1013-00006 · Client 1013 · Correspondence

letter-negotiation-issues-list.docx DOCUMENT M&A / Corporate

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CONFIDENTIAL — ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP Attorneys at Law

555 South Hope Street, Suite 4400 Los Angeles, California 90071 Telephone: (213) 402-8800 Facsimile: (213) 402-8801 www.calderwoodharkness.com

April 14, 2023

VIA EMAIL AND FIRST CLASS MAIL

Jonathan Whitfield, Esq. Whitfield Sayer & Gregg LLP 200 South Tryon Street, Suite 2800 Charlotte, NC 28202

Re: Asset Purchase Agreement between Genome Dx Therapeutics Inc. ("Seller" or "GDT") and Meridian Precision Diagnostics, Inc. ("Buyer" or "Meridian") — Response to Buyer's Markup C&H Matter No. 1013-00006&A-4471

Dear Jonathan:

Thank you for circulating Whitfield Sayer & Gregg's markup of the initial draft Asset Purchase Agreement (the "APA") that Calderwood & Harkness distributed on behalf of Genome Dx Therapeutics Inc. ("GDT" or the "Seller") on March 20, 2023, in connection with the proposed acquisition by Meridian Precision Diagnostics, Inc. ("Meridian" or the "Buyer") of substantially all of the assets comprising the OncuPath™ companion diagnostics assay line for a total purchase price of One Hundred Forty Million Dollars ($140,000,000) (the "Total Consideration"). We have reviewed the markup in detail, and this letter sets forth the Seller's positions on the principal open issues identified therein.

At the outset, we note that the parties have reached agreement on a number of significant points reflected in Buyer's markup, and we appreciate the collaborative approach your team has taken on those items. By way of example, we consider the structure of the Purchased Assets, the identification of the Excluded Assets, and the selection of Delaware as the governing law to be settled. Those and other points of agreement are not addressed further in this letter. Instead, we focus this correspondence exclusively on the items where the parties' respective positions remain apart, with the objective of narrowing the open issues and advancing the transaction toward a definitive agreement as expeditiously as practicable.

We remain available to arrange a call among the deal teams to discuss any and all of the matters raised herein. Seller's financial advisor, Brindoval Partners LLC (Victor Sandoval, Managing Director), as well as GDT's General Counsel, Rebecca Chiang, are available to discuss commercial points directly with Buyer's corporate development team at a mutually convenient time. We would suggest the week of April 17, 2023, as set forth more fully in Section XV below.

The open issues are organized by subject matter as follows:

I. Indemnification Cap

Buyer's markup proposes increasing the indemnification cap from twenty percent (20%) to thirty percent (30%) of the Total Consideration — that is, from Twenty-Eight Million Dollars ($28,000,000) to Forty-Two Million Dollars ($42,000,000). Seller respectfully declines this proposal.

The Seller's position is that the twenty percent (20%) cap ($28,000,000) set forth in the initial draft is appropriate and consistent with market practice for biotech asset divestitures of this size. Based on our review of publicly available data and proprietary transaction databases, indemnification caps in diagnostics and life sciences asset purchase transactions in the $100,000,000 to $250,000,000 range have generally fallen in the range of ten percent (10%) to fifteen percent (15%) of total consideration. Accordingly, the twenty percent (20%) cap in the initial draft already represents a generous position for the Seller, and there is no market-based justification for increasing it to thirty percent (30%).

The appropriateness of the twenty percent (20%) cap is further underscored by the existence of the buyer-side representations and warranties insurance policy currently being placed with Apex Mutual Insurance Company (Policy No. RWI-2023-07182). That policy provides an additional Twenty-Eight Million Dollars ($28,000,000) of coverage above the indemnification cap, with a retention of One Million Four Hundred Thousand Dollars ($1,400,000) aligned with the indemnification basket. When the R&W insurance coverage is taken into account, Buyer's aggregate recovery potential for representation and warranty claims is effectively Fifty-Six Million Dollars ($56,000,000) — or forty percent (40%) of the Total Consideration — which more than adequately protects Buyer's interests.

Notwithstanding the foregoing, the Seller agrees that the indemnification cap should not apply to breaches of the Fundamental Representations. Specifically, the representations and warranties relating to (a) organization and good standing, (b) authority and enforceability, (c) title to the Purchased Assets, (d) tax matters, and (e) broker and finder fees shall be subject only to an overall aggregate ceiling equal to the Total Consideration ($140,000,000), and shall not be subject to the twenty percent (20%) cap otherwise applicable to general representations and warranties.

Buyer's markup also includes a proposal to carve out claims based on fraud or intentional misrepresentation from the indemnification cap entirely. As drafted, this carve-out is so broad that it could be invoked in virtually any indemnification dispute through the inclusion of a fraud allegation, thereby effectively nullifying the cap. The Seller rejects this formulation. However, the Seller is willing to agree that the twenty percent (20%) cap does not apply to claims based on actual fraud (as distinguished from constructive fraud or fraud in the inducement based on negligence) committed by a Seller officer who executed the closing certificates delivered at the Closing — specifically, Martin Kowalski, Chief Financial Officer, as the designated signatory of the Seller's Closing Certificate. This narrowly tailored exception addresses Buyer's legitimate interest in maintaining recourse for affirmative fraud while preserving the intended function of the indemnification cap.

II. Indemnification Basket and De Minimis Threshold

Basket Structure. Buyer's markup proposes a true first-dollar (dollar-one) deductible basket of One Million Four Hundred Thousand Dollars ($1,400,000), representing one percent (1%) of the Total Consideration. Under this formulation, once aggregate qualifying losses exceed the basket amount, the Buyer would recover all losses from the first dollar, including those comprising the basket itself.

The Seller agrees to the basket amount of $1,400,000 but insists on a tipping basket (sometimes referred to as a "threshold" basket) structure rather than a true first-dollar deductible. Under the tipping basket mechanism, no indemnification claims would be payable unless and until aggregate qualifying losses exceed $1,400,000, at which point the Buyer would be entitled to recover all qualifying losses from the first dollar — not merely the amount by which losses exceed the basket. This structure is the Seller's meaningful concession from a pure deductible approach (under which the first $1,400,000 of losses would never be recoverable), while avoiding the "windfall" problem inherent in Buyer's dollar-one deductible proposal. Specifically, a dollar-one deductible creates an incentive for Buyer to aggregate immaterial claims to breach the threshold, knowing that doing so unlocks recovery for even the smallest losses. The tipping basket provides an appropriate screening mechanism that filters out truly immaterial matters while ensuring that the Buyer is made whole once losses cross a material threshold.

De Minimis Per-Claim Threshold. The initial draft included a de minimis per-claim threshold of Seventy-Five Thousand Dollars ($75,000), meaning that no individual claim for indemnifiable losses would be recoverable (or count toward the basket amount) unless the losses attributable to such individual claim exceed $75,000. Buyer's markup proposes reducing this threshold to Fifty Thousand Dollars ($50,000).

The Seller rejects the proposed reduction and maintains its initial position that the de minimis threshold should remain at $75,000. A $50,000 threshold is too low relative to the overall transaction size and would invite a proliferation of nuisance claims and impose unnecessary administrative burdens on both parties. Individual claims below $75,000 represent less than 0.054% of the Total Consideration and are properly borne by the Buyer as a cost of acquiring a going business. The $75,000 threshold is well within the range of market practice for transactions of this magnitude, and the Seller sees no basis for departing from it.

III. Survival Period

General Representations and Warranties. Buyer's markup proposes extending the general survival period for representations and warranties from eighteen (18) months to twenty-four (24) months following the Closing Date.

The Seller's position is that an eighteen (18) month survival period is appropriate for the general representations and warranties. Assuming an anticipated Closing Date of August 8, 2023, the general survival period would expire on February 8, 2025. This period provides Buyer with ample time to conduct its post-closing integration of the OncuPath Business, identify any potential breaches of representations, and assert indemnification claims. An eighteen-month survival period is consistent with prevailing market norms for negotiated asset sale transactions, particularly where, as here, the Buyer has the benefit of both a funded escrow and representations and warranties insurance.

The adequacy of the eighteen-month period is further supported by the $14,000,000 escrow being established at Ashgrove Equity Partners Escrow Services, Inc. (discussed in greater detail in Section IV below), which provides Buyer with a funded, readily accessible source of recovery during the survival period without the need to pursue direct claims against the Seller. The two-tranche escrow release schedule proposed by the Seller (fifty percent (50%) of the remaining escrow balance released at twelve (12) months post-closing; the balance released at the expiration of the survival period, net of any pending claims) further protects the Buyer by ensuring that a meaningful portion of the escrow remains available throughout the entire survival period.

Fundamental Representations. The Seller agrees that the Fundamental Representations (organization and good standing, authority and enforceability, title to assets, tax matters, and broker representations) shall survive for sixty (60) months following the Closing Date — i.e., through August 8, 2028 — consistent with the initial draft. The parties appear to be in agreement on this point.

Tax Representations. The Seller agrees that representations relating to tax matters shall survive for the full period of the applicable statute of limitations, plus sixty (60) days. This is consistent with the initial draft and standard market practice.

Environmental Representations. Buyer's markup proposes that representations relating to environmental matters survive for thirty-six (36) months post-closing. The Seller rejects this proposal. The environmental representations should be subject to the general eighteen (18) month survival period for the following reasons: (a) the APA is structured such that no environmental liabilities are being assumed by the Buyer — all pre-closing environmental liabilities are Excluded Liabilities retained by the Seller; (b) both the Carlsbad facility at 925 Industrial Court and the Towne Centre facility at 4820 Towne Centre Drive are leased premises, not owned real property, and the Seller's exposure to environmental conditions at those sites is therefore limited; and (c) no environmental conditions or concerns have been identified in due diligence, and the Disclosure Schedules do not include any disclosed environmental matters that would justify an extended survival period for these representations.

IV. Escrow Mechanics

The parties have reached agreement on the escrow amount: Fourteen Million Dollars ($14,000,000), representing ten percent (10%) of the Total Consideration, to be deposited into an escrow account held by Ashgrove Equity Partners Escrow Services, Inc. (Account No. 8841-7023-5500) at the Closing. The terms of the escrow are expected to be set forth in a separate Escrow Agreement among the Buyer, the Seller, and the escrow agent, to be negotiated and executed contemporaneously with the APA.

The parties disagree, however, on the escrow release schedule. Buyer's markup proposes a single release of the entire escrow balance at the expiration of the eighteen (18) month survival period (i.e., on or about February 8, 2025, assuming an August 8, 2023 Closing Date). The Seller rejects this approach and insists on a two-tranche release schedule structured as follows:

First Release — Fifty percent (50%) of the remaining escrow balance to be released to the Seller on the date that is twelve (12) months after the Closing Date (i.e., on or about August 8, 2024), net of any pending but unresolved indemnification claims as of such date.

Second Release — The entire remaining escrow balance to be released to the Seller on the date of expiration of the general survival period (i.e., on or about February 8, 2025), net of amounts retained with respect to pending but unresolved indemnification claims as of such date.

The rationale for the two-tranche release is straightforward. Market data and transactional experience demonstrate that the overwhelming majority of indemnification claims surface within the first twelve (12) months following a closing. By providing for a partial release at the twelve-month mark, the Seller recovers a meaningful portion of the escrowed funds at a point when the risk of new claims has substantially diminished, while the Buyer retains the benefit of the remaining escrow funds through the end of the full survival period. A single release at eighteen months effectively holds the entire escrow hostage for the maximum period regardless of whether any claims have been made, which is punitive and inconsistent with prevailing market practice for transactions of this nature.

The Seller further notes that the escrow is intended to serve as the Buyer's exclusive remedy for indemnification claims (other than claims relating to breaches of Fundamental Representations, claims based on actual fraud, and claims arising under specific indemnities set forth in the APA), and that the R&W insurance policy provides additional coverage beyond the escrow. This layered recovery structure provides ample protection for the Buyer without requiring that the full escrow remain locked up for the entire survival period.

V. Earnout — Milestone Definitions

The APA contemplates an earnout of up to Fourteen Million Dollars ($14,000,000) — representing ten percent (10%) of the Total Consideration — payable upon achievement of two clinical and regulatory milestones within the thirty-six (36) month Earnout Period following the Closing Date. The parties' positions on the milestone definitions are as follows:

Milestone 1 — FDA Clearance/Approval of OncuPath-HER3™ ($8,000,000)

Buyer's markup proposes narrowing the definition of this milestone to require full Premarket Approval ("PMA") (excluding 510(k) clearance and de novo classification) and further limiting the triggering event to approval of OncuPath-HER3™ as a companion diagnostic specifically for a single, named FDA-approved oncology therapeutic to be identified in the definitive agreement.

The Seller rejects both of these proposed limitations. The milestone should be triggered by either FDA clearance or approval of the OncuPath-HER3™ assay as a companion diagnostic, regardless of the specific regulatory pathway by which such clearance or approval is obtained — whether through the 510(k) process, the PMA process, or the de novo classification pathway. The regulatory landscape for companion diagnostics is evolving, and the FDA has in recent years demonstrated flexibility in the pathways available for companion diagnostic review. Locking the milestone to the PMA pathway alone would penalize the Seller if the FDA determines that a different pathway is appropriate, even if the clinical and commercial result is identical.

Furthermore, the milestone should not be limited to approval as a companion diagnostic for a single, named therapeutic product. The current PMA supplement (P230014, submitted January 30, 2023) is proceeding in connection with a specific therapeutic program, but the OncuPath-HER3™ technology platform has potential applicability as a companion diagnostic for multiple FDA-approved oncology therapeutics. Requiring that the milestone be tied to a single drug would artificially constrain the commercial flexibility that both parties should want the Buyer to have in pursuing the most expedient path to regulatory clearance or approval.

The deadline for achievement of Milestone 1 remains August 8, 2025, which is twenty-four (24) months after the anticipated Closing Date. The Seller does not object to this timeline.

Milestone 2 — CMS HCPCS Code and Medicare Reimbursement ($6,000,000)

Buyer's markup proposes modifying this milestone to require not merely the issuance by the Centers for Medicare & Medicaid Services ("CMS") of a unique HCPCS code for the OncuPath-HER3™ assay, but also a minimum Medicare reimbursement rate of Three Thousand Five Hundred Dollars ($3,500) per test.

The Seller rejects the imposition of a minimum reimbursement rate as a component of this milestone. The Seller's position is that the milestone should be satisfied upon the occurrence of two events: (a) CMS issuance of a unique Healthcare Common Procedure Coding System ("HCPCS") code for OncuPath-HER3™ (or any successor assay based substantially on the same underlying technology), and (b) receipt by the Buyer (or its designee) of the first Medicare reimbursement payment for a test performed using the coded assay.

The imposition of a minimum reimbursement rate is inappropriate because CMS rate-setting is a regulatory process that is within the exclusive discretion of CMS and is beyond the control of either party. Tying the milestone to a specific reimbursement rate would effectively transfer the risk of CMS pricing decisions to the Seller, which is neither equitable nor consistent with the purpose of the earnout. The purpose of Milestone 2 is to compensate the Seller for having developed a product to the point of Medicare coverage eligibility — not to guarantee a particular reimbursement level.

The deadline for achievement of Milestone 2 remains August 8, 2026, which is thirty-six (36) months after the anticipated Closing Date. The Seller does not object to this timeline.

VI. Earnout — Commercially Reasonable Efforts Standard

Buyer's markup proposes replacing the "commercially reasonable efforts" standard in the initial draft with a "reasonable best efforts" standard to describe the Buyer's obligation to pursue the earnout milestones during the Earnout Period.

The Seller rejects this change. "Commercially reasonable efforts" is the well-established and widely understood standard in the diagnostics and life sciences industries for post-closing earnout obligations. By contrast, "reasonable best efforts" is an undefined term that could be interpreted as imposing a more onerous and open-ended obligation, potentially requiring the Buyer to take actions that are not economically rational or that are inconsistent with the Buyer's overall portfolio strategy. The use of a non-standard efforts clause invites interpretive disputes and litigation, which is contrary to both parties' interests.

The Seller proposes that "commercially reasonable efforts" be defined in the APA as follows: efforts consistent with those that a similarly situated company in the diagnostics industry would use for a product of similar market potential, stage of development, and regulatory profile, taking into account all relevant commercial, regulatory, scientific, and financial factors. This definition provides meaningful content to the efforts obligation while maintaining the flexibility that is inherent in — and appropriate for — a commercially reasonable efforts standard.

In addition to the efforts standard itself, the Seller insists on the inclusion of the following protective provisions in the earnout section of the APA:

Anti-Embarrassment Clause. The Buyer shall not discontinue development, commercialization, or regulatory pursuit of OncuPath-HER3™, or divert resources (including personnel, funding, or facilities) away from the OncuPath-HER3™ program in a manner that would make the achievement of any earnout milestone impracticable, without the prior written consent of the Seller. This provision is essential to ensure that the Buyer does not undermine the earnout by deprioritizing or shelving the OncuPath-HER3™ program after closing.

Anti-Sandbagging. The Buyer shall not take any action the primary purpose of which is to avoid or delay the achievement of an earnout milestone. This covenant addresses the inherent moral hazard in earnout arrangements, where the party obligated to make the earnout payment (the Buyer) also controls the levers that determine whether the milestones are achieved.

Acceleration Upon Change of Control. If the Buyer undergoes a Change of Control (to be defined in customary fashion) during the Earnout Period, all then-unpaid earnout milestones shall be deemed to have been achieved as of the date of such Change of Control, and all associated earnout payments shall become immediately due and payable. This provision protects the Seller against the risk that a Change of Control of the Buyer could result in a successor entity that is not committed to pursuing the earnout milestones, or that could restructure the OncuPath-HER3™ program in a manner that makes milestone achievement impossible.

Dispute Resolution. Any dispute arising under the earnout provisions — including whether the Buyer expended commercially reasonable efforts to achieve the milestones, or whether a milestone event has in fact occurred — should be submitted to an independent expert with relevant expertise in the diagnostics industry, to be mutually agreed upon by the parties. If the parties are unable to agree on the identity of the independent expert within thirty (30) days of a dispute notice, either party may petition the Court of Chancery of the State of Delaware to appoint such expert. The determination of the independent expert shall be final and binding on the parties, absent manifest error.

VII. Non-Competition and Non-Solicitation Scope

A. Non-Competition Covenant

Buyer's markup proposes that GDT be subject to a five (5) year worldwide non-competition covenant covering all diagnostics, without limitation to the companion diagnostics field.

The Seller rejects both the duration and the scope of this proposal. The Seller's position is as follows:

Duration. The non-competition period should be limited to three (3) years following the Closing Date. A five-year non-compete is excessive for an asset purchase transaction and exceeds the duration typically seen in comparable diagnostics sector transactions. A three-year period provides the Buyer with ample time to integrate the OncuPath Business and establish its market position without the competitive threat of the Seller re-entering the companion diagnostics market.

Scope — Field of Activity. The non-competition covenant should be restricted to the companion diagnostics field — i.e., the development, manufacture, marketing, or sale of diagnostic assays designed for use as companion diagnostics to identify patients eligible for or likely to respond to specific therapeutic agents. An extension of the non-compete to cover "all diagnostics" would be vastly overbroad and would impair GDT's ability to continue operating its retained core business, the GenoStrat™ liquid biopsy platform, which operates in a distinct market segment (liquid biopsy-based genomic profiling for treatment selection and monitoring) that is not in competition with the OncuPath companion diagnostics line.

Scope — Geographic Limitation. The non-competition covenant should be limited to the United States. The OncuPath Business being acquired operates exclusively in the U.S. market, and GDT has no current international operations in the companion diagnostics field. A worldwide restriction is unnecessary to protect the Buyer's legitimate business interests and would be unlikely to be enforceable under Delaware law, which requires that restrictive covenants be reasonably tailored in scope, geography, and duration.

The Seller agrees that the non-competition covenant covers GDT as an entity, together with its controlled affiliates (as defined in the APA). However, the non-compete shall not bind Pinnacle Biosciences Partners Fund III, L.P. (GDT's majority equity holder) or any other portfolio company of Pinnacle Biosciences Partners or its affiliated funds. Each Pinnacle portfolio company operates independently, and imposing a non-compete on Pinnacle or its other portfolio companies would be unreasonable and unsupported by any legitimate business interest of the Buyer related to this transaction.

B. Non-Solicitation Covenant

Buyer's markup proposes a three (3) year non-solicitation period covering all employees of the OncuPath Business.

The Seller's position is that the non-solicitation period should be limited to two (2) years following the Closing Date, and should cover only the employees of the OncuPath Business who actually accept offers of employment from the Buyer and transfer to the Buyer at or promptly following the Closing (the "Transferred Employees"). Based on the current offer process, the Seller anticipates that seventy-eight (78) of the eighty-three (83) OncuPath employees will accept Buyer's offers and become Transferred Employees.

The non-solicitation covenant should include a customary carve-out for general solicitations that are not specifically targeted at any Transferred Employee — for example, job postings on public job boards, general recruitment advertisements, or responses to unsolicited inquiries from Transferred Employees who independently seek employment with GDT.

Key Transferred Employees who would be covered by the non-solicitation covenant include, without limitation:

• Dr. Lara Okonkwo, Vice President, OncuPath Research & Development

• Samuel Briggs, Director, OncuPath Commercial Operations

• Yuki Tanabe, Head of Regulatory Affairs, OncuPath

VIII. Representations and Warranties Insurance — Coordination

Both parties have agreed in principle to a buyer-side representations and warranties insurance policy to be issued by Apex Mutual Insurance Company (Policy No. RWI-2023-07182). The principal terms of the policy, as currently contemplated, are as follows:

• Policy Limit: Twenty-Eight Million Dollars ($28,000,000), matching the indemnification cap.

• Retention: One Million Four Hundred Thousand Dollars ($1,400,000), aligned with the indemnification basket.

• Premium: Eight Hundred Forty Thousand Dollars ($840,000) (three percent (3%) of the policy limit), to be split equally between the Seller ($420,000) and the Buyer ($420,000).

The Seller's positions on coordination between the R&W insurance policy and the indemnification provisions of the APA are as follows:

Primary Recovery Mechanism. The R&W insurance policy should serve as the primary recovery mechanism for the Buyer after the escrow funds have been exhausted, thereby reducing the pressure on direct Seller indemnification. The layered structure — escrow as the first source of recovery, followed by R&W insurance — provides the Buyer with substantial aggregate coverage while appropriately limiting the Seller's direct out-of-pocket exposure.

Known-Matters Exclusions. The known-matters exclusions in the R&W policy should be narrowly drafted and limited to matters that have been actually disclosed in the Disclosure Schedules delivered by the Seller in connection with the APA. The Seller will work cooperatively with Apex Mutual's underwriting team — specifically Philip Aldridge, Senior Vice President — during the underwriting process to ensure that the Disclosure Schedules are comprehensive and that the known-matters exclusions accurately reflect the scope of disclosed matters.

Coverage Gaps. Buyer's markup includes a provision that would allow the Buyer to recover directly from the Seller (outside the escrow and R&W insurance framework) for any indemnification claims that are excluded from coverage under the R&W policy for any reason, including policy exclusions, coverage limitations, or claim denials by the insurer. The Seller rejects this provision. The indemnification cap and basket set forth in the APA should apply to all claims regardless of whether a particular claim happens to fall outside the scope of R&W insurance coverage, with the sole exceptions of claims arising from breaches of Fundamental Representations and claims based on actual fraud. To hold otherwise would effectively render the indemnification limitations meaningless, as the Buyer could circumvent the cap and basket by pointing to gaps in R&W coverage that may have nothing to do with the Seller's conduct.

Covenant Regarding Policy Maintenance. The Seller requests that the Buyer covenant in the APA not to amend, cancel, or terminate the R&W insurance policy, or take any action that would adversely affect the scope or availability of coverage under the policy, without the prior written consent of the Seller. Because the R&W policy is integral to the overall indemnification and risk-allocation framework agreed upon by the parties, the Seller has a legitimate interest in ensuring that the policy remains in place and is not unilaterally modified by the Buyer in a manner that could increase the Seller's direct indemnification exposure.

IX. Working Capital Adjustment

The parties have agreed on a target Net Working Capital ("NWC") for the OncuPath Business of Six Million Eight Hundred Thousand Dollars ($6,800,000), with a collar of plus or minus Three Hundred Fifty Thousand Dollars ($350,000). No adjustment to the purchase price will be required if the final NWC falls within the range of $6,450,000 to $7,150,000.

Preparation of Closing Balance Sheet. Buyer's markup proposes that the final closing balance sheet for the OncuPath Business be prepared by Buyer's accountants. The Seller rejects this proposal. The closing balance sheet should be prepared by Haverford & Lane LLP (Douglas Crane, Engagement Partner), the Seller's independent auditor, using the same accounting principles, policies, methodologies, and practices that were applied in the preparation of the carve-out financial statements for the OncuPath Business that were provided to the Buyer and its advisors during due diligence. The use of the Seller's auditors and the same accounting principles ensures consistency and comparability with the historical financial information on which the parties' NWC target was negotiated. The Buyer shall have full review and objection rights with respect to the closing balance sheet, including the right to access the working papers and supporting documentation used in its preparation.

True-Up Payment. The purchase price true-up payment (whether payable by the Seller to the Buyer or by the Buyer to the Seller, depending on whether final NWC is below or above the collar range) shall be due within ninety (90) days following the Closing Date — i.e., by November 6, 2023, assuming an August 8, 2023 Closing Date.

Dispute Resolution. If the parties are unable to agree on the final NWC determination within the ninety (90) day post-closing period, the disputed items shall be submitted to an independent accounting firm mutually selected by the parties for a final and binding determination. The Seller rejects Buyer's proposal to designate Buyer's own auditors as the independent accounting firm for this purpose. The independent firm must be truly independent of both parties to ensure the integrity and credibility of the dispute resolution process.

X. Purchase Price Allocation

The parties agree that the allocation of the purchase price among the Purchased Assets for purposes of Section 1060 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder, shall be prepared and agreed upon within one hundred twenty (120) days following the Closing Date — i.e., by December 6, 2023, assuming an August 8, 2023 Closing Date.

The Seller has prepared a preliminary purchase price allocation, prepared with the assistance of Leonard Cross, Tax Partner at Calderwood & Harkness LLP, as follows:

Buyer's markup proposes that both parties be bound to the Buyer's allocation of the purchase price. The Seller rejects this one-sided approach. The purchase price allocation must be mutually agreed upon by the parties, and both the Seller and the Buyer shall be obligated to use the agreed-upon allocation for all federal, state, and local tax reporting purposes, including the preparation and filing of IRS Form 8594 (Asset Acquisition Statement Under Section 1060). Neither party should be bound to an allocation prepared unilaterally by the other.

In the event that the parties are unable to reach agreement on the purchase price allocation within the one hundred twenty (120) day period, the Seller proposes that the disputed allocation items be submitted to an independent appraiser with relevant expertise in the valuation of diagnostic and life sciences assets, jointly retained by the parties, whose determination shall be final and binding.

XI. Intellectual Property — Scope and Warranties

Non-Infringement Representation. Buyer's markup proposes expanding the Seller's intellectual property representations to include an unqualified warranty of non-infringement and freedom-to-operate with respect to all transferred OncuPath intellectual property, which includes fourteen (14) issued United States patents, seven (7) pending patent applications, and three (3) registered trademarks.

The Seller declines to provide an unqualified non-infringement warranty. An unqualified representation of this nature would impose strict liability on the Seller for any third-party infringement claim, regardless of whether the Seller had any reason to know of the potential infringement, and would be inconsistent with market practice for asset purchase transactions in the diagnostics sector. Instead, the Seller will represent that, to the Seller's Knowledge (as defined below), no OncuPath intellectual property infringes, misappropriates, or otherwise violates the intellectual property rights of any third party. For purposes of this representation, "Seller's Knowledge" shall mean the actual knowledge, after reasonable inquiry, of Dr. Lara Okonkwo, Vice President of OncuPath R&D, and Yuki Tanabe, Head of Regulatory Affairs for OncuPath, as the individuals with primary responsibility for OncuPath intellectual property and regulatory matters.

Vantage Molecular Sciences License

The Seller confirms that the exclusive license agreement dated September 12, 2019, between GDT and Vantage Molecular Sciences, Inc. for probe-labeling technology used in the OncuPath assay platform (the "Vantage License") requires the consent of Vantage to assignment in connection with the transactions contemplated by the APA. The Seller is actively pursuing such consent and expects to obtain it prior to the anticipated Closing Date. (We note for the record that such consent was subsequently obtained on July 14, 2023.)

Buyer's markup seeks expanded representations regarding the scope, terms, and enforceability of the Vantage License. The Seller agrees to include a representation that the Vantage License is in full force and effect as of the date of the APA, that it has not been materially amended or modified since its execution, and that neither party thereto has delivered or received any pending notice of termination, breach, or default. However, the Seller declines to warrant the enforceability of the Vantage License against Vantage Molecular Sciences. Whether the Vantage License is enforceable against Vantage is a matter of contract law as between the parties to that agreement, and the Seller cannot control or guarantee Vantage's future performance or the outcome of any enforcement proceeding.

XII. Regulatory Matters

The Seller confirms the following regulatory assets will transfer to the Buyer as Purchased Assets at the Closing:

• Three (3) FDA-cleared 510(k) assays in the OncuPath portfolio, bearing 510(k) clearance numbers K201847, K193215, and K210562;

• The pending PMA supplement for OncuPath-HER3™ (P230014), submitted to the FDA on January 30, 2023; and

• All related regulatory files, submissions, correspondence, and supporting documentation.

The Seller further notes that the CLIA certificate of accreditation (Certificate ID: 05D2178493) for the OncuPath reference laboratory located at 4820 Towne Centre Drive, San Diego, California 92121, will need to be transferred or reissued to the Buyer post-closing. CLIA certificates are facility-specific and personnel-specific, and the transfer or reissuance process may require coordination with the applicable state agency and CMS. The Seller agrees to cooperate fully with the Buyer in this process, including providing all necessary documentation and facilitating communication with the relevant regulatory authorities.

Buyer's markup requests a representation from the Seller that no FDA warning letters, Form 483 observations, or enforcement actions are pending or threatened against the OncuPath Business. The Seller agrees to make this representation as of the signing date of the APA and to bring it down at the Closing through the Seller's Closing Certificate. The Seller believes this representation to be accurate and does not anticipate any issues in making it.

XIII. Transferred Employees

Buyer's markup proposes that the Seller bear all costs associated with the transfer of OncuPath employees to the Buyer, including accrued paid time off ("PTO"), severance payments for employees who decline Buyer's offers of employment, and COBRA continuation coverage costs for all transitioning employees.

The Seller's position is as follows:

Buyer's Costs. The Buyer will bear all costs associated with making offers of employment to the eighty-three (83) OncuPath employees, including onboarding costs, background check expenses, and the costs of integrating Transferred Employees into Buyer's benefit plans.

Seller's Obligations — Transferred Employees. The Seller will be responsible for all accrued PTO and benefits obligations attributable to the Transferred Employees through and including the Closing Date. The Seller will satisfy these obligations in accordance with GDT's existing policies and applicable law.

Employees Who Decline Buyer's Offers. The Seller's obligations with respect to OncuPath employees who decline the Buyer's offers of employment are limited to severance and benefits obligations arising under the Seller's existing policies and plans as in effect on the date of the APA. The Seller will not provide enhanced or supplemental severance beyond what is provided for under the Seller's standard severance policy. The costs associated with employees who decline Buyer's offers are an inherent consequence of the Buyer's decision regarding the terms and conditions of its offers, and should not be borne by the Seller.

WARN Act. The Seller notes that no notification under the Worker Adjustment and Retraining Notification Act (29 U.S.C. §§ 2101-2109) is required in connection with the transactions contemplated by the APA, as fewer than one hundred (100) employees are affected at any single site of employment. The Seller will cooperate with the Buyer to ensure compliance with any applicable state mini-WARN statutes.

Transition Services Agreement. The parties have agreed in principle to enter into a Transition Services Agreement ("TSA") at the Closing pursuant to which the Seller will provide continued HR, payroll, and benefits administration support for the Transferred Employees for a period of up to nine (9) months following the Closing Date. The fees for such transition services will be at the Seller's cost plus five percent (5%). The TSA is intended to facilitate an orderly transition of employees and related administrative functions and to minimize disruption to the OncuPath Business during the integration period.

XIV. Miscellaneous Open Points

A. Outside Date for Closing

Buyer's markup proposes granting the Buyer a unilateral right to terminate the APA if the Closing has not occurred by July 15, 2023. The Seller rejects this proposal as unduly aggressive in light of the regulatory and consent timelines applicable to this transaction. The Seller counter-proposes an outside date of September 15, 2023. This later date is necessary to accommodate (a) the Hart-Scott-Rodino Antitrust Improvements Act review process (the HSR filing is anticipated to be made on or about May 18, 2023, and the initial thirty-day waiting period may be extended if the reviewing agency issues a second request for information), and (b) the third-party consent processes described below. The September 15, 2023 outside date provides a reasonable cushion for these regulatory and administrative processes while maintaining the parties' shared objective of completing the transaction as promptly as practicable.

B. Third-Party Consents

Consent to the assignment of the following real property leases is a condition to the Closing:

(i) The lease for the Towne Centre facility at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121, between Towne Centre Properties LLC (as landlord) and GDT (as tenant). The Seller is in active discussions with Towne Centre Properties LLC regarding the required consent and expects to obtain it in a timely manner.

(ii) The sublease for the Carlsbad facility at 925 Industrial Court, Carlsbad, California 92010, which sublease expires on December 31, 2025. The Seller is similarly pursuing the required consent to assignment of this sublease.

The Seller will keep the Buyer informed of the status of these consent processes and will use commercially reasonable efforts to obtain the required consents prior to the Closing.

C. Litigation Indemnity

Buyer's markup proposes that the Seller provide a specific indemnity for pre-closing litigation claims that would survive beyond the general eighteen (18) month survival period for indemnification claims. The Seller agrees that pre-closing litigation is properly categorized as an Excluded Liability that will remain with the Seller and will not be assumed by the Buyer. However, the Seller rejects the imposition of a separate, specific indemnity with an extended survival period for such claims. The treatment of pre-closing litigation as an Excluded Liability is sufficient to protect the Buyer, and any indemnification obligation of the Seller with respect to such matters should be subject to the general indemnification provisions of the APA, including the eighteen (18) month survival period, the indemnification cap, and the basket.

XV. Next Steps and Process

In order to maintain the transaction timeline and progress toward a definitive agreement, the Seller proposes the following next steps:

1. Deal Team Call. We propose a conference call among the deal teams during the week of April 17, 2023, to discuss the issues raised in this letter and work toward resolution of the principal open points. Please advise as to your team's availability, and we will coordinate scheduling.

2. Revised APA Draft. We suggest targeting the circulation of a revised APA draft reflecting the agreed positions by early May 2023. To that end, we respectfully request that Buyer's counsel circulate a revised markup reflecting Buyer's responses to the positions set forth in this letter by no later than April 28, 2023.

3. Board Approvals and Execution. The GDT board of directors is tentatively scheduled to meet on May 8, 2023, and we anticipate that approval of the definitive APA will be on the agenda for that meeting. We understand that Meridian's board approval is anticipated shortly thereafter. Subject to resolution of the open points and completion of the board approval processes, we would target execution of the definitive APA promptly following both board approvals.

4. Commercial Discussions. We note that Victor Sandoval of Brindoval Partners LLC is available to discuss commercial and valuation-related issues directly with Catherine Liang of Meridian's corporate development team. To the extent that any of the open points discussed herein implicate commercial considerations that are best addressed at the principal level, we would encourage such direct discussions in parallel with the legal negotiations.

We are confident that the remaining open points can be resolved efficiently and in a manner that is fair to both parties. The Seller remains committed to completing this transaction on the terms and timeline outlined above, and we look forward to working with you and your team to finalize the definitive agreement.

Please do not hesitate to contact me or any member of our team if you would like to discuss any aspect of this letter at your convenience. We are happy to accommodate your schedule for a call or in-person meeting as needed.

Nothing in this letter shall constitute a waiver of, or be deemed to limit, any rights, positions, or remedies of GDT or its affiliates not expressly addressed herein, all of which are hereby expressly reserved.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

James Prentice, Partner

555 South Hope Street, Suite 4400 Los Angeles, California 90071 Telephone: (213) 402-8800

Email: jprentice@calderwoodharkness.com

cc: (via email)

Sandra Tung, Esq., Calderwood & Harkness LLP (Billing Partner) Tiffany Rosenthal, Esq., Calderwood & Harkness LLP (Lead Associate) Andrew Fitzpatrick, Esq., Calderwood & Harkness LLP (Working Associate) Rebecca Chiang, General Counsel, Genome Dx Therapeutics Inc. Victor Sandoval, Managing Director, Brindoval Partners LLC

Enclosures: None

Asset Class	Preliminary Allocation
Tangible Personal Property	$18,200,000
Real Property Interests (Leasehold Interests)	$3,400,000
Intellectual Property (Patents, Trade Secrets)	$52,600,000
Customer Relationships and Contracts	$27,800,000
Trademarks and Trade Names	$9,400,000
Goodwill (Residual)	$28,600,000
Total	$140,000,000

CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Attorneys at Law
555 South Hope Street, Suite 4400 Los Angeles, California 90071 Telephone: (213) 402-8800 Facsimile: (213) 402-8801 www.calderwoodharkness.com
April 14, 2023
VIA EMAIL AND FIRST CLASS MAIL
Jonathan Whitfield, Esq. Whitfield Sayer & Gregg LLP 200 South Tryon Street, Suite 2800 Charlotte, NC 28202
Re: Asset Purchase Agreement between Genome Dx Therapeutics Inc. ("Seller" or "GDT") and Meridian Precision Diagnostics, Inc. ("Buyer" or "Meridian") — Response to Buyer's Markup C&H Matter No. 1013-00006&A-4471
Dear Jonathan:
Thank you for circulating Whitfield Sayer & Gregg's markup of the initial draft Asset Purchase Agreement (the "APA") that Calderwood & Harkness distributed on behalf of Genome Dx Therapeutics Inc. ("GDT" or the "Seller") on March 20, 2023, in connection with the proposed acquisition by Meridian Precision Diagnostics, Inc. ("Meridian" or the "Buyer") of substantially all of the assets comprising the OncuPath™ companion diagnostics assay line for a total purchase price of One Hundred Forty Million Dollars ($140,000,000) (the "Total Consideration"). We have reviewed the markup in detail, and this letter sets forth the Seller's positions on the principal open issues identified therein.
At the outset, we note that the parties have reached agreement on a number of significant points reflected in Buyer's markup, and we appreciate the collaborative approach your team has taken on those items. By way of example, we consider the structure of the Purchased Assets, the identification of the Excluded Assets, and the selection of Delaware as the governing law to be settled. Those and other points of agreement are not addressed further in this letter. Instead, we focus this correspondence exclusively on the items where the parties' respective positions remain apart, with the objective of narrowing the open issues and advancing the transaction toward a definitive agreement as expeditiously as practicable.
We remain available to arrange a call among the deal teams to discuss any and all of the matters raised herein. Seller's financial advisor, Brindoval Partners LLC (Victor Sandoval, Managing Director), as well as GDT's General Counsel, Rebecca Chiang, are available to discuss commercial points directly with Buyer's corporate development team at a mutually convenient time. We would suggest the week of April 17, 2023, as set forth more fully in Section XV below.
The open issues are organized by subject matter as follows:
I. Indemnification Cap
Buyer's markup proposes increasing the indemnification cap from twenty percent (20%) to thirty percent (30%) of the Total Consideration — that is, from Twenty-Eight Million Dollars ($28,000,000) to Forty-Two Million Dollars ($42,000,000). Seller respectfully declines this proposal.
The Seller's position is that the twenty percent (20%) cap ($28,000,000) set forth in the initial draft is appropriate and consistent with market practice for biotech asset divestitures of this size. Based on our review of publicly available data and proprietary transaction databases, indemnification caps in diagnostics and life sciences asset purchase transactions in the $100,000,000 to $250,000,000 range have generally fallen in the range of ten percent (10%) to fifteen percent (15%) of total consideration. Accordingly, the twenty percent (20%) cap in the initial draft already represents a generous position for the Seller, and there is no market-based justification for increasing it to thirty percent (30%).
The appropriateness of the twenty percent (20%) cap is further underscored by the existence of the buyer-side representations and warranties insurance policy currently being placed with Apex Mutual Insurance Company (Policy No. RWI-2023-07182). That policy provides an additional Twenty-Eight Million Dollars ($28,000,000) of coverage above the indemnification cap, with a retention of One Million Four Hundred Thousand Dollars ($1,400,000) aligned with the indemnification basket. When the R&W insurance coverage is taken into account, Buyer's aggregate recovery potential for representation and warranty claims is effectively Fifty-Six Million Dollars ($56,000,000) — or forty percent (40%) of the Total Consideration — which more than adequately protects Buyer's interests.
Notwithstanding the foregoing, the Seller agrees that the indemnification cap should not apply to breaches of the Fundamental Representations. Specifically, the representations and warranties relating to (a) organization and good standing, (b) authority and enforceability, (c) title to the Purchased Assets, (d) tax matters, and (e) broker and finder fees shall be subject only to an overall aggregate ceiling equal to the Total Consideration ($140,000,000), and shall not be subject to the twenty percent (20%) cap otherwise applicable to general representations and warranties.
Buyer's markup also includes a proposal to carve out claims based on fraud or intentional misrepresentation from the indemnification cap entirely. As drafted, this carve-out is so broad that it could be invoked in virtually any indemnification dispute through the inclusion of a fraud allegation, thereby effectively nullifying the cap. The Seller rejects this formulation. However, the Seller is willing to agree that the twenty percent (20%) cap does not apply to claims based on actual fraud (as distinguished from constructive fraud or fraud in the inducement based on negligence) committed by a Seller officer who executed the closing certificates delivered at the Closing — specifically, Martin Kowalski, Chief Financial Officer, as the designated signatory of the Seller's Closing Certificate. This narrowly tailored exception addresses Buyer's legitimate interest in maintaining recourse for affirmative fraud while preserving the intended function of the indemnification cap.
II. Indemnification Basket and De Minimis Threshold
Basket Structure. Buyer's markup proposes a true first-dollar (dollar-one) deductible basket of One Million Four Hundred Thousand Dollars ($1,400,000), representing one percent (1%) of the Total Consideration. Under this formulation, once aggregate qualifying losses exceed the basket amount, the Buyer would recover all losses from the first dollar, including those comprising the basket itself.
The Seller agrees to the basket amount of $1,400,000 but insists on a tipping basket (sometimes referred to as a "threshold" basket) structure rather than a true first-dollar deductible. Under the tipping basket mechanism, no indemnification claims would be payable unless and until aggregate qualifying losses exceed $1,400,000, at which point the Buyer would be entitled to recover all qualifying losses from the first dollar — not merely the amount by which losses exceed the basket. This structure is the Seller's meaningful concession from a pure deductible approach (under which the first $1,400,000 of losses would never be recoverable), while avoiding the "windfall" problem inherent in Buyer's dollar-one deductible proposal. Specifically, a dollar-one deductible creates an incentive for Buyer to aggregate immaterial claims to breach the threshold, knowing that doing so unlocks recovery for even the smallest losses. The tipping basket provides an appropriate screening mechanism that filters out truly immaterial matters while ensuring that the Buyer is made whole once losses cross a material threshold.
De Minimis Per-Claim Threshold. The initial draft included a de minimis per-claim threshold of Seventy-Five Thousand Dollars ($75,000), meaning that no individual claim for indemnifiable losses would be recoverable (or count toward the basket amount) unless the losses attributable to such individual claim exceed $75,000. Buyer's markup proposes reducing this threshold to Fifty Thousand Dollars ($50,000).
The Seller rejects the proposed reduction and maintains its initial position that the de minimis threshold should remain at $75,000. A $50,000 threshold is too low relative to the overall transaction size and would invite a proliferation of nuisance claims and impose unnecessary administrative burdens on both parties. Individual claims below $75,000 represent less than 0.054% of the Total Consideration and are properly borne by the Buyer as a cost of acquiring a going business. The $75,000 threshold is well within the range of market practice for transactions of this magnitude, and the Seller sees no basis for departing from it.
III. Survival Period
General Representations and Warranties. Buyer's markup proposes extending the general survival period for representations and warranties from eighteen (18) months to twenty-four (24) months following the Closing Date.
The Seller's position is that an eighteen (18) month survival period is appropriate for the general representations and warranties. Assuming an anticipated Closing Date of August 8, 2023, the general survival period would expire on February 8, 2025. This period provides Buyer with ample time to conduct its post-closing integration of the OncuPath Business, identify any potential breaches of representations, and assert indemnification claims. An eighteen-month survival period is consistent with prevailing market norms for negotiated asset sale transactions, particularly where, as here, the Buyer has the benefit of both a funded escrow and representations and warranties insurance.
The adequacy of the eighteen-month period is further supported by the $14,000,000 escrow being established at Ashgrove Equity Partners Escrow Services, Inc. (discussed in greater detail in Section IV below), which provides Buyer with a funded, readily accessible source of recovery during the survival period without the need to pursue direct claims against the Seller. The two-tranche escrow release schedule proposed by the Seller (fifty percent (50%) of the remaining escrow balance released at twelve (12) months post-closing; the balance released at the expiration of the survival period, net of any pending claims) further protects the Buyer by ensuring that a meaningful portion of the escrow remains available throughout the entire survival period.
Fundamental Representations. The Seller agrees that the Fundamental Representations (organization and good standing, authority and enforceability, title to assets, tax matters, and broker representations) shall survive for sixty (60) months following the Closing Date — i.e., through August 8, 2028 — consistent with the initial draft. The parties appear to be in agreement on this point.
Tax Representations. The Seller agrees that representations relating to tax matters shall survive for the full period of the applicable statute of limitations, plus sixty (60) days. This is consistent with the initial draft and standard market practice.
Environmental Representations. Buyer's markup proposes that representations relating to environmental matters survive for thirty-six (36) months post-closing. The Seller rejects this proposal. The environmental representations should be subject to the general eighteen (18) month survival period for the following reasons: (a) the APA is structured such that no environmental liabilities are being assumed by the Buyer — all pre-closing environmental liabilities are Excluded Liabilities retained by the Seller; (b) both the Carlsbad facility at 925 Industrial Court and the Towne Centre facility at 4820 Towne Centre Drive are leased premises, not owned real property, and the Seller's exposure to environmental conditions at those sites is therefore limited; and (c) no environmental conditions or concerns have been identified in due diligence, and the Disclosure Schedules do not include any disclosed environmental matters that would justify an extended survival period for these representations.
IV. Escrow Mechanics
The parties have reached agreement on the escrow amount: Fourteen Million Dollars ($14,000,000), representing ten percent (10%) of the Total Consideration, to be deposited into an escrow account held by Ashgrove Equity Partners Escrow Services, Inc. (Account No. 8841-7023-5500) at the Closing. The terms of the escrow are expected to be set forth in a separate Escrow Agreement among the Buyer, the Seller, and the escrow agent, to be negotiated and executed contemporaneously with the APA.
The parties disagree, however, on the escrow release schedule. Buyer's markup proposes a single release of the entire escrow balance at the expiration of the eighteen (18) month survival period (i.e., on or about February 8, 2025, assuming an August 8, 2023 Closing Date). The Seller rejects this approach and insists on a two-tranche release schedule structured as follows:
First Release — Fifty percent (50%) of the remaining escrow balance to be released to the Seller on the date that is twelve (12) months after the Closing Date (i.e., on or about August 8, 2024), net of any pending but unresolved indemnification claims as of such date.
Second Release — The entire remaining escrow balance to be released to the Seller on the date of expiration of the general survival period (i.e., on or about February 8, 2025), net of amounts retained with respect to pending but unresolved indemnification claims as of such date.
The rationale for the two-tranche release is straightforward. Market data and transactional experience demonstrate that the overwhelming majority of indemnification claims surface within the first twelve (12) months following a closing. By providing for a partial release at the twelve-month mark, the Seller recovers a meaningful portion of the escrowed funds at a point when the risk of new claims has substantially diminished, while the Buyer retains the benefit of the remaining escrow funds through the end of the full survival period. A single release at eighteen months effectively holds the entire escrow hostage for the maximum period regardless of whether any claims have been made, which is punitive and inconsistent with prevailing market practice for transactions of this nature.
The Seller further notes that the escrow is intended to serve as the Buyer's exclusive remedy for indemnification claims (other than claims relating to breaches of Fundamental Representations, claims based on actual fraud, and claims arising under specific indemnities set forth in the APA), and that the R&W insurance policy provides additional coverage beyond the escrow. This layered recovery structure provides ample protection for the Buyer without requiring that the full escrow remain locked up for the entire survival period.
V. Earnout — Milestone Definitions
The APA contemplates an earnout of up to Fourteen Million Dollars ($14,000,000) — representing ten percent (10%) of the Total Consideration — payable upon achievement of two clinical and regulatory milestones within the thirty-six (36) month Earnout Period following the Closing Date. The parties' positions on the milestone definitions are as follows:
Milestone 1 — FDA Clearance/Approval of OncuPath-HER3™ ($8,000,000)
Buyer's markup proposes narrowing the definition of this milestone to require full Premarket Approval ("PMA") (excluding 510(k) clearance and de novo classification) and further limiting the triggering event to approval of OncuPath-HER3™ as a companion diagnostic specifically for a single, named FDA-approved oncology therapeutic to be identified in the definitive agreement.
The Seller rejects both of these proposed limitations. The milestone should be triggered by either FDA clearance or approval of the OncuPath-HER3™ assay as a companion diagnostic, regardless of the specific regulatory pathway by which such clearance or approval is obtained — whether through the 510(k) process, the PMA process, or the de novo classification pathway. The regulatory landscape for companion diagnostics is evolving, and the FDA has in recent years demonstrated flexibility in the pathways available for companion diagnostic review. Locking the milestone to the PMA pathway alone would penalize the Seller if the FDA determines that a different pathway is appropriate, even if the clinical and commercial result is identical.
Furthermore, the milestone should not be limited to approval as a companion diagnostic for a single, named therapeutic product. The current PMA supplement (P230014, submitted January 30, 2023) is proceeding in connection with a specific therapeutic program, but the OncuPath-HER3™ technology platform has potential applicability as a companion diagnostic for multiple FDA-approved oncology therapeutics. Requiring that the milestone be tied to a single drug would artificially constrain the commercial flexibility that both parties should want the Buyer to have in pursuing the most expedient path to regulatory clearance or approval.
The deadline for achievement of Milestone 1 remains August 8, 2025, which is twenty-four (24) months after the anticipated Closing Date. The Seller does not object to this timeline.
Milestone 2 — CMS HCPCS Code and Medicare Reimbursement ($6,000,000)
Buyer's markup proposes modifying this milestone to require not merely the issuance by the Centers for Medicare & Medicaid Services ("CMS") of a unique HCPCS code for the OncuPath-HER3™ assay, but also a minimum Medicare reimbursement rate of Three Thousand Five Hundred Dollars ($3,500) per test.
The Seller rejects the imposition of a minimum reimbursement rate as a component of this milestone. The Seller's position is that the milestone should be satisfied upon the occurrence of two events: (a) CMS issuance of a unique Healthcare Common Procedure Coding System ("HCPCS") code for OncuPath-HER3™ (or any successor assay based substantially on the same underlying technology), and (b) receipt by the Buyer (or its designee) of the first Medicare reimbursement payment for a test performed using the coded assay.
The imposition of a minimum reimbursement rate is inappropriate because CMS rate-setting is a regulatory process that is within the exclusive discretion of CMS and is beyond the control of either party. Tying the milestone to a specific reimbursement rate would effectively transfer the risk of CMS pricing decisions to the Seller, which is neither equitable nor consistent with the purpose of the earnout. The purpose of Milestone 2 is to compensate the Seller for having developed a product to the point of Medicare coverage eligibility — not to guarantee a particular reimbursement level.
The deadline for achievement of Milestone 2 remains August 8, 2026, which is thirty-six (36) months after the anticipated Closing Date. The Seller does not object to this timeline.
VI. Earnout — Commercially Reasonable Efforts Standard
Buyer's markup proposes replacing the "commercially reasonable efforts" standard in the initial draft with a "reasonable best efforts" standard to describe the Buyer's obligation to pursue the earnout milestones during the Earnout Period.
The Seller rejects this change. "Commercially reasonable efforts" is the well-established and widely understood standard in the diagnostics and life sciences industries for post-closing earnout obligations. By contrast, "reasonable best efforts" is an undefined term that could be interpreted as imposing a more onerous and open-ended obligation, potentially requiring the Buyer to take actions that are not economically rational or that are inconsistent with the Buyer's overall portfolio strategy. The use of a non-standard efforts clause invites interpretive disputes and litigation, which is contrary to both parties' interests.
The Seller proposes that "commercially reasonable efforts" be defined in the APA as follows: efforts consistent with those that a similarly situated company in the diagnostics industry would use for a product of similar market potential, stage of development, and regulatory profile, taking into account all relevant commercial, regulatory, scientific, and financial factors. This definition provides meaningful content to the efforts obligation while maintaining the flexibility that is inherent in — and appropriate for — a commercially reasonable efforts standard.
In addition to the efforts standard itself, the Seller insists on the inclusion of the following protective provisions in the earnout section of the APA:
Anti-Embarrassment Clause. The Buyer shall not discontinue development, commercialization, or regulatory pursuit of OncuPath-HER3™, or divert resources (including personnel, funding, or facilities) away from the OncuPath-HER3™ program in a manner that would make the achievement of any earnout milestone impracticable, without the prior written consent of the Seller. This provision is essential to ensure that the Buyer does not undermine the earnout by deprioritizing or shelving the OncuPath-HER3™ program after closing.
Anti-Sandbagging. The Buyer shall not take any action the primary purpose of which is to avoid or delay the achievement of an earnout milestone. This covenant addresses the inherent moral hazard in earnout arrangements, where the party obligated to make the earnout payment (the Buyer) also controls the levers that determine whether the milestones are achieved.
Acceleration Upon Change of Control. If the Buyer undergoes a Change of Control (to be defined in customary fashion) during the Earnout Period, all then-unpaid earnout milestones shall be deemed to have been achieved as of the date of such Change of Control, and all associated earnout payments shall become immediately due and payable. This provision protects the Seller against the risk that a Change of Control of the Buyer could result in a successor entity that is not committed to pursuing the earnout milestones, or that could restructure the OncuPath-HER3™ program in a manner that makes milestone achievement impossible.
Dispute Resolution. Any dispute arising under the earnout provisions — including whether the Buyer expended commercially reasonable efforts to achieve the milestones, or whether a milestone event has in fact occurred — should be submitted to an independent expert with relevant expertise in the diagnostics industry, to be mutually agreed upon by the parties. If the parties are unable to agree on the identity of the independent expert within thirty (30) days of a dispute notice, either party may petition the Court of Chancery of the State of Delaware to appoint such expert. The determination of the independent expert shall be final and binding on the parties, absent manifest error.
VII. Non-Competition and Non-Solicitation Scope
A. Non-Competition Covenant
Buyer's markup proposes that GDT be subject to a five (5) year worldwide non-competition covenant covering all diagnostics, without limitation to the companion diagnostics field.
The Seller rejects both the duration and the scope of this proposal. The Seller's position is as follows:
Duration. The non-competition period should be limited to three (3) years following the Closing Date. A five-year non-compete is excessive for an asset purchase transaction and exceeds the duration typically seen in comparable diagnostics sector transactions. A three-year period provides the Buyer with ample time to integrate the OncuPath Business and establish its market position without the competitive threat of the Seller re-entering the companion diagnostics market.
Scope — Field of Activity. The non-competition covenant should be restricted to the companion diagnostics field — i.e., the development, manufacture, marketing, or sale of diagnostic assays designed for use as companion diagnostics to identify patients eligible for or likely to respond to specific therapeutic agents. An extension of the non-compete to cover "all diagnostics" would be vastly overbroad and would impair GDT's ability to continue operating its retained core business, the GenoStrat™ liquid biopsy platform, which operates in a distinct market segment (liquid biopsy-based genomic profiling for treatment selection and monitoring) that is not in competition with the OncuPath companion diagnostics line.
Scope — Geographic Limitation. The non-competition covenant should be limited to the United States. The OncuPath Business being acquired operates exclusively in the U.S. market, and GDT has no current international operations in the companion diagnostics field. A worldwide restriction is unnecessary to protect the Buyer's legitimate business interests and would be unlikely to be enforceable under Delaware law, which requires that restrictive covenants be reasonably tailored in scope, geography, and duration.
The Seller agrees that the non-competition covenant covers GDT as an entity, together with its controlled affiliates (as defined in the APA). However, the non-compete shall not bind Pinnacle Biosciences Partners Fund III, L.P. (GDT's majority equity holder) or any other portfolio company of Pinnacle Biosciences Partners or its affiliated funds. Each Pinnacle portfolio company operates independently, and imposing a non-compete on Pinnacle or its other portfolio companies would be unreasonable and unsupported by any legitimate business interest of the Buyer related to this transaction.
B. Non-Solicitation Covenant
Buyer's markup proposes a three (3) year non-solicitation period covering all employees of the OncuPath Business.
The Seller's position is that the non-solicitation period should be limited to two (2) years following the Closing Date, and should cover only the employees of the OncuPath Business who actually accept offers of employment from the Buyer and transfer to the Buyer at or promptly following the Closing (the "Transferred Employees"). Based on the current offer process, the Seller anticipates that seventy-eight (78) of the eighty-three (83) OncuPath employees will accept Buyer's offers and become Transferred Employees.
The non-solicitation covenant should include a customary carve-out for general solicitations that are not specifically targeted at any Transferred Employee — for example, job postings on public job boards, general recruitment advertisements, or responses to unsolicited inquiries from Transferred Employees who independently seek employment with GDT.
Key Transferred Employees who would be covered by the non-solicitation covenant include, without limitation:
• Dr. Lara Okonkwo, Vice President, OncuPath Research & Development
• Samuel Briggs, Director, OncuPath Commercial Operations
• Yuki Tanabe, Head of Regulatory Affairs, OncuPath
VIII. Representations and Warranties Insurance — Coordination
Both parties have agreed in principle to a buyer-side representations and warranties insurance policy to be issued by Apex Mutual Insurance Company (Policy No. RWI-2023-07182). The principal terms of the policy, as currently contemplated, are as follows:
• Policy Limit: Twenty-Eight Million Dollars ($28,000,000), matching the indemnification cap.
• Retention: One Million Four Hundred Thousand Dollars ($1,400,000), aligned with the indemnification basket.
• Premium: Eight Hundred Forty Thousand Dollars ($840,000) (three percent (3%) of the policy limit), to be split equally between the Seller ($420,000) and the Buyer ($420,000).
The Seller's positions on coordination between the R&W insurance policy and the indemnification provisions of the APA are as follows:
Primary Recovery Mechanism. The R&W insurance policy should serve as the primary recovery mechanism for the Buyer after the escrow funds have been exhausted, thereby reducing the pressure on direct Seller indemnification. The layered structure — escrow as the first source of recovery, followed by R&W insurance — provides the Buyer with substantial aggregate coverage while appropriately limiting the Seller's direct out-of-pocket exposure.
Known-Matters Exclusions. The known-matters exclusions in the R&W policy should be narrowly drafted and limited to matters that have been actually disclosed in the Disclosure Schedules delivered by the Seller in connection with the APA. The Seller will work cooperatively with Apex Mutual's underwriting team — specifically Philip Aldridge, Senior Vice President — during the underwriting process to ensure that the Disclosure Schedules are comprehensive and that the known-matters exclusions accurately reflect the scope of disclosed matters.
Coverage Gaps. Buyer's markup includes a provision that would allow the Buyer to recover directly from the Seller (outside the escrow and R&W insurance framework) for any indemnification claims that are excluded from coverage under the R&W policy for any reason, including policy exclusions, coverage limitations, or claim denials by the insurer. The Seller rejects this provision. The indemnification cap and basket set forth in the APA should apply to all claims regardless of whether a particular claim happens to fall outside the scope of R&W insurance coverage, with the sole exceptions of claims arising from breaches of Fundamental Representations and claims based on actual fraud. To hold otherwise would effectively render the indemnification limitations meaningless, as the Buyer could circumvent the cap and basket by pointing to gaps in R&W coverage that may have nothing to do with the Seller's conduct.
Covenant Regarding Policy Maintenance. The Seller requests that the Buyer covenant in the APA not to amend, cancel, or terminate the R&W insurance policy, or take any action that would adversely affect the scope or availability of coverage under the policy, without the prior written consent of the Seller. Because the R&W policy is integral to the overall indemnification and risk-allocation framework agreed upon by the parties, the Seller has a legitimate interest in ensuring that the policy remains in place and is not unilaterally modified by the Buyer in a manner that could increase the Seller's direct indemnification exposure.
IX. Working Capital Adjustment
The parties have agreed on a target Net Working Capital ("NWC") for the OncuPath Business of Six Million Eight Hundred Thousand Dollars ($6,800,000), with a collar of plus or minus Three Hundred Fifty Thousand Dollars ($350,000). No adjustment to the purchase price will be required if the final NWC falls within the range of $6,450,000 to $7,150,000.
Preparation of Closing Balance Sheet. Buyer's markup proposes that the final closing balance sheet for the OncuPath Business be prepared by Buyer's accountants. The Seller rejects this proposal. The closing balance sheet should be prepared by Haverford & Lane LLP (Douglas Crane, Engagement Partner), the Seller's independent auditor, using the same accounting principles, policies, methodologies, and practices that were applied in the preparation of the carve-out financial statements for the OncuPath Business that were provided to the Buyer and its advisors during due diligence. The use of the Seller's auditors and the same accounting principles ensures consistency and comparability with the historical financial information on which the parties' NWC target was negotiated. The Buyer shall have full review and objection rights with respect to the closing balance sheet, including the right to access the working papers and supporting documentation used in its preparation.
True-Up Payment. The purchase price true-up payment (whether payable by the Seller to the Buyer or by the Buyer to the Seller, depending on whether final NWC is below or above the collar range) shall be due within ninety (90) days following the Closing Date — i.e., by November 6, 2023, assuming an August 8, 2023 Closing Date.
Dispute Resolution. If the parties are unable to agree on the final NWC determination within the ninety (90) day post-closing period, the disputed items shall be submitted to an independent accounting firm mutually selected by the parties for a final and binding determination. The Seller rejects Buyer's proposal to designate Buyer's own auditors as the independent accounting firm for this purpose. The independent firm must be truly independent of both parties to ensure the integrity and credibility of the dispute resolution process.
X. Purchase Price Allocation
The parties agree that the allocation of the purchase price among the Purchased Assets for purposes of Section 1060 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder, shall be prepared and agreed upon within one hundred twenty (120) days following the Closing Date — i.e., by December 6, 2023, assuming an August 8, 2023 Closing Date.
The Seller has prepared a preliminary purchase price allocation, prepared with the assistance of Leonard Cross, Tax Partner at Calderwood & Harkness LLP, as follows:
Buyer's markup proposes that both parties be bound to the Buyer's allocation of the purchase price. The Seller rejects this one-sided approach. The purchase price allocation must be mutually agreed upon by the parties, and both the Seller and the Buyer shall be obligated to use the agreed-upon allocation for all federal, state, and local tax reporting purposes, including the preparation and filing of IRS Form 8594 (Asset Acquisition Statement Under Section 1060). Neither party should be bound to an allocation prepared unilaterally by the other.
In the event that the parties are unable to reach agreement on the purchase price allocation within the one hundred twenty (120) day period, the Seller proposes that the disputed allocation items be submitted to an independent appraiser with relevant expertise in the valuation of diagnostic and life sciences assets, jointly retained by the parties, whose determination shall be final and binding.
XI. Intellectual Property — Scope and Warranties
Non-Infringement Representation. Buyer's markup proposes expanding the Seller's intellectual property representations to include an unqualified warranty of non-infringement and freedom-to-operate with respect to all transferred OncuPath intellectual property, which includes fourteen (14) issued United States patents, seven (7) pending patent applications, and three (3) registered trademarks.
The Seller declines to provide an unqualified non-infringement warranty. An unqualified representation of this nature would impose strict liability on the Seller for any third-party infringement claim, regardless of whether the Seller had any reason to know of the potential infringement, and would be inconsistent with market practice for asset purchase transactions in the diagnostics sector. Instead, the Seller will represent that, to the Seller's Knowledge (as defined below), no OncuPath intellectual property infringes, misappropriates, or otherwise violates the intellectual property rights of any third party. For purposes of this representation, "Seller's Knowledge" shall mean the actual knowledge, after reasonable inquiry, of Dr. Lara Okonkwo, Vice President of OncuPath R&D, and Yuki Tanabe, Head of Regulatory Affairs for OncuPath, as the individuals with primary responsibility for OncuPath intellectual property and regulatory matters.
Vantage Molecular Sciences License
The Seller confirms that the exclusive license agreement dated September 12, 2019, between GDT and Vantage Molecular Sciences, Inc. for probe-labeling technology used in the OncuPath assay platform (the "Vantage License") requires the consent of Vantage to assignment in connection with the transactions contemplated by the APA. The Seller is actively pursuing such consent and expects to obtain it prior to the anticipated Closing Date. (We note for the record that such consent was subsequently obtained on July 14, 2023.)
Buyer's markup seeks expanded representations regarding the scope, terms, and enforceability of the Vantage License. The Seller agrees to include a representation that the Vantage License is in full force and effect as of the date of the APA, that it has not been materially amended or modified since its execution, and that neither party thereto has delivered or received any pending notice of termination, breach, or default. However, the Seller declines to warrant the enforceability of the Vantage License against Vantage Molecular Sciences. Whether the Vantage License is enforceable against Vantage is a matter of contract law as between the parties to that agreement, and the Seller cannot control or guarantee Vantage's future performance or the outcome of any enforcement proceeding.
XII. Regulatory Matters
The Seller confirms the following regulatory assets will transfer to the Buyer as Purchased Assets at the Closing:
• Three (3) FDA-cleared 510(k) assays in the OncuPath portfolio, bearing 510(k) clearance numbers K201847, K193215, and K210562;
• The pending PMA supplement for OncuPath-HER3™ (P230014), submitted to the FDA on January 30, 2023; and
• All related regulatory files, submissions, correspondence, and supporting documentation.
The Seller further notes that the CLIA certificate of accreditation (Certificate ID: 05D2178493) for the OncuPath reference laboratory located at 4820 Towne Centre Drive, San Diego, California 92121, will need to be transferred or reissued to the Buyer post-closing. CLIA certificates are facility-specific and personnel-specific, and the transfer or reissuance process may require coordination with the applicable state agency and CMS. The Seller agrees to cooperate fully with the Buyer in this process, including providing all necessary documentation and facilitating communication with the relevant regulatory authorities.
Buyer's markup requests a representation from the Seller that no FDA warning letters, Form 483 observations, or enforcement actions are pending or threatened against the OncuPath Business. The Seller agrees to make this representation as of the signing date of the APA and to bring it down at the Closing through the Seller's Closing Certificate. The Seller believes this representation to be accurate and does not anticipate any issues in making it.
XIII. Transferred Employees
Buyer's markup proposes that the Seller bear all costs associated with the transfer of OncuPath employees to the Buyer, including accrued paid time off ("PTO"), severance payments for employees who decline Buyer's offers of employment, and COBRA continuation coverage costs for all transitioning employees.
The Seller's position is as follows:
Buyer's Costs. The Buyer will bear all costs associated with making offers of employment to the eighty-three (83) OncuPath employees, including onboarding costs, background check expenses, and the costs of integrating Transferred Employees into Buyer's benefit plans.
Seller's Obligations — Transferred Employees. The Seller will be responsible for all accrued PTO and benefits obligations attributable to the Transferred Employees through and including the Closing Date. The Seller will satisfy these obligations in accordance with GDT's existing policies and applicable law.
Employees Who Decline Buyer's Offers. The Seller's obligations with respect to OncuPath employees who decline the Buyer's offers of employment are limited to severance and benefits obligations arising under the Seller's existing policies and plans as in effect on the date of the APA. The Seller will not provide enhanced or supplemental severance beyond what is provided for under the Seller's standard severance policy. The costs associated with employees who decline Buyer's offers are an inherent consequence of the Buyer's decision regarding the terms and conditions of its offers, and should not be borne by the Seller.
WARN Act. The Seller notes that no notification under the Worker Adjustment and Retraining Notification Act (29 U.S.C. §§ 2101-2109) is required in connection with the transactions contemplated by the APA, as fewer than one hundred (100) employees are affected at any single site of employment. The Seller will cooperate with the Buyer to ensure compliance with any applicable state mini-WARN statutes.
Transition Services Agreement. The parties have agreed in principle to enter into a Transition Services Agreement ("TSA") at the Closing pursuant to which the Seller will provide continued HR, payroll, and benefits administration support for the Transferred Employees for a period of up to nine (9) months following the Closing Date. The fees for such transition services will be at the Seller's cost plus five percent (5%). The TSA is intended to facilitate an orderly transition of employees and related administrative functions and to minimize disruption to the OncuPath Business during the integration period.
XIV. Miscellaneous Open Points
A. Outside Date for Closing
Buyer's markup proposes granting the Buyer a unilateral right to terminate the APA if the Closing has not occurred by July 15, 2023. The Seller rejects this proposal as unduly aggressive in light of the regulatory and consent timelines applicable to this transaction. The Seller counter-proposes an outside date of September 15, 2023. This later date is necessary to accommodate (a) the Hart-Scott-Rodino Antitrust Improvements Act review process (the HSR filing is anticipated to be made on or about May 18, 2023, and the initial thirty-day waiting period may be extended if the reviewing agency issues a second request for information), and (b) the third-party consent processes described below. The September 15, 2023 outside date provides a reasonable cushion for these regulatory and administrative processes while maintaining the parties' shared objective of completing the transaction as promptly as practicable.
B. Third-Party Consents
Consent to the assignment of the following real property leases is a condition to the Closing:
(i) The lease for the Towne Centre facility at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121, between Towne Centre Properties LLC (as landlord) and GDT (as tenant). The Seller is in active discussions with Towne Centre Properties LLC regarding the required consent and expects to obtain it in a timely manner.
(ii) The sublease for the Carlsbad facility at 925 Industrial Court, Carlsbad, California 92010, which sublease expires on December 31, 2025. The Seller is similarly pursuing the required consent to assignment of this sublease.
The Seller will keep the Buyer informed of the status of these consent processes and will use commercially reasonable efforts to obtain the required consents prior to the Closing.
C. Litigation Indemnity
Buyer's markup proposes that the Seller provide a specific indemnity for pre-closing litigation claims that would survive beyond the general eighteen (18) month survival period for indemnification claims. The Seller agrees that pre-closing litigation is properly categorized as an Excluded Liability that will remain with the Seller and will not be assumed by the Buyer. However, the Seller rejects the imposition of a separate, specific indemnity with an extended survival period for such claims. The treatment of pre-closing litigation as an Excluded Liability is sufficient to protect the Buyer, and any indemnification obligation of the Seller with respect to such matters should be subject to the general indemnification provisions of the APA, including the eighteen (18) month survival period, the indemnification cap, and the basket.
XV. Next Steps and Process
In order to maintain the transaction timeline and progress toward a definitive agreement, the Seller proposes the following next steps:
1. Deal Team Call. We propose a conference call among the deal teams during the week of April 17, 2023, to discuss the issues raised in this letter and work toward resolution of the principal open points. Please advise as to your team's availability, and we will coordinate scheduling.
2. Revised APA Draft. We suggest targeting the circulation of a revised APA draft reflecting the agreed positions by early May 2023. To that end, we respectfully request that Buyer's counsel circulate a revised markup reflecting Buyer's responses to the positions set forth in this letter by no later than April 28, 2023.
3. Board Approvals and Execution. The GDT board of directors is tentatively scheduled to meet on May 8, 2023, and we anticipate that approval of the definitive APA will be on the agenda for that meeting. We understand that Meridian's board approval is anticipated shortly thereafter. Subject to resolution of the open points and completion of the board approval processes, we would target execution of the definitive APA promptly following both board approvals.
4. Commercial Discussions. We note that Victor Sandoval of Brindoval Partners LLC is available to discuss commercial and valuation-related issues directly with Catherine Liang of Meridian's corporate development team. To the extent that any of the open points discussed herein implicate commercial considerations that are best addressed at the principal level, we would encourage such direct discussions in parallel with the legal negotiations.
We are confident that the remaining open points can be resolved efficiently and in a manner that is fair to both parties. The Seller remains committed to completing this transaction on the terms and timeline outlined above, and we look forward to working with you and your team to finalize the definitive agreement.
Please do not hesitate to contact me or any member of our team if you would like to discuss any aspect of this letter at your convenience. We are happy to accommodate your schedule for a call or in-person meeting as needed.
Nothing in this letter shall constitute a waiver of, or be deemed to limit, any rights, positions, or remedies of GDT or its affiliates not expressly addressed herein, all of which are hereby expressly reserved.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
James Prentice, Partner
555 South Hope Street, Suite 4400 Los Angeles, California 90071 Telephone: (213) 402-8800
Email: jprentice@calderwoodharkness.com
cc: (via email)
Sandra Tung, Esq., Calderwood & Harkness LLP (Billing Partner) Tiffany Rosenthal, Esq., Calderwood & Harkness LLP (Lead Associate) Andrew Fitzpatrick, Esq., Calderwood & Harkness LLP (Working Associate) Rebecca Chiang, General Counsel, Genome Dx Therapeutics Inc. Victor Sandoval, Managing Director, Brindoval Partners LLC
Enclosures: None
Asset Class | Preliminary Allocation
Tangible Personal Property | $18,200,000
Real Property Interests (Leasehold Interests) | $3,400,000
Intellectual Property (Patents, Trade Secrets) | $52,600,000
Customer Relationships and Contracts | $27,800,000
Trademarks and Trade Names | $9,400,000
Goodwill (Residual) | $28,600,000
Total | $140,000,000

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