[sheet: Cover]
Field | Value
Document Title | Closing Funds Flow Memorandum
Transaction | Asset Purchase of OncuPath™ Companion Diagnostics Assay Line
Seller | Genome Dx Therapeutics Inc. (EIN: 47-3892061)
Buyer | Meridian Precision Diagnostics, Inc. (EIN: 56-4210783)
Closing Date | August 8, 2023
Total Consideration | $140,000,000
Closing Cash Payment | $126,000,000
Earnout (Maximum) | $14,000,000 (not funded at closing; contingent on milestones)
Escrow Amount | $14,000,000
Escrow Agent | Ashgrove Equity Partners Escrow Services, Inc.
Escrow Account No. | 8841-7023-5500
Governing Agreement | Asset Purchase Agreement dated May 11, 2023
Prepared By | Calderwood & Harkness LLP — Matter No. 1013-00006&A-4471
Responsible Partner | James Prentice
Lead Associate | Tiffany Rosenthal
Working Associate | Andrew Fitzpatrick
Seller's Financial Advisor | Brindoval Partners LLC (Victor Sandoval, Managing Director)
Date Prepared | August 7, 2023
Status | Final — For Closing Execution
CONFIDENTIAL | Attorney-Client Privileged / Attorney Work Product
[sheet: Funds Flow Summary]
Line Item No. | Description | Payor | Payee | Gross Amount | Adjustment | Net Amount | Reference
1 | Closing Cash Payment (Total) | Meridian Precision Diagnostics, Inc. | — (see allocation below) | $126,000,000.00 | — | $126,000,000.00 | APA Section 2.3(a)
2 | Less: Escrow Deposit | Meridian Precision Diagnostics, Inc. | Ashgrove Equity Partners Escrow Services, Inc. (Acct. No. 8841-7023-5500) | $14,000,000.00 | — | $14,000,000.00 | APA Section 2.3(b); Escrow Agreement
3 | Net Cash to Seller at Closing | Meridian Precision Diagnostics, Inc. | Genome Dx Therapeutics Inc. | $112,000,000.00 | — | $112,000,000.00 | APA Section 2.3(a) less 2.3(b)
4 | Estimated NWC Adjustment (Preliminary) | — (TBD at true-up) | — (TBD at true-up) | — | $0.00 (est.) | $0.00 (est.) | APA Section 2.5; Target NWC: $6,800,000; Collar: ±$350,000
5 | R&W Insurance Premium — Seller's Share | Genome Dx Therapeutics Inc. | Apex Mutual Insurance Company | $420,000.00 | — | $420,000.00 | RWI Policy No. RWI-2023-07182; 50% of $840,000
6 | R&W Insurance Premium — Buyer's Share | Meridian Precision Diagnostics, Inc. | Apex Mutual Insurance Company | $420,000.00 | — | $420,000.00 | RWI Policy No. RWI-2023-07182; 50% of $840,000
7 | Total R&W Insurance Premium | — | Apex Mutual Insurance Company | $840,000.00 | — | $840,000.00 | 3% of $28,000,000 policy limit
8 | Net Seller Proceeds After RWI Premium | — | Genome Dx Therapeutics Inc. | — | ($420,000.00) | $111,580,000.00 | $112,000,000 – $420,000
9 | Earnout — Milestone 1 (Contingent) | Meridian Precision Diagnostics, Inc. | Genome Dx Therapeutics Inc. | $8,000,000.00 | — | Not funded at closing | APA Section 2.4(a); FDA clearance/approval by August 8, 2025
10 | Earnout — Milestone 2 (Contingent) | Meridian Precision Diagnostics, Inc. | Genome Dx Therapeutics Inc. | $6,000,000.00 | — | Not funded at closing | APA Section 2.4(b); CMS HCPCS code + Medicare reimbursement by August 8, 2026
[sheet: Wire Transfer Instructions]
Wire No. | Recipient Entity | Recipient Contact | Recipient Address | Amount | Purpose | Receiving Bank Name | Receiving Bank ABA / Routing No. | Beneficiary Account Name | Beneficiary Account No. | Reference / Memo | Funding Party | Expected Send Time
1 | Genome Dx Therapeutics Inc. | Martin Kowalski, CFO | 10250 Science Center Drive, Suite 600, San Diego, CA 92121 | $112,000,000.00 | Net Closing Cash to Seller (Closing Cash $126M less Escrow $14M) | Pacific Commerce Bank, N.A. | 121-000-358 | Genome Dx Therapeutics Inc. — Operating Account | 0047-3892-1001 | OncuPath Divestiture Closing — APA dated 5/11/2023 | Meridian Precision Diagnostics, Inc. | 10:00 AM ET
2 | Ashgrove Equity Partners Escrow Services, Inc. | Samantha Koh, Vice President | 101 California Street, Suite 1250, San Francisco, CA 94111 | $14,000,000.00 | Escrow Deposit per Escrow Agreement | Western Trust Bank, N.A. | 121-000-492 | Ashgrove Equity Partners Escrow Services, Inc. — Escrow Account | 8841-7023-5500 | GDT/Meridian Escrow — APA dated 5/11/2023 | Meridian Precision Diagnostics, Inc. | 10:00 AM ET
3 | Apex Mutual Insurance Company (Seller's Share) | Philip Aldridge, SVP | 175 Water Street, 22nd Floor, New York, NY 10038 | $420,000.00 | R&W Insurance Premium — Seller's 50% Share (Policy No. RWI-2023-07182) | Empire State Bank, N.A. | 021-000-714 | Apex Mutual Insurance Company — Premium Account | 0056-4210-5501 | RWI Premium — Seller Share — Policy RWI-2023-07182 | Genome Dx Therapeutics Inc. | 10:00 AM ET
4 | Apex Mutual Insurance Company (Buyer's Share) | Philip Aldridge, SVP | 175 Water Street, 22nd Floor, New York, NY 10038 | $420,000.00 | R&W Insurance Premium — Buyer's 50% Share (Policy No. RWI-2023-07182) | Empire State Bank, N.A. | 021-000-714 | Apex Mutual Insurance Company — Premium Account | 0056-4210-5501 | RWI Premium — Buyer Share — Policy RWI-2023-07182 | Meridian Precision Diagnostics, Inc. | 10:00 AM ET
[sheet: Purchase Price Reconciliation]
Line | Component | Amount | Timing | Notes
1 | Total Consideration | $140,000,000.00 | — | Per APA Section 2.1
2 | Less: Maximum Earnout (Contingent) | ($14,000,000.00) | Post-Closing (if milestones achieved) | Milestone 1: $8,000,000 (FDA clearance/approval of OncuPath-HER3™ by August 8, 2025); Milestone 2: $6,000,000 (CMS HCPCS code + first Medicare reimbursement by August 8, 2026)
3 | Closing Cash Payment | $126,000,000.00 | August 8, 2023 | Funded by Buyer at closing
4 | Less: Escrow Deposit | ($14,000,000.00) | August 8, 2023 (held in escrow) | Deposited to Ashgrove Equity Partners Escrow Acct. 8841-7023-5500; 50% released August 8, 2024; balance released February 8, 2025 (net of pending claims)
5 | Net Cash Wired to Seller | $112,000,000.00 | August 8, 2023 | Wire No. 1
6 | Estimated NWC Adjustment | $0.00 (preliminary) | True-up by November 6, 2023 | Target NWC: $6,800,000; Collar: ±$350,000; Final closing balance sheet to be prepared by Haverford & Lane LLP (Douglas Crane, Engagement Partner)
7 | R&W Premium — Seller's Share | ($420,000.00) | August 8, 2023 | Deducted from Seller proceeds; Wire No. 3
8 | Net Seller Proceeds (Day 1) | $111,580,000.00 | August 8, 2023 | Before any NWC true-up
[sheet: NWC Adjustment Detail]
Line | Item | Value | Notes
1 | Target Net Working Capital | $6,800,000.00 | Per APA Section 2.5 and carve-out financials prepared by Haverford & Lane LLP
2 | Estimated Closing NWC (Preliminary) | $6,800,000.00 | Seller's good-faith estimate as of closing date; subject to final determination
3 | Estimated NWC Surplus / (Shortfall) | $0.00 | Estimated Closing NWC less Target NWC
4 | NWC Collar — Upper Band | $7,150,000.00 | Target + $350,000; no adjustment if Closing NWC within collar
5 | NWC Collar — Lower Band | $6,450,000.00 | Target – $350,000; no adjustment if Closing NWC within collar
6 | Estimated Closing NWC Adjustment Amount | $0.00 | Within collar — no adjustment at closing
7 | Final Determination Deadline | November 6, 2023 | 90 days post-closing (August 8, 2023 + 90 days)
8 | Auditor for Final Closing Balance Sheet | Haverford & Lane LLP (Douglas Crane) | Per APA Section 2.5(b)
9 | Dispute Resolution | Per APA Section 2.5(c) | If parties cannot agree, independent accountant to resolve within 30 days
[sheet: Escrow Release Schedule]
Event | Date | Amount Released | Cumulative Released | Remaining in Escrow | Notes
Initial Deposit at Closing | August 8, 2023 | — | — | $14,000,000.00 | Funded by Buyer via Wire No. 2 to Ashgrove Equity Partners Escrow Acct. 8841-7023-5500
First Escrow Release (50% of remaining) | August 8, 2024 | $7,000,000.00 | $7,000,000.00 | $7,000,000.00 | 50% of remaining balance released to Seller; net of any pending indemnification claims
Final Escrow Release (balance) | February 8, 2025 | $7,000,000.00 | $14,000,000.00 | $0.00 | Remaining balance released upon expiration of 18-month survival period; net of any pending claims