DISCLOSURE SCHEDULES

DISCLOSURE SCHEDULES
TO THE
ASSET PURCHASE AGREEMENT
Dated as of May 11, 2023
by and between
GENOME DX THERAPEUTICS INC.
a Delaware corporation
("Seller" or "GDT")
and
MERIDIAN PRECISION DIAGNOSTICS, INC.
a Delaware corporation
("Buyer" or "Meridian")
Reference is made to that certain Asset Purchase Agreement dated as of May 11, 2023 (the "Agreement" or "APA"), by and between Genome Dx Therapeutics Inc. and Meridian Precision Diagnostics, Inc.
CONFIDENTIAL
Prepared by Calderwood & Harkness LLP 555 South Hope Street, Suite 4400 Los Angeles, CA 90071 Matter No. 1013-00006&A-4471
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INTRODUCTORY PROVISIONS AND GENERAL QUALIFICATIONS
These Disclosure Schedules (the "Schedules" or "Disclosure Schedules") are delivered by Genome Dx Therapeutics Inc., a Delaware corporation ("Seller" or "GDT"), with its principal executive offices located at 10250 Science Center Drive, Suite 600, San Diego, California 92121 (EIN: 47-3892061), to Meridian Precision Diagnostics, Inc., a Delaware corporation ("Buyer" or "Meridian"), pursuant to Article III of that certain Asset Purchase Agreement, dated as of May 11, 2023 (the "Agreement" or "APA"), by and between Seller and Buyer.
All capitalized terms used but not otherwise defined in these Disclosure Schedules shall have the respective meanings ascribed to such terms in the Agreement. The section numbers of these Disclosure Schedules correspond to the section numbers of the Agreement to which they relate; provided, however, that any information disclosed in a particular Schedule shall be deemed to be disclosed and incorporated by reference in all other Schedules to the extent that the relevance of such disclosure to such other Schedules is reasonably apparent on the face of such disclosure.
These Schedules relate solely to the OncuPath™ companion diagnostics assay line (the "OncuPath Business") and the assets, liabilities, operations, and affairs thereof. These Schedules do not disclose, and shall not be deemed to disclose, any matters pertaining to GDT's retained businesses, product lines, or operations, including, without limitation, the GenoStrat™ liquid biopsy platform and any other diagnostic or therapeutic product lines maintained by GDT.
General Qualifications. The following general qualifications apply to all of these Disclosure Schedules and are incorporated by reference into each individual Schedule as if fully set forth therein:
1.  No Admission of Materiality. The inclusion of any item, matter, or information in these Disclosure Schedules does not constitute an admission by Seller that such item, matter, or information is material, constitutes a breach or violation of any representation, warranty, covenant, or obligation of Seller under the Agreement, or would give rise to a claim for indemnification or any other remedy under the Agreement. Certain items, matters, and information have been included in these Disclosure Schedules solely for informational purposes and as a convenience to Buyer, even though such items, matters, or information may not be required to be disclosed under the terms of the Agreement.
2.  Cross-Reference and Deemed Disclosure. Information disclosed in any one Schedule of these Disclosure Schedules shall be deemed to be disclosed and incorporated by reference in all other Schedules of these Disclosure Schedules, whether or not a specific cross-reference is made, to the extent that the relevance of such disclosure to such other Schedules is reasonably apparent on the face of such disclosure. The mere listing of an item in a particular Schedule as an exception to a particular representation or warranty shall not be deemed an admission that such item represents a material exception, event, circumstance, change, or effect, or that such item has had or would reasonably be expected to have a Material Adverse Effect on the OncuPath Business.
3.  Headings. All headings and section references contained in these Disclosure Schedules are for convenience of reference only, do not form a part of these Disclosure Schedules, and shall not affect in any way the meaning, construction, or interpretation of any provision of these Disclosure Schedules.
4.  De Minimis Threshold. Except where specifically noted otherwise, dollar thresholds for the listing of items in these Disclosure Schedules correspond to the de minimis threshold of Seventy-Five Thousand Dollars ($75,000) per claim as set forth in the indemnification provisions of Article IX of the Agreement. Items below such threshold are not individually listed but may be included in aggregate figures where appropriate.
5.  Data Room. Documents, agreements, instruments, and other materials referenced in these Disclosure Schedules were made available to Buyer, Buyer's counsel, and Buyer's other advisors in the electronic virtual data room established and maintained by Westvale Software (the "Data Room"), which was opened on March 6, 2023, and which remains accessible as of the date hereof. All references to documents in these Disclosure Schedules include all amendments, modifications, supplements, exhibits, schedules, and annexes thereto, unless otherwise indicated. The Seller makes no representation or warranty as to the completeness or accuracy of any document or information contained in the Data Room except to the extent expressly set forth in the Agreement.
6.  Dates and Currency. Unless otherwise indicated, all dates referenced in these Disclosure Schedules are calendar dates, all dollar amounts are in United States Dollars, and all financial information is presented in accordance with generally accepted accounting principles ("GAAP") as applied consistently with the audited carve-out financial statements referenced in Schedule 3.4.
SCHEDULE 1.1 — PURCHASED ASSETS
Pursuant to Section 1.1 of the Agreement, the following is a description of all assets owned or held by Seller that are exclusively related to, or exclusively used or held for use in connection with, the OncuPath Business (collectively, the "Purchased Assets"), which shall be transferred, conveyed, assigned, and delivered by Seller to Buyer at the Closing:
I. Tangible Personal Property, Equipment, Laboratory Instruments, and Supplies
All tangible personal property, equipment, laboratory instruments, furniture, fixtures, supplies, tools, spare parts, and other tangible assets owned by Seller and exclusively used or held for use in the OncuPath Business, including all such items located at the following facilities:
(a) OncuPath Reference Laboratory and R&D Facility — 4820 Towne Centre Drive, Suite 200, San Diego, California 92121. This facility houses the primary OncuPath reference laboratory, the research and development operations for the OncuPath assay line, and the OncuPath commercial and regulatory affairs offices. All laboratory instruments, benchtop equipment, computational hardware, servers, workstations, and associated peripherals located at this facility that are exclusively used in the OncuPath Business are included in the Purchased Assets. A complete inventory of tangible personal property at this location was prepared as of April 30, 2023, and is contained in Data Room folder 2.3.1 (the "Towne Centre Equipment Inventory").
(b) OncuPath Manufacturing and Kitting Facility — 925 Industrial Court, Carlsbad, California 92010. This facility houses the manufacturing, kitting, and quality control operations for the OncuPath assay product line. All manufacturing equipment, kitting machinery, quality control instruments, packaging materials, and associated tangible assets located at this facility that are exclusively used in the OncuPath Business are included in the Purchased Assets. A complete inventory of tangible personal property at this location was prepared as of April 30, 2023, and is contained in Data Room folder 2.3.2 (the "Carlsbad Equipment Inventory").
II. Inventory
All inventory of the OncuPath Business, wherever located, including all finished goods, work-in-process, raw materials, reagents, consumables, packaging materials, labels, and shipping supplies, in each case as existing on the Closing Date. A summary of OncuPath Business inventory as of April 30, 2023, is set forth in Data Room folder 2.4.1. The final inventory count shall be taken in accordance with the procedures set forth in Section 2.5 of the Agreement.
III. Intellectual Property
All intellectual Property exclusively related to the OncuPath Business, including all patents, patent applications, trademarks, trademark registrations, copyrights, trade secrets, know-how, proprietary formulations, standard operating procedures, and other intangible property rights, as more fully described in Schedule 3.10 hereof.
IV. Assumed Contracts
All right, title, and interest of Seller in, to, and under the Assumed Contracts, as more fully described in Schedule 1.3 and Schedule 3.7 hereof.
V. Regulatory Filings, Clearances, and Approvals
All regulatory filings, clearances, approvals, registrations, certifications, and permits exclusively related to the OncuPath Business, including all FDA 510(k) clearances, PMA supplements, CLIA certifications, state laboratory licenses, and FDA establishment registrations, as more fully described in Schedule 3.9 hereof, to the extent transferable under applicable Law.
VI. Books and Records
All books, records, files, documents, correspondence, manuals, reports, studies, and other written or electronic materials exclusively related to the OncuPath Business, including customer files, supplier files, clinical validation data, quality system records, batch records, regulatory correspondence files, laboratory notebooks, and standard operating procedures. Seller shall retain copies of such books and records as may be necessary for Seller's tax, legal, or regulatory compliance obligations.
VII. Goodwill
All goodwill associated with the OncuPath Business, including customer relationships, referral relationships, and the going-concern value of the OncuPath Business.
VIII. Permits and Licenses
All permits, licenses, certifications, registrations, authorizations, and approvals issued by any Governmental Authority that are exclusively related to the OncuPath Business, to the extent transferable under applicable Law, as more fully described in Schedule 3.9 hereof.
IX. Leasehold Interests
(a) The leasehold interest of Seller in the OncuPath Reference Laboratory and R&D Facility located at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121, pursuant to that certain Lease Agreement between Towne Centre Properties LLC, as landlord, and Genome Dx Therapeutics Inc., as tenant, as amended from time to time (the "Towne Centre Lease"). Consent of the landlord to the assignment of such leasehold interest has been obtained as of July 28, 2023.
(b) The leasehold interest of Seller in the OncuPath Manufacturing and Kitting Facility located at 925 Industrial Court, Carlsbad, California 92010, pursuant to that certain Sublease Agreement, as amended from time to time (the "Carlsbad Sublease"), which sublease expires on December 31, 2025.
SCHEDULE 1.2 — EXCLUDED ASSETS
Pursuant to Section 1.2 of the Agreement, the following assets are excluded from the Purchased Assets and shall be retained by Seller (collectively, the "Excluded Assets"):
1.  GenoStrat™ Liquid Biopsy Platform. The GenoStrat™ liquid biopsy platform and all assets, properties, intellectual Property, contracts, permits, licenses, regulatory approvals, and other rights related thereto, including all tangible personal property, equipment, inventory, and supplies used exclusively in the GenoStrat™ business, regardless of location.
2.  Other Retained Businesses. All other retained GDT businesses, product lines, and operations other than the OncuPath Business, including all assets, properties, and rights related thereto.
3.  Cash and Cash Equivalents. All corporate-level cash and cash equivalents of Seller, including all bank accounts, money market accounts, certificates of deposit, short-term investments, and similar liquid assets, wherever located.
4.  Tax Refunds. All rights to receive tax refunds, credits, or overpayments attributable to Pre-Closing Tax Periods or the portion of any Straddle Period ending on the Closing Date, whether received before or after the Closing Date, and regardless of whether such refunds, credits, or overpayments relate to the OncuPath Business.
5.  Seller's Corporate Name and Retained Trademarks. GDT's corporate name, "Genome Dx Therapeutics," all trademarks incorporating the "Genome Dx" or "GDT" names or marks, the GenoStrat™ trademark and brand family, and all other trademarks, service marks, trade names, and brand identifiers of Seller that are outside the OncuPath brand family. The trademarks included in the Purchased Assets are limited to those identified in Schedule 3.10(c).
6.  Corporate Headquarters. The corporate headquarters facility of Seller located at 10250 Science Center Drive, Suite 600, San Diego, California 92121, and all furniture, fixtures, equipment, and other tangible personal property located therein that are not exclusively used in the OncuPath Business.
7.  Corporate-Level Insurance Policies. All insurance policies maintained by Seller at the corporate level, including general liability, directors and officers liability, employment practices liability, and umbrella/excess policies, except to the extent that any specific policies or coverages are expressly identified as Assumed Contracts in Schedule 1.3.
8.  Rights Under Transaction Documents. All rights of Seller under the Agreement, the Escrow Agreement, the Transition Services Agreement, and any other Ancillary Agreement entered into in connection with the transactions contemplated by the Agreement.
9.  Employee Benefit Plans. All employee benefit plans, programs, policies, and arrangements sponsored, maintained, or contributed to by Seller at the corporate level, including Seller's 401(k) plan, medical, dental, vision, disability, and life insurance plans, and all assets, trusts, and accounts related thereto, except to the extent that any specific benefit plans or arrangements are expressly assumed by Buyer in connection with the employment of Transferred Employees as provided in the Agreement.
10.  Intercompany Receivables. All intercompany receivables, advances, and other amounts owed by any retained business unit of Seller to the OncuPath Business, or by the OncuPath Business to any retained business unit of Seller, all of which shall be settled or eliminated by Seller prior to or at the Closing.
11.  Privileged Communications. All attorney-client privileged communications, attorney work product, and similar privileged documents and communications of Seller related to the negotiation and consummation of the transactions contemplated by the Agreement.
12.  Minute Books and Stock Records. The corporate minute books, stock transfer records, and corporate seal of Seller.
SCHEDULE 1.3 — ASSUMED CONTRACTS
Pursuant to Section 1.3 of the Agreement, the following contracts, agreements, leases, and other arrangements are being assigned by Seller and assumed by Buyer at the Closing (collectively, the "Assumed Contracts"):
I. Key License Agreements
II. Real Property Leases
III. Customer Supply Agreements
The following customer supply agreements related to the OncuPath Business are being assigned and assumed by Buyer. A cross-reference to Schedule 3.18(a) is provided for additional detail on customer relationships and revenue attributable to each customer.
Additional customer contracts with individual annual values below $75,000 are not individually listed but are included in the Purchased Assets and will be assigned and assumed in the aggregate.
IV. Supplier and Vendor Agreements
Additional supplier contracts with individual annual values below $75,000 are not individually listed but are included in the Purchased Assets.
V. Equipment Leases
VI. Service Agreements
VII. Employment Offer Letters
Employment offer letters have been extended by Meridian to the eighty-three (83) OncuPath Business employees identified in Schedule 3.13(a). As of the date hereof, seventy-eight (78) of such employees have accepted offers and will transfer at Closing. Five (5) employees have declined offers and their employment will remain with GDT. All offer letters are in the form approved by the parties and contained in Data Room folder 7.2.
SCHEDULE 1.4 — ASSUMED LIABILITIES
Pursuant to Section 1.4 of the Agreement, the following liabilities and obligations shall be assumed by Buyer at the Closing (collectively, the "Assumed Liabilities"):
1.  Post-Closing Trade Payables. All trade accounts payable and accrued expenses of the OncuPath Business arising in the ordinary course of business on or after the Closing Date, to the extent reflected in the Closing Net Working Capital calculation.
2.  Obligations Under Assumed Contracts. All obligations and liabilities of Seller arising under the Assumed Contracts (as listed in Schedule 1.3) that arise or are required to be performed on or after the Closing Date, but excluding any liability arising from any breach of, or default under, any such Assumed Contract occurring prior to the Closing Date.
3.  Post-Closing Product Warranty Claims. All product warranty claims and obligations relating to OncuPath assay products shipped or services performed on or after the Closing Date, including all obligations under the standard OncuPath product warranty terms described in Schedule 3.19.
4.  Post-Closing Lease Obligations. All obligations arising under the Towne Centre Lease and the Carlsbad Sublease from and after the Closing Date.
5.  Post-Closing Employment Obligations. All compensation, benefits, and employment-related obligations owed to the Transferred Employees arising on or after the Closing Date.
SCHEDULE 1.5 — EXCLUDED LIABILITIES
Pursuant to Section 1.5 of the Agreement, the following liabilities and obligations are excluded from the Assumed Liabilities and shall be retained by Seller (collectively, the "Excluded Liabilities"):
1.  Pre-Closing Liabilities. All liabilities and obligations of Seller of any kind or nature, whether known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured, determined or determinable, arising out of or relating to the OncuPath Business or the Purchased Assets to the extent arising out of acts, events, conditions, or circumstances occurring or existing prior to the Closing Date, except to the extent included in the calculation of Closing Net Working Capital.
2.  Pending Litigation. Any litigation, arbitration, mediation, governmental investigation, proceeding, or other dispute pending as of the Closing Date, including all matters disclosed in Schedule 3.8 hereof, and any liabilities arising therefrom.
3.  Non-Transferred Employee Obligations. All obligations and liabilities with respect to current or former employees of Seller who are not Transferred Employees, including all compensation, severance, benefits, pension, retirement, deferred compensation, and similar obligations, and any liability arising under any employee benefit plan sponsored, maintained, or contributed to by Seller at the corporate level.
4.  Environmental Liabilities at Non-Conveyed Facilities. All environmental liabilities, obligations, and claims arising out of or relating to GDT facilities not conveyed to Buyer, including the corporate headquarters at 10250 Science Center Drive, Suite 600, San Diego, California 92121, and any other GDT facility not included in the Purchased Assets.
5.  Intercompany Obligations. All intercompany obligations, receivables, payables, advances, allocations, and other amounts arising between the OncuPath Business and GDT's retained businesses, all of which shall be settled or eliminated by Seller prior to or at the Closing.
6.  Pre-Closing Tax Liabilities. All liabilities for Taxes arising out of or relating to the OncuPath Business or the Purchased Assets for any Pre-Closing Tax Period or the portion of any Straddle Period ending on the Closing Date, including all income taxes, employment taxes, sales and use taxes, and property taxes attributable to periods ending on or before the Closing Date.
7.  Product Liability — Pre-Closing. All product liability, product warranty, and recall obligations relating to OncuPath assay products shipped or services performed prior to the Closing Date.
8.  Indebtedness. All indebtedness of Seller for borrowed money, including principal, interest, fees, premiums, penalties, and breakage costs.
9.  Transaction Expenses. All fees, costs, and expenses incurred by Seller in connection with the negotiation, execution, and consummation of the transactions contemplated by the Agreement, including legal fees, financial advisory fees, accounting fees, and all other professional fees.
SCHEDULE 3.1 — ORGANIZATION AND GOOD STANDING
Pursuant to Section 3.1 of the Agreement, the following information is disclosed with respect to the organization and good standing of Seller:
Genome Dx Therapeutics Inc.
Foreign Qualifications. Seller is duly qualified and authorized to transact business as a foreign corporation in each of the following jurisdictions:
Copies of all certificates of good standing and qualification are contained in Data Room folder 1.1.2.
Seller has full corporate power and authority to own, lease, and operate its properties and assets and to conduct its business as presently conducted, including the OncuPath Business, in each jurisdiction in which the character of its properties or the nature of its business makes such qualification necessary. Seller is not required to be qualified or authorized to do business in any other jurisdiction in which the failure to be so qualified or authorized would reasonably be expected to have a Material Adverse Effect on the OncuPath Business.
SCHEDULE 3.2 — AUTHORIZATION; NO CONFLICTS
Pursuant to Section 3.2 of the Agreement, the following information is disclosed with respect to Seller's authorization of the transactions contemplated by the Agreement and any conflicts arising therefrom:
I. Board Authorization
The Board of Directors of Genome Dx Therapeutics Inc. duly authorized and approved the execution, delivery, and performance by Seller of the Agreement and the Ancillary Agreements and the consummation of the transactions contemplated thereby at a meeting of the Board of Directors held on May 8, 2023. The resolutions adopted by the Board of Directors at such meeting are contained in Data Room folder 1.2.1.
II. Stockholder Approval
No stockholder vote or approval is required for the consummation of the transactions contemplated by the Agreement. The sale of the Purchased Assets does not constitute a sale, lease, or exchange of all or substantially all of the assets of Seller within the meaning of Section 271 of the Delaware General Corporation Law. For the twelve months ended December 31, 2022, the OncuPath Business contributed revenues of approximately Forty-Seven Million Six Hundred Thousand Dollars ($47,600,000) of GDT's total consolidated revenues of approximately Three Hundred Twelve Million Dollars ($312,000,000), representing approximately 15.3% of GDT's total revenue. The OncuPath Business assets represent less than 20% of Seller's total consolidated assets. Accordingly, the transaction does not require stockholder approval under the DGCL or under Seller's Certificate of Incorporation or Bylaws.
III. Equity Sponsor
Pinnacle Biosciences Partners Fund III, L.P., a Delaware limited partnership (EIN: 83-1726450), holds approximately 68.4% of the issued and outstanding shares of common stock of Seller as of the date hereof. The general partner of Pinnacle Biosciences Partners Fund III, L.P. is Pinnacle Biosciences Partners GP III, LLC, a Delaware limited liability company. The Managing Partners of Pinnacle Biosciences Partners GP III, LLC are Nathaniel Hargrove and Priya Ramanathan. Nathaniel Hargrove serves as Chair of the Board of Directors of Seller, having been designated to such position by Pinnacle Biosciences Partners Fund III, L.P. pursuant to the terms of that certain Stockholders' Agreement dated November 3, 2020. Pinnacle Biosciences Partners Fund III, L.P. does not hold any voting or approval rights with respect to asset sales by Seller under the terms of the Stockholders' Agreement, provided that the net proceeds of such sale do not exceed 25% of the enterprise value of Seller.
IV. Consents and Conflicts
The execution, delivery, and performance of the Agreement by Seller, and the consummation of the transactions contemplated thereby, do not and will not: (a) violate or conflict with the Certificate of Incorporation or Bylaws of Seller; (b) violate or conflict with any applicable Law; or (c) result in a breach of, or constitute a default under, or require the consent of any third party under, any material contract, agreement, or instrument to which Seller is a party or by which Seller or the Purchased Assets are bound, except for the following consents, which have been obtained or addressed as indicated:
No other material consents, waivers, approvals, authorizations, or filings are required in connection with the execution, delivery, and performance by Seller of the Agreement, other than the governmental approvals described in Schedule 3.3.
SCHEDULE 3.3 — GOVERNMENTAL APPROVALS
Pursuant to Section 3.3 of the Agreement, the following governmental approvals, consents, authorizations, and filings are required in connection with the consummation of the transactions contemplated by the Agreement:
No other material governmental approvals, consents, authorizations, orders, or filings are required to be obtained or made by Seller in connection with the execution, delivery, and performance of the Agreement, or the consummation of the transactions contemplated thereby, other than routine post-Closing notifications and filings that are customary in transactions of this nature.
SCHEDULE 3.4 — FINANCIAL STATEMENTS
Pursuant to Section 3.4 of the Agreement, the following information is disclosed with respect to the financial statements of the OncuPath Business:
I. Audited Carve-Out Financial Statements
Audited carve-out financial statements of the OncuPath Business have been prepared by Haverford & Lane LLP, independent registered public accounting firm (engagement partner: Douglas Crane, CPA), for the fiscal years ended December 31, 2022, December 31, 2021, and December 31, 2020 (collectively, the "Financial Statements"). The Financial Statements are contained in Data Room folder 3.1.1 and include the following:
(a) Audited carve-out balance sheets as of December 31, 2022, December 31, 2021, and December 31, 2020;
(b) Audited carve-out statements of operations for the fiscal years ended December 31, 2022, December 31, 2021, and December 31, 2020;
(c) Audited carve-out statements of cash flows for the fiscal years ended December 31, 2022, December 31, 2021, and December 31, 2020; and
(d) Notes to the audited carve-out financial statements.
The Financial Statements have been prepared in accordance with GAAP, applied on a consistent basis throughout the periods presented, and present fairly, in all material respects, the financial position, results of operations, and cash flows of the OncuPath Business as of and for the periods indicated. Haverford & Lane LLP has issued an unqualified audit opinion with respect to each set of Financial Statements.
II. Key Financial Metrics
III. Net Working Capital
The Target Net Working Capital of the OncuPath Business is Six Million Eight Hundred Thousand Dollars ($6,800,000), calculated in accordance with the methodology set forth in Exhibit A to the Agreement (the "NWC Methodology"). The NWC adjustment collar is plus or minus Three Hundred Fifty Thousand Dollars (±$350,000), meaning that no adjustment to the Purchase Price shall be made if the Closing Net Working Capital is within the range of $6,450,000 to $7,150,000.
The post-Closing NWC true-up shall be completed no later than November 6, 2023 (being ninety (90) calendar days following the anticipated Closing Date of August 8, 2023). The final closing balance sheet of the OncuPath Business shall be prepared by Haverford & Lane LLP in accordance with the NWC Methodology and the procedures set forth in Section 2.5 of the Agreement.
IV. Undisclosed Liabilities
Except as set forth in these Disclosure Schedules, to the Knowledge of Seller, there are no material undisclosed liabilities of the OncuPath Business other than: (a) liabilities reflected or reserved against on the audited carve-out balance sheet of the OncuPath Business as of December 31, 2022; (b) liabilities incurred in the ordinary course of business since December 31, 2022, consistent with past practice; and (c) liabilities disclosed elsewhere in these Schedules.
SCHEDULE 3.5 — ABSENCE OF CHANGES
Pursuant to Section 3.5 of the Agreement, the following information is disclosed with respect to changes to the OncuPath Business since December 31, 2022 (the "Balance Sheet Date") that may be material:
1.  OncuPath-HER3™ PMA Supplement. On January 30, 2023, Seller submitted a premarket approval ("PMA") supplement to the U.S. Food and Drug Administration for the OncuPath-HER3™ companion diagnostic assay (PMA Supplement No. P230014). As of the date hereof, a Prescription Drug User Fee Act ("PDUFA") target action date has not yet been assigned by the FDA. The submission is in the ordinary course of Seller's regulatory affairs activities for the OncuPath Business and is consistent with Seller's previously disclosed product development roadmap.
2.  Ordinary Course Inventory Fluctuations. Normal course fluctuations in inventory levels of finished goods, work-in-process, and raw materials have occurred since the Balance Sheet Date, consistent with seasonal demand patterns and historical operating practices. No material write-downs of inventory have been taken or are anticipated.
3.  No Material Adverse Effect. Except as disclosed herein, since the Balance Sheet Date, Seller has conducted the OncuPath Business in the ordinary course of business, consistent with past practice, and no event, circumstance, change, or effect has occurred that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the OncuPath Business.
4.  No Other Material Changes. Since the Balance Sheet Date, with respect to the OncuPath Business, Seller has not:
(a) sold, transferred, assigned, or otherwise disposed of any material assets of the OncuPath Business other than inventory sold in the ordinary course;
(b) incurred, assumed, or guaranteed any material indebtedness;
(c) made any material capital expenditure or commitment for capital expenditure in excess of $250,000 individually or $500,000 in the aggregate, other than those included in the approved capital expenditure budget previously provided to Buyer;
(d) granted any increase in compensation or benefits to any OncuPath Business employee, other than increases in the ordinary course of business consistent with past practice and not exceeding 4% on an annualized basis;
(e) entered into, amended, or terminated any Material Contract; or
(f) experienced any material damage, destruction, or loss to any Purchased Asset (whether or not covered by insurance).
SCHEDULE 3.6 — TITLE TO ASSETS; SUFFICIENCY
Pursuant to Section 3.6 of the Agreement, the following information is disclosed with respect to Seller's title to the Purchased Assets and the sufficiency of such assets for the conduct of the OncuPath Business:
I. Title
Seller has good and marketable title to all of the Purchased Assets, free and clear of all Liens and encumbrances, except for the following Permitted Exceptions:
(a) Vantage Molecular Sciences License Encumbrance. The Exclusive License Agreement with Vantage Molecular Sciences, Inc. dated September 12, 2019, contains restrictions on sublicensing of the licensed probe-labeling technology without the prior written consent of Vantage Molecular Sciences. Such consent to the assignment of the License Agreement in connection with the transactions contemplated by the Agreement has been obtained as of July 14, 2023. The License Agreement does not create a security interest or ownership claim in favor of Vantage Molecular Sciences in any of the Purchased Assets, other than the ownership by Vantage of the underlying intellectual property that is the subject of the license grant.
(b) Landlord's Reversionary Interest. The landlord, Towne Centre Properties LLC, retains its reversionary interest in the real property at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121, subject to and in accordance with the terms of the Towne Centre Lease. Seller's interest in the leased premises is a leasehold interest only.
(c) Permitted Liens. As defined in Section 1.1 of the Agreement, the following categories of Liens are Permitted Liens and do not constitute exceptions to Seller's title to the Purchased Assets:
(i) statutory liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings;
(ii) mechanics', materialmen's, carriers', workers', repairers', and similar liens arising or incurred in the ordinary course of business, securing obligations that are not overdue or are being contested in good faith;
(iii) zoning, entitlement, and other land use and environmental regulations promulgated by any Governmental Authority, which are not violated by the current use and operation of the leased facilities;
(iv) easements, covenants, conditions, restrictions, and other similar matters of record affecting the leased real property that do not materially impair the current use of such property; and
(v) Liens arising under the Assumed Contracts.
II. Sufficiency
The Purchased Assets, together with the services to be provided by Seller to Buyer under the Transition Services Agreement for the term thereof, constitute all of the assets, properties, and rights that are necessary and sufficient to conduct the OncuPath Business as currently conducted by Seller, in all material respects. Upon the expiration of the Transition Services Agreement, Buyer will have established or obtained replacement services for the corporate-level services currently provided by GDT to the OncuPath Business (including IT infrastructure, HR/payroll administration, and facilities management).
SCHEDULE 3.7 — MATERIAL CONTRACTS
Pursuant to Section 3.7 of the Agreement, the following is a complete list of all Material Contracts of the OncuPath Business. For purposes of this Schedule, "Material Contracts" includes all contracts, agreements, and arrangements to which Seller is a party or by which the Purchased Assets are bound that (i) involve annual payments or receipts in excess of $75,000, (ii) have a remaining term in excess of one year, (iii) contain exclusivity, non-competition, or most-favored-nation provisions, (iv) relate to intellectual Property, or (v) are otherwise material to the OncuPath Business.
I. License Agreements
II. Real Property Leases
III. Customer Contracts
See Schedule 1.3, Section III, and Schedule 3.18(a) for a complete listing and description of all material customer contracts.
IV. Supplier and Vendor Contracts
See Schedule 1.3, Section IV, and Schedule 3.18(b) for a complete listing and description of all material supplier and vendor contracts.
V. Equipment Leases
See Schedule 1.3, Section V, for a complete listing and description of all equipment leases.
VI. Service and Maintenance Agreements
See Schedule 1.3, Section VI, for a complete listing and description of all service agreements. In addition, the following service and maintenance agreements are Material Contracts:
VII. Collaboration and Research Agreements
Note: Contracts with annual value below $75,000 are not individually listed in this Schedule but are included in the Purchased Assets and referenced in Data Room folder 4.8 (master contract register).
SCHEDULE 3.8 — LITIGATION
Pursuant to Section 3.8 of the Agreement, the following information is disclosed with respect to all pending or, to the Knowledge of Seller, threatened litigation, arbitration, governmental investigation, or other legal or administrative proceedings related to the OncuPath Business:
I. Pending Matters
As of the date hereof, the following matters are pending with respect to the OncuPath Business:
(a) Kellner v. Genome Dx Therapeutics Inc. — Case No. 3:22-cv-01847-BEN-AGS, United States District Court, Southern District of California. This matter involves a product liability claim brought by plaintiff Sarah Kellner, an individual, alleging that the OncuPath companion diagnostic assay produced an incorrect test result that led to an incorrect treatment decision. The complaint was filed on September 14, 2022. Seller filed a motion to dismiss on December 2, 2022, which was denied on February 17, 2023. Discovery is ongoing. Seller's outside counsel (Calderwood & Harkness LLP) estimates a low probability of an adverse outcome and has assessed the potential range of loss at $0 to $500,000. No reserve has been recorded in the Financial Statements for this matter. Pursuant to Section 1.5(b) of the Agreement, this matter constitutes an Excluded Liability and shall be retained by Seller.
No other litigation, arbitration, or governmental proceeding is currently pending against Seller that relates exclusively to the OncuPath Business or the Purchased Assets.
II. Threatened Matters
As of the date hereof, to the Knowledge of Seller, no litigation, arbitration, or governmental proceeding has been threatened in writing against Seller that relates exclusively to the OncuPath Business or the Purchased Assets, other than as disclosed in Section I above.
III. Cease-and-Desist Letters, Demand Letters, and IP-Related Correspondence
Within the three (3) years preceding the date hereof, Seller has received the following cease-and-desist letters, demand letters, or other correspondence relating to intellectual Property of the OncuPath Business:
(a) Letter dated April 8, 2021, from counsel for SpectraGen Technologies, Inc. alleging potential infringement by the OncuPath assay line of U.S. Patent No. 10,428,371 (relating to fluorescent probe labeling methods). Seller's patent counsel conducted a freedom-to-operate analysis and responded on June 15, 2021, setting forth Seller's position that the OncuPath assays do not infringe the cited patent. No further correspondence has been received from SpectraGen Technologies, Inc. or its counsel, and no litigation has been filed.
No other cease-and-desist letters, demand letters, or IP-related correspondence have been received by Seller with respect to the OncuPath Business within the three-year look-back period.
IV. Governmental Investigations
No governmental investigations, enforcement actions, or regulatory proceedings are pending or, to the Knowledge of Seller, threatened relating to the OncuPath Business. Seller has not received any subpoena, civil investigative demand, or request for information from any Governmental Authority relating exclusively to the OncuPath Business within the three (3) years preceding the date hereof.
SCHEDULE 3.9 — PERMITS AND REGULATORY MATTERS
Pursuant to Section 3.9 of the Agreement, the following information is disclosed with respect to the permits, licenses, registrations, certifications, and regulatory approvals of the OncuPath Business:
I. CLIA Certification
II. FDA 510(k) Clearances
III. Pending FDA Submissions
IV. FDA Establishment Registration
Seller's OncuPath reference laboratory at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121, is registered with the FDA as an establishment under 21 C.F.R. Part 807. The FDA establishment registration number is 3014878. Post-Closing, the FDA establishment registration will need to be updated to reflect Buyer as the new owner/operator of the facility.
V. California State Clinical Laboratory License
The OncuPath reference laboratory holds a California State Clinical Laboratory License issued by the California Department of Public Health, Laboratory Field Services (License No. CLS-07841). The license is currently in full force and effect and expires on June 30, 2024. Post-Closing, the license will need to be updated to reflect the change of ownership.
VI. Compliance Status
All permits, licenses, registrations, certifications, and approvals listed in this Schedule are in full force and effect as of the date hereof. Seller has not received any notice of violation, revocation, suspension, limitation, or restriction of any such permit, license, registration, certification, or approval from any Governmental Authority within the three (3) years preceding the date hereof. The OncuPath reference laboratory has passed all proficiency testing challenges administered by CAP during such period.
VII. Post-Closing Updates Required
Following the Closing, Buyer will be required to update the following registrations, certifications, and licenses to reflect Buyer as the new operator of the OncuPath reference laboratory:
(a) CLIA Certificate of Accreditation (CLIA ID: 05D2178493) — update to reflect new operator name and laboratory director information;
(b) FDA Establishment Registration (Registration No. 3014878) — update to reflect new owner/operator;
(c) California State Clinical Laboratory License (License No. CLS-07841) — application for change of ownership; and
(d) Any other state-specific laboratory licenses or registrations that may be applicable to Buyer's operations at the OncuPath facilities.
SCHEDULE 3.10 — INTELLECTUAL PROPERTY
Pursuant to Section 3.10 of the Agreement, the following information is disclosed with respect to the intellectual Property of the OncuPath Business:
3.10(a) — Issued U.S. Patents (14 Total)
The following table sets forth all issued United States patents owned by Seller that are exclusively related to the OncuPath Business:
All issued patents listed above are owned by Genome Dx Therapeutics Inc. as assignee. All maintenance fees are current as of the date hereof. Copies of all issued patents and assignment records are contained in Data Room folder 5.1.
3.10(b) — Pending U.S. Patent Applications (7 Total)
The following table sets forth all pending United States patent applications owned by Seller that are exclusively related to the OncuPath Business:
All pending applications listed above have been filed by Genome Dx Therapeutics Inc. as applicant. Copies of all pending applications and prosecution histories are contained in Data Room folder 5.2.
3.10(c) — Registered Trademarks (3 Total)
The following table sets forth all registered trademarks owned by Seller that are exclusively related to the OncuPath Business:
All trademark registrations listed above are owned by Genome Dx Therapeutics Inc. All registrations are active, in good standing, and not subject to any pending cancellation or opposition proceeding. Copies of all trademark registration certificates are contained in Data Room folder 5.3.
3.10(d) — IP Licenses (Inbound)
The following inbound intellectual property license has been granted to Seller and is exclusively related to the OncuPath Business:
Exclusive License Agreement with Vantage Molecular Sciences, Inc.
No other inbound intellectual property licenses are exclusively related to the OncuPath Business.
3.10(e) — IP Licenses (Outbound)
Seller has not granted any outbound licenses, sublicenses, or other rights to any third party with respect to the intellectual Property exclusively related to the OncuPath Business, other than non-exclusive, limited rights of use granted to customers in the ordinary course of business in connection with the sale and delivery of OncuPath assay products and testing services.
3.10(f) — Trade Secrets and Know-How
The following categories of trade secrets, proprietary information, and know-how are exclusively related to the OncuPath Business and are included in the Purchased Assets:
1.  Proprietary Assay Formulations. Proprietary formulations for all OncuPath companion diagnostic assay reagents, including specific concentrations, buffer compositions, enzyme mixtures, and stabilizer compounds.
2.  Reagent Compositions. Detailed reagent compositions, including proprietary modifications to commercially available reagent bases, optimized reaction conditions, and quality control specifications.
3.  Manufacturing Processes. Proprietary manufacturing processes, kitting procedures, and assembly protocols for OncuPath assay kits, including process validation data, manufacturing batch records, and standard operating procedures for the Carlsbad manufacturing facility.
4.  Standard Operating Procedures. Comprehensive standard operating procedures ("SOPs") for all laboratory testing, sample processing, quality control, and reporting activities conducted at the OncuPath reference laboratory.
5.  Laboratory Protocols. Validated laboratory protocols for specimen handling, nucleic acid extraction, hybridization, amplification, sequencing, and data analysis, including instrument-specific protocols for each major equipment platform.
6.  Quality Control Methods. Proprietary quality control and quality assurance methods, including internal control sample specifications, proficiency testing protocols, and inter-laboratory comparison methods.
7.  Customer Data. Customer lists, customer contact information, pricing schedules, volume commitments, and order histories for all OncuPath Business customers.
8.  Clinical Validation Data. Clinical validation study data, analytical validation study data, and clinical utility evidence supporting the regulatory submissions and marketing of OncuPath assay products.
All trade secrets and know-how listed above are subject to confidentiality protections, including nondisclosure agreements with employees, contractors, and third parties. Such protections are described in the confidentiality and information security policies maintained by Seller and contained in Data Room folder 5.6.
3.10(g) — Freedom-to-Operate; IP Disputes
1.  No Pending Infringement Claims. As of the date hereof, no claims of patent infringement, trademark infringement, trade secret misappropriation, or other intellectual Property infringement have been asserted against Seller with respect to the OncuPath Business, and no such claims are pending before any court, tribunal, or administrative body. The correspondence from SpectraGen Technologies, Inc. described in Schedule 3.8, Section III(a) did not result in any pending claim or proceeding.
2.  No Validity Challenges. No third party has filed, or to the Knowledge of Seller threatened to file, any inter partes review, post-grant review, ex parte reexamination, or other proceeding before the United States Patent and Trademark Office or any court challenging the validity or enforceability of any OncuPath patent listed in Schedule 3.10(a). No cancellation or opposition proceedings are pending or, to the Knowledge of Seller, threatened with respect to any OncuPath trademark listed in Schedule 3.10(c).
3.  Chain of Title. The chain of title for all patents listed in Schedule 3.10(a) and all patent applications listed in Schedule 3.10(b) has been confirmed through a review of assignment records on file with the United States Patent and Trademark Office. All inventors named on such patents and applications have executed written assignments of their rights to Genome Dx Therapeutics Inc. Copies of all recorded assignments are contained in Data Room folder 5.7.
SCHEDULE 3.11 — REAL PROPERTY
Pursuant to Section 3.11 of the Agreement, the following information is disclosed with respect to the real property used in the OncuPath Business:
I. OncuPath Reference Laboratory and R&D Facility
II. OncuPath Manufacturing and Kitting Facility
III. Owned Real Property
Seller does not own any real property that is exclusively used in, or exclusively held for use in connection with, the OncuPath Business. All real property used in the OncuPath Business is leased as described above.
SCHEDULE 3.12 — ENVIRONMENTAL MATTERS
Pursuant to Section 3.12 of the Agreement, the following information is disclosed with respect to environmental matters relating to the OncuPath Business:
1.  No Known Material Environmental Liabilities. To the Knowledge of Seller, there are no material environmental liabilities, obligations, or conditions existing at or relating to either the OncuPath reference laboratory and R&D facility at 4820 Towne Centre Drive, Suite 200, San Diego, California 92121, or the OncuPath manufacturing and kitting facility at 925 Industrial Court, Carlsbad, California 92010.
2.  Regulatory Compliance. The OncuPath reference laboratory handles biological samples (including patient tissue specimens and extracted nucleic acids), chemicals (including laboratory-grade solvents, acids, and bases), and reagents (including fluorescent dyes and enzymatic reagents) in compliance with all applicable federal and California environmental, health, and safety regulations, including:
(a) The Occupational Safety and Health Act ("OSHA"), 29 U.S.C. §§ 651–678, and applicable OSHA standards, including the Bloodborne Pathogens Standard (29 C.F.R. § 1910.1030) and the Hazard Communication Standard (29 C.F.R. § 1910.1200);
(b) The California Occupational Safety and Health Act ("Cal/OSHA"), Cal. Lab. Code §§ 6300–6719, and applicable Cal/OSHA standards;
(c) The Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901–6992k, and applicable regulations, including 40 C.F.R. Parts 260–272; and
(d) Applicable California hazardous waste management regulations, Cal. Health & Safety Code §§ 25100–25250, and implementing regulations at 22 Cal. Code Regs. Division 4.5.
3.  Hazardous Waste Management. Hazardous waste generated at the OncuPath facilities, including biological waste, chemical waste, and mixed waste, is managed through licensed waste haulers and treatment, storage, and disposal facilities in compliance with all applicable federal and state laws. The OncuPath reference laboratory operates as a Small Quantity Generator ("SQG") under RCRA. The EPA Identification Number for the Towne Centre Drive facility is CAD982367521. The Carlsbad facility is a Conditionally Exempt Small Quantity Generator ("CESQG").
4.  No Pending or Threatened Environmental Claims. Seller has not received any notice of violation, complaint, order, directive, or other communication from any Governmental Authority alleging any violation of any Environmental Law at either of the OncuPath facilities. No claims, actions, suits, or proceedings relating to environmental matters are pending or, to the Knowledge of Seller, threatened against Seller with respect to the OncuPath Business.
5.  No Remediation Orders. No remediation, corrective action, closure, or post-closure obligations have been imposed on Seller by any Governmental Authority with respect to either of the OncuPath facilities.
6.  No Underground Storage Tanks. There are no underground storage tanks currently located at, or, to the Knowledge of Seller, formerly located at, either 4820 Towne Centre Drive, Suite 200, San Diego, California 92121, or 925 Industrial Court, Carlsbad, California 92010.
7.  Excluded Environmental Liabilities. Environmental liabilities at GDT facilities not conveyed to Buyer, including the corporate headquarters at 10250 Science Center Drive, Suite 600, San Diego, California 92121, and all other GDT facilities not included in the Purchased Assets, are Excluded Liabilities and shall be retained by Seller.
8.  Environmental Reports. Phase I Environmental Site Assessments were conducted for both OncuPath facilities in connection with the execution of the respective leases. Copies of these assessments, which identified no recognized environmental conditions, are contained in Data Room folder 6.3.
SCHEDULE 3.13 — EMPLOYEES AND EMPLOYEE BENEFITS
Pursuant to Section 3.13 of the Agreement, the following information is disclosed with respect to the employees and employee benefit matters of the OncuPath Business:
3.13(a) — Transferred Employees
Meridian has committed to extend employment offers to eighty-three (83) employees of the OncuPath Business (the "Offered Employees"). As of the date hereof, seventy-eight (78) of such employees have accepted Meridian's offers and will transfer to Meridian's employment at the Closing (the "Transferred Employees"). Five (5) employees have declined Meridian's offers, and their employment will remain with GDT.
Key Transferring Personnel:
Summary of All Offered Employees by Department and Location:
A complete list of all Offered Employees, including each employee's name, title, department, base salary or hourly rate, hire date, work location, and exempt or non-exempt status under the Fair Labor Standards Act and applicable California law, is contained in Data Room folder 7.1 (the "Employee Census"). Such list is deemed incorporated herein by reference. Access to the Employee Census is restricted to authorized individuals of Buyer in accordance with the Confidentiality Agreement between the parties.
3.13(b) — WARN Act
No notification is required under the Worker Adjustment and Retraining Notification Act of 1988 (29 U.S.C. §§ 2101–2109) (the "WARN Act") or the California WARN Act (Cal. Lab. Code §§ 1400–1408) in connection with the transactions contemplated by the Agreement. The transaction does not involve a "plant closing" or "mass layoff" (as defined in the WARN Act) because:
(a) Fewer than one hundred (100) employees are affected at any single site of employment. The San Diego (Towne Centre) facility has sixty-nine (69) Offered Employees, and the Carlsbad facility has fourteen (14) Offered Employees, neither of which exceeds the WARN Act threshold.
(b) Meridian has extended employment offers to all eighty-three (83) OncuPath Business employees, and seventy-eight (78) employees have accepted such offers and will continue employment with Buyer at the same work locations. The five (5) employees who declined Meridian's offers will remain employed by GDT and are not being terminated.
(c) The transaction does not result in any layoffs or employment losses as defined under the WARN Act.
3.13(c) — Employee Benefit Plans
The Offered Employees currently participate in the following employee benefit plans sponsored and maintained by GDT at the corporate level:
Buyer has committed to provide the Transferred Employees with employee benefit plans that are, in the aggregate, substantially comparable to those currently provided by GDT, as set forth in Section 6.8 of the Agreement. With respect to the GDT 401(k) Retirement Plan, Transferred Employees will be eligible to roll over their account balances to Buyer's 401(k) plan in accordance with applicable Law.
COBRA continuation coverage obligations with respect to the five (5) employees who declined Meridian's offers, and any other qualified beneficiaries of such employees, shall remain with GDT and constitute Excluded Liabilities.
The treatment of accrued but unused paid time off ("PTO") for Transferred Employees shall be as set forth in Section 2.6(c) of the Agreement. As of the Closing Date, GDT shall provide Buyer with a schedule of accrued PTO balances for each Transferred Employee.
3.13(d) — Employment Agreements; Restrictive Covenants
Employment Agreements. The following OncuPath Business employees have written employment agreements with GDT that contain provisions triggered by or relevant to the transactions contemplated by the Agreement:
All other Offered Employees are employed by GDT on an at-will basis pursuant to standard offer letters. All Offered Employees have executed GDT's standard Proprietary Information and Inventions Assignment Agreement ("PIIA"), which includes confidentiality obligations and assignment of inventions. Copies of all employment agreements and PIIAs are contained in Data Room folder 7.3.
Non-Competition and Non-Solicitation Agreement. At the Closing, GDT shall execute and deliver to Buyer the Non-Competition and Non-Solicitation Agreement (the "Restrictive Covenant Agreement") substantially in the form attached as Exhibit D to the Agreement, which provides for:
(a) A three (3)-year non-competition covenant, pursuant to which GDT and its Affiliates shall not engage in, or invest in any Person that engages in, the development, manufacture, marketing, or sale of companion diagnostic assays within the United States, subject to customary exceptions (including passive investments of less than 5% in publicly traded securities);
(b) A two (2)-year non-solicitation covenant, pursuant to which GDT and its Affiliates shall not solicit, recruit, or hire any Transferred Employee, or induce any Transferred Employee to terminate his or her employment with Buyer, subject to customary exceptions (including general solicitations not targeted at Transferred Employees).
SCHEDULE 3.14 — TAX MATTERS
Pursuant to Section 3.14 of the Agreement, the following information is disclosed with respect to Tax matters relating to the OncuPath Business and the transactions contemplated by the Agreement:
I. Seller Tax Identification
II. Transaction Structure
The transactions contemplated by the Agreement are structured as a purchase and sale of assets, which will permit Buyer to obtain a step-up in the tax basis of the Purchased Assets to their respective fair market values as of the Closing Date. The parties have agreed to allocate the aggregate Purchase Price of One Hundred Forty Million Dollars ($140,000,000) among the Purchased Assets in accordance with Section 1060 of the Internal Revenue Code of 1986, as amended ("IRC"), and the Treasury Regulations promulgated thereunder. The Purchase Price allocation shall be agreed upon by the parties within one hundred twenty (120) calendar days following the Closing Date (the "Allocation Deadline"), which, based on an anticipated Closing Date of August 8, 2023, would be December 6, 2023.
III. Preliminary Purchase Price Allocation
The following preliminary allocation of the aggregate Purchase Price has been prepared by Leonard Cross, Esq. of Calderwood & Harkness LLP, in consultation with the parties' respective tax advisors, and is subject to finalization pursuant to the procedures set forth in Section 7.3 of the Agreement:
The preliminary allocation set forth above does not include the Net Working Capital amount, which will be calculated and allocated upon finalization of the Closing Balance Sheet.
IV. California Source Income
Seller's gain on the sale of the Purchased Assets will be subject to California source income apportionment rules, as the OncuPath Business is conducted entirely within California. The allocation of income to California will be determined in accordance with Cal. Rev. & Tax. Code §§ 25120–25141 and applicable regulations.
V. Seller's Tax Treatment
Seller will recognize gain on the sale of the Purchased Assets at the corporate level. Seller's equity sponsor, Pinnacle Biosciences Partners Fund III, L.P. (EIN: 83-1726450), a Delaware limited partnership, will receive distributions from Seller at the fund level, and such distributions will be reported by the partners of Pinnacle in accordance with their respective partnership interests and applicable tax law.
VI. Excluded Tax Items
As set forth in Schedules 1.2 and 1.5:
(a) Tax refunds attributable to Pre-Closing Tax Periods are Excluded Assets and shall be retained by Seller.
(b) Pre-Closing Tax liabilities are Excluded Liabilities and shall be retained by Seller.
VII. Tax Compliance
(a) No pending tax audits, examinations, or assessments by any Taxing Authority have been initiated or are currently pending with respect to the OncuPath Business exclusively.
(b) All required federal, state, and local income tax returns of Seller tha