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PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

DEAL SUMMARY MEMORANDUM

Divestiture of OncuPath™ Companion Diagnostics Assay Line by Genome Dx Therapeutics Inc. to Meridian Precision Diagnostics, Inc.

MEMORANDUM

FROM: Tiffany Rosenthal, Lead Associate, Mergers & Acquisitions

TO: James Prentice, Responsible Partner Sandra Tung, Billing Partner Leonard Cross, Tax Partner Andrew Fitzpatrick, Working Associate

DATE: March 22, 2023

RE: Deal Summary Memorandum — Divestiture of OncuPath™ Companion Diagnostics Assay Line by Genome Dx Therapeutics Inc. to Meridian Precision Diagnostics, Inc.

MATTER NO.: 1013-00006&A-4471

CLIENT: Genome Dx Therapeutics Inc.

This memorandum has been prepared at the direction of counsel and is subject to the attorney-client privilege and the work product doctrine. It is intended solely for the internal use of Calderwood & Harkness LLP in connection with its representation of Genome Dx Therapeutics Inc. This memorandum should not be disclosed to any third party without the prior written consent of the undersigned and the Responsible Partner. Distribution is limited to the individuals identified above.

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I. Executive Summary

Calderwood & Harkness LLP ("C&H" or the "Firm") represents Genome Dx Therapeutics Inc. ("GDT" or the "Seller"), a Delaware corporation headquartered in San Diego, California, as seller's counsel in the proposed divestiture of GDT's non-core OncuPath™ companion diagnostics assay line (the "OncuPath Business") to Meridian Precision Diagnostics, Inc. ("Meridian" or the "Buyer"), a Delaware corporation headquartered in Research Triangle Park, North Carolina. This memorandum is intended to provide the C&H deal team with a comprehensive overview of the transaction, the parties, the key commercial terms, the principal legal issues, and the anticipated timeline for execution and closing.

The transaction is structured as an asset purchase agreement ("APA") for total aggregate consideration of One Hundred Forty Million Dollars ($140,000,000), comprising One Hundred Twenty-Six Million Dollars ($126,000,000) in cash payable at closing and a clinical-milestone earnout of up to Fourteen Million Dollars ($14,000,000). The earnout is linked to two discrete regulatory and reimbursement milestones relating to the OncuPath-HER3™ companion diagnostic assay, as described in greater detail in Section IV.C below.

GDT is a portfolio company of Pinnacle Biosciences Partners Fund III, L.P. ("Pinnacle" or "PBP III"), a Delaware limited partnership that holds approximately 68.4% of GDT's outstanding common stock. Pinnacle's managing partners are Nathaniel Hargrove (who also serves as Chairman of GDT's Board of Directors) and Priya Ramanathan. The general partner of PBP III is Pinnacle Biosciences Partners GP III, LLC, a Delaware limited liability company headquartered at 600 Lexington Avenue, Suite 3100, New York, NY 10022. Pinnacle manages assets of approximately $4.2 billion across four funds. The divestiture of the OncuPath Business represents a strategic portfolio optimization for GDT under Pinnacle's direction, enabling GDT to refocus resources on its core retained business — the GenoStrat™ liquid biopsy platform — while generating meaningful liquidity for the company and its equity holders.

GDT's core retained business is the GenoStrat™ liquid biopsy platform, a next-generation genomic profiling technology with applications in oncology and rare-disease diagnostics. The OncuPath™ companion diagnostics assay line is a legacy product portfolio originally acquired by GDT through a prior acquisition and is no longer aligned with GDT's long-term strategic roadmap or Pinnacle's value-creation thesis for the company. Management and the Board have determined that the OncuPath Business is better positioned within a platform such as Meridian's, which possesses the commercial infrastructure, regulatory capabilities, and clinical relationships to fully exploit the OncuPath™ product portfolio, including the pending OncuPath-HER3™ PMA supplement.

For fiscal year 2022, GDT reported total revenue of approximately $312,000,000, of which the OncuPath™ line contributed approximately $47,600,000, or roughly 15.3% of consolidated revenue. Meridian, a well-established player in the precision diagnostics market, reported revenue of approximately $589,000,000 and EBITDA of approximately $104,000,000 for fiscal year 2022. The OncuPath™ line is expected to complement Meridian's existing CLIA-validated test menu across oncology, cardiovascular, and autoimmune indications, and to strengthen Meridian's competitive position in the companion diagnostics segment of the molecular diagnostics market.

The C&H engagement was opened and the engagement letter was signed on February 9, 2023. A non-binding letter of intent ("LOI") was executed between GDT and Meridian on February 24, 2023, following a competitive process managed by GDT's financial advisor, Brindoval Partners LLC. The first draft of the APA was circulated by C&H to Buyer's counsel, Whitfield Sayer & Gregg LLP, on March 20, 2023. This memorandum reflects the terms of the first draft APA and the current state of negotiations as of the date hereof.

The APA is governed by the laws of the State of Delaware. The parties have agreed to submit disputes arising under the APA to binding arbitration administered by the American Arbitration Association, except with respect to equitable relief, which may be sought in the Court of Chancery of the State of Delaware.

II. Transaction Parties

A. Seller — Genome Dx Therapeutics Inc.

Full Legal Name: Genome Dx Therapeutics Inc.

Entity Type and Jurisdiction: Corporation organized and existing under the laws of the State of Delaware.

Headquarters: 10250 Science Center Drive, Suite 600, San Diego, California 92121.

Employer Identification Number (EIN): 47-3892061.

Officers and Directors:

• Chief Executive Officer: Dr. Helena Vasquez

• Chief Financial Officer: Martin Kowalski

• General Counsel: Rebecca Chiang

• Chairman of the Board of Directors: Nathaniel Hargrove (Pinnacle Biosciences Partners designee)

Principal Business: GDT is a commercial-stage molecular diagnostics company focused on the development, manufacture, and commercialization of genomic profiling assays for oncology and rare-disease applications. GDT's core product is the GenoStrat™ liquid biopsy platform, a proprietary next-generation sequencing-based diagnostic tool designed for the non-invasive detection and monitoring of genomic alterations in solid tumors and hematologic malignancies. The OncuPath™ companion diagnostics assay line, which is the subject of the proposed transaction, represents a complementary but strategically non-core business line that GDT originally acquired through the acquisition of OncuPath Diagnostics LLC in 2018.

GDT maintains its principal corporate offices, research and development facilities, and CLIA-accredited reference laboratory operations at its San Diego, California headquarters, with additional laboratory and manufacturing space in Carlsbad, California. GDT employs approximately 620 full-time employees company-wide, of whom approximately 83 are dedicated to the OncuPath Business.

B. Equity Sponsor — Pinnacle Biosciences Partners Fund III, L.P.

Full Legal Name: Pinnacle Biosciences Partners Fund III, L.P.

Entity Type and Jurisdiction: Limited partnership organized under the laws of the State of Delaware.

General Partner: Pinnacle Biosciences Partners GP III, LLC, a Delaware limited liability company.

Headquarters (GP): 600 Lexington Avenue, Suite 3100, New York, New York 10022.

Employer Identification Number (EIN): 83-1726450.

Managing Partners: Nathaniel Hargrove and Priya Ramanathan.

Ownership of GDT: PBP III holds approximately 68.4% of GDT's outstanding common stock. The remaining equity is held by management through equity incentive plans, by certain angel and institutional investors, and by minority financial holders from GDT's earlier funding rounds. PBP III acquired its initial controlling stake in GDT in 2017 through a majority recapitalization.

Assets Under Management: Approximately $4.2 billion across four funds (Funds I through IV). Fund III, the fund in which the GDT investment is held, has a vintage year of 2016 and a committed capital base of approximately $1.4 billion. GDT is understood to be one of the larger remaining portfolio investments in Fund III.

The divestiture of the OncuPath Business is consistent with PBP III's strategy of streamlining GDT's operations ahead of an anticipated liquidity event for the broader GDT platform, whether through a strategic sale or an initial public offering, which Pinnacle's investment committee is currently evaluating for execution in the 2024–2025 timeframe. The proceeds from the OncuPath divestiture are expected to be used to fund GDT's continued investment in the GenoStrat™ platform, retire a portion of GDT's existing indebtedness, and potentially fund a partial distribution to PBP III's limited partners.

C. Buyer — Meridian Precision Diagnostics, Inc.

Full Legal Name: Meridian Precision Diagnostics, Inc.

Entity Type and Jurisdiction: Corporation organized and existing under the laws of the State of Delaware.

Headquarters: 2400 Meridian Parkway, Suite 300, Durham, North Carolina 27713.

Employer Identification Number (EIN): 56-4210783.

Officers:

• Chief Executive Officer: Thomas Ellsworth

• Chief Financial Officer: Angela Rossi

• General Counsel: David Pruitt

• Vice President, Corporate Development: Catherine Liang

Meridian is a publicly traded molecular diagnostics company (NASDAQ: MPDI) with a diversified portfolio of CLIA-validated laboratory-developed tests ("LDTs") and FDA-cleared or FDA-approved in vitro diagnostic ("IVD") products spanning oncology, cardiovascular, and autoimmune indications. Meridian operates five CLIA-accredited reference laboratories across the United States and maintains a commercial infrastructure of approximately 200 sales representatives and medical science liaisons covering the U.S. market. The acquisition of the OncuPath Business is expected to complement Meridian's existing oncology test menu and to provide Meridian with an enhanced companion diagnostics capability, particularly in the HER3 biomarker space, which Meridian has publicly identified as a strategic growth priority.

Meridian's acquisition of the OncuPath Business will be financed in part through a $95,000,000 term loan commitment from Summit National Bank, N.A. The balance of the purchase price will be funded from Meridian's existing cash on hand and available revolving credit facility.

D. Advisors and Key Third Parties

The following advisors and key third parties are involved in the transaction:

Seller's Counsel:

Calderwood & Harkness LLP 555 South Hope Street, Suite 4400 Los Angeles, California 90071

• Responsible Partner: James Prentice

• Billing Partner: Sandra Tung

• Lead Associate: Tiffany Rosenthal

• Working Associate: Andrew Fitzpatrick

• Tax Specialist Partner: Leonard Cross

Buyer's Counsel:

Whitfield Sayer & Gregg LLP 200 South Tryon Street, Suite 2800 Charlotte, North Carolina 28202

• Lead Partner: Jonathan Whitfield

• Senior Associate: Rachel Dempsey

Seller's Financial Advisor:

Brindoval Partners LLC 1999 Avenue of the Stars, Suite 1500 Los Angeles, California 90067

• Managing Director: Victor Sandoval

• Vice President: Elaine Cho

Brindoval Partners LLC served as GDT's exclusive financial advisor in connection with the competitive sale process for the OncuPath Business and continues to advise GDT on valuation, financial due diligence matters, and negotiation strategy.

Seller's Auditor / Carve-Out Financials:

Haverford & Lane LLP 350 South Grand Avenue, Suite 3600 Los Angeles, California 90071

• Engagement Partner: Douglas Crane

Haverford & Lane LLP has been engaged to prepare audited carve-out financial statements for the OncuPath Business for fiscal years 2020, 2021, and 2022, as well as stub-period interim financials through the most recent practicable date prior to closing. Haverford & Lane will also prepare the final closing balance sheet for purposes of the net working capital adjustment described in Section IV.E below.

Escrow Agent:

Ashgrove Equity Partners Escrow Services, Inc. 101 California Street, Suite 1250 San Francisco, California 94111

• Vice President: Samantha Koh

• Account No.: 8841-7023-5500

Representations & Warranties Insurance Carrier:

Apex Mutual Insurance Company 175 Water Street, 22nd Floor New York, New York 10038

• Senior Vice President, Underwriting: Philip Aldridge

• Policy No.: RWI-2023-07182

Buyer's Acquisition Financing Lender:

Summit National Bank, N.A. 227 West Monroe Street, Suite 4500 Chicago, Illinois 60606

• Managing Director: Karen Delacroix

• Commitment: $95,000,000 term loan

Summit National Bank, N.A. has issued a commitment letter to Meridian in connection with a $95,000,000 senior secured term loan to partially finance the closing cash payment under the APA. The commitment is subject to customary conditions, including the absence of a material adverse effect on the OncuPath Business, satisfactory completion of lender due diligence, and the execution and delivery of definitive credit documentation. We should expect the Buyer to request a financing condition in the APA, which we will resist in the first draft consistent with market practice for acquisitions of this size.

III. Transaction Structure

A. Form of Transaction

The proposed transaction is structured as an asset purchase, pursuant to which Meridian will acquire substantially all of the assets, properties, and rights used in or relating to the OncuPath Business, and will assume certain specified liabilities of the OncuPath Business, in each case as set forth in the APA. The transaction is not structured as a stock sale, merger, or other form of business combination. GDT will retain all assets, properties, rights, and liabilities not expressly transferred to Meridian under the APA.

The asset purchase structure was selected for several reasons. First, it provides Buyer with a step-up in the tax basis of the acquired assets under Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), which was a significant consideration for Meridian and Summit National Bank in their financial modeling. Second, the asset purchase structure permits a cleaner separation of the OncuPath Business from GDT's retained GenoStrat™ platform, allowing GDT to avoid the complexities of a partial stock sale of a subsidiary (the OncuPath Business is not held in a separate subsidiary). Third, the asset purchase structure permits the parties to clearly delineate the purchased assets and assumed liabilities, providing both Seller and Buyer with greater certainty as to the scope of the transfer. Fourth, from Seller's perspective, the asset purchase structure ensures that GDT retains all pre-closing liabilities not expressly assumed by Meridian, including any pending or threatened litigation.

B. Purchased Assets

The Purchased Assets under the first draft APA include all assets, intellectual property, contracts, inventory, equipment, regulatory filings, books and records, and goodwill exclusively related to, or primarily used or held for use in, the OncuPath Business (collectively, the "Purchased Assets"). The Purchased Assets include, without limitation, the following:

intellectual Property:

• Fourteen (14) issued United States patents covering various aspects of the OncuPath™ companion diagnostics assay technology, including probe chemistry, sample preparation methods, and bioinformatics algorithms;

• Seven (7) pending United States patent applications relating to next-generation OncuPath™ assay designs and biomarker panels;

• Three (3) registered United States trademarks: OncuPath™ (U.S. Reg. No. 5,847,321); OncuPath-HER3™ (U.S. Reg. No. 6,412,088); and OncuPath-GENOMARK™ (U.S. Reg. No. 6,118,754);

• All trade secrets, proprietary know-how, and confidential technical information relating to OncuPath assay development, manufacturing, and commercialization;

• An exclusive license from Vantage Molecular Sciences, Inc. ("Vantage"), a Massachusetts corporation headquartered at 75 Hayden Avenue, Lexington, Massachusetts 02421, for probe-labeling technology, dated September 12, 2019 (the "Vantage License"), which is critical to the manufacture and performance of certain OncuPath™ assays. The assignment of the Vantage License to Buyer requires the prior written consent of Vantage pursuant to the terms of such license. Obtaining such consent is a condition to closing under the first draft APA.

Regulatory Assets:

• Three (3) FDA-cleared 510(k) assays: K201847 (OncuPath-EGFR™), K193215 (OncuPath-ALK™), and K210562 (OncuPath-GENOMARK™);

• The pending OncuPath-HER3™ PMA supplement (submitted to the FDA on January 30, 2023; PMA Supplement No. P230014). A PDUFA date has not yet been assigned by the FDA as of the date of this memorandum;

• The CLIA certificate of accreditation for the OncuPath reference laboratory, CLIA ID 05D2178493, located at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121;

• All FDA establishment registrations, device listings, and state-level laboratory permits and licenses relating to the OncuPath Business.

Tangible Assets:

• All laboratory equipment, instruments, fixtures, and furniture located at the OncuPath reference laboratory and R&D facility at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121;

• All manufacturing equipment, kitting supplies, and inventory located at the OncuPath manufacturing/kitting space at 925 Industrial Court, Carlsbad, California 92010;

• All raw materials, work-in-process, and finished goods inventory of OncuPath™ assay products.

Real Property Interests:

• The leasehold interest in the OncuPath reference laboratory and R&D facility at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121 (leased from Towne Centre Properties LLC). Assignment of this lease requires landlord consent, which is a condition to closing;

• The subleasehold interest in the OncuPath manufacturing/kitting space at 925 Industrial Court, Carlsbad, California 92010 (subleased from GDT as sublandlord under a master lease). The sublease expires December 31, 2025. Assignment of the sublease to Buyer will require consent of the master landlord.

Contracts:

• All customer contracts, supplier agreements, collaboration agreements, clinical trial agreements, and other commercial arrangements exclusively or primarily related to the OncuPath Business (the "Assumed Contracts"), to be identified and scheduled in the disclosure schedules to the APA;

• The Vantage License described above.

Other Assets:

• All books, records, files, data, correspondence, and documentation exclusively or primarily relating to the OncuPath Business;

• All accounts receivable, prepaid expenses, and deposits of the OncuPath Business as of the closing date;

• All goodwill of the OncuPath Business.

C. Excluded Assets

The following assets are expressly excluded from the Purchased Assets and will be retained by GDT (the "Excluded Assets"):

• The GenoStrat™ liquid biopsy platform and all assets, intellectual property, contracts, inventory, equipment, regulatory filings, and goodwill related thereto;

• All other GDT businesses, product lines, and operations not constituting the OncuPath Business;

• Corporate-level cash and cash equivalents of GDT (other than petty cash at OncuPath facilities);

• All tax refunds and tax credits attributable to pre-closing periods;

• The GDT corporate name, logo, and trademarks outside the OncuPath brand family;

• All rights of GDT under the APA and the ancillary agreements;

• All insurance policies and rights thereunder;

• GDT's minute books, organizational documents, stock transfer ledgers, and other corporate records not exclusively relating to the OncuPath Business.

D. Assumed Liabilities

Meridian will assume the following liabilities of the OncuPath Business at closing (the "Assumed Liabilities"):

• All trade payables and accrued expenses of the OncuPath Business arising in the ordinary course of business from and after the closing date;

• All obligations under the Assumed Contracts arising from and after the closing date (but not obligations relating to any breach by GDT occurring prior to the closing date);

• All product warranty claims and product liability claims relating to OncuPath™ assays shipped by Meridian from and after the closing date;

• All employment-related obligations for transferred employees arising from and after the closing date.

E. Excluded Liabilities

All liabilities of the OncuPath Business not expressly assumed by Meridian are retained by GDT (the "Excluded Liabilities"), including without limitation:

• All liabilities of the OncuPath Business arising prior to the closing date, including pre-closing trade payables, accrued expenses, and deferred revenue;

• Any litigation, claims, or proceedings pending as of the closing date or arising out of events occurring prior to the closing date;

• All employee benefit obligations, pension liabilities, and deferred compensation obligations relating to employees of the OncuPath Business who do not accept employment with Meridian, or who are terminated by GDT in connection with the transaction;

• Environmental liabilities at any GDT facility, including the OncuPath facilities, to the extent arising from conditions existing prior to the closing date;

• All indebtedness of GDT, including any intercompany indebtedness between GDT and the OncuPath Business;

• All tax liabilities of GDT relating to pre-closing periods, including income taxes arising from the consummation of the transaction.

IV. Purchase Price and Payment Mechanics

A. Total Consideration

The total aggregate consideration for the Purchased Assets is One Hundred Forty Million Dollars ($140,000,000), consisting of (i) One Hundred Twenty-Six Million Dollars ($126,000,000) in closing cash and (ii) a clinical-milestone earnout of up to Fourteen Million Dollars ($14,000,000), as described below. The total consideration is subject to adjustment based on the net working capital adjustment mechanism described in Section IV.E below.

B. Closing Cash Payment

At closing, Meridian will pay GDT aggregate cash consideration of One Hundred Twenty-Six Million Dollars ($126,000,000), allocated as follows:

• Net wire to GDT at closing: One Hundred Twelve Million Dollars ($112,000,000), to be paid by wire transfer of immediately available funds to an account designated by GDT;

• Escrow deposit: Fourteen Million Dollars ($14,000,000), to be deposited by wire transfer of immediately available funds into a segregated escrow account established and maintained by Ashgrove Equity Partners Escrow Services, Inc. (Account No. 8841-7023-5500), to secure Seller's indemnification obligations under Article [X] of the APA, as described in Section IV.D and Section V below.

The closing cash payment is not subject to any financing condition. Although Meridian intends to finance a portion of the purchase price through a $95,000,000 term loan from Summit National Bank, N.A., the first draft APA does not include a financing condition. We anticipate that Buyer's counsel may seek to include a financing condition or a "reverse break fee" mechanism in its markup; our position is that no financing condition is appropriate in this transaction and that Meridian should bear the risk of obtaining its acquisition financing.

C. Earnout. In addition to the closing cash payment, Meridian has agreed to pay GDT an earnout of up to Fourteen Million Dollars ($14,000,000) (the "Earnout Amount"), representing ten percent (10%) of the total consideration, contingent upon the achievement of two discrete clinical and regulatory milestones relating to the OncuPath-HER3™ companion diagnostic assay, as follows:

Milestone 1 — FDA Clearance/Approval ($8,000,000):

Meridian shall pay GDT Eight Million Dollars ($8,000,000) upon the earlier of (i) the receipt by Meridian of FDA clearance (via 510(k)) or FDA approval (via PMA) of the OncuPath-HER3™ assay as a companion diagnostic for any FDA-approved therapeutic product, and (ii) August 8, 2025 (twenty-four (24) months after the target closing date of August 8, 2023). To the extent FDA clearance or approval is received on or before August 8, 2025, the Milestone 1 payment shall be made within thirty (30) business days following such clearance or approval. If FDA clearance or approval is not received on or before August 8, 2025, the Milestone 1 payment obligation shall expire and GDT shall have no further right to receive such payment.

Milestone 2 — CMS Reimbursement ($6,000,000):

Meridian shall pay GDT Six Million Dollars ($6,000,000) upon the earliest of (i) the issuance by the Centers for Medicare & Medicaid Services ("CMS") of a unique HCPCS code for the OncuPath-HER3™ assay (or any successor assay) and the receipt by Meridian of the first Medicare reimbursement payment for a test performed using such assay, and (ii) August 8, 2026 (thirty-six (36) months after the target closing date of August 8, 2023). To the extent the CMS reimbursement milestone is achieved on or before August 8, 2026, the Milestone 2 payment shall be made within thirty (30) business days following such achievement. If the CMS reimbursement milestone is not achieved on or before August 8, 2026, the Milestone 2 payment obligation shall expire and GDT shall have no further right to receive such payment.

The total earnout period is thirty-six (36) months from the closing date. The earnout provisions are subject to a commercially reasonable efforts standard requiring Meridian to use commercially reasonable efforts to achieve the Earnout Milestones during the earnout period, including maintaining adequate staffing, funding, and operational support for the OncuPath-HER3™ regulatory and commercial programs.

The first draft APA includes the following Seller-favorable earnout protections:

• Anti-Sandbagging: Meridian shall not take any action, or fail to take any action, with the primary purpose of avoiding or reducing any earnout payment obligation;

• Anti-Embarrassment: If Meridian divests the OncuPath-HER3™ program or materially alters the regulatory strategy for the OncuPath-HER3™ assay during the earnout period in a manner that would be reasonably expected to prevent achievement of an Earnout Milestone, GDT shall be entitled to receive the full Earnout Amount as though all milestones had been achieved;

• Acceleration on Change of Control: If Meridian undergoes a change of control (as defined in the APA) during the earnout period, all unpaid Earnout Milestones shall be deemed achieved and the full remaining Earnout Amount shall become immediately due and payable;

• Information Rights: GDT shall have the right to receive quarterly reports from Meridian regarding the status of OncuPath-HER3™ regulatory submissions, clinical studies, and reimbursement activities during the earnout period;

• Dispute Resolution: Disputes regarding achievement of Earnout Milestones or Meridian's compliance with the commercially reasonable efforts standard shall be submitted to a mutually agreed independent expert for binding determination, with the costs of such expert to be borne by the non-prevailing party.

D. Escrow. At closing, Fourteen Million Dollars ($14,000,000) of the closing cash payment will be deposited by Meridian into a segregated interest-bearing escrow account at Ashgrove Equity Partners Escrow Services, Inc. (Account No. 8841-7023-5500) (the "Escrow Account"), pursuant to an Escrow Agreement to be entered into among GDT, Meridian, and the Escrow Agent at closing.

The purpose of the Escrow Account is to secure Seller's indemnification obligations under the APA. The escrow funds will be the first source of recovery for Buyer's indemnification claims, prior to any direct claims against Seller.

The escrow release schedule is as follows:

• First Release: Fifty percent (50%) of the remaining balance in the Escrow Account (after deduction for any pending or resolved claims) shall be released to GDT on the date that is twelve (12) months after the closing date (i.e., August 8, 2024);

• Final Release: The remaining balance in the Escrow Account (after deduction for any pending or resolved claims) shall be released to GDT on the date that is eighteen (18) months after the closing date (i.e., February 8, 2025), which is the expiration of the survival period for general representations and warranties.

To the extent any indemnification claims are pending as of any scheduled release date, the Escrow Agent shall retain in the Escrow Account an amount equal to the claimed amount until such claim is resolved, and shall release the balance (if any) in excess of such retained amount to GDT. Interest accrued on escrowed funds shall be allocated to GDT as the beneficial owner of the escrowed funds, subject to reduction for any indemnification payments made from the Escrow Account.

E. Working Capital Adjustment

The APA includes a customary net working capital adjustment mechanism designed to ensure that the OncuPath Business is delivered to Meridian with a normalized level of working capital at closing. The key terms of the working capital adjustment are as follows:

• Target Net Working Capital: Six Million Eight Hundred Thousand Dollars ($6,800,000) (the "Target NWC"), based on the average net working capital of the OncuPath Business over the twelve-month period ended December 31, 2022, as reflected in the carve-out financial statements prepared by Haverford & Lane LLP;

• Collar: No adjustment shall be made if the final net working capital of the OncuPath Business at closing falls within a collar of plus or minus Three Hundred Fifty Thousand Dollars ($350,000) of the Target NWC (i.e., between $6,450,000 and $7,150,000). If the final net working capital falls outside the collar, the purchase price shall be adjusted dollar-for-dollar for the full amount of the difference (not merely the excess over the collar);

• Estimated Closing Statement: GDT shall prepare and deliver to Meridian an estimated closing balance sheet and estimated net working capital statement no later than three (3) business days prior to the closing date;

• True-Up: Within ninety (90) days after closing (deadline: November 6, 2023), Haverford & Lane LLP shall prepare a final closing balance sheet and final net working capital calculation. Meridian shall have thirty (30) days to review and object. If Meridian does not object within such period, the final closing balance sheet shall be deemed accepted. If Meridian objects, the parties shall attempt to resolve the dispute in good faith for a period of fifteen (15) days, after which any unresolved items shall be submitted to a mutually agreed independent accounting firm for final and binding determination;

• Payment: Any net purchase price adjustment in favor of Meridian (shortfall below Target NWC, net of collar) shall be paid by GDT to Meridian within five (5) business days of final determination. Any net purchase price adjustment in favor of GDT (excess above Target NWC, net of collar) shall be paid by Meridian to GDT within five (5) business days of final determination.

V. Indemnification and Risk Allocation

A. Indemnification Cap

Seller's aggregate indemnification obligations under the APA for breaches of general representations and warranties shall not exceed twenty percent (20%) of the Total Consideration, or Twenty-Eight Million Dollars ($28,000,000) (the "Cap"). This Cap is consistent with market norms for asset divestitures in the life sciences sector at this transaction size, and was a negotiated point reflected in the LOI term sheet.

B. Basket. The APA provides for an aggregate deductible basket (structured as a "tipping basket") of One Million Four Hundred Thousand Dollars ($1,400,000), representing one percent (1%) of the Total Consideration. Buyer may not seek indemnification for breaches of general representations and warranties unless and until the aggregate amount of Buyer's indemnifiable losses exceeds the basket amount. Once the basket is exceeded, however, Buyer shall be entitled to recover from dollar one — i.e., the full amount of its losses (not merely the excess over the basket), subject to the Cap. This "tipping" structure is less favorable to Seller than a "true deductible" structure, but is consistent with current market practice and was accepted by GDT management and the Board as part of the overall risk allocation package.

C. De Minimis Threshold

Individual claims with a value of less than Seventy-Five Thousand Dollars ($75,000) (the "De Minimis Threshold") shall be disregarded for all purposes, including for purposes of determining whether the basket has been exceeded. This provision is intended to prevent the assertion of nuisance claims and to focus the indemnification regime on claims of meaningful economic significance.

D. Survival Period

The survival periods for representations and warranties under the APA are as follows:

• General Representations and Warranties: Eighteen (18) months from the closing date (i.e., from August 8, 2023 through February 8, 2025). This is slightly shorter than the twenty-four (24) month survival period seen in some comparable transactions, which is favorable to Seller;

• Fundamental Representations: Sixty (60) months from the closing date (i.e., through August 8, 2028). "Fundamental Representations" include representations relating to organization, authority, capitalization, title to assets, and brokers' fees. Fundamental Representations are not subject to the Cap or the basket; provided, however, that Seller's aggregate liability for all claims (including claims based on Fundamental Representations) shall not exceed the Total Consideration of One Hundred Forty Million Dollars ($140,000,000);

• Tax Representations: Co-terminus with the applicable statute of limitations, plus sixty (60) days;

• Covenants: Survive in accordance with their respective terms.

E. Escrow Mechanics

As described in Section IV.D above, $14,000,000 will be deposited into the Escrow Account at closing to secure Seller's indemnification obligations. The Escrow Account is the exclusive source of recovery for Buyer's indemnification claims during the first twelve (12) months following closing, except with respect to claims based on Fundamental Representations, fraud, or willful breach. After the first escrow release, Buyer may pursue claims against the remaining escrow balance and, if the remaining escrow balance is insufficient, directly against Seller, subject to the Cap.

F. Representations & Warranties Insurance

In connection with the transaction, Meridian has procured a buyer-side representations and warranties insurance policy (the "RWI Policy") from Apex Mutual Insurance Company, which will provide Buyer with an additional layer of indemnification protection beyond the Seller's direct indemnification obligations and the Escrow Account. The key terms of the RWI Policy are as follows:

• Issuer: Apex Mutual Insurance Company, 175 Water Street, 22nd Floor, New York, New York 10038;

• Policy Number: RWI-2023-07182;

• SVP Underwriting: Philip Aldridge;

• Policy Limit: Twenty-Eight Million Dollars ($28,000,000), which matches the indemnification Cap under the APA;

• Retention: One Million Four Hundred Thousand Dollars ($1,400,000), which is aligned with the basket amount. The retention represents the amount of losses that must be borne by Buyer (or recovered from Seller through the indemnification provisions) before the RWI Policy responds;

• Premium: Eight Hundred Forty Thousand Dollars ($840,000), representing three percent (3%) of the $28,000,000 policy limit;

PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
DEAL SUMMARY MEMORANDUM
Divestiture of OncuPath™ Companion Diagnostics Assay Line by Genome Dx Therapeutics Inc. to Meridian Precision Diagnostics, Inc.
MEMORANDUM
FROM: Tiffany Rosenthal, Lead Associate, Mergers & Acquisitions
TO: James Prentice, Responsible Partner Sandra Tung, Billing Partner Leonard Cross, Tax Partner Andrew Fitzpatrick, Working Associate
DATE: March 22, 2023
RE: Deal Summary Memorandum — Divestiture of OncuPath™ Companion Diagnostics Assay Line by Genome Dx Therapeutics Inc. to Meridian Precision Diagnostics, Inc.
MATTER NO.: 1013-00006&A-4471
CLIENT: Genome Dx Therapeutics Inc.
This memorandum has been prepared at the direction of counsel and is subject to the attorney-client privilege and the work product doctrine. It is intended solely for the internal use of Calderwood & Harkness LLP in connection with its representation of Genome Dx Therapeutics Inc. This memorandum should not be disclosed to any third party without the prior written consent of the undersigned and the Responsible Partner. Distribution is limited to the individuals identified above.
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I. Executive Summary
Calderwood & Harkness LLP ("C&H" or the "Firm") represents Genome Dx Therapeutics Inc. ("GDT" or the "Seller"), a Delaware corporation headquartered in San Diego, California, as seller's counsel in the proposed divestiture of GDT's non-core OncuPath™ companion diagnostics assay line (the "OncuPath Business") to Meridian Precision Diagnostics, Inc. ("Meridian" or the "Buyer"), a Delaware corporation headquartered in Research Triangle Park, North Carolina. This memorandum is intended to provide the C&H deal team with a comprehensive overview of the transaction, the parties, the key commercial terms, the principal legal issues, and the anticipated timeline for execution and closing.
The transaction is structured as an asset purchase agreement ("APA") for total aggregate consideration of One Hundred Forty Million Dollars ($140,000,000), comprising One Hundred Twenty-Six Million Dollars ($126,000,000) in cash payable at closing and a clinical-milestone earnout of up to Fourteen Million Dollars ($14,000,000). The earnout is linked to two discrete regulatory and reimbursement milestones relating to the OncuPath-HER3™ companion diagnostic assay, as described in greater detail in Section IV.C below.
GDT is a portfolio company of Pinnacle Biosciences Partners Fund III, L.P. ("Pinnacle" or "PBP III"), a Delaware limited partnership that holds approximately 68.4% of GDT's outstanding common stock. Pinnacle's managing partners are Nathaniel Hargrove (who also serves as Chairman of GDT's Board of Directors) and Priya Ramanathan. The general partner of PBP III is Pinnacle Biosciences Partners GP III, LLC, a Delaware limited liability company headquartered at 600 Lexington Avenue, Suite 3100, New York, NY 10022. Pinnacle manages assets of approximately $4.2 billion across four funds. The divestiture of the OncuPath Business represents a strategic portfolio optimization for GDT under Pinnacle's direction, enabling GDT to refocus resources on its core retained business — the GenoStrat™ liquid biopsy platform — while generating meaningful liquidity for the company and its equity holders.
GDT's core retained business is the GenoStrat™ liquid biopsy platform, a next-generation genomic profiling technology with applications in oncology and rare-disease diagnostics. The OncuPath™ companion diagnostics assay line is a legacy product portfolio originally acquired by GDT through a prior acquisition and is no longer aligned with GDT's long-term strategic roadmap or Pinnacle's value-creation thesis for the company. Management and the Board have determined that the OncuPath Business is better positioned within a platform such as Meridian's, which possesses the commercial infrastructure, regulatory capabilities, and clinical relationships to fully exploit the OncuPath™ product portfolio, including the pending OncuPath-HER3™ PMA supplement.
For fiscal year 2022, GDT reported total revenue of approximately $312,000,000, of which the OncuPath™ line contributed approximately $47,600,000, or roughly 15.3% of consolidated revenue. Meridian, a well-established player in the precision diagnostics market, reported revenue of approximately $589,000,000 and EBITDA of approximately $104,000,000 for fiscal year 2022. The OncuPath™ line is expected to complement Meridian's existing CLIA-validated test menu across oncology, cardiovascular, and autoimmune indications, and to strengthen Meridian's competitive position in the companion diagnostics segment of the molecular diagnostics market.
The C&H engagement was opened and the engagement letter was signed on February 9, 2023. A non-binding letter of intent ("LOI") was executed between GDT and Meridian on February 24, 2023, following a competitive process managed by GDT's financial advisor, Brindoval Partners LLC. The first draft of the APA was circulated by C&H to Buyer's counsel, Whitfield Sayer & Gregg LLP, on March 20, 2023. This memorandum reflects the terms of the first draft APA and the current state of negotiations as of the date hereof.
The APA is governed by the laws of the State of Delaware. The parties have agreed to submit disputes arising under the APA to binding arbitration administered by the American Arbitration Association, except with respect to equitable relief, which may be sought in the Court of Chancery of the State of Delaware.
II. Transaction Parties
A. Seller — Genome Dx Therapeutics Inc.
Full Legal Name: Genome Dx Therapeutics Inc.
Entity Type and Jurisdiction: Corporation organized and existing under the laws of the State of Delaware.
Headquarters: 10250 Science Center Drive, Suite 600, San Diego, California 92121.
Employer Identification Number (EIN): 47-3892061.
Officers and Directors:
•  Chief Executive Officer: Dr. Helena Vasquez
•  Chief Financial Officer: Martin Kowalski
•  General Counsel: Rebecca Chiang
•  Chairman of the Board of Directors: Nathaniel Hargrove (Pinnacle Biosciences Partners designee)
Principal Business: GDT is a commercial-stage molecular diagnostics company focused on the development, manufacture, and commercialization of genomic profiling assays for oncology and rare-disease applications. GDT's core product is the GenoStrat™ liquid biopsy platform, a proprietary next-generation sequencing-based diagnostic tool designed for the non-invasive detection and monitoring of genomic alterations in solid tumors and hematologic malignancies. The OncuPath™ companion diagnostics assay line, which is the subject of the proposed transaction, represents a complementary but strategically non-core business line that GDT originally acquired through the acquisition of OncuPath Diagnostics LLC in 2018.
GDT maintains its principal corporate offices, research and development facilities, and CLIA-accredited reference laboratory operations at its San Diego, California headquarters, with additional laboratory and manufacturing space in Carlsbad, California. GDT employs approximately 620 full-time employees company-wide, of whom approximately 83 are dedicated to the OncuPath Business.
B. Equity Sponsor — Pinnacle Biosciences Partners Fund III, L.P.
Full Legal Name: Pinnacle Biosciences Partners Fund III, L.P.
Entity Type and Jurisdiction: Limited partnership organized under the laws of the State of Delaware.
General Partner: Pinnacle Biosciences Partners GP III, LLC, a Delaware limited liability company.
Headquarters (GP): 600 Lexington Avenue, Suite 3100, New York, New York 10022.
Employer Identification Number (EIN): 83-1726450.
Managing Partners: Nathaniel Hargrove and Priya Ramanathan.
Ownership of GDT: PBP III holds approximately 68.4% of GDT's outstanding common stock. The remaining equity is held by management through equity incentive plans, by certain angel and institutional investors, and by minority financial holders from GDT's earlier funding rounds. PBP III acquired its initial controlling stake in GDT in 2017 through a majority recapitalization.
Assets Under Management: Approximately $4.2 billion across four funds (Funds I through IV). Fund III, the fund in which the GDT investment is held, has a vintage year of 2016 and a committed capital base of approximately $1.4 billion. GDT is understood to be one of the larger remaining portfolio investments in Fund III.
The divestiture of the OncuPath Business is consistent with PBP III's strategy of streamlining GDT's operations ahead of an anticipated liquidity event for the broader GDT platform, whether through a strategic sale or an initial public offering, which Pinnacle's investment committee is currently evaluating for execution in the 2024–2025 timeframe. The proceeds from the OncuPath divestiture are expected to be used to fund GDT's continued investment in the GenoStrat™ platform, retire a portion of GDT's existing indebtedness, and potentially fund a partial distribution to PBP III's limited partners.
C. Buyer — Meridian Precision Diagnostics, Inc.
Full Legal Name: Meridian Precision Diagnostics, Inc.
Entity Type and Jurisdiction: Corporation organized and existing under the laws of the State of Delaware.
Headquarters: 2400 Meridian Parkway, Suite 300, Durham, North Carolina 27713.
Employer Identification Number (EIN): 56-4210783.
Officers:
•  Chief Executive Officer: Thomas Ellsworth
•  Chief Financial Officer: Angela Rossi
•  General Counsel: David Pruitt
•  Vice President, Corporate Development: Catherine Liang
Meridian is a publicly traded molecular diagnostics company (NASDAQ: MPDI) with a diversified portfolio of CLIA-validated laboratory-developed tests ("LDTs") and FDA-cleared or FDA-approved in vitro diagnostic ("IVD") products spanning oncology, cardiovascular, and autoimmune indications. Meridian operates five CLIA-accredited reference laboratories across the United States and maintains a commercial infrastructure of approximately 200 sales representatives and medical science liaisons covering the U.S. market. The acquisition of the OncuPath Business is expected to complement Meridian's existing oncology test menu and to provide Meridian with an enhanced companion diagnostics capability, particularly in the HER3 biomarker space, which Meridian has publicly identified as a strategic growth priority.
Meridian's acquisition of the OncuPath Business will be financed in part through a $95,000,000 term loan commitment from Summit National Bank, N.A. The balance of the purchase price will be funded from Meridian's existing cash on hand and available revolving credit facility.
D. Advisors and Key Third Parties
The following advisors and key third parties are involved in the transaction:
Seller's Counsel:
Calderwood & Harkness LLP 555 South Hope Street, Suite 4400 Los Angeles, California 90071
•  Responsible Partner: James Prentice
•  Billing Partner: Sandra Tung
•  Lead Associate: Tiffany Rosenthal
•  Working Associate: Andrew Fitzpatrick
•  Tax Specialist Partner: Leonard Cross
Buyer's Counsel:
Whitfield Sayer & Gregg LLP 200 South Tryon Street, Suite 2800 Charlotte, North Carolina 28202
•  Lead Partner: Jonathan Whitfield
•  Senior Associate: Rachel Dempsey
Seller's Financial Advisor:
Brindoval Partners LLC 1999 Avenue of the Stars, Suite 1500 Los Angeles, California 90067
•  Managing Director: Victor Sandoval
•  Vice President: Elaine Cho
Brindoval Partners LLC served as GDT's exclusive financial advisor in connection with the competitive sale process for the OncuPath Business and continues to advise GDT on valuation, financial due diligence matters, and negotiation strategy.
Seller's Auditor / Carve-Out Financials:
Haverford & Lane LLP 350 South Grand Avenue, Suite 3600 Los Angeles, California 90071
•  Engagement Partner: Douglas Crane
Haverford & Lane LLP has been engaged to prepare audited carve-out financial statements for the OncuPath Business for fiscal years 2020, 2021, and 2022, as well as stub-period interim financials through the most recent practicable date prior to closing. Haverford & Lane will also prepare the final closing balance sheet for purposes of the net working capital adjustment described in Section IV.E below.
Escrow Agent:
Ashgrove Equity Partners Escrow Services, Inc. 101 California Street, Suite 1250 San Francisco, California 94111
•  Vice President: Samantha Koh
•  Account No.: 8841-7023-5500
Representations & Warranties Insurance Carrier:
Apex Mutual Insurance Company 175 Water Street, 22nd Floor New York, New York 10038
•  Senior Vice President, Underwriting: Philip Aldridge
•  Policy No.: RWI-2023-07182
Buyer's Acquisition Financing Lender:
Summit National Bank, N.A. 227 West Monroe Street, Suite 4500 Chicago, Illinois 60606
•  Managing Director: Karen Delacroix
•  Commitment: $95,000,000 term loan
Summit National Bank, N.A. has issued a commitment letter to Meridian in connection with a $95,000,000 senior secured term loan to partially finance the closing cash payment under the APA. The commitment is subject to customary conditions, including the absence of a material adverse effect on the OncuPath Business, satisfactory completion of lender due diligence, and the execution and delivery of definitive credit documentation. We should expect the Buyer to request a financing condition in the APA, which we will resist in the first draft consistent with market practice for acquisitions of this size.
III. Transaction Structure
A. Form of Transaction
The proposed transaction is structured as an asset purchase, pursuant to which Meridian will acquire substantially all of the assets, properties, and rights used in or relating to the OncuPath Business, and will assume certain specified liabilities of the OncuPath Business, in each case as set forth in the APA. The transaction is not structured as a stock sale, merger, or other form of business combination. GDT will retain all assets, properties, rights, and liabilities not expressly transferred to Meridian under the APA.
The asset purchase structure was selected for several reasons. First, it provides Buyer with a step-up in the tax basis of the acquired assets under Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), which was a significant consideration for Meridian and Summit National Bank in their financial modeling. Second, the asset purchase structure permits a cleaner separation of the OncuPath Business from GDT's retained GenoStrat™ platform, allowing GDT to avoid the complexities of a partial stock sale of a subsidiary (the OncuPath Business is not held in a separate subsidiary). Third, the asset purchase structure permits the parties to clearly delineate the purchased assets and assumed liabilities, providing both Seller and Buyer with greater certainty as to the scope of the transfer. Fourth, from Seller's perspective, the asset purchase structure ensures that GDT retains all pre-closing liabilities not expressly assumed by Meridian, including any pending or threatened litigation.
B. Purchased Assets
The Purchased Assets under the first draft APA include all assets, intellectual property, contracts, inventory, equipment, regulatory filings, books and records, and goodwill exclusively related to, or primarily used or held for use in, the OncuPath Business (collectively, the "Purchased Assets"). The Purchased Assets include, without limitation, the following:
intellectual Property:
•  Fourteen (14) issued United States patents covering various aspects of the OncuPath™ companion diagnostics assay technology, including probe chemistry, sample preparation methods, and bioinformatics algorithms;
•  Seven (7) pending United States patent applications relating to next-generation OncuPath™ assay designs and biomarker panels;
•  Three (3) registered United States trademarks: OncuPath™ (U.S. Reg. No. 5,847,321); OncuPath-HER3™ (U.S. Reg. No. 6,412,088); and OncuPath-GENOMARK™ (U.S. Reg. No. 6,118,754);
•  All trade secrets, proprietary know-how, and confidential technical information relating to OncuPath assay development, manufacturing, and commercialization;
•  An exclusive license from Vantage Molecular Sciences, Inc. ("Vantage"), a Massachusetts corporation headquartered at 75 Hayden Avenue, Lexington, Massachusetts 02421, for probe-labeling technology, dated September 12, 2019 (the "Vantage License"), which is critical to the manufacture and performance of certain OncuPath™ assays. The assignment of the Vantage License to Buyer requires the prior written consent of Vantage pursuant to the terms of such license. Obtaining such consent is a condition to closing under the first draft APA.
Regulatory Assets:
•  Three (3) FDA-cleared 510(k) assays: K201847 (OncuPath-EGFR™), K193215 (OncuPath-ALK™), and K210562 (OncuPath-GENOMARK™);
•  The pending OncuPath-HER3™ PMA supplement (submitted to the FDA on January 30, 2023; PMA Supplement No. P230014). A PDUFA date has not yet been assigned by the FDA as of the date of this memorandum;
•  The CLIA certificate of accreditation for the OncuPath reference laboratory, CLIA ID 05D2178493, located at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121;
•  All FDA establishment registrations, device listings, and state-level laboratory permits and licenses relating to the OncuPath Business.
Tangible Assets:
•  All laboratory equipment, instruments, fixtures, and furniture located at the OncuPath reference laboratory and R&D facility at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121;
•  All manufacturing equipment, kitting supplies, and inventory located at the OncuPath manufacturing/kitting space at 925 Industrial Court, Carlsbad, California 92010;
•  All raw materials, work-in-process, and finished goods inventory of OncuPath™ assay products.
Real Property Interests:
•  The leasehold interest in the OncuPath reference laboratory and R&D facility at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121 (leased from Towne Centre Properties LLC). Assignment of this lease requires landlord consent, which is a condition to closing;
•  The subleasehold interest in the OncuPath manufacturing/kitting space at 925 Industrial Court, Carlsbad, California 92010 (subleased from GDT as sublandlord under a master lease). The sublease expires December 31, 2025. Assignment of the sublease to Buyer will require consent of the master landlord.
Contracts:
•  All customer contracts, supplier agreements, collaboration agreements, clinical trial agreements, and other commercial arrangements exclusively or primarily related to the OncuPath Business (the "Assumed Contracts"), to be identified and scheduled in the disclosure schedules to the APA;
•  The Vantage License described above.
Other Assets:
•  All books, records, files, data, correspondence, and documentation exclusively or primarily relating to the OncuPath Business;
•  All accounts receivable, prepaid expenses, and deposits of the OncuPath Business as of the closing date;
•  All goodwill of the OncuPath Business.
C. Excluded Assets
The following assets are expressly excluded from the Purchased Assets and will be retained by GDT (the "Excluded Assets"):
•  The GenoStrat™ liquid biopsy platform and all assets, intellectual property, contracts, inventory, equipment, regulatory filings, and goodwill related thereto;
•  All other GDT businesses, product lines, and operations not constituting the OncuPath Business;
•  Corporate-level cash and cash equivalents of GDT (other than petty cash at OncuPath facilities);
•  All tax refunds and tax credits attributable to pre-closing periods;
•  The GDT corporate name, logo, and trademarks outside the OncuPath brand family;
•  All rights of GDT under the APA and the ancillary agreements;
•  All insurance policies and rights thereunder;
•  GDT's minute books, organizational documents, stock transfer ledgers, and other corporate records not exclusively relating to the OncuPath Business.
D. Assumed Liabilities
Meridian will assume the following liabilities of the OncuPath Business at closing (the "Assumed Liabilities"):
•  All trade payables and accrued expenses of the OncuPath Business arising in the ordinary course of business from and after the closing date;
•  All obligations under the Assumed Contracts arising from and after the closing date (but not obligations relating to any breach by GDT occurring prior to the closing date);
•  All product warranty claims and product liability claims relating to OncuPath™ assays shipped by Meridian from and after the closing date;
•  All employment-related obligations for transferred employees arising from and after the closing date.
E. Excluded Liabilities
All liabilities of the OncuPath Business not expressly assumed by Meridian are retained by GDT (the "Excluded Liabilities"), including without limitation:
•  All liabilities of the OncuPath Business arising prior to the closing date, including pre-closing trade payables, accrued expenses, and deferred revenue;
•  Any litigation, claims, or proceedings pending as of the closing date or arising out of events occurring prior to the closing date;
•  All employee benefit obligations, pension liabilities, and deferred compensation obligations relating to employees of the OncuPath Business who do not accept employment with Meridian, or who are terminated by GDT in connection with the transaction;
•  Environmental liabilities at any GDT facility, including the OncuPath facilities, to the extent arising from conditions existing prior to the closing date;
•  All indebtedness of GDT, including any intercompany indebtedness between GDT and the OncuPath Business;
•  All tax liabilities of GDT relating to pre-closing periods, including income taxes arising from the consummation of the transaction.
IV. Purchase Price and Payment Mechanics
A. Total Consideration
The total aggregate consideration for the Purchased Assets is One Hundred Forty Million Dollars ($140,000,000), consisting of (i) One Hundred Twenty-Six Million Dollars ($126,000,000) in closing cash and (ii) a clinical-milestone earnout of up to Fourteen Million Dollars ($14,000,000), as described below. The total consideration is subject to adjustment based on the net working capital adjustment mechanism described in Section IV.E below.
B. Closing Cash Payment
At closing, Meridian will pay GDT aggregate cash consideration of One Hundred Twenty-Six Million Dollars ($126,000,000), allocated as follows:
•  Net wire to GDT at closing: One Hundred Twelve Million Dollars ($112,000,000), to be paid by wire transfer of immediately available funds to an account designated by GDT;
•  Escrow deposit: Fourteen Million Dollars ($14,000,000), to be deposited by wire transfer of immediately available funds into a segregated escrow account established and maintained by Ashgrove Equity Partners Escrow Services, Inc. (Account No. 8841-7023-5500), to secure Seller's indemnification obligations under Article [X] of the APA, as described in Section IV.D and Section V below.
The closing cash payment is not subject to any financing condition. Although Meridian intends to finance a portion of the purchase price through a $95,000,000 term loan from Summit National Bank, N.A., the first draft APA does not include a financing condition. We anticipate that Buyer's counsel may seek to include a financing condition or a "reverse break fee" mechanism in its markup; our position is that no financing condition is appropriate in this transaction and that Meridian should bear the risk of obtaining its acquisition financing.
C. Earnout.  In addition to the closing cash payment, Meridian has agreed to pay GDT an earnout of up to Fourteen Million Dollars ($14,000,000) (the "Earnout Amount"), representing ten percent (10%) of the total consideration, contingent upon the achievement of two discrete clinical and regulatory milestones relating to the OncuPath-HER3™ companion diagnostic assay, as follows:
Milestone 1 — FDA Clearance/Approval ($8,000,000):
Meridian shall pay GDT Eight Million Dollars ($8,000,000) upon the earlier of (i) the receipt by Meridian of FDA clearance (via 510(k)) or FDA approval (via PMA) of the OncuPath-HER3™ assay as a companion diagnostic for any FDA-approved therapeutic product, and (ii) August 8, 2025 (twenty-four (24) months after the target closing date of August 8, 2023). To the extent FDA clearance or approval is received on or before August 8, 2025, the Milestone 1 payment shall be made within thirty (30) business days following such clearance or approval. If FDA clearance or approval is not received on or before August 8, 2025, the Milestone 1 payment obligation shall expire and GDT shall have no further right to receive such payment.
Milestone 2 — CMS Reimbursement ($6,000,000):
Meridian shall pay GDT Six Million Dollars ($6,000,000) upon the earliest of (i) the issuance by the Centers for Medicare & Medicaid Services ("CMS") of a unique HCPCS code for the OncuPath-HER3™ assay (or any successor assay) and the receipt by Meridian of the first Medicare reimbursement payment for a test performed using such assay, and (ii) August 8, 2026 (thirty-six (36) months after the target closing date of August 8, 2023). To the extent the CMS reimbursement milestone is achieved on or before August 8, 2026, the Milestone 2 payment shall be made within thirty (30) business days following such achievement. If the CMS reimbursement milestone is not achieved on or before August 8, 2026, the Milestone 2 payment obligation shall expire and GDT shall have no further right to receive such payment.
The total earnout period is thirty-six (36) months from the closing date. The earnout provisions are subject to a commercially reasonable efforts standard requiring Meridian to use commercially reasonable efforts to achieve the Earnout Milestones during the earnout period, including maintaining adequate staffing, funding, and operational support for the OncuPath-HER3™ regulatory and commercial programs.
The first draft APA includes the following Seller-favorable earnout protections:
•  Anti-Sandbagging: Meridian shall not take any action, or fail to take any action, with the primary purpose of avoiding or reducing any earnout payment obligation;
•  Anti-Embarrassment: If Meridian divests the OncuPath-HER3™ program or materially alters the regulatory strategy for the OncuPath-HER3™ assay during the earnout period in a manner that would be reasonably expected to prevent achievement of an Earnout Milestone, GDT shall be entitled to receive the full Earnout Amount as though all milestones had been achieved;
•  Acceleration on Change of Control: If Meridian undergoes a change of control (as defined in the APA) during the earnout period, all unpaid Earnout Milestones shall be deemed achieved and the full remaining Earnout Amount shall become immediately due and payable;
•  Information Rights: GDT shall have the right to receive quarterly reports from Meridian regarding the status of OncuPath-HER3™ regulatory submissions, clinical studies, and reimbursement activities during the earnout period;
•  Dispute Resolution: Disputes regarding achievement of Earnout Milestones or Meridian's compliance with the commercially reasonable efforts standard shall be submitted to a mutually agreed independent expert for binding determination, with the costs of such expert to be borne by the non-prevailing party.
D. Escrow.  At closing, Fourteen Million Dollars ($14,000,000) of the closing cash payment will be deposited by Meridian into a segregated interest-bearing escrow account at Ashgrove Equity Partners Escrow Services, Inc. (Account No. 8841-7023-5500) (the "Escrow Account"), pursuant to an Escrow Agreement to be entered into among GDT, Meridian, and the Escrow Agent at closing.
The purpose of the Escrow Account is to secure Seller's indemnification obligations under the APA. The escrow funds will be the first source of recovery for Buyer's indemnification claims, prior to any direct claims against Seller.
The escrow release schedule is as follows:
•  First Release: Fifty percent (50%) of the remaining balance in the Escrow Account (after deduction for any pending or resolved claims) shall be released to GDT on the date that is twelve (12) months after the closing date (i.e., August 8, 2024);
•  Final Release: The remaining balance in the Escrow Account (after deduction for any pending or resolved claims) shall be released to GDT on the date that is eighteen (18) months after the closing date (i.e., February 8, 2025), which is the expiration of the survival period for general representations and warranties.
To the extent any indemnification claims are pending as of any scheduled release date, the Escrow Agent shall retain in the Escrow Account an amount equal to the claimed amount until such claim is resolved, and shall release the balance (if any) in excess of such retained amount to GDT. Interest accrued on escrowed funds shall be allocated to GDT as the beneficial owner of the escrowed funds, subject to reduction for any indemnification payments made from the Escrow Account.
E. Working Capital Adjustment
The APA includes a customary net working capital adjustment mechanism designed to ensure that the OncuPath Business is delivered to Meridian with a normalized level of working capital at closing. The key terms of the working capital adjustment are as follows:
•  Target Net Working Capital: Six Million Eight Hundred Thousand Dollars ($6,800,000) (the "Target NWC"), based on the average net working capital of the OncuPath Business over the twelve-month period ended December 31, 2022, as reflected in the carve-out financial statements prepared by Haverford & Lane LLP;
•  Collar: No adjustment shall be made if the final net working capital of the OncuPath Business at closing falls within a collar of plus or minus Three Hundred Fifty Thousand Dollars ($350,000) of the Target NWC (i.e., between $6,450,000 and $7,150,000). If the final net working capital falls outside the collar, the purchase price shall be adjusted dollar-for-dollar for the full amount of the difference (not merely the excess over the collar);
•  Estimated Closing Statement: GDT shall prepare and deliver to Meridian an estimated closing balance sheet and estimated net working capital statement no later than three (3) business days prior to the closing date;
•  True-Up: Within ninety (90) days after closing (deadline: November 6, 2023), Haverford & Lane LLP shall prepare a final closing balance sheet and final net working capital calculation. Meridian shall have thirty (30) days to review and object. If Meridian does not object within such period, the final closing balance sheet shall be deemed accepted. If Meridian objects, the parties shall attempt to resolve the dispute in good faith for a period of fifteen (15) days, after which any unresolved items shall be submitted to a mutually agreed independent accounting firm for final and binding determination;
•  Payment: Any net purchase price adjustment in favor of Meridian (shortfall below Target NWC, net of collar) shall be paid by GDT to Meridian within five (5) business days of final determination. Any net purchase price adjustment in favor of GDT (excess above Target NWC, net of collar) shall be paid by Meridian to GDT within five (5) business days of final determination.
V. Indemnification and Risk Allocation
A. Indemnification Cap
Seller's aggregate indemnification obligations under the APA for breaches of general representations and warranties shall not exceed twenty percent (20%) of the Total Consideration, or Twenty-Eight Million Dollars ($28,000,000) (the "Cap"). This Cap is consistent with market norms for asset divestitures in the life sciences sector at this transaction size, and was a negotiated point reflected in the LOI term sheet.
B. Basket.  The APA provides for an aggregate deductible basket (structured as a "tipping basket") of One Million Four Hundred Thousand Dollars ($1,400,000), representing one percent (1%) of the Total Consideration. Buyer may not seek indemnification for breaches of general representations and warranties unless and until the aggregate amount of Buyer's indemnifiable losses exceeds the basket amount. Once the basket is exceeded, however, Buyer shall be entitled to recover from dollar one — i.e., the full amount of its losses (not merely the excess over the basket), subject to the Cap. This "tipping" structure is less favorable to Seller than a "true deductible" structure, but is consistent with current market practice and was accepted by GDT management and the Board as part of the overall risk allocation package.
C. De Minimis Threshold
Individual claims with a value of less than Seventy-Five Thousand Dollars ($75,000) (the "De Minimis Threshold") shall be disregarded for all purposes, including for purposes of determining whether the basket has been exceeded. This provision is intended to prevent the assertion of nuisance claims and to focus the indemnification regime on claims of meaningful economic significance.
D. Survival Period
The survival periods for representations and warranties under the APA are as follows:
•  General Representations and Warranties: Eighteen (18) months from the closing date (i.e., from August 8, 2023 through February 8, 2025). This is slightly shorter than the twenty-four (24) month survival period seen in some comparable transactions, which is favorable to Seller;
•  Fundamental Representations: Sixty (60) months from the closing date (i.e., through August 8, 2028). "Fundamental Representations" include representations relating to organization, authority, capitalization, title to assets, and brokers' fees. Fundamental Representations are not subject to the Cap or the basket; provided, however, that Seller's aggregate liability for all claims (including claims based on Fundamental Representations) shall not exceed the Total Consideration of One Hundred Forty Million Dollars ($140,000,000);
•  Tax Representations: Co-terminus with the applicable statute of limitations, plus sixty (60) days;
•  Covenants: Survive in accordance with their respective terms.
E. Escrow Mechanics
As described in Section IV.D above, $14,000,000 will be deposited into the Escrow Account at closing to secure Seller's indemnification obligations. The Escrow Account is the exclusive source of recovery for Buyer's indemnification claims during the first twelve (12) months following closing, except with respect to claims based on Fundamental Representations, fraud, or willful breach. After the first escrow release, Buyer may pursue claims against the remaining escrow balance and, if the remaining escrow balance is insufficient, directly against Seller, subject to the Cap.
F. Representations & Warranties Insurance
In connection with the transaction, Meridian has procured a buyer-side representations and warranties insurance policy (the "RWI Policy") from Apex Mutual Insurance Company, which will provide Buyer with an additional layer of indemnification protection beyond the Seller's direct indemnification obligations and the Escrow Account. The key terms of the RWI Policy are as follows:
•  Issuer: Apex Mutual Insurance Company, 175 Water Street, 22nd Floor, New York, New York 10038;
•  Policy Number: RWI-2023-07182;
•  SVP Underwriting: Philip Aldridge;
•  Policy Limit: Twenty-Eight Million Dollars ($28,000,000), which matches the indemnification Cap under the APA;
•  Retention: One Million Four Hundred Thousand Dollars ($1,400,000), which is aligned with the basket amount. The retention represents the amount of losses that must be borne by Buyer (or recovered from Seller through the indemnification provisions) before the RWI Policy responds;
•  Premium: Eight Hundred Forty Thousand Dollars ($840,000), representing three percent (3%) of the $28,000,000 policy limit;
•  Premium Split: The premium is split equally between Seller and Buyer, with each party bearing Four Hundred Twenty Thousand Dollars ($420,000);
•  Known-Matters Exclusions: The RWI Policy contains standard exclusions for known matters, including matters identified in the disclosure schedules, matters identified in the course of the underwriting process, and matters involving fraud or willful misconduct. We should carefully review the final form of known-matters exclusions with the deal team and GDT's General Counsel to ensure that no material matters are excluded that would undermine the intended scope of coverage;
•  Subrogation: The RWI Policy includes customary subrogation provisions. The insurer may subrogate against Seller only in cases of fraud or willful breach.
Impact on Indemnification Package: The RWI Policy provides significant value to both parties. For Buyer, the RWI Policy provides a creditworthy source of indemnification recourse beyond the Escrow Account and the Cap, reducing Buyer's reliance on Seller's post-closing financial condition and willingness to satisfy claims. For Seller, the RWI Policy substantially reduces the likelihood that Buyer will pursue direct indemnification claims against GDT, since Buyer will generally have an incentive to pursue claims under the RWI Policy (which does not require Buyer to first exhaust the Escrow Account for claims within the policy's coverage). The existence of the RWI Policy also facilitates a shorter survival period and a staged escrow release, both of which are favorable to Seller.
VI. Key Covenants
A. Non-Competition and Non-Solicitation
The APA contains the following restrictive covenants binding on GDT:
•  Non-Competition: GDT covenants that, for a period of three (3) years following the closing date, neither GDT nor any of its controlled affiliates will, directly or indirectly, engage in, invest in, own, manage, operate, or control any business that competes with the OncuPath Business in the field of companion diagnostics within the United States. The non-competition covenant does not restrict GDT's ability to continue to develop, manufacture, and commercialize the GenoStrat™ liquid biopsy platform or any other product or service that does not constitute a companion diagnostic, as that term is defined in the APA. The non-competition covenant also includes customary exceptions for passive investments of less than five percent (5%) in publicly traded companies;
•  Non-Solicitation of Employees: GDT covenants that, for a period of two (2) years following the closing date, neither GDT nor any of its controlled affiliates will, directly or indirectly, solicit, recruit, hire, or otherwise induce any Transferred Employee (as defined in the APA) to leave the employment of Meridian or any of its affiliates. The non-solicitation covenant includes customary exceptions for general solicitations not specifically directed at Transferred Employees.
We should note that the scope of the non-competition covenant is a subject on which Buyer's counsel may seek expansion (e.g., broader geographic scope, longer duration, or a more expansive definition of the competitive field). GDT's General Counsel, Rebecca Chiang, has indicated that GDT is prepared to accept a three-year, U.S.-only non-competition covenant limited to companion diagnostics, but would resist any effort to extend the restriction to molecular diagnostics generally or to include international markets.
B. Pre-Closing Covenants
Between the date of signing of the APA (targeted for May 11, 2023) and the closing date, GDT has agreed to the following pre-closing covenants:
•  Ordinary Course: GDT shall operate the OncuPath Business in the ordinary course of business consistent with past practice in all material respects, including maintaining existing relationships with customers, suppliers, employees, and regulatory authorities;
•  Consent to Specific Actions: GDT shall not, without Meridian's prior written consent (not to be unreasonably withheld, conditioned, or delayed), take certain specified actions with respect to the OncuPath Business, including (a) entering into, amending, or terminating any material contract, (b) making capital expenditures in excess of $100,000 individually or $300,000 in the aggregate, (c) hiring or terminating any employee with an annual base salary in excess of $150,000, (d) changing the pricing of any OncuPath™ assay product, or (e) initiating or settling any litigation;
•  Commercially Reasonable Efforts: GDT shall use commercially reasonable efforts to obtain all required consents and approvals necessary for the consummation of the transactions contemplated by the APA, including the consent of Vantage Molecular Sciences, Inc. to the assignment of the Vantage License, the consent of Towne Centre Properties LLC to the assignment of the OncuPath laboratory lease, and the consent of the master landlord to the assignment of the Carlsbad sublease;
•  Access: GDT shall provide Meridian and its representatives with reasonable access to the OncuPath Business, its facilities, books, records, and personnel for purposes of due diligence and transition planning, subject to reasonable restrictions regarding confidential information and business disruption;
•  Notice of Material Changes: GDT shall promptly notify Meridian of any event, circumstance, or development that would reasonably be expected to have a material adverse effect on the OncuPath Business.
C. Post-Closing Covenants
The parties have agreed to the following post-closing covenants:
•  Earnout Cooperation: GDT shall cooperate with Meridian in connection with Meridian's efforts to achieve the Earnout Milestones, including providing reasonable access to historical regulatory and clinical records, personnel with knowledge of the OncuPath-HER3™ program, and other information reasonably requested by Meridian. GDT's cooperation obligations shall be subject to a commercially reasonable efforts standard and shall not require GDT to incur material out-of-pocket expense;
•  Transition Services Agreement: GDT shall provide certain transition services to Meridian pursuant to a Transition Services Agreement ("TSA") to be entered into at closing, as described in Section IX below;
•  Purchase Price Allocation: The parties shall use good-faith efforts to agree on an allocation of the purchase price among the Purchased Assets in accordance with Section 1060 of the Code and the Treasury Regulations promulgated thereunder within one hundred twenty (120) days after the closing date (deadline: December 6, 2023). The agreed allocation shall be binding on both parties for all tax reporting purposes;
•  Further Assurances: Each party shall, from time to time after closing, execute and deliver such additional instruments, documents, and assurances and take such further actions as the other party may reasonably request to effectuate the purposes and intent of the APA;
•  Confidentiality: GDT shall maintain the confidentiality of all proprietary and confidential information relating to the OncuPath Business that is transferred to Meridian, and shall not use or disclose such information following the closing, except as required by law or in connection with GDT's indemnification obligations or the defense of any claim.
VII. Closing Conditions
A. Regulatory Approvals
The obligation of each party to consummate the transactions contemplated by the APA is subject to the satisfaction or waiver of the following regulatory conditions:
•  Hart-Scott-Rodino Act ("HSR Act"): The parties shall file their respective notifications and report forms under the HSR Act with the Federal Trade Commission ("FTC") and the Antitrust Division of the Department of Justice ("DOJ") promptly after signing of the APA. The applicable waiting period (or any extension thereof) must have expired or been terminated prior to closing. At a total consideration of $140,000,000, the transaction exceeds the current size-of-transaction threshold ($101,000,000 for 2023) and is therefore reportable. We intend to seek early termination of the HSR waiting period. Based on a preliminary review, the transaction does not appear to present significant antitrust concerns — GDT and Meridian operate in overlapping but differentiated segments of the molecular diagnostics market, and the OncuPath™ product line occupies a niche position in the companion diagnostics segment. We will prepare a detailed HSR filing analysis memo for the deal team's review;
•  CLIA Certificate Transfer: The CLIA certificate of accreditation for the OncuPath reference laboratory (CLIA ID 05D2178493) must be transferred to Meridian or Meridian must obtain a new CLIA certificate for the laboratory. This is an administrative process that typically requires submission of CMS Form 116 and a follow-up inspection, and can take several weeks. We will coordinate with the Centers for Medicare & Medicaid Services to ensure timely processing;
•  FDA Establishment Registration: Meridian must update the FDA establishment registration for the OncuPath laboratory and manufacturing facilities to reflect the change in ownership. This is an administrative filing but must be completed prior to or promptly following closing.
B. Third-Party Consents
The following third-party consents are required as conditions to closing:
•  Vantage Molecular Sciences, Inc.: Written consent to the assignment of the exclusive probe-labeling technology license dated September 12, 2019, from GDT to Meridian. This consent is critical — the Vantage License is essential to the manufacture and performance of certain OncuPath™ assays, and the loss of this license would materially impair the value of the Purchased Assets. We have identified the consent provision in Section 12.3 of the Vantage License, which provides that the license may not be assigned without Vantage's prior written consent, not to be unreasonably withheld. GDT's General Counsel has initiated preliminary discussions with Vantage regarding the consent, and initial indications are positive, though Vantage may seek modifications to the license terms (e.g., increased royalty rates or additional milestone payments) as a condition to granting consent;
•  Towne Centre Properties LLC: Landlord consent to the assignment of the lease for the OncuPath reference laboratory and R&D facility at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121. The lease contains a standard anti-assignment clause requiring landlord consent, which may not be unreasonably withheld. We will prepare and circulate a consent solicitation letter to the landlord promptly after signing;
•  Carlsbad Sublease: Consent of the master landlord to the assignment of the sublease for the OncuPath manufacturing/kitting space at 925 Industrial Court, Carlsbad, California 92010. The sublease expires December 31, 2025, and the parties should evaluate whether a new direct lease between Meridian and the master landlord may be more efficient.
C. Other Conditions
In addition to the regulatory approvals and third-party consents described above, the obligation of each party to close is subject to the following conditions:
•  Bring-Down of Representations and Warranties: The representations and warranties of the other party shall be true and correct in all material respects (or, in the case of representations and warranties qualified by materiality or material adverse effect, in all respects) as of the closing date as though made on and as of such date (except for representations and warranties that by their terms speak as of an earlier date, which shall be true and correct as of such earlier date);
•  Compliance with Covenants: The other party shall have performed and complied in all material respects with all covenants and agreements required to be performed by it under the APA on or prior to the closing date;
•  No Material Adverse Effect: No material adverse effect (as defined in the APA) shall have occurred with respect to the OncuPath Business since the date of the APA;
•  Delivery of Closing Certificates: Each party shall deliver a certificate signed by an authorized officer certifying the satisfaction of the closing conditions applicable to such party;
•  Secretary's Certificates: Each party shall deliver a certificate of the secretary or assistant secretary of such party certifying the resolutions of the board of directors authorizing the transactions, the incumbency and signatures of the officers executing the APA and ancillary agreements, and the organizational documents of such party;
•  FIRPTA Certificate: GDT shall deliver a certificate of non-foreign status pursuant to Section 1445 of the Code, certifying that GDT is not a "foreign person" within the meaning of Section 1445. Since GDT is a domestic Delaware corporation, this certification is straightforward;
•  Board Approvals: Both the board of directors of GDT (including the approval of Pinnacle's designated directors) and the board of directors of Meridian shall have approved the transactions contemplated by the APA and authorized the execution and delivery of the APA and the ancillary agreements;
•  No Injunction: No governmental authority shall have issued any order, decree, ruling, or injunction (whether temporary, preliminary, or permanent) that restrains, enjoins, or otherwise prohibits the consummation of the transactions contemplated by the APA;
•  Ancillary Agreements: The parties shall have executed and delivered all ancillary agreements, including the Escrow Agreement, the Transition Services Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the IP Assignment Agreement, and such other instruments of transfer and assumption as may be required.
VIII. Employee Transfer Matters
A total of eighty-three (83) employees of GDT who are dedicated to the OncuPath Business (the "OncuPath Employees") are expected to receive offers of employment from Meridian in connection with the closing of the transaction. The APA provides that Meridian shall extend offers of employment on terms and conditions that are substantially comparable in the aggregate to the terms and conditions of employment provided by GDT to such employees immediately prior to the closing, including base salary, target bonus opportunity, and employee benefits (subject to Meridian's standard benefit plan terms and conditions).
Key transferring personnel include:
•  Dr. Lara Okonkwo, Vice President, OncuPath R&D — Dr. Okonkwo is the senior scientific leader of the OncuPath program and is a named inventor on several of the Purchased Patents. Her continued involvement is critical to the success of the OncuPath-HER3™ PMA submission and, by extension, to the achievement of Earnout Milestone 1;
•  Samuel Briggs, Director, OncuPath Commercial Operations — Mr. Briggs leads the OncuPath sales and marketing organization and maintains key customer relationships with academic medical centers and pharmaceutical company partners;
•  Yuki Tanabe, Head of Regulatory Affairs, OncuPath — Ms. Tanabe is responsible for all FDA and CLIA regulatory matters relating to the OncuPath product line, including the pending OncuPath-HER3™ PMA supplement. Her expertise and institutional knowledge of the regulatory file are essential for a smooth transition and continued regulatory compliance post-closing.
The retention of Dr. Okonkwo, Mr. Briggs, and Ms. Tanabe is of particular importance to both parties, given their critical roles in the OncuPath Business and their direct relevance to the achievement of the Earnout Milestones. We understand from GDT management that all three individuals have expressed preliminary willingness to transition to Meridian, but formal retention arrangements (including any retention bonuses or modified equity incentive packages) have not yet been finalized. We recommend that the deal team coordinate with GDT's General Counsel and Meridian's VP, Corporate Development to ensure that appropriate retention arrangements are in place prior to or at signing.
WARN Act Analysis: The Worker Adjustment and Retraining Notification Act ("WARN Act") requires employers with 100 or more employees to provide sixty (60) calendar days' advance written notice of a plant closing or mass layoff affecting fifty (50) or more employees at a single site of employment. Based on our preliminary analysis, the WARN Act is not triggered by the proposed transaction because (i) GDT is not closing any plant or facility — the OncuPath facilities will continue to operate under Meridian's ownership, and (ii) the number of OncuPath Employees at any single site (83 total, distributed between the San Diego laboratory and the Carlsbad manufacturing facility) is below the fifty (50) employee threshold when analyzed on a per-site basis. However, we should continue to monitor this analysis as circumstances evolve, particularly if any OncuPath Employees decline Meridian's employment offers or if Meridian determines not to extend offers to all OncuPath Employees.
GDT will be responsible for providing benefits tail coverage and satisfying COBRA obligations for any OncuPath Employees who do not transfer to Meridian or whose employment is terminated in connection with the transaction. The APA will include customary provisions allocating responsibility for employee benefit costs and liabilities between the parties based on the closing date.
The expected acceptance rate of employment offers will be tracked as we approach closing, and we will report to the deal team any material deviations from the assumed 100% acceptance rate that could affect business continuity or earnout achievement.
IX. Transition Services Agreement
In connection with the closing, GDT and Meridian will enter into a Transition Services Agreement (the "TSA"), pursuant to which GDT will provide certain transitional support services to Meridian to facilitate the orderly transfer of the OncuPath Business and to enable Meridian to operate the OncuPath Business on a standalone basis following the closing.
The key terms of the TSA are as follows:
•  Scope of Services: GDT will provide Meridian with the following categories of transitional services: (i) information technology services, including access to GDT's enterprise resource planning ("ERP") system, laboratory information management system ("LIMS"), and IT infrastructure to the extent used by the OncuPath Business; (ii) facilities services, including shared facility management, security, and maintenance services at the San Diego campus; and (iii) human resources and payroll services, including payroll processing, benefits administration, and HR systems access for Transferred Employees during the transition period;
•  Service Term: Up to nine (9) months following the closing date, subject to earlier termination by Meridian on thirty (30) days' prior written notice with respect to any individual service. GDT shall have the right to terminate any service if Meridian fails to pay for such service within the time period specified in the TSA;
•  Service Fees: GDT shall be compensated for the transition services at cost plus a five percent (5%) markup, reflecting GDT's incremental costs of providing such services and a reasonable margin for administrative overhead. Service fees shall be invoiced monthly in arrears and payable within thirty (30) days of invoice;
•  Service Descriptions and Service Levels: The TSA will include detailed service descriptions and agreed-upon service levels for each category of transition service, including minimum response times, system uptime commitments, and escalation procedures. The service levels are intended to maintain continuity of operations during the transition period and are not intended to exceed the level of service provided by GDT to the OncuPath Business prior to the closing;
•  Termination: In addition to the termination rights described above, the TSA shall terminate automatically upon the expiration of the nine-month service term. Any services that have not been terminated or transitioned by Meridian prior to expiration will be deemed terminated on the expiration date;
•  Liability Limitations: GDT's aggregate liability under the TSA shall be limited to the total service fees paid by Meridian under the TSA during the twelve-month period preceding the claim. GDT shall not be liable for any indirect, incidental, special, consequential, or punitive damages arising under or in connection with the TSA, regardless of the theory of liability.
We anticipate that the TSA will be attached as an exhibit to the APA and will be negotiated in parallel with the APA itself. The specific service descriptions and service levels will require input from GDT's operational teams and Meridian's integration planning team, and we will coordinate with both sides to finalize these provisions.
X. Intellectual Property
The intellectual property assets to be transferred to Meridian as part of the Purchased Assets are among the most valuable components of the OncuPath Business. A summary of the key intellectual property assets is set forth below.
Patents and Patent Applications:
The Purchased Assets include fourteen (14) issued United States patents and seven (7) pending United States patent applications related to the OncuPath™ companion diagnostics assay technology. The issued patents cover a range of technologies, including proprietary probe chemistry compositions, sample preparation and enrichment methods, multiplexed detection platforms, and bioinformatics algorithms for variant calling and biomarker quantification. The pending patent applications relate to next-generation OncuPath™ assay designs, novel biomarker panels for emerging therapeutic targets, and improvements to assay sensitivity and specificity. A complete schedule of all Purchased Patents and pending patent applications will be included in the intellectual Property disclosure schedule to the APA.
Trademarks:
The Purchased Assets include three (3) registered United States trademarks:
•  OncuPath™ — U.S. Registration No. 5,847,321
•  OncuPath-HER3™ — U.S. Registration No. 6,412,088
•  OncuPath-GENOMARK™ — U.S. Registration No. 6,118,754
All three registrations are currently in force and in good standing with the United States Patent and Trademark Office. The OncuPath™ trademark is the principal brand identifier for the OncuPath Business and has significant commercial recognition among oncologists, pathologists, and pharmaceutical company partners.
Vantage License:
The Purchased Assets include the exclusive license from Vantage Molecular Sciences, Inc. for probe-labeling technology, dated September 12, 2019 (the "Vantage License"). The Vantage License grants GDT an exclusive, worldwide license to use Vantage's proprietary probe-labeling technology in connection with the manufacture, use, and sale of companion diagnostic assays. The Vantage License is material to the OncuPath Business because the probe-labeling technology covered by the license is a critical component of the OncuPath™ assay manufacturing process. As noted above, the assignment of the Vantage License to Meridian requires the prior written consent of Vantage, and obtaining such consent is a condition to closing.
Trade Secrets and Know-How:
The Purchased Assets include all trade secrets, proprietary know-how, and confidential technical information related to OncuPath assay development, manufacturing processes, quality control procedures, and commercialization strategies. These trade secrets and know-how are embodied in technical documentation, laboratory notebooks, standard operating procedures, validation protocols, and training materials that will be transferred to Meridian at closing.
Freedom-to-Operate and Chain-of-Title:
A comprehensive freedom-to-operate ("FTO") analysis and chain-of-title analysis for the Purchased Patents and other intellectual property assets is currently being conducted as part of our ongoing due diligence review. The FTO analysis is intended to identify any third-party paten

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