Contract analysis

I. Executive Summary This memorandum summarizes the findings of our litigation and contingent liabilities due diligence review of Veridian Biosciences, Inc. ("Veridian" or the "Company"), a privately held corporation organized under the laws of the State of Delaware and headquartered at 550 Gateway Drive, Cambridge, Massachusetts 02142, conducted in connection with the proposed acquisition of one hundred percent (100

II. Scope of Review and Materials Examined The following sets forth the materials reviewed, interviews conducted, and public records searches performed in connection with this memorandum. Our review and analysis is limited to the materials and information made available to us as described below. We have not independently verified the accuracy or completeness of the information provided by the Company, its management,

1. Litigation Docket and Case Summary Spreadsheet. The Company's legal department maintains an internal litigation tracker spreadsheet (Data Room Document No. 12.01.001, last updated April 28, 2024) summarizing all pending, threatened, and recently closed legal matters involving the Company as a party, potential party, or interested party. The spreadsheet includes matter descriptions, status designations, retention o

2. Correspondence Files for All Pending and Threatened Claims. We reviewed the complete correspondence files for the two pending matters and the one threatened/inquiry matter described in Sections III and IV below, including internal memoranda, demand letters, response letters, counsel communications, and negotiation correspondence. These files were maintained in Data Room Folders 12.02 through 12.04.

3. Insurance Coverage Correspondence. We reviewed correspondence between the Company and its insurance carriers and brokers relating to any claims or potential claims that may implicate the Company's insurance coverage, including notice letters, reservation of rights correspondence, and coverage position letters. This review was conducted in coordination with the insurance due diligence workstream. Cross-reference to

4. Board Minutes and Audit Committee Minutes. We reviewed the minutes of all meetings of the Board of Directors and the Audit Committee of the Board of Directors for fiscal years 2021 through 2024 year-to-date (Data Room Folder 1.03), with particular attention to any references to pending or threatened litigation, governmental investigations, enforcement actions, or contingent liabilities. We noted that litigation ma

5. Reserves and Accruals Schedules. We reviewed the Company's internal litigation reserves and accruals schedules for fiscal years 2021 through 2024 year-to-date, as maintained by the Company's finance department and provided to us in Data Room Folder 12.05. These schedules were cross-referenced to the audited financial statements of the Company prepared in accordance with U.S. GAAP and audited by Northbridge Account

6. Responses to Preliminary Due Diligence Request List. We reviewed the Company's detailed written responses (dated March 28, 2024, supplemented April 22, 2024) to Section XII (Litigation, Claims, and Proceedings) of our Preliminary Due Diligence Request List dated March 6, 2024. The Company's responses were prepared by the General Counsel's office and were reviewed by Zalcourt Archer & Cole LLP prior to submission.

7. Management Representation Letters. We reviewed the management representation letters provided by Veridian's management (signed by the CEO and CFO) to Northbridge Accounting Group LLP in connection with the audits of the Company's financial statements for fiscal years 2021, 2022, and 2023. Each representation letter included standard representations regarding pending and threatened litigation, unasserted claims, an

1. Rachel Stein-Goldberg, General Counsel, Veridian Biosciences, Inc. We conducted two in-person interviews with Ms. Stein-Goldberg: the first on April 12, 2024, at the Company's Cambridge headquarters, and the second on May 3, 2024, by videoconference. Ms. Stein-Goldberg provided an overview of the Company's current litigation posture, discussed the specific pending and threatened matters described herein, and confi

2. Zalcourt Archer & Cole LLP (Jonathan Pratt, Partner; Rebecca Whitmore, Partner). We submitted written due diligence questionnaires to Zalcourt Archer & Cole LLP, the Company's principal outside litigation counsel, and received detailed written responses dated April 30, 2024 and May 10, 2024 from Jonathan Pratt. These responses confirmed the status and assessment of the pending matters, provided Zalcourt Archer & C

3. Steven R. Kessler, Chief Financial Officer, Veridian Biosciences, Inc. We conducted a telephone interview with Mr. Kessler on April 15, 2024, focusing on the Company's accounting treatment of contingent liabilities, the process for evaluating litigation reserves under ASC 450, and the Company's coordination with its auditors on litigation-related disclosures. Mr. Kessler confirmed that no litigation reserves or ac

4. Dr. Anne-Marie Fontaine, Vice President of Regulatory Affairs, Veridian Biosciences, Inc. We submitted a written inquiry to Dr. Fontaine on April 18, 2024, requesting confirmation of whether Veridian or any of its officers, directors, employees, or contractors had been the subject of any FDA warning letters, untitled letters, Form 483 observations, consent decrees, debarment proceedings, clinical holds, or other F

1. Federal Court Litigation Searches. We conducted searches of all United States District Court and Bankruptcy Court dockets through the PACER system, covering all federal judicial districts. No pending federal court cases involving Veridian as a party were identified. No closed federal court cases involving Veridian were identified.

2. Delaware Court of Chancery Docket Search. Given Veridian's Delaware incorporation, we conducted a targeted search of the Delaware Court of Chancery docket. No pending or closed cases involving Veridian were identified.

3. Massachusetts State Court Docket Search. We conducted searches of the dockets of the Suffolk County Superior Court, Middlesex County Superior Court, and the Massachusetts Land Court. No pending or closed cases involving Veridian were identified. We note that the MCAD administrative complaint described in Section III.B.1 would not appear in the state court dockets, as it remains at the administrative agency level.

4. California State Court Docket Search. Reflecting the Company's employee presence and state tax nexus in California, we conducted searches of the San Francisco County Superior Court and San Mateo County Superior Court dockets, as well as the California Division of Labor Standards Enforcement (DLSE) complaint database. No pending or closed cases or complaints involving Veridian were identified.

5. Maryland State Court Docket Search. Reflecting the Company's operations and employee presence in Maryland, we conducted searches of the circuit court dockets for Baltimore City, Baltimore County, and Montgomery County. No pending or closed cases involving Veridian were identified.

6. USPTO Trademark Trial and Appeal Board (TTAB) and Patent Litigation Searches. We conducted searches of the TTAB docket and cross-referenced patent litigation search results with the IP due diligence workstream. No TTAB proceedings or patent litigation involving Veridian were identified. This is addressed in greater detail in the intellectual Property Due Diligence Memorandum (dated May 14, 2024).

7. SEC EDGAR Search. Not applicable. Veridian is a privately held company and has not filed any registration statements, periodic reports, or other documents with the U.S. Securities and Exchange Commission. No SEC filings were identified.

8. FDA Enforcement Database Searches. We searched the FDA's public databases, including the Warning Letters database, the Debarment List (under 21 U.S.C. § 335a), the Consent Decrees database, and the Clinical Trials database (ClinicalTrials.gov). No warning letters, untitled letters, consent decrees, or debarment actions involving Veridian or any of its officers, directors, employees, or contractors were identified.

9. OSHA Inspection and Citation Database Search. We searched the Occupational Safety and Health Administration's inspection and citation database for any inspections or citations involving Veridian's facilities. No OSHA inspections or citations were identified.

10. EPA and State Environmental Enforcement Searches. We searched the U.S. Environmental Protection Agency's Enforcement and Compliance History Online (ECHO) database and applicable state environmental enforcement databases for Massachusetts, California, and Maryland. No enforcement actions, notices of violation, or compliance orders involving Veridian were identified. This matter is addressed in greater detail in th

III. Pending Litigation A. Summary At the time of this review, Veridian has no pending material litigation, whether as a defendant, plaintiff, cross-claimant, third-party defendant, or intervenor, in any federal court, state court, arbitral forum, or administrative tribunal. Two minor matters are identified below. Neither matter, individually or in the aggregate, is material in the context of the Transaction. Based o

1. Employment Dispute — Former Employee Wrongful Termination Claim Parties: Jennifer M. Dalton (Complainant) v. Veridian Biosciences, Inc. (Respondent) Forum: Massachusetts Commission Against Discrimination (MCAD), Docket No. 23-BEM-03847 Date Filed: November 14, 2023 Description: Ms. Dalton, a former Research Associate II in the Company's Immunology Research division at the Cambridge facility, filed an administrativ

2. Vendor Payment Dispute Parties: Meridian Clinical Research Associates, LLC ("Meridian") v. Veridian Biosciences, Inc. Forum: No litigation filed. Informal commercial dispute. Date of Dispute: January 2024 (initial invoice dispute communication dated January 11, 2024) Description: Meridian Clinical Research Associates, LLC, a clinical research organization ("CRO") headquartered in Raleigh, North Carolina, was engag

IV. Threatened Litigation A. Summary No material threatened litigation has been identified against the Company as of the date of this memorandum. We define "threatened litigation" for purposes of this review to include matters where a potential adverse party has communicated, directly or through counsel, a claim, demand, or threat of legal action, or where the Company has reason to believe that such a claim may be as

V. Governmental Investigations and Regulatory Proceedings A. Summary No pending or threatened governmental investigations, enforcement actions, or regulatory proceedings have been identified against Veridian, any of its subsidiaries (none), or any of its current or former officers, directors, employees, or agents in their capacity as such, as of the date of this memorandum. Our review encompassed federal and state re

VI. Contingent Liabilities This section addresses contingent liabilities that, while not constituting pending or threatened litigation, represent categories of potential exposure that should be considered in connection with the Transaction, including for purposes of drafting the SPA's representations, warranties, covenants, and indemnification provisions. A. Clinical Trial Liability As a clinical-stage biopharmaceuti

VII. Auditor Confirmation Northbridge Accounting Group LLP (engagement partner: Patrick Calloway, CPA) has served as Veridian's independent registered public accounting firm since 2019 and has audited the Company's financial statements for fiscal years 2021, 2022, and 2023. In connection with each annual audit, Veridian's management provided written representation letters to Northbridge in accordance with AU-C Sectio

VIII. Disclosure Schedule Implications A. Recommended Disclosures Based on our review, the following matters should be listed on the applicable Disclosure Schedule to the Stock Purchase Agreement. We anticipate that the relevant schedule will be Schedule 3.17 (or equivalent section number, corresponding to the Sellers' representation regarding litigation and proceedings):

1. MCAD Employment Complaint. The administrative complaint filed by Jennifer M. Dalton before the Massachusetts Commission Against Discrimination (Docket No. 23-BEM-03847), as described in Section III.B.1 of this memorandum. The disclosure should include a brief description of the nature of the claim, the forum, the date filed, the current status, and the Company's assessment that the claim is without merit. We recom

2. CRO Vendor Payment Dispute. The invoice dispute with Meridian Clinical Research Associates, LLC, as described in Section III.B.2 of this memorandum. The disclosure should include a brief description of the nature of the dispute, the amount in controversy ($340,000), the Company's assessment of the likely resolution range ($100,000–$150,000 in additional payments), and the current status (informal negotiations; no

3. Third-Party Patent Inquiry Letter. The March 2023 inquiry letter from Velundrix Therapeutics Holdings, LLC (through Finnegan Marsh & Dougherty LLP) regarding certain antibody engineering patents in relation to the VeriTCE platform, as described in Section IV.B of this memorandum. Whether this matter is disclosed under the litigation schedule, the intellectual property schedule, or both will depend on the final sco

1. Materiality Qualifier. We recommend that the litigation representation include a standard materiality qualifier, requiring disclosure of claims that would reasonably be expected to result in a liability in excess of Two Hundred Fifty Thousand Dollars ($250,000) individually or Five Hundred Thousand Dollars ($500,000) in the aggregate. This threshold is appropriate given the size of the Transaction and is consisten