there are any incomplete items or other deficiencies. A punch list of such deficiencies shall be prepared. Tenant shall make all corrections within no more than fifteen (15) days thereafter.
18
(c) Required Project Closeout Information. Tenant shall provide an electronic copy of items (i) through (iii) below to Landlord at the following email address:
leaseadmin@woodburycorp.com.
In order for such plans and specifications to be deemed received by Landlord for Landlord’s approval, the email transmittal must include the following information in the subject line: 1603 - Sera Prognostics - 2749 East Parleys Way, Suites 200, 210, 320, 330 & 340, Salt Lake City, Utah.
Additional, physical copies can be sent to:
Woodbury Corporation
Attn: Architecture
2733 Parleys Way, Suite 300
Salt Lake City, Utah 84109-1662
Ref: 1603 - Sera Prognostics
With a copy to:
Woodbury Corporation
Attn: Lease Administration
2733 Parleys Way, Suite 300
Salt Lake City, Utah 84109-1662
Ref: 1603 - Sera Prognostics
(i) As-built drawings depicting changes to the construction documents that occurred during construction, organized according to the original construction documents.
(ii) A list of all subcontractors and major material and equipment supplies having contracts greater than Five Thousand Dollars ($5,000.00). The list shall include the actual final contract value of the contractor’s and each subcontractors’ work. Also, include a copy of contractor’s final application for payment with a cost breakdown of the various categories of work.
(iii) Copies of final unconditional lien waivers from Tenant’s general contractor, each subcontractor and material supplier who have provided materials, labor and/or services during the construction of Tenant’s Work, and any person who has filed a preliminary lien notice with the State’s registry. Tenant shall include a copy of the State registry of preliminary lien notices demonstrating that all rights to claim have been removed. In the event of disputes, reasonable evidence shall be required showing that any lien rights have been bonded over and that the Tenant is contesting such matters in good faith and by appropriate proceedings, or upon evidence of expiration of statute of limitation for filing mechanics liens.
19
ARTICLE VII. PERMITTED USE
SECTION 7.01. PERMITTED USE OF LEASED PREMISES. Tenant shall use and occupy the Leased Premises during the continuance of this Lease solely for the Permitted Use set forth in Section 1.01(F) and shall not use, permit or suffer the use of the Leased Premises for any other business or purpose without the prior written consent of Landlord. Tenant shall promptly comply with all present or future laws, ordinances, lawful orders and regulations affecting the Leased Premises and the cleanliness, safety, occupancy and use of the Leased Premises. Tenant shall not make any use of the Leased Premises which shall cause cancellation or an increase in the cost of any insurance policy covering the Leased Premises. Tenant shall not keep or use on the Leased Premises any article, item, or thing which is prohibited by the standard form of fire insurance policy. Tenant shall not commit any waste upon the Leased Premises and shall not conduct or allow any business, activity, or thing on the Leased Premises which is an annoyance or causes damage to Landlord, to other subtenants, occupants, or users of the improvements, or to occupants of the vicinity. Tenant shall comply with and abide by all laws, ordinances, and regulations of all municipal, county, state, and federal authorities which are now in force or which may hereafter become effective with respect to use and occupancy of the Leased Premises. Landlord represents that to the best of its knowledge and understanding, that upon Delivery of Possession, the Building shall comply with all currently applicable laws, ordinances and regulations of municipal, county, state and federal authorities.
SECTION 7.02. HAZARDOUS SUBSTANCES. Tenant shall not use, produce, store, release, dispose or handle in or about the Leased Premises or transfer to or from the Leased Premises (or permit any other party to do such acts) any Hazardous Substance (as defined herein) except in compliance with all applicable Environmental Laws (as defined herein). Tenant shall not construct or use any improvements, fixtures or equipment or engage in any act on or about the Leased Premises that would require the procurement of any license or permit pursuant to any Environmental Law. Tenant shall immediately notify Landlord of (i) the existence of any Hazardous Substance on or about the Leased Premises that may be in violation of any Environmental Law (regardless of whether Tenant is responsible for the existence of such Hazardous Substance), (ii) any proceeding or investigation by any governmental authority regarding the presence of any Hazardous Substance on the Leased Premises or the migration thereof to or from any other property, (iii) all claims made or threatened by any third party against Tenant relating to any loss or injury resulting from any Hazardous Substance, or (iv) Tenant’s notification of the National Response Center of any release of a reportable quantity of a Hazardous Substance in or about the Leased Premises. “Environmental Law(s)” shall mean any federal, state or local statute, ordinance, rule, regulation or guideline pertaining to health, industrial hygiene, or the environment, including without limitation, the federal Comprehensive Environmental Response, Compensation, and Liability Act. “Hazardous Substance(s)” shall mean all substances, materials and wastes that are or become regulated, or classified as hazardous or toxic, under any Environmental Law. If it is determined that any Hazardous Substance that is not legally used in the ordinary course of Tenant’s business exists on the Leased Premises resulting from any act of Tenant or its employees, agents, contractors, licensees, subtenants or customers, then Tenant shall immediately take necessary action to cause the removal of such substance and shall remove such within ten (10) days after discovery. Notwithstanding the above, if the Hazardous Substance that is not legally used in the ordinary course of Tenant’s business is of a nature that cannot be reasonably removed within ten (10) days Tenant shall not be in default if Tenant has commenced to cause such removal and proceeds diligently thereafter to complete removal, except that in all cases, any Hazardous Substance must be removed within sixty (60) days after discovery thereof. Furthermore, notwithstanding the above, if in the good faith judgment of Landlord, the existence of such Hazardous Substance creates an emergency or is of a nature which may result in immediate physical danger to persons at the property or the Building, Landlord may enter upon the Leased Premises and remove such Hazardous Substances and charge the cost thereof to Tenant as Additional Rent.
20
ARTICLE VIII. OPERATION AND MAINTENANCE OF COMMON AREAS
SECTION 8.01. CONSTRUCTION AND CONTROL OF COMMON AREAS. All automobile parking areas, driveways, entrances and exits thereto, and other facilities furnished by Landlord in or near the Building, including if any, employee parking areas, truck ways, loading docks, mail rooms or mail pickup areas, pedestrian sidewalks and hallways, landscaped areas, retaining walls, stairways, elevators, utility rooms, restrooms and other areas and improvements provided by Landlord for the general use in common with all tenants, their officers, agents, employees and customers (“Common Area(s)”), shall at all times be subject to the exclusive control and management of Landlord, which Landlord shall have the right from time to time to establish, modify and enforce reasonable rules and regulations with respect to all facilities and areas mentioned in this Section 8.01. Landlord shall have the right to construct, maintain and operate lighting and drainage facilities on or in all such areas and improvements; to police the same, from time to time to change the area, level, location and arrangement of parking areas and other facilities hereinabove referred to; to restrict parking by tenants, their officers, agents and employees to employee parking areas; to close temporarily all or any portion of such areas or facilities to such extent as may, in the opinion of counsel, be legally sufficient to prevent a dedication thereof or the accrual of any rights to any person or the public therein; to assign “reserved” parking spaces for exclusive use of certain tenants or for customer parking, to discourage non-employee and non-customer parking; and to do and perform such other acts in and to such areas and improvements as, in the exercise of good business judgment, Landlord shall determine to be advisable with a view toward maintaining of appropriate convenience uses, amenities, and for permitted uses by tenants, their officers, agents, employees and customers. Landlord shall operate and maintain the Common Areas and Common Facilities (as defined herein) referred to above in such a manner as it, in its sole discretion, shall determine from time to time to be reasonable. Without limiting the scope of such discretion, Landlord shall have the full right and authority to employ all personnel and to make all rules and regulations pertaining to and necessary for the proper operation, security and maintenance of the Common Areas and Common Facilities. The Building and/or property signs, traffic control signs and other signs determined by Landlord to be in best interest of the Building shall be considered part of the Common Areas and Common Facilities.
For purposes of this Article VIII, “Common Facilities” shall mean all areas, space, equipment and special services available for the common or joint use and/or benefit of any of the occupants of the Building or their employees, agents, servants, customers and other invitees, including without limitation, parking areas, access roads, driveways, retaining walls, landscaped areas, truck serviceways or tunnels, loading docks, pedestrian lanes, courts, stairs, ramps and sidewalks, comfort and first-aid stations, washrooms, restrooms, janitorial rooms, transformer vaults, electrical rooms, sprinkler riser rooms, common equipment storage rooms, information booths, canopies, utility systems, energy management systems, roof drains, sumps and gutters, walls and fences, and elevators and air-walkways, if any.
21
SECTION 8.02. LICENSE. All Common Areas and Common Facilities not within the Leased Premises, which Tenant may be permitted to use and occupy, are to be used and occupied under a revocable license, and if the amount of such areas be diminished, Landlord shall not be subject to any liabilities nor shall Tenant be entitled to any compensation or diminution or abatement of rent, nor shall such diminution of such areas be deemed constructive or actual eviction, so long as such revocations or diminutions are deemed by Landlord to serve the best interests of the Building. The term of such revocable license shall be coterminous with this Lease and shall not be revoked or terminated during the Rental Term of this Lease. Notwithstanding the foregoing, Landlord acknowledges that Tenant has the right, at no additional cost, to the exclusive use of four (4) covered parking spaces. In the event that additional parking spaces in the Common Areas become available during the Rental Term, Landlord shall offer up to two (2) additional spaces to Tenant at no additional cost before offering the parking spaces to a third (3rd) party.
ARTICLE IX. ALTERATIONS, SIGNS, LOCKS & KEYS
SECTION 9.01. ALTERATIONS. Tenant shall not make or suffer to be made any alterations or additions to the Leased Premises or any part thereof in excess of Ten Thousand Dollars ($10,000.00) per Lease Year without the prior written consent of Landlord, in Landlord’s reasonable discretion. Any additions to, or alterations of the Leased Premises, except movable furniture, equipment and trade fixtures, shall become a part of the realty and belong to Landlord upon the expiration of the Rental Term, or any Rental Term extension or renewal thereof, or other termination or surrender of the Leased Premises to Landlord. Tenant shall promptly pay all contractors and materialmen so as to minimize the possibility of a lien attaching to the Leased Premises, and should any such lien be made or filed, Tenant shall bond against or discharge the same within ten (10) days after written request by Landlord. Landlord reserves the right to enter the Leased Premises to post, and keep posted, notices of non-responsibility for any such liens.
SECTION 9.02. REMOVAL BY TENANT. In the event of any Landlord-approved remodeling by Tenant, Landlord reserves title to all removed materials, building components, plumbing and HVAC equipment, except that Tenant shall remove from the Leased Premises those items which Landlord chooses not to salvage. All new alterations, decorations, additions and improvements paid by Tenant, if any, shall be deemed to belong to Tenant although attached to the Leased Premises. However, none of such items (excluding personal property) may be removed from the Leased Premises and shall become the property of Landlord upon the expiration of the Rental Term, or any Rental Term renewal or extension thereof, or other termination or surrender of the Leased Premises to Landlord. Tenant shall not remove any of such alterations, decorations, additions and improvements, although trade fixtures installed by Tenant may be removed if all rents due herein are paid in full and Tenant is in full compliance with all other terms and conditions in this Lease. Furthermore, Tenant shall have no obligation to remove any Landlord’s Work or other alterations to the Leased Premises at the end of the Rental Term.
22
SECTION 9.03. SIGNS. Tenant shall not place or suffer to be placed or maintained on any exterior door, wall or window of the Leased Premises, or elsewhere in the Building, any sign, awning, marquee, decoration, lettering, attachment, canopy, advertising matter or other thing of any kind, and shall not place or maintain any decoration, lettering or advertising matter on the glass of any window or door of the Leased Premises without first obtaining Landlord’s prior written approval and in Landlord’s sole and absolute discretion, provided, however, that any Tenant signage existing in or about the Building as of the date this Lease is executed is deemed approved by Landlord, and that Landlord shall permit Tenant to install signage at the entrance of Suites 210 and 340 consistent with the existing signage at the exterior of Suites 200, 320 and 330. Tenant shall maintain any such sign, awning, canopy, decoration, lettering, advertising matter or other things as may be approved in good condition and repair at all times. Landlord may, at Tenant’s cost, and without liability to Tenant, enter the Leased Premises and remove any item erected in violation of this Section 9.03. Landlord has established rules and regulations governing the size, type and design of all signs, decorations, etc., which are specifically set forth in Exhibit D.
SECTION 9.04. REMOVAL OF TENANT SIGNS. At the end of the Rental Term, or any Rental Term extension or renewal thereof, or in the event Landlord or Tenant terminates this Lease, Tenant shall remove all signage on or within the Leased Premises within thirty (30) days of the expiration or earlier termination of this Lease. In the event Tenant fails to remove its signage within thirty (30) days of the expiration or earlier termination of this Lease, Tenant shall pay to Landlord a fee of Fifty Dollars ($50.00) per day for each day Tenant fails to remove its signage from the Leased Premises. Tenant shall, at Tenant’s sole cost and expense, repair any and all damage from the removal of any Tenant signage.
SECTION 9.05. COMPUTERIZED ELECTRONIC SIGNS. Subject to the approval of the city and any other governmental agency or body having jurisdiction thereover, Landlord may revise, reconstruct or replace any computerized electronic identification sign for the Building and/or Project (the “ID Sign”), if any, containing an electronic message panel that permits the pre-programmed display of trade name, product and service identification, advertising, messages and announcements (“Messages”) on a periodic and rotational basis. The ID Sign can display Messages in such time increments as Landlord shall elect from time to time in its sole discretion. The use and operation of the ID Sign shall remain under the exclusive control of Landlord, and shall further be subject to all applicable governmental ordinances, regulations and requirements, including, without limitation, any restrictions deemed appropriate by the zoning administrator for the city. Notwithstanding the foregoing, if Landlord installs an ID Sign and any Building tenants are listed thereon, Tenant shall be listed in a manner no less prominent that other tenants.
SECTION 9.06. LOCKS AND KEYS. Landlord shall have the right, but not the obligation, to install a card key system for access to the Building and covered parking area and shall issue appropriate card keys to Tenant and Tenant’s authorized employees. Landlord shall initially provide keys or key cards for entry doors to the Leased Premises. From time to time, Tenant may change locks or install other locks on doors, but if Tenant does, Tenant must provide Landlord with duplicate keys or key cards, if any, within twenty-four (24) hours after such change or installation. Tenant shall, upon termination of this Lease, deliver to Landlord all the keys and/or key cards to the Building and the Leased Premises including any interior offices, toilet rooms, combinations to built-in safes, etc. which shall have been furnished to or by Tenant or are in the possession of Tenant.
23
ARTICLE X. MAINTENANCE AND REPAIRS; ALTERATIONS; ACCESS
SECTION 10.01. LANDLORD’S OBLIGATION FOR MAINTENANCE.
(a) Subject to the exception and limitations set forth in paragraph 10.02(d) herein below, Landlord shall maintain and repair: (1) the areas outside the Leased Premises including hallways, stairways, elevators, public restrooms, if any, general landscaping, Landlord owned parking areas, driveways and walkways; (2) the Building structure including the roof, exterior walls and foundation; and (3) all plumbing, electrical, heating, and air conditioning systems in accordance with standards for comparable office buildings in the Salt Lake metropolitan region. However, if the need for such repairs or maintenance results from any careless, wrongful or negligent act or omission of Tenant, Tenant shall pay the entire cost of any such repair or maintenance including a reasonable charge to cover Landlord’s supervisory overhead. Landlord shall not be obligated to repair any damage or defect until Landlord has actual notice of the need for such repair or maintenance or Landlord is in receipt of written notice from Tenant of the need of such repair and Landlord shall have a reasonable time after receipt of such notice in which to make such repairs. Tenant shall give immediate notice to Landlord in case of fire or accidents in the Leased Premises or in the Building of which the Leased Premises is a part or of defects therein or in any fixtures or equipment provided by Landlord. Costs of Landlord-provided maintenance for item (2) herein shall be included as Operating Expenses.
(b) Generator Equipment: Throughout the Rental Term, Landlord shall maintain, repair and replace an emergency generator and a fuel tank and connecting equipment at the Building (but outside of the Leased Premises) to provide emergency generation to the Building, including the Leased Premises and Tenant’s equipment located therein (collectively, the “Generator Equipment”). Within thirty (30) days following the Effective Date, Landlord shall deliver to Tenant documentation of the Generator Equipment’s load relative to the Building’s electrical load as determined by the Landlord’s engineer, and in the event that Landlord has actual knowledge of any material change in such load capacity during the Rental Term, Landlord shall notify Tenant of the same. Landlord shall be responsible, at Landlord’s sole cost and expense, for the operation, maintenance, repair and replacement of the Generator Equipment, which shall include maintenance testing once every six (6) calendar months. Within ten (10) days Landlord’s receipt, Landlord shall provide Tenant with copies of all maintenance reports and test results regarding the Generator Equipment, including without limitation, submissions to and correspondence with any governmental agency regarding such tests. In addition, throughout the Rental Term, Landlord shall maintain, repair and replace the uninterruptable power supply for the Building (“UPS System”), which shall include maintenance as recommended by the manufacturer thereof and replacement of batteries as needed or at least every four (4) years. If Landlord fails to provide such reports within the aforesaid ten (10) day period or if Tenant reasonably believes that the Generator Equipment or UPS System is not properly maintained or adequate to provide emergency generation or power supply for the Leased Premises and Landlord fails to remedy such matters within ten (10) days following notice from Tenant, then Tenant shall have the right to exercise self-help to effectuate any maintenance, repairs, or replacements that Tenant finds reasonably necessary, which shall include Tenant’s right to access the Generator Equipment and UPS System, as applicable; provided, however, that Tenant shall be responsible for any damage or loss caused by Tenant’s exercise of such self-help rights and shall indemnify Landlord in connection with any third party claims related thereto. Landlord shall reimburse Tenant for the reasonable costs incurred by Tenant in connection with such self-help exercise. Except as for Landlord’s obligation to reimburse Tenant for any costs Tenant incurs exercising its self-help rights in accordance with this Section 10.01(b), Landlord shall not be liable for any damages arising from or related to Landlord’s failure to operate, maintain, repair or replace the Generator Equipment or UPS System, including any and all damages incurred by Tenant. Landlord shall ensure that the placement and operation of the Generator Equipment and UPS System comply with all applicable laws.
24
SECTION 10.02. TENANT’S OBLIGATION FOR MAINTENANCE.
(a) Tenant shall provide its own janitorial service and keep and maintain the Leased Premises, including the interior wall surfaces and windows, floors, floor coverings and ceilings, in a clean, sanitary and safe condition in accordance with applicable laws of the State and in accordance with all directions, rules and regulations of the health officer, fire marshal, insurance underwriter or rating bureau designated by Landlord, building inspector, or other proper officials of the governmental agencies having jurisdiction, at the sole cost and expense of Tenant, and Tenant shall comply with all requirements of law, ordinance and otherwise, affecting the Leased Premises.
(b) Tenant shall pay, when due, all claims for labor or material furnished, for work under Sections 9.01, 9.02 and 10.02(a) hereof, to or for Tenant at or for use in the Leased Premises, and shall bond such work to prevent assertion of claims against Landlord unless Landlord waives such requirement in writing.
(c) Tenant agrees to be responsible for all furnishings, fixtures and equipment located upon the Leased Premises from time to time and shall replace carpeting within the Leased Premises if same shall be damaged by tearing, burning, or stains resulting from spilling anything on such carpet, reasonable wear and tear excepted.
(d) Tenant shall be responsible for the maintenance, repair and replacement of any HVAC mini split systems for server rooms and/or any other specialty HVAC equipment exclusively serving any lab or lab equipment of the Leased Premises.
SECTION 10.03. SURRENDER OF LEASED PREMISES AND RIGHTS UPON TERMINATION.
(a) This Lease, and the tenancy hereby created, shall cease and terminate at the end of the Rental Term hereof, or any Rental Term extension or renewal thereof, without the necessity of any notice from either Landlord or Tenant to terminate the same, and Tenant hereby waives notice to vacate the Leased Premises and agrees that Landlord shall be entitled to the benefit of all provisions of law respecting summary recovery of possession of the Leased Premises from Tenant holding over to the same extent as if statutory notice has been given.
25
(b) Upon termination of this Lease at any time and for any reason whatsoever, Tenant shall surrender and deliver up the Leased Premises to Landlord in the same condition as existed upon Delivery of Possession (as to Suite 210 and 340) and as of the Effective Date for the balance of the Leased Premises, or as altered as provided in Section 9.01, ordinary wear and tear excepted. At the end of the Rental Term, Tenant shall promptly remove all personal property from the Leased Premises and repair any damage caused by such removal. Subject to the terms of this Lease, upon termination of the Rental Term, Tenant shall deliver the Leased Premises to Landlord broom clean, with no obligation of Tenant to clean any ventilation systems or components within the interior walls of the Leased Premises. Obligations under this Lease relating to events occurring or circumstances existing prior to the date of termination shall survive the expiration or other termination of the Rental Term of this Lease. Liabilities accruing after the date of termination are defined in Sections 13.05, 19.01 and 19.02.
ARTICLE XI. INSURANCE AND INDEMNITY
SECTION 11.01. TENANT’S LIABILITY INSURANCE AND INDEMNITY. Tenant shall, during the entire Rental Term, and any Rental Term extension or renewal thereof, keep in full force and effect a policy of commercial general liability insurance with respect to the Leased Premises, with a combined single limit of not less than Two Million Dollars ($2,000,000.00) per occurrence. The policy shall name Landlord, property manager (i.e., Woodbury Corporation) and any other persons, firms or corporations designated by Landlord and Tenant as named “Additional Insured(s)”, and shall contain a clause that the insurer shall not cancel or change the insurance without first giving Landlord ten (10) days prior written notice. Such insurance shall include an endorsement permitting Landlord and property manager to recover damage suffered due to act or omission of Tenant, notwithstanding being named as an Additional Insured party in such policies. Such insurance may be furnished by Tenant under any blanket policy carried by it or under a separate policy therefor. The insurance shall be with an insurance company approved by Landlord and a copy of the paid-up policy evidencing such insurance or a certificate of insurer certifying to the issuance of such policy, and providing copies of all endorsements, shall be delivered to Landlord. If Tenant fails to provide such insurance proof of insurance within three (3) business days of request by Landlord, Landlord may do so and charge the same to Tenant.
Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims, actions, damages, liability and expense in connection with loss of life, personal injury and/or damage to property arising from or out of any occurrence in, upon or at the Leased Premises or from the occupancy or use by Tenant of the Leased Premises or any part thereof, or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, sublessees, concessionaires or business invitees unless caused by the negligence of Landlord and to the extent not covered by its casualty or liability insurance. In case Landlord shall, without fault of its part, be made a party to any litigation commenced by or against Tenant, then Tenant shall protect and hold Landlord harmless and shall pay all costs, expenses and reasonable attorneys’ fees incurred or paid by either in defending itself or enforcing the covenants and agreements of this Lease.
26
SECTION 11.02. FIRE AND CASUALTY INSURANCE.
(a) Subject to the provisions of this Section 11.02, Landlord shall secure, pay for, and at all times during the Rental Term, and any Rental Term extension or renewal thereof, maintain fire and casualty extended coverage insurance providing coverage upon the Building improvements in an amount equal to the full insurable replacement value thereof (as determined by Landlord). Such insurance shall include twelve (12) months rental income coverage as well as such additional endorsements as may be required by Landlord’s lender or Landlord. All insurance required hereunder shall be written by reputable, responsible companies licensed in the State of Utah. Tenant shall have the right, at its request at any reasonable time, to be furnished with copies of the insurance policies then in force pursuant to this Section 11.02, together with. evidence that the premiums therefor have been paid.
(b) Tenant agrees to maintain, at its own expense, such fire and casualty insurance coverage as Tenant may desire or require in respect to Tenant’s personal property, equipment, furniture, fixtures or inventory and Landlord shall have no obligation in, respect to such insurance or losses. All property kept or stored on the Leased Premises by Tenant or with Tenant’s permission shall be so done at Tenant’s sole risk and Tenant shall indemnify Landlord against and hold it harmless from any claims arising out of loss or damage to same.
(c) Tenant shall not permit the Leased Premises to be used for any purpose which would render the insurance thereon void or cause cancellation thereof or increase the insurance risk or increase the insurance premiums in effect just prior to the Rental Term Commencement Date of this Lease. Tenant agrees to pay as Additional Rent the total amount of any increase in the insurance premium of Landlord over that in effect prior to the Rental Term Commencement Date of this Lease resulting from Tenant’s use of the Leased Premises. If Tenant installs any electrical or other equipment which overloads the lines in the Leased Premises, Tenant shall at its own expense make whatever changes are necessary to comply with the requirements of Landlord’s insurance.
(d) Tenant shall be responsible for all glass breakage in and about the Leased Premises, unless caused by Landlord, its employees or agents, and agrees to immediately replace all glass broken or damaged during the Rental Term, and any Rental Term extension or renewal thereof, with glass of the same quality as that broken or damaged. Landlord may replace, at Tenant’s expense, any broken or damaged glass if not replaced by Tenant within five (5) days after such damage.
SECTION 11.03. WAIVER OF SUBROGATION. Each party hereto does hereby remise, release and discharge the other party hereto and any officer, agent, employee or representative of such party, of and from any liability whatsoever hereafter arising from any insurable loss, damage or injury caused by fire or other casualty for which insurance (permitting waiver of liability and containing a waiver of subrogation) is required to be carried by the injured party pursuant to the terms of this Lease.
27
SECTION 11.04. INDEMNIFICATION.
(a) Subject to the terms and conditions set forth in Section 11.03, Tenant shall indemnify Landlord and save it harmless from and against any and all claims, actions, damages, liability and expense in connection with loss of life, personal injury and/or damage to property arising from or out of any occurrence in, upon or at the Leased Premises or from the occupancy or use by Tenant of the Leased Premises or any part thereof, or occasioned wholly or in part by any act or omission of Tenant, its agents, contractors, employees, servants, sublessees, concessionaires or business invitees to extent not covered by insurance required by Article XI. In case Landlord is, without fault on its part, made a party to any litigation commenced by or against Tenant, then Tenant shall protect and hold Landlord harmless and shall pay all costs, expenses and reasonable attorneys’ fees incurred or paid by Landlord in defending itself or enforcing the covenants and agreements of this Lease.
(b) Subject to the terms and conditions set forth in Section 11.03, to the extent not covered by the insurance required to be maintained by Tenant, or that would not have been covered by insurance had Tenant maintained such insurance, Landlord agrees to indemnify and save harmless Tenant in regard to third parties for damages occurring on the Common Area proximately caused by the wrongful acts or negligence of Landlord, its contractors, agents or employees in scope of their employment, including costs of defense and reasonable attorneys’ fees incurred in such defense. In case Tenant is, without fault on its part, made a party to litigation against Landlord as a result of such acts or negligence which Tenant’s insurer is not required to defend, then Landlord shall indemnify Tenant against costs of such defense including reasonable attorneys’ fees.
ARTICLE XII. UTILITY CHARGES
SECTION 12.01. OBLIGATION OF LANDLORD. Unless otherwise agreed in writing by the parties, during the Rental Term of this Lease Landlord shall cause to be furnished to the Leased Premises at all times, but subject to Section 1.01 (Q) the following utilities and services, the cost and expense of which shall be included in Operating Expenses:
(a) Electricity, water, gas and sewer service;
(b) Telephone connection, but not including telephone stations and equipment (it being expressly understood and agreed that Tenant shall be responsible for the ordering and installation of telephone lines and equipment which pertain to the Leased Premises);
(c) Heat and air-conditioning to such extent and to such levels as, in Landlord’s judgment, is reasonably required for the comfortable use and occupancy of the Leased Premises subject however to any limitations imposed by any government agency. The parties agree and understand that the above heat and air-conditioning shall be provided to the Leased Premises at all times during the Rental Term, but subject to Section 1.01 (Q);
28
(d) Snow removal and parking lot sweeping services for parking areas that are Common Areas of the Building;
(e) Elevator service;
(f) Building systems maintenance services.
SECTION 12.02. OBLIGATIONS OF TENANT. Tenant shall arrange for and shall pay the entire cost and expense of all telephone and data installation and services, equipment and monthly use charges, electric light bulbs (but not fluorescent bulbs used in fixtures originally installed in the Leased Premises) and all other materials and services not expressly required to be provided and paid for pursuant to the provisions of Section 12.01. Tenant covenants to use good faith efforts to reasonably conserve utilities by turning off lights and equipment when not in use and taking such other reasonable actions in accordance with sound standards for energy conservation. Notwithstanding the foregoing, it is the nature of Tenant’s business that certain equipment remain in operation at all times, but Tenant shall be subject to the excess costs set forth Section 1.01 (Q). Additional limitations of Tenant are as follows:
(a) Tenant shall not, without the written consent of Landlord, which consent shall not be unreasonably withheld, use any apparatus or device on the Leased Premises using current in excess of 208 volts which shall in any way or to any extent increase the amount of electricity or water usually furnished or supplied for use on the Leased Premises for the Permitted Use designated in Section 1.01(F), nor connect with electrical current, except through existing electrical outlets in the Leased Premises, or water pipes, any apparatus or device, for the purposes of using electric current or water;
(b) If Tenant shall require water or electric current in excess of that usually furnished or supplied for use of the Leased Premises, or for purposes other than those designated in Section 1.01(F), Tenant shall first procure the written consent of Landlord for the use thereof, which consent Landlord may refuse and/or Landlord may cause a water meter or electric current meter to be installed in the Leased Premises, so as to measure the amount of water and/or electric current consumed for any such use. The cost of such meters and of installation maintenance, and repair thereof shall be paid for by Tenant and Tenant agrees to pay Landlord promptly upon demand by Landlord for all such water and electric current consumed as shown by such meters, to the extent in excess of Tenant’s Pro-Rata share of such Operating Expenses, at the rates charged for such service by the city in which the Building is located or the local public utility, as the case may be, furnishing the same, plus any additional expense incurred in keeping account of the water and electric current so consumed; and
(c) If and where heat generating devices are used in the Leased Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right, after thirty (30) day notice and cure period, to install additional or supplementary air conditioning units for the Leased Premises, and the entire cost of installing, operating, maintaining and repairing the same shall be paid by Tenant to Landlord promptly after demand by Landlord.
29
SECTION 12.03. Intentionally Omitted.
SECTION 12.04. LIMITATIONS ON LANDLORD’S LIABILITY. Landlord shall not be liable for and Tenant shall not be entitled to terminate this Lease or to effectuate any abatement or reduction of Base Monthly Rent by reason of Landlord’s failure to provide or furnish any of the foregoing utilities or services if such failure was reasonably beyond the control of Landlord. In no event shall Landlord be liable for loss or injury to persons or property, however, arising or occurring in connection with or attributable to any failure to furnish such utilities or services even if within the control of Landlord. Notwithstanding anything in this Section 12.04, to the contrary, if an interruption or cessation of a utility service to the Leased Premises from a cause within the reasonable control of Landlord results in the Leased Premises being unusable by Tenant for the conduct of Tenant’s business, then Base Monthly Rent shall be abated commencing on that date which is seven (7) consecutive business days following the date Tenant delivers written notice to Landlord of such interruption and continuing until either such utility service to the Leased Premises is restored or the Leased Premises is again usable for the conduct of Tenant’s business.
ARTICLE
XIII. ESTOPPEL AND OFF-SET STATEMENT, ATTORNMENT
AND SUBORDINATION
SECTION 13.01. ESTOPPEL OR OFF-SET STATEMENT. Tenant agrees, within ten (10) days after request therefor by Landlord, to execute in recordable form and deliver to Landlord a statement in writing, certifying:
(a) that this Lease is unmodified and in full force and effect, or if there have been modifications, stating the modifications;
(b) the Rental Term Commencement Date;
(c) that rent is paid currently without any off-set or defense thereto;
(d) the amount of rent, if any, paid in advance; and
(e) that there are no uncured defaults by Landlord or stating those claimed by Tenant.
SECTION 13.02. ATTORNMENT. In the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage or deed of trust made by Landlord covering the Leased Premises, or in the event Landlord conveys in a sale all of its rights and duties in and to this Lease and the Leased Premises, Tenant shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as Landlord under this Lease.
30
SECTION 13.03. SUBORDINATION. Tenant agrees that this Lease shall, at the request of Landlord, be subordinate to any first mortgages or deeds of trust that may hereafter be placed upon the Leased Premises and to any and all advances to be made thereunder; and to the interest thereon, and any Rental Term renewals, replacements and extensions thereof, provided the mortgagees or trustees named in such mortgages or deeds of trust shall agree to recognize this Lease in the event of foreclosure, if Tenant is not in default.
SECTION 13.04. MORTGAGEE SUBORDINATION. Tenant hereby agrees that this Lease shall, if at any time requested by Landlord or any lender in respect to Landlord’s financing of the Building or the property in which the Leased Premises is located or any portion hereof, be made superior to any mortgage or deed of trust that may have preceded this Lease.
ARTICLE XIV. ASSIGNMENT
SECTION 14.01. ASSIGNMENT. Tenant shall not assign this Lease or sublet the Leased Premises, or any part thereof, without first obtaining the written consent of Landlord, which consent shall not be unreasonably withheld. The consent of Landlord shall not relieve Tenant from continuing liability for all obligations under this Lease. Any Assignment (as defined herein) by operation of law or if Tenant is a corporation, unincorporated association or partnership, the transfer, assignment or hypothecation of any stock or interest in such corporation, association or partnership in the aggregate in excess of fifty percent (50%) shall be deemed an “Assignment” within the meaning of this Section 14.01. An Assignment consummated in violation of the provisions of this Article XIV shall be null and void and of no force or effect.
SECTION 14.02. Intentionally Omitted.
SECTION 14.03. CONDITIONS OF CONSENT.
(a) Should consent be granted, such consent shall be subject to Tenant causing the Assignee to execute an agreement directly with Landlord undertaking to be bound by all the terms, covenants and conditions contained in this Lease as though Assignee had originally executed this Lease as Tenant.
(b) Tenant shall pay to Landlord any and all consideration received by Tenant for such Assignment to the extent such consideration exceeds the remaining book value of Tenant’s leasehold improvements paid for by Tenant, whether paid in lump sum or in rent exceeding Base Monthly Rent required under this Lease.
(c) At no time when Tenant is in default in the performance of any covenant of this Lease or in payment of Base Monthly Rent or any other matured sums payable hereunder shall any Assignment be approved or permitted, nor shall the notice provision of Section 14.02 limit the right to declare default and pursue other remedies provided for in this Lease or under the laws of the State of Utah.
31
SECTION 14.04. STANDARDS OF REASONABLENESS IN WITHHOLDING CONSENT. In determining whether to grant consent, Landlord may consider any statutory or common law tests including, but not limited to, the following tests, each of which if applicable in Landlord’s sole business judgment, shall be deemed a reasonable ground for rejection:
(a) Any Assignment disapproved by Landlord’s lender;
(b) Any Assignment resulting in a change of Permitted Use from that specified in Section 1.01(F);
(c) Any Assignment to an Assignee who lacks good reputation, successful business experience in Tenant’s type of business and substantial means and financial capacity adequate to conduct such a business;
(d) Any Assignment which would breach any covenant of Landlord respecting use or exclusivity in any other lease, financing agreement or other agreement relating to the Building:
However, any Assignment to a parent corporation, or to a successor corporation acquiring substantially all the assets of Tenant, and intending to operate Tenant’s business under the same trade name, shall be deemed reasonable.
Consent by Landlord to one (1) or more Assignments shall not constitute a waiver or consent to any subsequent Assignment nor exhaust Landlord’s rights under this Article XIV; nor shall acceptance of Base Monthly Rent, Additional Rent or any other payment from Assignee be deemed a waiver or consent by Landlord or an acceptance of such Assignment. Any Assignment without such Landlord’s consent shall be void and of no force and effect and shall confer no estate or benefit on anyone, nor shall Landlord be required to terminate this Lease in order to invalidate such Assignment.
SECTION 14.05. DOCUMENTATION OF ASSIGNMENT. Whether the documentation of any such Assignment shall be prepared by Tenant or by Landlord or its attorneys, all costs and reasonable attorneys’ fees related to considering such Assignment shall be paid by Tenant, which fees payable to Landlord shall in no case be more than One Thousand Dollars ($1,000.00) per Assignment considered, payable by Tenant upon demand as Additional Rent.
SECTION 14.06. CONTINUING LIABILITY OF TENANT. Neither the consent of Landlord nor any otherwise permitted Assignment or subletting shall relieve Tenant from continuing liability under this Lease, including liability for Base Monthly Rent as provided in Section 1.01(L) and 1.01(M) and any Additional Rent for which Tenant shall remain obligated.
SECTION 14.07. VOIDABLE ASSIGNMENT. Any assignment, subletting, occupancy or use without the prior written consent of Landlord shall be voidable in Landlord’s sole and absolute discretion and shall constitute a default under this Lease. Tenant specifically understands and agrees that at any time Tenant is in default under the provisions of this Article XIV, Tenant shall have no right to assign or sublet Tenant’s interest in this Lease and Landlord shall have no obligation to give approval or disapproval under this Article XIV should Tenant attempt an assignment or subletting while in default.
32
ARTICLE XV. WASTE OR NUISANCE
SECTION 15.01. WASTE OR NUISANCE. Tenant shall not commit or suffer to be committed any waste upon the Leased Premises, or any nuisance or other act or thing which may disturb the quiet enjoyment of any other tenant in the Building in which the Leased Premises may be located, or elsewhere within the Building or the Common Areas.
ARTICLE XVI. NOTICES
SECTION 16.01. NOTICES. Except as provided in Section 19.01, any notice, demand, request or other instrument which may be or is required to be given under this Lease shall be personally delivered or mailed by United States certified mail, return receipt requested, postage prepaid, or via a nationally recognized overnight courier or expedited mail service, and shall be addressed (a) if to Landlord at the address set forth in Section 1.01(C), Section 6.01 and Section 6.03, or at such other address as Landlord may designate by written notice and (b) if to Tenant at the address set forth in Section 1.01(E) or at such other address as Tenant shall designate by written notice. Notice shall be effective on delivery unless delivery is refused or cannot be made, in which event notice shall be effective on mailing. In order for notices to be deemed received by Landlord, Tenant must include the details as outlined in Section 1.01(C), Section 6.01 and Section 6.03.
Notwithstanding the foregoing, any notices Landlord is required or authorized to deliver to Tenant in order to advise Tenant of alleged violations of Tenant’s covenants relating to advertising, signs, parking of automobiles, hours of operation, failure of Tenant to properly maintain or repair the Leased Premises, all as provided in, but not limited to, Articles VII, IX and X and Sections 8.01, 15.01 and 16.02, must be in writing but may be served upon Tenant by delivering a copy of such notice to Tenant as above specified and delivering a copy of such notice to one (1) of Tenant’s managing employees at the Leased Premises
ARTICLE XVII. DESTRUCTION OF THE LEASED PREMISES
SECTION 17.01. DESTRUCTION.
(a) If the Leased Premises is partially or totally destroyed by fire or other casualty insurable under standard fire insurance policies with extended coverage endorsement so as to become partially or totally untenantable, the same shall be repaired or rebuilt as speedily as practical under the circumstances at the expense of Landlord, unless Landlord elects not to repair or rebuild as provided in subsection (b) of this Section 17.01. During the period required for restoration, a just and proportionate part of Base Monthly Rent, Additional Rent and other charges payable by Tenant hereunder shall be abated until the Leased Premises is repaired or rebuilt. If Landlord does not commence to repair or rebuild for a period equaling one hundred eighty (180) days from the date of the insurance settlement, Tenant may terminate this Lease upon thirty (30) days’ prior written notice to Landlord.
33
(b) If the Leased Premises is (i) rendered totally untenantable by reason of an occurrence described in subsection 17.01(a), or (ii) damaged or destroyed as a result of a risk which is not insured under Landlord’s fire insurance policies, or (iii) at least twenty percent (20%) damaged or destroyed during the last year of the Rental Term, or (iv) if the Building is damaged in whole or in part (whether or not the Leased Premises is damaged), to such an extent that Tenant cannot practically use the Leased Premises for its intended purpose, then and in any such events Landlord may at its option terminate this Lease by notice in writing to Tenant within sixty (60) days after the date of such occurrence. Unless Landlord gives such notice, this Lease shall remain in full force and effect and Landlord shall repair such damage at its expense as expeditiously as possible under the circumstances.
(c) If Landlord should elect or be obligated, pursuant to subsection 17.01(a), to repair or rebuild because of any damage or destruction, Landlord’s obligation shall be limited to the original Building and any other work or improvements which may have been originally performed or installed at Landlord’s expense. If the cost of performing Landlord’s obligation exceeds the actual proceeds of insurance paid or payable to Landlord on account of such casualty, Landlord may terminate this Lease unless Tenant, within fifteen (15) days after demand therefor, deposits with Landlord a sum of money sufficient to pay the difference between the cost of repair and the proceeds of the insurance available for such purpose. Tenant shall replace all work and improvements not originally installed or performed by Landlord at its expense.
(d) Except as stated in this Article XVII, Landlord shall not be liable for any loss or damage sustained by Tenant by reason of casualties mentioned hereinabove or any other accidental casualty.
ARTICLE XVIII. CONDEMNATION
SECTION 18.01. CONDEMNATION. As used in this Section 18.01, the term “Condemnation Proceeding(s)” means any action or proceeding in which any interest in the Leased Premises or the Building is taken for any public or quasi-public purpose by any lawful authority through exercise of the power of eminent domain or right of condemnation or by purchase or otherwise in lieu thereof. If the whole of the Leased Premises is taken through Condemnation Proceedings, this Lease shall automatically terminate as of the date possession is taken by the condemning authority. If in excess of twenty-five percent (25%) of the Leased Premises is taken, either party hereto shall have the option to terminate this Lease by giving the other written notice of such election at any time within thirty (30) days after the date of taking. If less than twenty-five percent (25%) of the space is taken and Landlord determines, in Landlord’s sole discretion, that a reasonable amount of reconstruction thereof shall not result in the Leased Premises or the Building becoming a practical improvement reasonably suitable for use for the purpose for which it is designed, then Landlord may elect to terminate this Lease by giving thirty (30) days written notice as provided hereinabove. If Landlord does not commence to repair or rebuild for a period equaling one hundred eighty (180) days from the date of the insurance settlement, Tenant may terminate this Lease upon thirty (30) days’ prior written notice to Landlord. In all other cases, or if neither party exercises its option to terminate, this Lease shall remain in effect and the rent payable hereunder from and after the date of taking shall be proportionately reduced in proportion to the ratio of: (i) the area contained in the Leased Premises which is capable of occupancy after the taking; to (ii) the total area contained in the Leased Premises which was capable of occupancy prior to the taking. In the event of any termination or rental reduction provided for in this Section 18.01, there shall be a proration of the rent payable under this Lease and Landlord shall refund any excess theretofore paid by Tenant. Whether or not this Lease is terminated as a consequence of Condemnation Proceedings, all damages or compensation awarded for a partial or total taking, including any sums compensating Tenant for diminution in the value of or deprivation of its leasehold estate, shall be the sole and exclusive property of Landlord, except that Tenant shall be entitled to any awards intended to compensate Tenant for expenses of locating and moving Tenant’s operations to a new space.
34
ARTICLE XIX. DEFAULT OF TENANT
SECTION 19.01. DEFAULT - RIGHT TO RE-ENTER. In the event of any failure of Tenant to pay any Base Monthly Rent, Additional Rent and other charges due hereunder within ten (10) days after the same shall be due, or any failure by Tenant to perform any other of the terms, conditions or covenants required of Tenant by this Lease within thirty (30) days after written notice of such default shall have been mailed to Tenant by registered mail to Tenant’s address as listed in Section 1.01(E) or to such address as Tenant has specified in writing, or if Tenant shall permit this Lease to be taken under any writ of execution, then Landlord, besides other rights or remedies it may have, shall have the right to declare this Lease terminated and the Rental Term ended and shall have the immediate right of re-entry and may remove all persons and property from the Leased Premises. Such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant, without evidence of notice or resort to legal process and without being deemed guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby. Tenant hereby waives all compensation for the forfeiture of the Rental Term or its loss of possession of the Leased Premises in the event of the forfeiture of this Lease as provided for above. Any notice that Landlord may desire or is required to give Tenant with reference to the foregoing provision may, in lieu of mailing, at the option of Landlord, be conspicuously posted for ten (10) consecutive days at the main entrance to or in front of the Leased Premises, and such notice shall constitute a good, sufficient, and lawful notice for the purpose of declaring a forfeiture of this Lease and for terminating all of the rights of Tenant hereunder.
35
SECTION 19.02. DEFAULT - RIGHT TO RE-LET. Should Landlord elect to re-enter, as provided herein, or should it take possession pursuant to legal proceedings or pursuant to any notice provided for by law, it may either terminate this Lease or it may from time to time, without terminating this Lease, make such alterations and repairs as may be necessary in order to re-let the Leased Premises and may re-let the Leased Premises, or any part thereof, for such term or terms (which may be for a term extending beyond the Rental Term of this Lease) and at such rent or rental income and upon such other terms and conditions as Landlord in its sole discretion may deem advisable. Upon each re-letting, all rental income received by Landlord from such re-letting shall be applied, first, to the payment of any indebtedness other than rents due hereunder from Tenant to Landlord; second, to the payment of any costs and expenses of such re-letting, including brokerage fees and attorneys’ fees and costs of such alterations and repairs; third, to the payment of rents due and unpaid hereunder; and fourth, the residue, if any, shall be held by Landlord and applied in payment of future rent as the same may become due and payable hereunder. If such rental income received from such re-letting during any month is less than those payable during that month by Tenant hereunder, Tenant shall pay any such deficiency immediately to Landlord. Such deficiency shall be calculated and paid monthly. No such re-entry or taking possession of the Leased Premises by Landlord shall be construed as an election on its part to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding any such re-letting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach. Should Landlord at any time terminate this Lease for any breach, in addition to any other remedies it may have, it may recover from Tenant all damages it may incur by reason of such breach, including the cost of recovering the Leased Premises, reasonable attorneys’ fees, and including the worth at the time of such termination of the excess, if any, of the amount of rents and other charges equivalent to rents reserved in this Lease for the remainder of the stated Rental Term over the then reasonable rental value of the Leased Premises for the remainder of the Rental Term, all of which amounts shall be immediately due and payable from Tenant to Landlord. In determining the rents which would be payable by Tenant hereunder, subsequent to default, Base Monthly Rent for each year of the unexpired Rental Term shall be equal to the average Base Monthly Rent and Additional Rent payable by Tenant from the Rental Term Commencement Date to the time of default, or during the preceding three (3) full calendar years, whichever is the greater amount. Notwithstanding anything to the contrary in this Lease, Landlord’s remedies as set forth in the Lease shall be subject to the legal doctrines of mitigation and offset. In exercising its remedies following an event of default by Tenant, Landlord shall use commercially reasonable efforts to mitigate its damages and shall use reasonable efforts to re-let the Leased Premises on favorable market terms
SECTION 19.03. LEGAL EXPENSES. In case of default by either party in the performance and obligations under this Lease, the non-prevailing party shall pay all costs incurred in enforcing this Lease, or any right arising out of the breach thereof, whether by suit or otherwise, including reasonable attorneys’ fees.
ARTICLE XX. BANKRUPTCY, INSOLVENCY OR RECEIVERSHIP
SECTION 20.01. ACT OF INSOLVENCY, GUARDIANSHIP, ETC. The following shall constitute a default of this Lease by Tenant for which Landlord, at Landlord’s option, may immediately terminate this Lease.
(a) The appointment of a receiver to take possession of all or substantially all of the assets of Tenant;
(b) A general assignment by Tenant of its assets for the benefit of creditors;
(c) Any action taken or suffered by or against Tenant under any federal or state insolvency or bankruptcy act; and
(d) The appointment of a guardian, conservator, trustee, or other similar officer to take charge of all or any substantial part of Tenant’s property.
Neither this Lease, nor any interest therein nor any estate thereby created shall pass to any trustee, guardian, receiver or assignee for the benefit of creditors or otherwise by operation of law.
36
SECTION 20.02. BANKRUPTCY. If Landlord shall not be permitted to terminate this Lease as hereinabove provided because of the provisions of the United States Code relating to Bankruptcy (“Bankruptcy Code”), then Tenant as a debtor-in-possession or any trustee for Tenant agrees promptly, within no more than fifteen (15) days upon request by Landlord to the “Bankruptcy Court”, to assume or reject this Lease and Tenant on behalf of itself, and any trustee agrees not to seek or request any extension or adjournment of any application to assume or reject this Lease by Landlord with such Bankruptcy Court. In such event, Tenant or any trustee for Tenant may only assume this Lease if (a) it cures or provides adequate assurance that the trustees shall promptly cure any default hereunder, (b) compensates or provides adequate assurance that Tenant shall promptly compensate Landlord for any actual pecuniary loss to Landlord resulting from Tenant’s defaults, and (c) provides adequate assurance of performance during the fully stated Rental Term hereof of all the terms, covenants, and provisions of this Lease to be performed by Tenant. In no event after the assumption of this Lease shall any then-existing default remain uncured for a period in excess of the earlier of ten (10) days or the time period set forth herein. Adequate assurance of performance of this Lease, as set forth hereinabove, shall include, without limitation, adequate assurance (1) of the source of rent reserved hereunder, (2) that the assumption of this Lease shall not breach any provision hereunder, and (3) that business operated shall comply with the Permitted Use covenants set forth in Sections 1.01(F) and 7.01. In the event of a filing of a petition under the Bankruptcy Code, Landlord shall have no obligation to provide Tenant with any services or utilities as herein required, unless Tenant shall have paid and be current in all payments of Operating Expenses, utilities or other charges therefor. Tenant shall pay all of Landlord’s costs incurred as a result of Tenant’s insolvency and/or bankruptcy proceedings including, but not limited to, reasonable attorneys’ fees incurred as a result of Landlord’s participation in and/or monitoring of Tenant’s insolvency proceeding.
ARTICLE XXI. LANDLORD ACCESS
SECTION 21.01. LANDLORD ACCESS. Except in the case of emergency and subject to the foregoing, Landlord or Landlord’s agent shall have the right to enter the Leased Premises upon forty-eight (48) hours prior notice at all reasonable times to examine the same, or to show the Leased Premises to prospective purchasers or lessees of the Building, or to make all reasonable repairs, alterations, improvements or additions as Landlord may deem necessary or desirable, to the extent such is necessary to the structure or utility functions of the Building and does not materially adversely affect the Leased Premises, and Landlord shall be allowed to take all material into and upon the Leased Premises that may be required therefor without the same constituting an eviction of tenant in whole or in part, and the rents reserved shall not abate while such repairs, alterations, improvements, or additions are being made, by reason of loss or interruption of business of Tenant, or otherwise. Landlord shall have no liability to Tenant for any damages suffered by Tenant and/or to Tenant’s property occur during the required forty-eight (48) hour notice period. During the ninety (90) days prior to the expiration of the Rental Term, or any Rental Term extension or renewal thereof, Landlord may exhibit the Leased Premises to prospective tenants and place upon the Leased Premises the usual notices “To Let” or “For Rent” which notices Tenant shall permit to remain thereon without molestation. Notwithstanding anything to the contrary herein, in the event that at any time during the Rental Term, Tenant notifies Landlord that any portion of the Leased Premises has been designated for restricted entry, then Landlord agrees to abide by the restricted entry requirements as Tenant may provide. Notwithstanding the foregoing or anything to the contrary in this Lease, neither Landlord nor any of its agents, lenders or purchasers (actual or prospective) shall at any time during the Rental Term (i) enter any of the laboratory portions of the Leased Premises unless accompanied by a representative of Tenant and in compliance with any reasonable gowning or other protocols required by Tenant to protect the sterile environment, or (ii) cause any laboratory equipment to be powered down without Tenant’s consent; provided, however, that the foregoing requirements shall not apply in an emergency or in the event that Tenant fails to make a representative available to accompany Landlord or its agents, lenders or purchasers (actual or prospective) upon at least forty-eight (48) hours’ notice.
37
ARTICLE XXII. TENANT’S PROPERTY AND LANDLORD’S LIEN
SECTION 22.01. TAXES ON LEASEHOLD. Tenant shall be responsible for and shall pay before delinquency all municipal, county and state taxes assessed during the Rental Term of this Lease against any leasehold interest, improvements, trade fixtures or personal property of any kind, owned by or placed in, upon or about the Leased Premises by Tenant, and taxes, levies or fees assessed on the basis of Tenant’s occupancy thereof, including, but not limited to, taxes measured by Base Monthly Rent and Additional Rent due from Tenant hereunder. Landlord shall have no liability to Tenant for any damages suffered by Tenant and/or to Tenant’s property occurring during the required forty-eight (48) hour notice period.
SECTION 22.02. Intentionally Omitted.
SECTION 22.03. Intentionally Omitted.
SECTION 22.04. LANDLORD’S LIEN. Tenant is advised that Utah Code Section 38-3-1 and following grants Landlord (Lessor) a lien in regard to unpaid rent.
SECTION 22.05. LANDLORD’S SUBORDINATION. Provided that Tenant is not in default hereunder, Landlord agrees to subordinate its lien on Tenant’s personal property to that of any bona-fide third party lender providing financing which directly benefits Tenant’s operations in the Leased Premises. However, Landlord shall refuse and shall otherwise not be required to subordinate its lien or priority as to Tenant’s equipment or trade fixtures, and Landlord shall be entitled to refuse subordination if loans are not directly related to the Leased Premises.
ARTICLE XXIII. HOLDING OVER
SECTION 23.01. HOLDING OVER. Any holding over after the expiration of the Rental Term, or any Rental Term extension thereof, without landlord’s approval, shall be construed to be a tenancy-at-will and all provisions of this Lease shall be and remain in effect except that Base Monthly Rent shall be double the amount of Base Monthly Rent (including any adjustments as provided herein) payable for the last full calendar month of the Rental Term, including any Rental Term extension or renewal thereof, or tenancy on a month-to-month basis.
SECTION 23.02. SUCCESSORS. All rights and liabilities herein given to, or imposed upon, the respective parties hereto shall extend to and bind the several respective heirs, executors, administrators, successors and assigns of such parties; and if there shall be more than one (1) tenant, they shall all be bound jointly and severally by the terms, covenants and agreements herein. No rights, however, shall inure to the benefit of any assignee of Tenant unless the assignment to such assignee has been approved by Landlord in writing.
38
ARTICLE XXIV. RULES AND REGULATIONS
SECTION 24.01. RULES AND REGULATIONS. Tenant agrees to comply with and observe all rules and regulations as established by Landlord and which are now, or which may be hereafter, prescribed by Landlord from time to time, provided, in Landlord’s commercially reasonable discretion, and posted in or about the Leased Premises or otherwise brought to the notice of Tenant, both with regard to the Building as a whole and to the Leased Premises, including Common Areas and Common Facilities. Tenant’s failure to keep and observe such rules and regulations shall constitute a breach of the terms of this Lease in the manner as if such rules and regulations were contained herein as covenants.
ARTICLE XXV. QUIET ENJOYMENT
SECTION 25.01. QUIET ENJOYMENT. Upon payment by Tenant of the rents herein provided, and upon the observance and performance of all the covenants, terms and conditions on Tenant’s part to be observed and performed, Tenant shall peaceably and quietly hold and enjoy the Leased Premises for the Rental Term, or any Rental Term extension or renewal thereof, without hindrance or interruption by Landlord or any other person or persons lawfully or equitably claiming by, through or under Landlord, subject, nevertheless, to the terms and conditions of this Lease and actions resulting from future eminent domain proceedings and casualty losses.
ARTICLE XXVI. SECURITY DEPOSIT
SECTION 26.01. SECURITY DEPOSIT. Landlord herewith acknowledges receipt of the Security Deposit in the amount set forth in Section 1.01(S), which is to be retained as security for the faithful performance of all the covenants, conditions and agreements of this Lease, but in no event shall Landlord be obliged to apply the same upon rents or other charges in arrears or upon damages for Tenant’s failure to perform such covenants, conditions and agreements; Landlord may so apply the Security Deposit, at its option; and Landlord’s right to the possession of the Leased Premises for non-payment of rents or for other reasons shall not in any event be affected by reason of the fact that Landlord holds the Security Deposit. Such sum, if not applied toward the payment of rents in arrears or toward the payment of damages suffered by Landlord by reason of Tenant’s breach of the covenants, conditions and agreements of this Lease, is to be returned to Tenant within thirty (30) days following termination of the Rental Term without interest when this Lease is terminated or expired, according to these terms, and in no event is the Security Deposit to be returned until Tenant has vacated the Leased Premises and delivered possession to Landlord.
39
In the event that Landlord repossesses the Leased Premises because of Tenant’s default or because of Tenant’s failure to carry out the covenants, conditions and agreements of this Lease, Landlord may apply the Security Deposit toward damages as may be suffered or shall accrue thereafter by reason of Tenant’s default or breach. In the event of bankruptcy or other debtor-creditor proceedings against Tenant as set forth in Article XX, the Security Deposit shall be deemed to be applied first to the payment of Base Monthly Rent, Additional Rent and other charges due to Landlord for the earliest possible periods prior to the filing of such proceedings. Landlord shall not be obliged to keep the Security Deposit as a separate fund, but may mix the same with its own funds.
SECTION 26.02. TRANSFER OF LANDLORD’S INTEREST IN THE SECURITY DEPOSIT. Landlord may deliver the Security Deposit to the purchaser or assignee of Landlord’s interest in the Leased Premises and thereupon Landlord shall be discharged from any further liability with respect to the Security Deposit. Landlord shall provide Tenant with written notice of any such transfer. This Section 26.02 shall also apply to any subsequent transfers of Landlord’s interest in the Leased Premises.
ARTICLE XXVII. MISCELLANEOUS
SECTION 27.01. WAIVER. One (1) or more waivers of any covenant or condition by Landlord shall not be construed as a waiver of a subsequent breach of the same covenant or condition and the consent or approval to or of any subsequent or similar act by Tenant. The subsequent acceptance of rents hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rents so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such rents. No breach of a covenant or condition of this Lease shall be deemed to have been waived by Landlord, unless such waiver is in writing signed by Landlord.
SECTION 27.02. ENTIRE LEASE AGREEMENT. This Lease, the Prior Leases (as defined in Section 28.02) and the exhibits and riders, if any attached hereto or thereto and forming a part hereof or thereof, set forth all the covenants, promises, agreements, conditions, and understandings between Landlord and Tenant concerning the Leased Premises, and there are no covenants, promises, agreements, conditions, representations or understandings, either oral or written, between them other than are herein set forth. No subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by each party.
SECTION 27.03. INTERPRETATION, USE OF PRONOUNS. Nothing contained herein shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture between the parties hereto, it being understood and agreed that neither the method of computation of rent, nor any other provision contained herein, nor any acts of the parties herein, shall be deemed to create any relationship between the parties hereto other than the relationship of Landlord and Tenant. Whenever herein the singular number is used, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders.
The laws of the state where the Building is situated shall govern the validity, performance and enforcement of this Lease. Although the printed provisions of this Lease were drawn by Landlord, this Lease shall not be construed either for or against Landlord or Tenant, but this Lease shall be interpreted in accordance with the general tenor of the language in an effort to reach an equitable result.
40
The parties agree that any deletion of language from this Lease prior to mutual execution by Landlord and Tenant shall not be construed to have any particular meaning or to raise any presumption or implication, including without limitation, any implication that the parties intended thereby to state the converse or opposite of the deleted language. It is the intention of the parties hereto that, if any provision of this Lease is capable of two (2) constructions, one (1) of which would render the provision void and one (1) of which would render the provision valid, then the provision shall have the meaning which renders it valid.
SECTION 27.04. FORCE MAJEURE. In the event that either party hereto shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of strikes, lockouts, labor troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war or other reason of a like nature not the fault of the party delayed in performing work or doing acts required under the terms of this Lease, then performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. The provisions of this Section 27.04 shall not operate to excuse Tenant from prompt payment of Base Monthly Rent, Additional Rent or any other payments required by the terms of this Lease.
SECTION 27.05. LOSS AND DAMAGE. Landlord shall not be responsible or liable to Tenant for any loss or damage that may be occasioned by or through the acts or omissions of persons occupying all or any part of the Leased Premises adjacent to or connected with the Leased Premises or any part of the Building of which the Leased Premises is a part, or for any loss or damage resulting to Tenant or its property from bursting, stoppage or leaking of water, gas sewer or steam pipes or for any damage or loss of property within the Leased Premises from any cause whatsoever.
SECTION 27.06. CAPTIONS AND SECTION NUMBERS. The captions, section numbers, article numbers and index appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe, or describe the scope or intent of such sections or articles of this Lease nor in any way affect this Lease.
SECTION 27.07. BROKER’S COMMISSION. Each of the parties represents and warrants that there are no claims for brokerage commissions or finder’s fees in connection with the execution of this Lease, except as listed below, and each of the parties agrees to indemnify the other against, and hold it harmless from, all liabilities arising from any such claim (including, without limitation, the cost of reasonable attorneys’ fees in connection therewith) except as follows: Landlord has commission obligation to Woodbury Corporation. This provision in no way creates any third-party beneficiary rights in any party, nor does it create any liability on the part of Tenant to pay any or all of the commission due Tenant’s broker or Landlord’s broker.
SECTION 27.08. RECORDING. Tenant shall not record this Lease without the written consent of Landlord; however, upon the request of either party hereto, the other party shall join in the execution of a memorandum or so-called “short form” of this Lease for the purposes of recordation. Such memorandum nr short form of this Lease shall describe the parties, the Leased Premises, the Rental Term, and any Rental Term extension or renewal thereof, any special provisions, and shall incorporate this Lease by reference.
41
SECTION 27.09. CONSENT NOT UNREASONABLY WITHHELD. Landlord agrees that whenever under this Lease a provision is made for Tenant to secure the written consent of Landlord, such written consent shall not be unreasonably withheld, except as provided in Article XIV.
SECTION 27.10. Intentionally Omitted.
SECTION 27.11. TIME OF ESSENCE. Time is of the essence in the performance of all covenants and conditions in this Lease for which time is a factor.
SECTION 27.12. ACCORD AND SATISFACTION. No payment by Tenant or receipt by Landlord of a lesser amount than the amount owing hereunder shall be deemed to be other than on account of the earliest stipulated amount receivable from Tenant, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or receivable or pursue any other remedy available under this Lease or the law of the state wherein the Leased Premises is located.
SECTION 27.13. NO OPTION. The submission of this Lease for examination does not constitute a reservation of, or option for, the Leased Premises. This Lease becomes effective as a lease only upon full execution and delivery thereof by Landlord and Tenant.
SECTION 27.14. ANTI-DISCRIMINATION. Tenant herein covenants by and for itself, its heirs, executors, administrators and assigns and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons on account of race, sex, marital status, color, creed, national origin or ancestry, in the leasing, subleasing, assigning, use, occupancy, tenure or enjoyment of the Leased Premises, nor shall Tenant itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, or subtenants in the Leased Premises.
SECTION 27.15. SEVERABILITY. If any term, covenant or condition of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Lease shall be valid and be enforced to the fullest extent permitted by law.
SECTION 27.16. SURVIVAL OF OBLIGATIONS. The provisions of this Lease, with respect to any obligation of Tenant to pay any sum owing in order to perform any act after the expiration or early termination of this Lease, shall survive the expiration or early termination of this Lease.
42
SECTION 27.17. WARRANTY OF AUTHORITY. The person(s) executing this Lease on behalf of Tenant hereby covenant(s) and warrant(s) as of the Effective Date that (a) Tenant is a duly constituted entity, qualified to do business in the state where the Leased Premises is located, and (b) Tenant has paid all applicable franchise fees and taxes, and (c) Tenant shall file when due all future forms, reports, fees, and other documents necessary to comply with applicable laws. If Tenant is a corporation, Tenant shall furnish Landlord with such evidence as Landlord reasonably requires to evidence the binding effect on Tenant of the execution of this Lease. The person(s) executing this Lease on behalf of Landlord hereby covenant(s) and warrant(s) as of the Effective Date that (a) Landlord is a duly constituted entity, qualified to do business in the state where the Leased Premises is located, and (b) Landlord has paid all applicable franchise fees and taxes, and (c) Landlord shall file when due all future forms, reports, fees, and other documents necessary to comply with applicable laws.
SECTION 27.18. TENANT’S LIABILITY. In the event there is more than one (1) Tenant hereunder, the liability of each shall be joint and several.
SECTION 27.19. LANDLORD’S LIABILITY. Landlord’s liability hereunder shall be limited solely to Landlord’s interest in the Building.
SECTION 27.20. COUNTERCLAIM AND JURY TRIAL. In the event that Landlord commences any summary proceedings or action for non-payment of Base Monthly Rent, Additional Rent or other charges provided for in this Lease, Tenant shall not interpose any non-compulsory counterclaim of any nature or description in any such proceeding or action. Tenant and Landlord both waive a trial by jury of any or all issues arising in any action or proceeding between the parties hereto or their successors, under or relating to this Lease, or any of its provisions. Notwithstanding the foregoing, this provision shall not prohibit Tenant from bringing any claim it may have against Landlord in a separate and distinct proceeding.
SECTION 27.21. TRANSFER OF LANDLORD’S INTEREST IN THE LEASED PREMISES. In the event of any transfer or transfers of Landlord’s interest in the Leased Premises, the transferor shall be automatically relieved of any and all obligations and liabilities on the part of Landlord accruing from and after the date of such transfer, provided the transferee assumes such obligations and liabilities.
SECTION 27.22. TENANT SELECTION BY LANDLORD. Landlord reserves the absolute right to effect such other tenancies in the Building as Landlord, in the exercise of its sole business judgment, shall determine to best promote the interests of the Building. Tenant does not rely on the fact, nor does Landlord represent, that any specific tenant or number of tenants shall, during the Rental Term of this Lease, occupy any space in the Building.
SECTION 27.23. DISCLOSURE OF PARTIES. Landlord is a limited liability company, one (1) or more Managers of which is a licensed real estate broker or agent.
SECTION 27.24. Intentionally Omitted.
43
SECTION 27.25. EXECUTIVE ORDER CERTIFICATION. For purposes of compliance with Executive Order 13224 and related regulations, Landlord and Tenant each represent and warrant that:
(i) it is not acting, directly or indirectly, for or on behalf of any person, group, entity, or nation named by any Executive Order, the United States Department of Justice, or the United States Treasury department as a terrorist, “Specially Designated National or Blocked Person,” or other banned or blocked person, entity, nation, or transaction (“SDN”) pursuant to any law, order, rule or regulation that is enforced or administered by the Office of Foreign Assets Control (“OFAC”);
(ii) it is not engaged in this transaction, directly or indirectly on behalf of, any such person, group, entity or nation; and
(iii) it is not in violation of Presidential Executive order 13224, the USA Patriot Act, the Bank Secrecy Act, the Money Laundering Control Act or an regulations promulgated pursuant thereto.
Landlord agrees to defend, indemnify, and hold harmless Tenant from and against any and all claims, damages, losses, risks, liabilities and expenses (including attorney’s fees and costs) arising from or related to any breach of the foregoing certification. Should Landlord, during the Rental Term of this Lease, be designated an SDN, Tenant may, at its sole option, terminate this Lease.
Tenant agrees to defend, indemnify, and hold harmless Landlord from and against any and all claims, damages, losses, risks, liabilities and expenses (including attorney’s fees and costs) arising from or related to any breach of the foregoing certification. Should Tenant, during the Rental Term of this Lease, be designated an SDN, Landlord may, at its sole option, terminate this Lease.
ARTICLE XXVIII. ADDITIONAL PROVISIONS
SECTION 28.01. OPTION TO RENEW. Provided Tenant is not, and has not been, in default beyond any applicable cure period under any of the terms and conditions contained herein, Tenant shall have one (1) additional consecutive five (5) year option to renew and extend the Rental Term (“Option’) as provided herein. The Option shall only be exercised by Tenant delivering written notice thereof to Landlord not less than one hundred eighty (180) days prior to the expiration of the Rental Term. Base Monthly Rent for the Option period shall be as follows:
Option Period | Base Monthly Rent | |||
January 1, 2023 - December 31, 2023 | $ | 47,570.55 | ||
January 1, 2024 - December 31, 2024 | $ | 48,997.66 | ||
January 1, 2025 - December 31, 2025 | $ | 50,467.59 | ||
January 1, 2026 - December 31, 2026 | $ | 51,981.62 | ||
January 1, 2027 - December 31, 2027 | $ | 53,541.07 |
SECTION 28.02. PRIOR LEASES.
(a) Landlord and Tenant previously entered into a lease for Suite 330 dated August 31, 2015; a lease for Suite 320 dated October 31, 2013; and, a lease for Suite 200 dated March 5, 2012 (collectively the “Prior Leases”).
44
(b) From and after the Effective Date of this Lease, the Prior Leases are hereby fully amended and superseded by this Lease notwithstanding anything to the contrary in this Lease or the Prior Leases, Landlord and Tenant acknowledge and agree as follows:
(i) | The parties hereby acknowledge and agree that there are no known outstanding obligations under the Prior Leases with regard to Tenant’s obligation to pay Base Monthly Rent or Additional Rent under the Prior Leases. |
(ii) | All improvements to the premises that are the subject of the Prior Leases are the property of Tenant throughout the Rental Term of this Lease. |
(iii) | The full amount of the security deposits held by Landlord under the Prior Leases is Fifty-Seven Thousand Seven Hundred Dollars ($57,700.00), which amount is hereby credited to the Security Deposit required under this Lease. |
(iv) | Tenant has no obligation under this Lease or the Prior Leases to contribute to any Operating Expenses incurred in calendar year 2017. |
(v) | The Prior Leases are in effect until effectively terminated and replaced by this Lease and such Prior Leases shall be of no further force or effect and the parties shall have no further obligations thereunder. |
SECTION 28.03. FIRST RIGHT OF OFFER TO LEASE CONTIGUOUS SPACE. From the Effective Date of this Lease until the end of the Rental Term, Tenant shall have an ongoing right of first offer to lease space adjacent and contiguous to the Leased Premises on the second and third floors when such applicable space becomes available for lease as provided herein (hereinafter “First Offer Space”). For purposes hereof, the First Offer Space (or any applicable portion thereof) shall become available for lease by Tenant immediately prior to the first time after the Effective Date that Landlord intends to submit to a third party a bona fide proposal or letter of intent to lease such First Offer Space (or such applicable portion thereof. Landlord shall give Tenant written notice that the First Offer Space (or such applicable portion thereof) will or has become available for lease by Tenant and the terms (the “Offer”) upon which Landlord is willing to rent out the First Offer Space. Tenant shall have ten (10) business days to accept the Offer by delivering to Landlord written notice of its intent to do so. Failure of Tenant to timely deliver written notice shall be deemed a refusal by Tenant. Should Landlord thereafter intend to offer the First Offer Space to a third party of better terms than the Offer, then Tenant shall once again have a right of first offer and the process set forth in this Section 28.03 shall be repeated. Furthermore, if Tenant declines to exercise its right of first offer with regard to any First Offer Space, Landlord shall have a continuing obligation to provide Tenant with a new offer with regard to any other adjacent and continuous space during the Rental Term and with regard to the same First Offer Space if the terms of the Offer change or more than one calendar year passes since Tenant’s prior decline.
45
In the event Tenant exercises its option to lease the First Offer Space, Landlord and Tenant shall endeavor to execute within thirty (30) days thereafter an amendment to this Lease for such First Offer Space upon the terms and conditions set forth in the Offer.
SECTION 28.04. RIGHT TO TERMINATE. Provided Tenant is not, and has not been, in default beyond any applicable cure period under any of the terms and provisions contained herein, Tenant shall have the one (1) time right to terminate this Lease as of December 31, 2020. To exercise such right, on or before July 1, 2020, Tenant shall provide Landlord with written notice of its intent to exercise this right to terminate. In the event Tenant exercises this right, Tenant shall reimburse Landlord in full of any unamortized portion of Landlord’s Construction Cost Cap and unamortized commission payments within ten (10) days of receiving an invoice therefore from Landlord.
[Signature Page(s) to Follow]
46
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this Lease as of the day and year first above written.
SIGNATURES:
LANDLORD | ||
EASTLAND REGENCY, L.C., a Utah limited liability company | ||
By: | WOODBURY CORPORATION, a Utah corporation, Its Manager | |
By: | /s/ O. Randall Woodbury, President | |
O. Randall Woodbury, President | ||
By: | /s/ W. Richards Woodbury, Chairman | |
W. Richards Woodbury, Chairman | ||
TENANT | ||
SERA PROGNOSTICS, Inc., a Delaware corporation | ||
By: | /s/ Andrew Sauter, CFO | |
Andrew Sauter, CFO |
47
EXHIBIT A
SITE PLAN
48
EXHIBIT “A-1”
LEASE PLAN
49
50
EXHIBIT “B”
LEGAL DESCRIPTION
The property which is the subject of this tweed of Trust is situated in the County of Salt Lake, State of Utah, and is legally described as
lot 2, EASTLAND REGENCY SUBDIVISION, according to the official plat thereof on tile and of record in the office of the Salt Lake County Recorder.
Parcel 2:
Non-Exclusive Easement rights to Parcel 1. under the following:
Restrictions and Declaration of Easements:
Declarant: | Woodbury-Morris Co., a limited partnership |
Dated: | December 23, 1968 |
Recorded: | December 27, 1968 |
Entry | No.: 2271792 |
Book/Page: | 2718/270 |
First Amendment to Restrictions and Declaration of Easements.
Recorded: | May 13, 1997 |
Entry | No.: 6643123 |
Book/Page: | 7665/1682 |
Over and across the following described Parcel:
Beginning at a point South 0’ 01 West 2000.0 feet along the Section line and East 193.084 feet from Northwest corner of Section 21 Township 1 South, Range 1 Fast, Salt Lake Base and Meridian and running thence Last 20.0 feet; thence North 0°01 East 40.0 feet; thence last 52.8.816 feet; thence North 60 35’ 40” Fast 40.0 feet; thence South 29° 24’ 20” Last 60.0 feet; thence South 60° 35’ 40” West 13.303 feet said point being North 29’’ 24’ 20” West 735.8 feet and South 60’ 35’ 40” West 277.97 feet from et Salt Lake City monument; thence South 257.46 feet; thence East 45.0 feet, thence South 599.137 feet: thence North 59’ 51’ 20” West 140.057 feel; thence North 67’ 29° 30” West 242.38 feet; thence South 38” 58’ West 14.6 feet to the Northerly line of Parley’s Way; thence North 51’ 02’ West 205.185 feet (said being North 38” 59’ Fast 50.0 tees from the Salt Lake City monument at the intersection of Parley’s Way and Wilshire Drive); thence North 31’ West 170.865 feet; thence North 467.624; feet to the point of beginning.
Parcel 3:
Easement:
Grantor: | Eastland Regency Co., a Utah general partnership |
Dated: | January 25, 1999 |
Recorded: | January 26, 1999 |
Entry | No.: 7234315 |
Book/Page: | 82390/0138 |
Over and across the following described parcel:
51
1 of 1, EASTLAND REGENCY SUBDIVISION, according to the official plat thereof on file and of record in the office of the Salt Lake County Recorder.
The following is shown for information purposes only: 16-23-301-004
This lease is subject to and together with certain easements, rights of way, and restrictions as more particularly set forth in that certain agreement designated as RESTRICTIONS AND DECLARATION OF EASEMENTS, dated December 23, 1968 and recorded on December 27, 1968 in Book 2718 at pages 270 - 277 inclusive as entry #2271792 which agreement is incorporated in this Lease by reference.
Subject to utility and other existing easements.
52
EXHIBIT “C”
SIGN CRITERIA
A. | FREESTANDING PYLONS |
None provided.
B. | EXTERIOR SIGNAGE |
1. | Tenants occupying a gross leasable of over 6,000 sq. ft. may install in a location approved by Landlord signage on the exterior of the Building. All such signage shall be of the same type, letter style, construction, and design as described herein. |
2. | Prior to proceeding with the fabrication and installation of any exterior signage, Tenant shall submit to Landlord a sign fabrication drawing showing the dimensions, construction details, method of attachment, location of lighting, and other pertinent information. All sign fabrication drawings must be approved by Landlord in writing. |
2. | The wording of Tenant’s exterior signage shall be as set forth in Section 1.01(G) of this Lease. Use of corporate logos, shields, or crests shall be permitted. |
3. | The location of Tenant’s sign shall be where shown on elevation page attached hereto. Multiple signs may only be provided where specifically indicated thereon. |
4. | All signs shall be individual letter type signs constructed from sheet metal with 4” deep painted returns matching the color used in the exterior aluminum framing system (Duranar - Commerce Brown). No exposed fasteners shall be permitted. Signs may be illuminated or non-illuminated at Tenant’s option. |
a. | If sign is illuminated, face shall be constructed of black/white plastic. This plastic appears black at daytime, but when illuminated appears white. Illumination is by way of white neon concealed within each letter. Backs shall be solid sheet metal or metal-ply construction. Letter shall be set off from the face of the wall by 1”. |
b. | If sign is non-illuminated, construction shall be the same as for illuminated signs except that no neon shall be installed. |
5. | Maximum letter size shall be 18” high. |
6. | Letter style shall be selected by Landlord. Where Tenant’s logo or trade mark utilizes a different letter style, such style may be used only when specifically approved by Landlord. |
53
C. | DIRECTORY SIGNAGE |
1. | A directory of uniform design and style shall be located at the main entry identifying each suite and business therein. |
2. | Landlord shall initially design and install all directories and identifications in accordance with established criteria for the overall project. Each business shall be identified with a uniformly sized letter and letter style. |
3. | Any subsequent changes necessary from time-to-time shall be made by Landlord at Tenant’s expense. Such changes shall be of the same type and quality as initially installed. |
4. | An exterior monument type directory of a design and style selected by Landlord shall be installed on the exterior of the building near the front entry. Sign and lettering thereon shall be of sufficient size to be read by a person in a car traveling in the drive directly in front of building. Such directory shall identify the name of each business only. Cost of lettering associated therewith shall be paid by Tenant. |
D. | UNIT IDENTIFICATION SIGNAGE |
1. | Each unit shall be identified by signage of a uniform style and character for the project as determined by Landlord’s architect. |
2. | All such signage shall be located on a wall directly adjacent to the main customer entry or on the door of the Leased Premises as determined by Landlord’s architect. Signs shall identify the suite number and business therein. |
3. | All signs shall be provided and installed by Landlord with Tenant paying the cost of the lettering. |
4. | Sign lettering shall utilize vinyl cut-outs applied to a fiberglass or plexi-glass background. Standard size shall be approximately 7” high by 15’ wide. Additional sign area is permitted with Tenant paying the entire cost of the sign. Listing of sub-departments, individual professionals, or other associated entities is permitted subject to Landlord’s architect’s approval of the arrangement of names, letter heights, etc. |
5. | Any changes required after initial installation shall be made by Landlord at Tenant’s expense. |
E. | PARKING STALL IDENTIFICATION |
1. | Reserved parking spaces may be designated. Reserved parking spaces shall be identified by painting “Reserved,” “Business Name Only,” or such other mutually approved designation. |
2. | Other parking spaces may be designated for visitor or customer use only in a similar manner. |
3. | Tenant shall not permit its employees to park in spaces that are reserved or designated for specific tenants, visitors, or customers. |
54
Exhibit 21.1
Subsidiaries of the Registrant
None.
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption “Experts” and to the use of our report dated March 26, 2021 (except for Note 1 and paragraph 5 of Note 16, as to which the date is May 5, 2021), in the Registration Statement (Form S-1) and related Prospectus of Sera Prognostics, Inc for the registration of shares of its common stock.
/s/ Ernst & Young LLP
Salt Lake City, Utah
June 11, 2021