[sheet: Cover]

[sheet: Cover]
Field | Value
Document Title | DRAFT — Payoff and Funds Flow Memorandum
Prepared By | Calderwood & Harkness LLP
Address | 200 Park Avenue, 42nd Floor, New York, NY 10166
Date | June 8, 2024
Matter Number | 1018-00008
Prepared For | Penterra Pharmaceuticals Corp.
Transaction | Acquisition of 100% of the Outstanding Capital Stock of Veridian Biosciences, Inc.
Purchase Price | $900,000,000
Anticipated Closing Date | [TBD]
Contact — Responsible Partner | Oliver Mackenzie
Contact — Lead Associate | Megan Chu
Status | DRAFT — Subject to revision upon finalization of closing date and wire instructions
Confidential | PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
[sheet: Sources of Funds]
Line Item | Source Entity | Account / Reference | Amount | Notes
1. Term Loan Drawdown | Ironclad Trust Company, N.A. (as Administrative Agent) / Summit Ridge Capital Partners, LP (as Lead Arranger) | Commitment Letter Ref. CL-2024-PPCA-0607 dated June 7, 2024 | $500,000,000 | SOFR + 225 bps; $500,000,000 committed term loan facility
2. Penterra Cash on Hand | Penterra Pharmaceuticals Corp. | Penterra operating account — [Wire instructions TBD] | $400,000,000 | From PPC cash on hand (Q2 2024 balance: $2,100,000,000)
TOTAL SOURCES | $900,000,000 | Must equal Total Uses
[sheet: Uses of Funds]
Line Item | Recipient / Payee | Account / Reference | Amount | Percentage of Purchase Price | Notes
1. Indemnification Escrow Deposit | Fidelis National Escrow Corp. (Escrow Agent) — 601 Riverside Avenue, Jacksonville, FL 32204; Contact: Brian Mulcahy, SVP | Indemnification Escrow Account — [Account No. TBD] | $180,000,000 | 20.00% | Per SPA § 2.3(a); Indemnification cap = 20% of Purchase Price; 1% tipping basket ($9,000,000)
2. Stockholder Representative Expense Fund | Fidelis National Escrow Corp. (Escrow Agent) — 601 Riverside Avenue, Jacksonville, FL 32204; Contact: Brian Mulcahy, SVP | Stockholder Rep. Expense Fund Account — [Account No. TBD] | $2,500,000 | 0.28% | Per SPA § 2.3(b); For use by David Ng (Crestline Ventures, LP) as Stockholder Representative
3. Net Closing Payment to Sellers | Veridian Biosciences, Inc. Stockholders (via Paying Agent / Stockholder Representative) | [Wire instructions TBD — to be provided by Zalcourt Archer & Cole LLP] | $717,500,000 | 79.72% | Per SPA § 2.1; Net of escrow holdbacks; distributed pro rata to Sellers per capitalization table
TOTAL USES | $900,000,000 | 100.00% | Must equal Total Sources
[sheet: Funds Flow Sequence]
Step No. | Timing | Sending Party | Sending Account | Receiving Party | Receiving Account | Amount | Description / Purpose | Condition Precedent
1 | T (Closing Date) — 9:00 AM ET | Ironclad Trust Company, N.A. (Administrative Agent) | Term Loan Funding Account — 60 Wall Street, New York, NY 10005 — [Account No. TBD] | Penterra Pharmaceuticals Corp. | PPC Closing Funding Account — [Account No. TBD] | $500,000,000 | Drawdown of $500,000,000 under committed term loan facility per Commitment Letter Ref. CL-2024-PPCA-0607 | Satisfaction of all conditions precedent under credit agreement; delivery of borrowing notice
2 | T — 9:30 AM ET | Penterra Pharmaceuticals Corp. | PPC Closing Funding Account | Penterra Pharmaceuticals Corp. | PPC Closing Disbursement Account — [Account No. TBD] | $400,000,000 | Internal transfer of $400,000,000 from PPC operating account to closing disbursement account | Confirmation of receipt of term loan proceeds in Step 1
3 | T — 10:00 AM ET | Penterra Pharmaceuticals Corp. | PPC Closing Disbursement Account | Fidelis National Escrow Corp. | Indemnification Escrow Account — Fidelis National Escrow Corp., 601 Riverside Avenue, Jacksonville, FL 32204 — [Account No. TBD] | $180,000,000 | Deposit of Indemnification Escrow Amount per SPA § 2.3(a) and Escrow Agreement dated June 10, 2024 | Execution and delivery of Escrow Agreement; confirmation of aggregate funds in disbursement account
4 | T — 10:00 AM ET | Penterra Pharmaceuticals Corp. | PPC Closing Disbursement Account | Fidelis National Escrow Corp. | Stockholder Representative Expense Fund Account — Fidelis National Escrow Corp. — [Account No. TBD] | $2,500,000 | Deposit of Stockholder Representative Expense Fund per SPA § 2.3(b) | Execution and delivery of Escrow Agreement
5 | T — 10:30 AM ET | Penterra Pharmaceuticals Corp. | PPC Closing Disbursement Account | Veridian Biosciences, Inc. Stockholders (via Paying Agent / Stockholder Representative — David Ng) | Sellers' Payment Account — [Wire instructions to be provided by Zalcourt Archer & Cole LLP, One Federal Street, 30th Floor, Boston, MA 02110] | $717,500,000 | Net Closing Payment to Sellers — distributed pro rata among stockholders of Veridian per the capitalization table attached as Exhibit A to the SPA | Satisfaction of all Buyer and Seller closing conditions under SPA §§ 7.1, 7.2, 7.3; delivery of all closing deliverables; confirmation of Steps 3 and 4
[sheet: Seller Payment Allocation]
Stockholder / Holder | Equity Class | Fully Diluted Ownership % | Gross Entitlement (Purchase Price × Ownership %) | Less: Pro Rata Escrow Holdback | Less: Pro Rata Expense Fund Holdback | Net Closing Payment
Crestline Ventures, LP (David Ng, Managing Partner) | Series A & B Preferred | 28.30% | $254,700,000 | $50,940,000 | $707,500 | $203,052,500
Boreal Health Partners Fund III, LP (Sarah Dalmqvist, MD) | Series C Preferred | 19.70% | $177,300,000 | $35,460,000 | $492,500 | $141,347,500
Apex Growth Equity Fund II, LP (Marcus Doyle, Partner) | Series D Preferred | 14.10% | $126,900,000 | $25,380,000 | $352,500 | $101,167,500
Dr. Julian Marek (CEO & Co-Founder) | Common Stock | 8.40% | $75,600,000 | $15,120,000 | $210,000 | $60,270,000
Dr. Priya Chandrasekaran (CSO & Co-Founder) | Common Stock | 6.20% | $55,800,000 | $11,160,000 | $155,000 | $44,485,000
ESOP Pool (Management & Employees) | Common Stock / Options | 9.80% | $88,200,000 | $17,640,000 | $245,000 | $70,315,000
Other Institutional Investors | Various Preferred / Common | 13.50% | $121,500,000 | $24,300,000 | $337,500 | $96,862,500
TOTAL | 100.00% | $900,000,000 | $180,000,000 | $2,500,000 | $717,500,000
[sheet: Wire Instructions]
Party | Bank Name | Bank Address | ABA / Routing Number | Account Number | Account Name | Reference | Contact
Ironclad Trust Company, N.A. (Term Loan Funding) | Ironclad Trust Company, N.A. | 60 Wall Street, New York, NY 10005 | [TBD] | [TBD] | Summit Ridge / Ironclad Term Loan Funding — CL-2024-PPCA-0607 | Penterra Pharmaceuticals Corp. — Veridian Acquisition | Samantha Hwang, VP — Ironclad Trust Company, N.A.
Penterra Pharmaceuticals Corp. (Closing Funding Account) | [TBD] | [TBD] | [TBD] | [TBD] | Penterra Pharmaceuticals Corp. — Closing Funding Account | Veridian Acquisition Closing | Catherine M. Burgess, CFO — Penterra Pharmaceuticals Corp., 1100 Meridian Boulevard, Suite 400, Princeton, NJ 08540
Penterra Pharmaceuticals Corp. (Closing Disbursement Account) | [TBD] | [TBD] | [TBD] | [TBD] | Penterra Pharmaceuticals Corp. — Closing Disbursement Account | Veridian Acquisition Closing | Catherine M. Burgess, CFO
Fidelis National Escrow Corp. (Indemnification Escrow) | [TBD] | 601 Riverside Avenue, Jacksonville, FL 32204 | [TBD] | [TBD] | Fidelis National Escrow Corp. — Indemnification Escrow re: Penterra/Veridian | Escrow Agreement dated June 10, 2024 | Brian Mulcahy, SVP — Fidelis National Escrow Corp.
Fidelis National Escrow Corp. (Stockholder Rep. Expense Fund) | [TBD] | 601 Riverside Avenue, Jacksonville, FL 32204 | [TBD] | [TBD] | Fidelis National Escrow Corp. — Stockholder Rep. Expense Fund re: Penterra/Veridian | Escrow Agreement dated June 10, 2024 | Brian Mulcahy, SVP — Fidelis National Escrow Corp.
Sellers' Payment Account (via Stockholder Representative / Paying Agent) | [TBD — to be provided by Zalcourt Archer & Cole LLP] | [TBD] | [TBD] | [TBD] | [TBD — Stockholder Representative: David Ng, Crestline Ventures, LP] | SPA dated June 10, 2024 — Net Closing Payment | David Ng, Managing Partner, Crestline Ventures, LP; cc: Rebecca Whitmore, Zalcourt Archer & Cole LLP, One Federal Street, 30th Floor, Boston, MA 02110