Contract analysis

I. Executive Summary This memorandum summarizes the results of the employment and benefits due diligence conducted by Calderwood & Harkness LLP on behalf of Penterra Pharmaceuticals Corp. ("Penterra" or "PPC") in connection with Penterra's proposed acquisition of Veridian Biosciences, Inc. ("Veridian" or "VBI"), a privately held Delaware corporation headquartered at 550 Gateway Drive, Cambridge, Massachusetts 02142.

1. Change-of-Control Severance Exposure. Veridian's key executive employment agreements contain significant change-of-control severance provisions that, if triggered, would result in aggregate cash severance payments of approximately $2.9 million, plus prorated bonuses, COBRA premium reimbursement, and full or partial acceleration of unvested equity awards. Because the Transaction is structured as a stock purchase, t

2. Section 280G Excise Tax Risks. A preliminary analysis under Section 280G of the Internal Revenue Code indicates that the combination of accelerated equity vesting and cash severance payments may constitute "excess parachute payments" for at least three named executive officers, potentially subjecting those individuals to a 20% excise tax under Section 4999 and limiting Penterra's tax deduction for such payments. A

3. California Employment Law Compliance. Veridian employs approximately 15 individuals in California. We have identified certain non-competition provisions in employment agreements applicable to California-based employees that are likely unenforceable under California Business and Professions Code Section 16600. Additionally, Veridian's unlimited paid time off policy may present wage accrual issues under California l

4. Maryland Employment Law Compliance. Veridian maintains approximately 8 employees at a research collaboration site in Maryland. While our review did not identify material compliance deficiencies, Penterra should ensure ongoing compliance with Maryland-specific requirements, including the Healthy Working Families Act and applicable noncompete restrictions.

5. Key-Person Dependence on Co-Founders. The VeriTCE platform technology and the lead clinical asset VRD-4187 are heavily dependent on the continued involvement of co-founders Dr. Julian Marek (CEO) and Dr. Priya Chandrasekaran (CSO). While the Transaction contemplates separate Non-Competition and Non-Solicitation Agreements with each co-founder, supplemental retention arrangements for these individuals and other key

II. Workforce Overview A. Employee Census As of the date of our diligence review, Veridian's total employee headcount stands at 148 individuals, all of whom are classified as regular full-time or part-time employees on a W-2 basis. This headcount is consistent with Veridian's representations in the data room and was confirmed during our management interview with Mr. Kessler on April 3, 2024. The workforce is distribu

III. Key Employee Agreements Our review identified five named executive officers of Veridian whose employment agreements contain material provisions relevant to the Transaction, including severance, change-of-control, non-competition, and equity-related terms. A summary of each executive's employment agreement follows. A. Chief Executive Officer — Dr. Julian Marek (Co-Founder; 8.4% Equity) Dr. Marek is the co-founder

IV. Equity Incentive Plan A. Plan Structure Veridian's equity compensation program is administered under the Veridian Biosciences, Inc. 2016 Equity Incentive Plan, as amended in 2018, 2020, and 2022 (the "Plan"). The Plan was adopted by the Veridian Board of Directors in connection with the company's incorporation and initial capitalization in 2016 and has been amended on three occasions to increase the share reserve

Section 409A Compliance. We reviewed the outstanding option grants for potential compliance issues under Section 409A of the Internal Revenue Code, which imposes penalty taxes on certain deferred compensation arrangements. A stock option may be subject to Section 409A if it is granted with an exercise price below the fair market value of the underlying stock on the date of grant (a "Discounted option"). Based on our

V. Employee Benefit Plans — ERISA and Non-ERISA A. Health and Welfare Plans Veridian sponsors a comprehensive suite of group health and welfare benefit plans for its employees and their eligible dependents. Based on our review of the summary plan descriptions, insurance contracts, and related documents provided in the data room, the following plans are currently maintained:

1. Group Medical Insurance: Veridian offers two medical plan options — a Preferred Provider Organization ("PPO") plan and a High Deductible Health Plan ("HDHP") with a linked Health Savings Account ("HSA"). Both plans are fully insured through a group policy issued by a national health insurance carrier.

2. Group Dental Insurance: Veridian offers a fully insured group dental plan covering preventive, basic, and major dental services.

3. Group Vision Insurance: Veridian offers a fully insured group vision plan covering routine eye exams, lenses, and frames.

4. Group Life Insurance and Accidental Death & Dismemberment ("AD&D"): Veridian provides employer-paid group life insurance at a benefit level of one times (1x) annual base salary, together with a matching AD&D benefit. Employees may also elect supplemental voluntary life insurance at their own expense, subject to evidence of insurability requirements.

5. Short-Term Disability Insurance: Veridian provides employer-paid short-term disability coverage providing income replacement benefits, typically at 60% of base salary, for a benefit period of up to 26 weeks.

6. Long-Term Disability Insurance: Veridian provides employer-paid long-term disability coverage providing income replacement benefits, typically at 60% of base salary, commencing after the exhaustion of the short-term disability benefit period.

7. Flexible Spending Accounts: Veridian offers both medical flexible spending accounts ("Medical FSAs") and dependent care flexible spending accounts ("DCAP FSAs") under a Section 125 cafeteria plan.

8. Employee Assistance Program ("EAP"): Veridian provides an employer-paid EAP offering confidential counseling and referral services. All of the foregoing health and welfare plans are fully insured, meaning that Veridian pays premiums to third-party insurance carriers that bear the risk of claims. Veridian does not maintain any self-funded or self-insured health plan arrangements. This is a favorable finding from a

VI. Independent Contractors and Consulting Arrangements A. Scientific Advisory Board Veridian maintains a Scientific Advisory Board ("SAB") composed of eight distinguished academic and industry scientists who provide strategic and scientific advisory services to the company. Each SAB member is engaged under an individual consulting agreement with Veridian. The material terms of the SAB consulting agreements are summa

VII. Employment Litigation and Disputes Our review of Veridian's employment litigation history revealed a generally clean recor