EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER
by and among
BIONANO GENOMICS, INC.
ALTA MERGER SUB, INC.
LINEAGEN, INC.
and
MICHAEL S. PAUL PH.D.,
Solely in its capacity as the Representative
Dated as of August 21, 2020

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Table of Contents

Page

Article I    DEFINITIONS
1
1.1    Certain Definitions
1
Article II    THE MERGER
9
2.1    The Merger
9
2.2    Closing
9
2.3    Effective Time
9
2.4    Effects of the Merger
9
2.5    Certificate of Incorporation and Bylaws
9
2.6    Directors and Officers
10
Article III    CONVERSION OF SECURITIES IN THE MERGER
10
3.1    Effect of Merger on Capital Stock
10
3.2    Treatment of Company Stock Options, Company Warrants and Company
Convertible Notes.
10
3.3    Dissenting Shares
11
3.4    Purchase Price
11
3.5    Payments at Closing.
11
3.6    Withholding
14
3.7    Escrow.
14
Article IV    REPRESENTATIONS AND WARRANTIES OF THE COMPANY
15
4.1    Organization, Standing and Power
15
4.2    Capitalization.
15
4.3    No Subsidiaries; Officers and Directors
17
4.4    Authority; No Conflict; Required Filings and Consents.
17
4.5    Financial Statements.
18
4.6    No Undisclosed Liabilities.
19
4.7    Absence of Certain Changes or Events
19
4.8    Taxes.
21
4.9    Indebtedness
23
4.10    Owned and Leased Real Properties.
23
4.11    Intellectual Property.
23
4.12    Agreements, Contracts and Commitments; Government Contracts.
27
4.13    Litigation
29
4.14    Environmental Matters.
29
4.15    Employee Benefit Plans.
29
4.16    Compliance With Laws; Registrations; Healthcare Compliance.
31
4.17    Privacy; Security Measures.
32
4.18    Labor Matters.
34
4.19    Insurance
35
4.20    Assets
36
4.21    Payors
36

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Table of Contents
(continued)
Page

4.22    Books and Records
36
4.23    No Illegal Payments
36
4.24    Affiliated Transactions.
37
4.25    Suppliers
37
4.26    Brokers; Schedule of Fees and Expenses
38
4.27    Accounts Receivable
38
4.28    Non Reliance.
38
4.29    No Other Representations
39
Article V    REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE PURCHASER
39
5.1    Organization, Standing and Power
39
5.2    Authority; No Conflict; Required Filings and Consents.
39
5.3    Interim Operations of the Purchaser
40
5.4    Financing
40
5.5    Brokers
40
5.6    SEC Documents.
40
5.7    Non-Reliance.
41
5.8    No Other Representations
42
Article VI    ADDITIONAL AGREEMENTS
42
6.1    Public Disclosure
42
6.2    Employee Matters.
42
6.3    Equity Incentive Plan and 401(k) Plan Terminations
43
6.4    Tax Matters.
43
6.5    Directors and Officers Indemnification
44
6.6    Consents
45
Article VII    CONDITIONS
45
7.1    Conditions to the Parent’s and the Purchaser’s Obligation to Effect the
Merger
45
7.2    Conditions to the Company’s Obligation to Effect the Merger
46
Article VIII    INDEMNIFICATION
47
8.1    Indemnity Obligations of Escrow Beneficiaries
47
8.2    Indemnity Obligations of Parent
47
8.3    Procedures.
48
8.4    Expiration of Representations and Warranties
49
8.5    Certain Limitations; Calculation of Losses; Mitigation
49
8.6    Indemnification Payments to Parent Indemnitees
50
8.7    Treatment of Indemnification Payments
50
8.8    Materiality
50
8.9    Sole Remedy
51
8.10    Subrogation
51
Article IX    MISCELLANEOUS
51

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Table of Contents
(continued)
Page

9.1    Notices
51
9.2    Entire Agreement; Amendment
52
9.3    No Third Party Beneficiaries
52
9.4    Assignment
52
9.5    Severability
53
9.6    Counterparts and Signature
53
9.7    Interpretation
53
9.8    Governing Law
54
9.9    Remedies
54
9.10    Submission to Jurisdiction
54
9.11    WAIVER OF JURY TRIAL
54
9.12    Attorney-Client Privilege; Continued Representation
54
9.13    Disclosure Schedule
55
9.14    Representative.
55

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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of August 21,
2020, is entered into by and among Bionano Genomics, Inc., a Delaware
corporation (the “Parent”), Alta Merger Sub, Inc., a Delaware corporation and
wholly-owned Subsidiary of the Parent (the “Purchaser”), Lineagen, Inc., a
Delaware corporation (the “Company”), and Michael S. Paul, Ph.D., solely in his
capacity as the Representative. The Parent, the Purchaser, the Company and
Representative are collectively referred to herein as the “Parties”.
WHEREAS, the Purchaser and the Company desire for the Parent to acquire the
Company upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, to effectuate such acquisition, the Purchaser will be merged with and
into the Company, with the Company continuing as the surviving corporation in
such merger (the “Merger”); and
WHEREAS, prior to the execution of this Agreement, and as a condition to the
willingness of Parent to enter into this Agreement, the Company has obtained and
delivered to Parent a true, correct and complete copy of an irrevocable written
consent in the form attached hereto as Exhibit A (the “Executed Written
Consent”) of (i) the holders of at least eighty percent (80%) of the outstanding
Company Common Stock and the Company Preferred Stock voting together as a single
class on an as converted basis; (ii) a majority of the outstanding Company
Preferred Stock (voting together as a single class on an as converted basis);
and (iii) the holders of at least sixty-six percent (66%) of the outstanding
Series C-1 Preferred Stock (voting as a separate class), adopting, among other
things, this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereby agree as follows:
Article I.

DEFINITIONS
i.Certain Definitions
. The following terms, when used in this Agreement and the Exhibits, Schedules,
and other documents delivered in connection herewith, have the meanings assigned
to them in this Section 1.1.
“Affiliate” when used with respect to any party means any person who is an
“affiliate” of that party within the meaning of Rule 405 promulgated under the
Securities Act of 1933, as amended (the “Securities Act”).
“Anti-Corruption/AML Laws” means the U.S. Foreign Corrupt Practices Act of 1977,
as amended, the Anti-Kickback Act of 1986, as amended, the U.S. Domestic Bribery
Statute (18 U.S.C. § 201), the U.S. Travel Act (18 U.S.C. § 1952), the UK
Bribery Act of 2010, the UK Proceeds of Crime Act 2002, the USA PATRIOT Act, and
all other applicable anti-bribery, anti-corruption, anti-kickback, anti-money
laundering, anti-terrorist financing, anti-fraud, anti-embezzlement, or conflict
of interest Laws in all of the jurisdictions in which the Company has
operations, including without limitation the Anti-

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Bribery Laws of the People’s Republic of China or any Laws of similar effect,
and the related regulations and published interpretations thereunder.
“Business Day” means any day, other than Saturday, Sunday or any other day on
which banks located in the State of Delaware or in the State of Utah are
authorized or required to close.
“CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act of
2020, Pub. L. 116-136.
“Closing Assumed Liabilities” means an amount, as determined in accordance with
GAAP and without duplication, equal to the sum of (i) all liabilities of the
Company, including, but not limited to, all accounts payable, accrued or
deferred expenses, payroll liabilities, Tax liabilities, deferred revenue,
dividends payable or other similar obligations or current liabilities (excluding
(A) Company Transaction Costs, (B) Closing Date Indebtedness, (C) Company Trade
Liabilities and (D) liabilities and obligations pursuant to capital leases not
classified as current liabilities in accordance with GAAP) as of the Closing
Date, (ii) Closing Date Indebtedness, (iii) Company Trade Liabilities, and (iv)
Parent Closing Cash Payments, in each case, to the extent not paid at or prior
to Closing, including pursuant to Section 3.5(d), and as adjusted for any
settlements thereof; provided that, notwithstanding anything to the contrary,
all (1) accrued commissions, bonuses, vacation, sick time, paid time off and
similar employee entitlements and (2) unpaid Pre-Closing Taxes (other than
Transaction Payroll Taxes included in Company Transaction Costs) shall be
treated as liabilities taken into account in the calculation of Closing Assumed
Liabilities.
“Closing A/R and Cash” means the sum of all cash and cash equivalents of the
Company and accounts receivable of the Company as of the Closing, as computed in
accordance with GAAP.
“Closing Date Indebtedness” means the Indebtedness of the Company as of the
Closing Date.
“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
“Company Convertible Notes” means the Company Series D Convertible Notes and the
Company Series E Convertible Notes.
“Company Data” means all data (including Personal Data) collected, generated,
received or stored or otherwise Processed by the Company in the operation of its
business.
“Company Material Adverse Effect” means any change, occurrence, event,
circumstance, development or effect that, individually or in the aggregate with
all other changes, occurrences, events, circumstances, developments or effects
occurring that has a material adverse effect on the business, assets,
liabilities, capitalization, financial condition or results of operations of the
Company; provided, however, that none of the following shall be deemed either
alone or in combination with any of the following to constitute a Company
Material Adverse Effect: (i) any adverse effect that results from general
economic, business, financial or market conditions; (ii) any adverse effect that
results from conditions in any of the industries or industry sectors in which
the Company operates; (iii) any adverse effect resulting from any act of
terrorism, war, national or international calamity pandemic, epidemic or disease
outbreak (including the COVID-19 Pandemic); (iv) any adverse effect resulting
from any changes in GAAP; or (v) any failure to meet internal projections,
estimates or forecasts of revenues, earnings, or other measures of financial or
operating performance for any period (except that the underlying causes,
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facts and circumstances of such failure may, to the extent not otherwise
described in clauses (i) through (iv), constitute, or be taken into account in
determining whether there is, or has been, a Company Material Adverse Effect);
provided, however, that any adverse effect referred to in clauses (i) through
(iv) immediately above shall be taken into account in determining whether a
Company Material Adverse Effect has occurred to the extent that such adverse
effect has a disproportionate effect on the Company compared to companies in the
industries in which the Company conducts its businesses. For the avoidance of
doubt, the terms “material”, “materially” or “materiality” as used in this
Agreement with an initial lower case “m” shall have their respective customary
and ordinary meanings, without regard to the meanings ascribed to Company
Material Adverse Effect in the prior sentence of this paragraph.
“Company Series D Convertible Notes” means the outstanding convertible
promissory notes of the Company issued pursuant to the (a) that certain Note and
Warrant Purchase Agreement, dated May 25, 2018, by and among Lineagen, Inc. and
the persons and entities named on the Schedule of Purchasers attached thereto,
(b) that certain Note and Warrant Purchase Agreement, dated July 19, 2018, by
and among Lineagen, Inc. and the persons and entities named on the Schedule of
Purchasers attached thereto, (c) that certain Note and Warrant Purchase
Agreement, dated December 13, 2018, by and among Lineagen, Inc. and the persons
and entities named on the Schedule of Purchasers attached thereto and (d) that
certain Note and Warrant Purchase Agreement, dated February 12, 2019, by and
among Lineagen, Inc. and the persons and entities named on the Schedule of
Purchasers attached thereto; as amended by (i) that certain Amendment No. 1 to
Convertible Promissory Notes, dated November 20, 2018, (ii) that certain Omnibus
Amendment No. 2 to Convertible Promissory Notes, dated February 12, 2019, (iii)
that certain Omnibus Amendment No. 3 to Convertible Promissory Notes, dated May
30, 2019, and (iv) that certain Omnibus Amendment No. 4 to Convertible
Promissory Notes, dated April 15, 2020.
“Company Series E Convertible Notes” means the outstanding convertible
promissory notes of the Company issued pursuant to that certain Note and Warrant
Purchase Agreement, dated May 30, 2019, by and among Lineagen, Inc. and the
persons and entities named on the Schedule of Purchasers attached thereto; as
amended by that certain Amendment No. 1 to Note Purchase Agreement, dated
October 9, 2019 and that certain Omnibus Amendment No. 4 to Convertible
Promissory Notes, dated April 15, 2020.
“Company Trade Liabilities” means the liabilities, obligations or commitments
incurred and payable by the Company (other than Company Transaction Costs,
Indebtedness and obligations, liabilities or commitments incurred in connection
with the PPP Loan) in the amounts and to the service providers and trade
creditors of the Company (the “Trade Creditors”) listed on Section 1.1 of the
Company Disclosure Schedule.
“Company Transaction Costs” means all costs, fees, expenses, payments, or
expenditures of the Company incurred, but not paid, at or prior to the Closing
(whether or not invoiced) in connection with this Agreement and the consummation
of the transactions contemplated hereby, including: (a)(i) fees and expenses of
advisors, investment bankers, lawyers and accountants arising out of, relating
to or incidental to the discussion, evaluation, financing, negotiation and
documentation of the transactions contemplated hereby; (ii) any broker’s,
finder’s, financial advisor’s or other similar fee, bonus or commission; (iii)
all payments to current or former directors, officers, employees and consultants
arising out of, or in connection with, the transactions contemplated hereby
(other than (A) any such amounts that become payable post-Closing due to actions
taken with respect to such individuals at or after the Closing by Parent, the
Surviving Corporation or any of their respective Affiliates, and/or (B) any and
all severance payments that are payable in connection with or as a result of the
termination of any employee(s) of the Company on or prior to the Closing who the
Parent or the Purchaser requested be terminated on or prior
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to the Closing); (iv) Transaction Payroll Taxes or (v) fees and expenses related
to the obtaining of any third-party vendor consent to be obtained in connection
with the transactions contemplated hereby, and (b) that arise or are expected to
arise, are triggered or become due or payable, in whole or in part, as a direct
or indirect result of the consummation (whether alone or in combination with any
other event or circumstance) of the Merger or any of the other transactions
contemplated hereby, other than as a result of actions taken by Parent or its
Affiliates following

4

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the Closing; provided, however, “Company Transaction Costs” shall not include
(x) any fees or other compensation payable to the Escrow Agent, which shall be
paid solely by Parent pursuant to Section 3.4 of the Escrow Agreement, (y) any
obligations, liabilities or commitments incurred in connection with the PPP
Loan, including, without limitation, repayment obligations that arise or are
expected to arise, are triggered or become due or payable, in whole or in part,
as a direct or indirect result of the consummation (whether alone or in
combination with any other event or circumstance) of the Merger or any of the
other transactions contemplated hereby, or (z) any costs, fees or expenses,
including audit or accounting costs, incurred or payable by the Surviving
Corporation arising from or relating to any statements, reports, schedules,
forms or other documents (including exhibits and schedules thereto and all other
information incorporated by reference), required to be filed or furnished with
the SEC by Parent or any of its Subsidiaries or otherwise comply with SEC rules
following the Closing.
“Contract” means any contract, agreement, instrument, license, lease, sublease,
note, bond, indenture, deed of trust, mortgage, loan agreement or other legally
binding commitment (including any binding plan, arrangement or agreement in
principle), whether written or oral.
“COVID-19” means the 2019 Novel Coronavirus or 2019-nCoV.
“COVID-19 Pandemic” means the outbreak of the disease caused by COVID-19 and
which was declared a pandemic on March 11, 2020 by the World Health
Organization.
“Deferred Payroll Taxes” means the “applicable employment taxes” (as defined in
Section 2302(d) of the CARES Act) payable by the Company that (x) relate to the
portion of the “payroll tax deferral period” (as defined in Section 2302(d) of
the CARES Act) that occurs prior to the Closing and (y) are payable following
the Closing as permitted by Section 2302(a) of the CARES Act, calculated without
giving effect to any tax credits afforded under the CARES Act, the Families
First Coronavirus Response Act or any similar applicable federal, state or local
Law to reduce the amount of any such Taxes payable or owned.
“DGCL” means the Delaware General Corporation Law.
“Employee Benefit Plan” means each plan, program, policy, practice, Contract,
agreement or other arrangement providing for direct or indirect compensation,
severance benefits (including redundancy), notice or termination pay, deferred
compensation, performance awards, stock or stock-related options or awards,
pension benefits, retirement benefits, profit-sharing benefits, savings
benefits, disability benefits, medical insurance, dental insurance, health
insurance, life insurance, death benefit, other insurance, repatriation or
expatriation benefits, tax gross ups, welfare benefits, part time and early
retirement scheme fringe benefits or other employee benefits or remuneration of
any kind, whether written, unwritten or otherwise, qualified or nonqualified,
funded or unfunded, including, but not limited to, each “employee benefit plan,”
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”) which is or has been maintained, sponsored,
contributed to, or required to be contributed to, by the Company for the benefit
of any for any current or former employees, directors, independent contractors,
consultants or other persons engaged by the Company or under which the Company
has any liability.
“Entity” means any corporation (including any nonprofit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any
5

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limited liability company or joint stock company), firm or other enterprise,
association, organization or other legal entity.
“Environmental Law” means any federal, state or local Law relating to the
environment or occupational health and safety, including any statute,
regulation, administrative decision or order pertaining to: (a) the treatment,
storage, disposal, release, manufacture, use, discharge, emission, generation
and transportation of industrial, toxic, infectious, biological, radioactive or
Hazardous Materials or substances or solid, medical, mixed or hazardous waste;
(b) air, water, soil and noise pollution or contamination; and (c) the
protection of wild life, marine life and wetlands, including all endangered and
threatened species.
“ERISA Affiliate” means any Entity which is, or at any applicable time was, a
member of (a) a controlled group of corporations (as defined in Section 414(b)
of the Code), (b) a group of trades or businesses under common control (as
defined in Section 414(c) of the Code), or (c) an affiliated service group (as
defined under Section 414(m) of the Code or the regulations under Section 414(o)
of the Code), any of which includes or included the Company.
“Escrow Agent” means Wilmington Trust, N.A.
“Fraud” means, with respect to any Person, common law fraud under the common law
of the State of Delaware against such Person based on a representation or
warranty in this Agreement.
“Fundamental Representations” means the representations and warranties set forth
in Section 4.1 (Organization, Standing and Power), Section 4.2 (Capitalization),
Section 4.4(a)-(c) (Authority; No Conflict; Required Filings and Consents)
(other than Section 4.4(b)(ii)), Section 4.26 (Brokers; Schedule of Fees and
Expenses), Section 5.1 (Organization, Standing and Power), Section 5.2(a)-(b)
(Authority; No Conflict; Required Filings and Consents) (other than Section
5.2(b)(ii)), and Section 5.5 (Brokers).
“GAAP” means generally accepted accounting principles in the United States as in
effect from
time to time.
“Governmental Entity” means a foreign or domestic court, arbitrational tribunal,
administrative agency or commission or other governmental, regulatory or
administrative authority, agency, commission or instrumentality; provided that
no Payor acting in its capacity as such shall be deemed a Governmental Entity.
“Hazardous Materials” means any substance that is: (a) listed, classified,
regulated or which falls within the definition of a “hazardous substance,”
“hazardous waste” or “hazardous material” pursuant to any Environmental Law; or
(b) any petroleum product or by-product, asbestos-containing material,
lead-containing paint, pipes or plumbing, polychlorinated biphenyls, radioactive
materials or radon.
“HIPAA” means the Health Insurance Portability and Accountability Act of 1996
and all regulations promulgated hereunder, including the Privacy Standards (45
C.F.R. Parts 160 and 164, Subparts A and E), the Electronic Transactions
Standards (45 C.F.R. Parts 160 and 162), the Security Standards (45 C.F.R. Parts
160 and 164, Subparts A and C), and the Breach Notification Standards (45 C.F.R.
Part 164 Subpart D), all as amended by the Health Information Technology for
Economic and Clinical Health Act of 2009 (HITECH Act).
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“Indebtedness” means, without duplication, any obligations of the Company: (a)
for borrowed money, whether or not represented by bonds, debentures, notes or
other securities (whether or not convertible into any other security), from a
financial institution, employee, Affiliate or other Person (including all
obligations for principal, interest, premiums, penalties, fees, expenses and
breakage costs); (b) evidenced by any note, bond, debenture or other debt
security; (c) for or on account of leases required to be capitalized in
accordance with GAAP; (d) any obligations of a person other than the Company
secured by a Lien (other than Permitted Liens) against any of the assets of the
Company, whether or not obligations secured thereby will have been assumed; (e)
for the reimbursement of letters of credit, bankers’ acceptance or similar
credit transactions; (f) under any of its cash accounts, overdraft accounts,
currency or interest rate swap, hedge or similar protection device; (g) all
deferred indebtedness of the Company for the payment of the purchase price of
property or assets purchased (other than accounts payable incurred in the
Ordinary Course of Business); (h) all premiums, penalties, fees, expenses,
breakage costs and change of control payments required to be paid or payable in
respect of any of the foregoing on prepayment, as a result of the consummation
of the Merger or any of the other transactions contemplated hereby or in
connection with any lender consent and (i) all obligations of the types
described in clauses (a) through (h) above of any person other than the Company,
the payment of which is guaranteed, directly or indirectly, by the Company. For
the avoidance of doubt, “Indebtedness” shall not include obligations of the
Company pursuant to the U.S. Small Business Administration Paycheck Protection
Program Note, dated April 22, 2020, by and between the Company and Silicon
Valley Bank (the “PPP Loan”).
“Knowledge” means, with respect to the Company, the actual knowledge, after
reasonable investigation, of Michael S. Paul, Ph.D.
“Law” means, with respect to any Person, any federal, state, local, municipal,
or foreign laws, statutes, regulations, rules, executive order, injunction,
judgment, order, award, decree, ruling, consent agreements, constitutions,
treaties, codes, ordinances or other legally binding requirements enacted,
adopted, issued, implemented, promulgated or otherwise put into effect by or
under the authority of any Governmental Entity that is binding on such Person,
including common law.
“Lien” means any charge, claim, encumbrance, community property interest, lien,
mortgage, option, pledge, and security interests of any kind or nature
whatsoever.
“Open Source Materials” means all Software and other material that is
distributed as “free software,” “open source software” or under a similar open
source licensing or distribution model, including the GNU General Public License
(GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL),
or any other license described by the Open Source Initiative as set forth on
www.opensource.org.
“Ordinary Commercial Agreement” means any customary commercial agreement entered
into in the Ordinary Course of Business, such as a credit agreement or property
lease, no primary purpose of which is related to the sharing, apportionment or
allocation of Taxes.
“Ordinary Course of Business” means (a) prior to March 1, 2020, the ordinary
course of business of the Company consistent with past practice; and (b) on or
after March 1, 2020, the commercially reasonable operation of the business of
the Company, including after taking into consideration the impact of the
COVID-19 Pandemic and any quarantine, “shelter in place”, “stay at home”,
workforce reduction,
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shut down, closure or any other Law, order or directive having the force of Law
by any Governmental Entity in connection with or in response to the COVID-19
Pandemic, including the CARES Act.
“Parent Common Stock” means the Common Stock, $0.0001 par value per share, of
Parent.
“Parent Consideration Shares” means (i) the sum of (a) $5,000,000, minus (b) the
amount (if any) by which the Closing Assumed Liabilities plus the Company
Transaction Costs (in each case, to the extent not paid at or prior to Closing)
minus 50% of Closing A/R and Cash exceeds Target Assumed Liabilities, plus (c)
the amount (if any) by which the Closing Assumed Liabilities plus the Company
Transaction Costs (in each case, to the extent not paid at or prior to Closing)
minus 50% of Closing A/R and Cash is less than Target Assumed Liabilities,
divided by (ii) the Parent Trading Price, as adjusted pursuant to Section
3.5(c).
“Parent Trading Price” means (a) if the Closing occurs on or before August 21,
2020, $0.8107, which is the volume weighted average price of one share of Parent
Common Stock as reported on Nasdaq for the ten consecutive trading day period
ending August 14, 2020, or (b) if the Closing does not occur on or before August
21, 2020, the volume weighted average price of one share of Parent Common Stock
as reported on Nasdaq for the ten consecutive trading day period ending the
third (3rd) trading day prior to the Closing Date, in each case, subject to
appropriate adjustment in the event of any reclassification, share subdivision
(including a reverse share split), share dividend or distribution,
recapitalization, merger, issuer self-tender or exchange offer, or any other
similar transaction affecting Parent Common Stock after the date hereof.
“Payor Programs” means all third party payor programs in which the Company
participates (including, without limitation, Medicare, Medicaid,
CHAMPUS/TRICARE, or any other federal or state health care programs, as well as
Blue Cross and/or Blue Shield, managed care plans, or any other private
insurance programs).
“Payors” means any third party payors who finance or reimburse the cost of
health services provided by the Company pursuant to Payor Programs.
“Permit” means any franchise, license, approval, authorization, certificate of
public convenience and necessity, waiver, certification or permit issued or
granted by any Governmental Entity.
“Permitted Lien” means (a) carriers’, warehouseman’s, mechanics’, materialmen’s
and repairmen’s liens which have arisen in the Ordinary Course of Business and
securing obligations incurred prior to the Closing Date that are not delinquent
and that will be paid and discharged in the Ordinary Course of Business, (b)
Liens imposed or promulgated by Laws with respect to real property and
improvements, including zoning regulations, that, singularly or in the
aggregate, will not interfere with the ownership, use or operation of such real
property, and (c) Liens for Taxes that (i) are not yet due and delinquent or
(ii) are being contested in good faith by appropriate proceedings and for which
adequate reserves have been established and maintained on the face of the
Company Balance Sheet.
“Personal Data” means information that (a) identifies, directly or indirectly, a
natural person; and (b) any other information that is considered “personally
identifiable information”, “personal information”, “protected health
information”, “individual health information”, “personal data” or similar term
under applicable Law (including all applicable Privacy and Security Laws).
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“Pre-Closing Taxes” means, without duplication, (a) any and all Taxes (or the
nonpayment thereof) attributable to the Company for all Pre-Closing Periods
(including the portion through the end of the Closing Date for any taxable
period that includes (but does not end on) the Closing Date), including any
Deferred Payroll Taxes to the extent unpaid as of the Closing Date; (b) any and
all Taxes of any member of an affiliated, consolidated, combined or unitary
group of which the Company (or any predecessor of the Company) is or was a
member on or prior to the Closing Date, including pursuant to Treasury
Regulation Section 1.1502-6 or any analogous or similar state, local, or
non-U.S. law or regulation; (c) any and all Taxes of any Person imposed on the
Company as a transferee or successor, by Contract or pursuant to any applicable
Law, which Taxes relate to an event or transaction occurring before the Closing;
and (d) any and all Taxes (whether or not arising in a Pre-Closing Period) of
Creditors. For purposes of allocating Taxes with respect to any Tax period that
includes but does not end on the Closing Date, the portion of any Tax that is
allocable to the taxable period that is deemed to end on the Closing Date will
be: (i) in the case of property and other ad valorem taxes be deemed to be the
amount of such Taxes for the entire Tax period multiplied by a fraction, the
numerator of which is the number of calendar days during the portion of such Tax
period ending on and including the Closing Date and the denominator of which is
the number of calendar days in the entire Tax period, and (ii) in the case of
all other Taxes, determined as though the taxable year of the Company terminated
at the close of business on the Closing Date.
“Privacy and Security Laws” means each Law applicable to privacy, integrity,
availability or security of Personal Data such as the breach, retention,
security, protection, disposal, international transfer or other Processing of
Personal Data, by the Company, including, as applicable, (a) the EU Data
Protection Directive 95/46/EC, the EU General Data Protection Regulation
2016/679, the EU e-Privacy Directive 2002/58/EC as amended by Directive
2009/136/EC or further amended or replaced from time to time, and any relevant
national implementing legislation, and any substantially similar local
legislation, (b) Laws regarding the Processing of Personal Data in direct
marketing, e-mails, text messages or telemarketing, (c) Laws regarding the
secure disposal of records containing Personal Data, (d) Laws regarding
international data transfers and/or on-soil requirements of Personal Data, (e)
Laws regarding incident reporting and data breach notification requirements with
respect to Personal Data, (f) the Payment Card Industry Data Security Standard,
(g) the California Consumer Privacy Act of 2018, (h) Laws regarding unfair or
deceptive practices with respect to the Processing of Personal Data; (i) state
consumer protection Laws with respect to the Processing of Personal Data, and
(j) HIPAA and any similar state Laws related to the privacy and security of
health information.
“Process”, “Processed” or “Processing” means, with respect to data (including
Personal Data), the use, access, collection, processing, storage, recording,
organization, adaption, modification, alteration, transfer, retrieval,
consultation, disclosure, dissemination or combination of such data.
“Registrations” means authorizations, approvals, licenses, Permits, franchises,
certificates, or exemptions issued by any Governmental Entity held by the
Company that are required for the conduct of the business by the Company as now
being conducted.
“Subsidiary” means, with respect to any party, any corporation, partnership,
trust, limited liability company or other non-corporate business enterprise in
which such party (or another Subsidiary of such party) holds stock or other
ownership interests representing: (i) more than 50% of the voting power of all
outstanding stock or ownership interests of such Entity; or (ii) the right to
receive more than 50% of the net assets of such Entity available for
distribution to the holders of outstanding stock or ownership interests upon a
liquidation or dissolution of such Entity.
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“Target Assumed Liabilities” means an amount equal to $4,000,000.
“Tax Returns” means any and all reports, returns, or declarations filed or
required to be filed with a Governmental Entity and relating to Taxes, including
any schedule or attachment thereto, including any amendment thereof.
“Taxes” means any and all taxes, including, without limitation, income, gross
receipts, ad valorem, premium, value-added, net worth, capital stock, capital
gains, documentary, recapture, alternative or add-on minimum, disability,
estimated, registration, recording, excise, real property, personal property,
escheat or unclaimed property, sales, use, license, lease, service, service use,
transfer, withholding, employment, unemployment, insurance, social security,
business license, business organization, environmental, workers compensation,
payroll, profits, severance, stamp, occupation, windfall profits, customs,
duties, franchise and other taxes of any kind whatsoever, and any similar
charges, fees, levies or other assessments, in each case, in the nature of
taxes, imposed by the United States of America or any state, local or foreign
government, or any agency or political subdivision thereof, and any interest,
fines, penalties, assessments or additions to tax imposed with respect to such
items or any contest or dispute thereof.
“Transaction Documents” means this Agreement together with any other agreements,
instruments, certificates and documents executed in connection herewith or
therewith or in connection with the transactions contemplated hereby or thereby,
including the Subscription Agreements and the Escrow Agreement.
“Transaction Payroll Taxes” means any employment or payroll Taxes (whether
payable by the Parent, the Purchaser, or any Subsidiary of Parent on behalf of
the Company), with respect to any change in control payments or other bonuses or
other compensatory payments made in connection with the transactions
contemplated by this Agreement.
“Transfer” means, with respect to any security, to sell, offer, pledge, contract
to sell, grant any option or contract to purchase, purchase any option or
contract to sell, grant any right or warrant to purchase, lend or otherwise
transfer (including by gift or operation of law), dispose of, hypothecate or
encumber, directly or indirectly, such security, or to enter into any swap,
hedging or other arrangement that transfers to another, in whole or in part, any
of the economic consequences of ownership of such security.
Article II.

THE MERGER
i.The Merger
. Upon the terms and subject to the conditions set forth in this Agreement, and
in accordance with the DGCL, the Purchaser shall merge with and into the Company
at the Effective Time. At the Effective Time, the separate corporate existence
of the Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger and as a wholly-owned Subsidiary of the Parent (the
“Surviving Corporation”) and shall succeed to and assume all the rights and
obligations of the Purchaser in accordance with the DGCL.
ii.Closing
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. Upon the terms and subject to the conditions set forth in this Agreement, the
closing of the Merger (the “Closing”) shall take place at 12:00 p.m., Pacific
Time, on the date hereof, or at such other time or date agreed to in writing by
the Parent and the Company. The date on which the Closing occurs is referred to
in this Agreement as the “Closing Date.” The Parties shall complete the Closing
by electronic transfer of signature pages and wire transfer of immediately
available funds to avoid the necessity of a physical Closing. To the extent a
physical Closing is required, the Closing shall take place at the offices of
Bass Berry & Sims PLC, 150 Third Avenue South, Suite 2800, Nashville, Tennessee
37201.
iii.Effective Time
. Upon the terms and subject to the conditions set forth in this Agreement, as
soon as practicable on the Closing Date, a certificate of merger (the
“Certificate of Merger”) shall be duly prepared, executed and acknowledged by
the Parties in accordance with the DGCL and filed with the Secretary of State of
the State of Delaware. The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware or at
such subsequent time or date as the Parent and the Company shall agree and
specify in the Certificate of Merger. The time at which the Merger becomes
effective is referred to in this Agreement as the “Effective Time”.
iv.Effects of the Merger
. At the Effective Time, the Merger shall have the effects set forth in this
Agreement, the Certificate of Merger and the applicable provisions of the DGCL.
v.Certificate of Incorporation and Bylaws
. The Certificate of Incorporation of the Purchaser in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation. The Bylaws of the Purchaser in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation.
vi.Directors and Officers
. The officers and directors of the Purchaser immediately prior to the Effective
Time will be the initial officers and directors of the Surviving Corporation.
The Company shall cause each member of the Board of Directors of the Company
(the “Company Board”) and each officer of the Company to execute and deliver a
letter effectuating his or her resignation as a director or officer of the
Company, as the case may be, effective upon the Effective Time.
Article III.

CONVERSION OF SECURITIES IN THE MERGER
i.Effect of Merger on Capital Stock
. At the Effective Time, by virtue of the Merger and without any action on the
part of the Parties, the Surviving Corporation or the holder of any of the
following securities:
(1)each share of the Purchaser’s capital stock issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of the same class of capital
stock of the Surviving Corporation;
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(2)each share of Company Capital Stock issued and outstanding immediately prior
to the Effective Time that is owned by the Company, including all shares of
Company Capital Stock held by the Company as treasury stock, shall automatically
be cancelled and retired, and no payment shall be made with respect thereto;
(3)each share of Company Common Stock issued and outstanding immediately prior
to the Effective Time (other than shares of Company Common Stock to be cancelled
pursuant to Section 3.1(b) above) shall be automatically cancelled and
extinguished and (other than, if applicable, with respect to any Dissenting
Shares) no payment shall be made with respect thereto; and
(4)each share of Company Preferred Stock issued and outstanding immediately
prior to the Effective Time (other than shares of Company Preferred Stock to be
cancelled pursuant to Section 3.1(b) above) shall be automatically cancelled and
extinguished and (other than, if applicable, with respect to any Dissenting
Shares) no payment shall be made with respect thereto.
ii.Treatment of Company Stock Options, Company Warrants and Company Convertible
Notes.
(1)Subject to the terms and conditions of this Agreement, at the Effective Time,
by virtue of the Merger and without any action on the part of the Parties, the
Surviving Corporation or any holder of any Company Stock Option that is
outstanding immediately prior to the Effective Time, each Company Stock Option
whether vested or unvested shall be cancelled and no payment shall be made with
respect thereto.
(2)Subject to the terms and conditions of this Agreement, at the Effective Time,
by virtue of the Merger and without any action on the part of the Parties, the
Surviving Corporation or any holder of any Company Warrant that is outstanding
immediately prior to the Effective Time, each Company Warrant shall be cancelled
and no payment shall be made with respect thereto.
(3)Subject to the terms and conditions of this Agreement, at the Effective Time,
by virtue of the Merger and without any action on the part of the Parties, the
Surviving Corporation or any holder of any Company Series D Convertible Note
that is outstanding immediately prior to the Effective Time, each Company Series
D Convertible Note shall be cancelled and no payment shall be made with respect
thereto.
(4)Subject to the terms and conditions of this Agreement, at the Effective Time,
by virtue of the Merger and without any action on the part of the Parties, the
Surviving Corporation or any holder of any Company Series E Convertible Note
that is outstanding immediately prior to the Effective Time, each Company Series
E Convertible Note shall be treated in accordance with the Estimated Closing
Statement, the Closing Payment Schedule and applicable Subscription Agreement.
(5)All dividends or other distributions declared and not paid at the Effective
Time on or with respect to any shares of Company Capital Stock shall be deemed
to have been cancelled at the Effective Time.
iii.Dissenting Shares
. Notwithstanding anything in this Agreement to the contrary, shares (the
“Dissenting Shares”) of the Company Capital Stock that are issued and
outstanding immediately prior to the Effective Time and that are held by any
holder who is entitled to demand and properly demands appraisal of such shares
pursuant
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to, and who has complied in all respects with, the provisions of Section 262 of
the DGCL shall not be subject to the treatment set forth in Sections 3.1(c) and
(d), as the case may be, but instead such holder shall be entitled to payment of
the fair value of such Dissenting Shares in accordance with the provisions of
Section 262 of the DGCL. At the Effective Time, all Dissenting Shares shall no
longer be outstanding and shall automatically be cancelled and shall cease to
exist, and each holder of Dissenting Shares shall cease to have any rights with
respect thereto, except the right to receive the fair value of such shares in
accordance with the provisions of Section 262 of the DGCL. Notwithstanding the
foregoing, if any such holder shall fail to perfect or otherwise shall waive,
withdraw or lose the right to appraisal under Section 262 of the DGCL or a court
of competent jurisdiction shall determine that such holder is not entitled to
the relief provided by Section 262 of the DGCL, then the right of such holder to
be paid the fair value of such holder’s Dissenting Shares under Section 262 of
the DGCL shall cease and such Dissenting Shares shall be deemed to have been
cancelled as provided in Sections 3.1(c) and (d), as the case may be.
iv.Purchase Price
. The aggregate merger consideration to be paid or issued hereunder shall be an
amount equal to the Parent Consideration Shares, the Parent Closing Cash
Payments and any Closing Assumed Liabilities in excess of the Parent Closing
Cash Payments (but up to the Target Assumed Liabilities) (the “Purchase Price”).
v.Payments at Closing.
(1)The Company has delivered to Parent a written schedule (the “Estimated
Closing Statement”) setting forth (i) the name of each Creditor immediately
prior to the Effective Time, (ii) the amount of Closing Date Indebtedness or
other amount owed each Creditor, (iii) the amount of Indebtedness or other
liability each Creditor shall have settled pursuant to a Subscription
Agreements, (iv) the amount of Closing Assumed Liabilities (other than pursuant
to clause “(iii)”) settled as of the Closing, (v) itemized cash payments in the
aggregate of One Million Five Hundred Thousand Dollars and wire transfer
instructions for the applicable payments of certain Indebtedness, Company Trade
Liabilities and Company Transaction Costs by Parent on behalf of the Company at
Closing (the “Parent Closing Cash Payments”), and (vi) the calculation of the
Parent Consideration Shares, including in reasonable detail the Company’s good
faith estimates of the (a) Company Transaction Costs, (b) Closing Assumed
Liabilities, and (c) Closing A/R and Cash. The estimates of the Company
Transaction Costs, Closing Assumed Liabilities and Closing A/R and Cash, in each
case as set forth in the final Estimated Closing Statement delivered by the
Company to Parent prior to the Closing, shall be referred to as the “Estimated
Company Transaction Costs,” “Estimated Assumed Liabilities,” and “Estimated
Closing A/R and Cash,” respectively.
(2)Within 120 calendar days following the Closing, Parent shall prepare and
deliver to the Representative a written schedule (the “Closing Statement”)
setting forth in reasonable detail its calculation of (i) the Company
Transaction Costs, (ii) the Closing Assumed Liabilities and (iii) the Closing
A/R and Cash, in each case, as determined pursuant to the applicable definitions
set forth in this Agreement. The Closing Statement shall include such schedules
and data with respect to the determinations set forth therein as may be
appropriate to support the calculations set forth therein. Parent shall provide
the Representative reasonable access, during regular business hours, in such a
manner as to not interfere with the normal operation of Parent or the Surviving
Corporation (subject to the execution of customary work paper access letters, if
requested) to work papers and books and records relating to the preparation of
the Closing Statement solely for the purpose of assisting the Representative in
its review of
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the Closing Statement and the calculations contained therein. If the
Representative disagrees with, which may be based on the Representative’s good
faith determination that it does not have sufficient information to verify, the
calculations in the Closing Statement, the Representative shall notify Parent of
such disagreement or deficiency in writing (the “Dispute Notice”) within 45 days
after delivery of the Closing Statement. The Dispute Notice must, to the extent
known, set forth in reasonable detail (A) any item on the Closing Statement
which the Representative believes in good faith has not been prepared in
accordance with this Agreement which may be based on the Representative’s
determination that it does not have sufficient information to verify such item,
and (B) the Representatives’ alternative calculation of the Company Transaction
Costs, the Closing Assumed Liabilities and/or Closing A/R and Cash, as the case
may be, if the Representative determines in good faith that it has sufficient
information to calculate such amounts, together with all relevant supporting
documentation. Any item or amount that Representative does not dispute as
provided above in the Dispute Notice within such 45-day period shall be final,
binding and conclusive for all purposes hereunder. In the event any such Dispute
Notice is timely provided, Parent and the Representative shall use commercially
reasonable efforts for a period of 30 days (or such longer period as they may
mutually agree) to resolve any disagreements with respect to the calculations
included in the Closing Statement that were disputed in the Dispute Notice. If,
at the end of such period, the Representative and Parent remain unable to
resolve the dispute in its entirety, then the unresolved items and amounts
thereof in dispute shall be submitted to a nationally recognized independent
accounting firm, mutually acceptable to Parent and Representative, which shall
not be the independent accountants of Parent or the Company (the “Dispute
Auditor”). The Dispute Auditor shall determine, based solely on the written
presentations by the Representative and Parent, and not by independent review,
only those items and amounts that remain then in dispute as set forth in the
Dispute Notice. In rendering its decision, the Dispute Auditor shall adhere to
and be bound by the provisions of this Section 3.5(b) and the applicable
definitions set forth in this Agreement. The Dispute Auditor’s determination of
the Company Transaction Costs, the Closing Assumed Liabilities and/or the
Closing A/R and Cash, as applicable, shall be made within 45 days after the
dispute is submitted for its determination and shall be set forth in a written
statement delivered to the Representative and Parent. A judgment of a court of
competent jurisdiction selected pursuant to
Section 9.11 hereof may be entered upon the Dispute Auditor’s determination. The
Dispute Auditor shall
have exclusive jurisdiction over, and resorting to the Dispute Auditor as
provided in this Section 3.5(b) shall be the only recourse and remedy of the
Parties against one another with respect to, those items and amounts that remain
in dispute under this Section 3.5(b), and no Parent Indemnitee or Creditor
Indemnitee shall be entitled to seek indemnification or recovery of any Losses,
including attorneys’ fees or other professional fees incurred by Parent or the
Representative, as applicable, in connection with any dispute governed by this
Section 3.5(b). The Dispute Auditor shall allocate its fees and expenses between
the
Parent and the Representative according to the degree to which the positions of
the respective Parties are not accepted by the Dispute Auditor. The
Representative and Parent shall, and shall cause their respective Affiliates and
representatives to, cooperate in good faith with the Dispute Auditor, and shall
give the Dispute Auditor access to all data and other information (or, in the
case of data or other information not in the possession of such Party, use
commercially reasonable efforts to cause such access to be provided) it
reasonably requests for purposes of such resolution. In no event shall the
decision of the Dispute Auditor assign a value to any item greater than the
greatest value for such item claimed by either Parent or the Representative or
lesser than the smallest value for such item claimed by either Parent or the
Representative. Any determinations made by the Dispute Auditor pursuant to this
Section 3.5(b) shall be final, non-appealable and binding on the Parties hereto,
absent manifest error or fraud. Notwithstanding any provision herein to the
contrary and for the avoidance of doubt, in no event shall Company
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Transaction Costs, Closing Date Indebtedness or Closing Assumed Liabilities
include (and the adjustments and payments contemplated by this Section 3.5 shall
be determined without regard to) any obligations, liabilities or commitments
incurred in connection with or relating to the PPP Loan, including, without
limitation, repayment obligations that arise or are expected to arise, are
triggered or become due or payable, in whole or in part, as a direct or indirect
result of the consummation (whether alone or in combination with any other event
or circumstance) of the Merger or any of the other transactions contemplated
hereby.
(3)“Adjustment Amount” means the net amount, which may be positive or negative,
equal to: (i) (A) the Estimated Company Transaction Costs; minus (B) the Company
Transaction Costs (as finally determined in accordance with Section 3.5(b));
plus (ii) (A) the Estimated Assumed Liabilities minus (B) the Closing Assumed
Liabilities (as finally determined in accordance with Section 3.5(b)); plus
(iii) (A) 50% of the Closing A/R and Cash minus (B) 50% of the Estimated Closing
A/R and Cash (as finally determined in accordance with Section 3.5(b)).
“Adjustment Shares” means a number of shares of Parent Common Stock equal to (i)
the absolute value of the Adjustment Amount, divided by (ii) the Parent Trading
Price. If the Adjustment Amount is a positive number, then the Parent
Consideration Shares shall be increased by a number of shares of Parent Common
Stock equal to the Adjustment Shares, and if the Adjustment Amount is a negative
number, the Parent Consideration Shares shall be decreased by a number of shares
of Parent Common Stock equal to the Adjustment Shares. If the Adjustment Amount
is a positive number, then within five (5) Business Days after the final
determination of the amount pursuant to Section 3.5(b), Parent shall issue a
number of shares of Parent Common Stock equal to the Adjustment Shares to the
Escrow Beneficiaries and deliver such shares to the Escrow Beneficiaries based
on each such Escrow Beneficiary’s Pro Rata Portion. In furtherance of the
foregoing payments, if the Adjustment Amount is a positive number, the
Representative shall, not later than five (5) Business Days after the final
determination of such amount pursuant to Section 3.5(b), deliver to Parent an
updated Closing Payment Schedule (which need not be certified by an officer of
the Company) setting forth the portion of such Adjustment Amount payable to each
Escrow Beneficiary. If the Adjustment Amount is a negative number, Parent shall
be entitled to recover a number of shares of Parent Common Stock equal to the
Adjustment Shares solely from the Escrowed Shares, and, within five (5) Business
Days after the final determination of such amount pursuant to Section 3.5(b),
the Representative and Parent shall jointly instruct the Escrow Agent to either
cancel or transfer to Parent (at Parent’s election) a number of the Escrowed
Shares equal in value to such amount. Subject to the second to last sentence of
Section 3.5(b), the Adjustment Amount, as finally determined pursuant to this
Section 3.5, shall be final, non-appealable and binding on the Parties.
(4)At the Closing, the Parent shall:
(a)issue the Parent Consideration Shares (less the Escrowed Shares) to the
holders of Closing Date Indebtedness and other service providers, vendors and
suppliers of the Company (collectively, the “Creditors”) as set forth on and in
accordance with the Estimated Closing Statement pursuant to the terms of
subscription agreements executed and delivered by the Creditors (other than
Silicon Valley Bank) and Parent concurrently herewith (the “Subscription
Agreements”); and
(b)deposit 15% of the Parent Consideration Shares (the “Escrowed Shares”) with
the Escrow Agent (the “Escrow Account”) under the terms of the escrow agreement
executed and delivered by Parent, the Representative and the Escrow Agent
concurrently herewith (the “Escrow Agreement”) as security for certain
obligations of the holders, as of immediately prior to the Closing, of Company
Series E Convertible Notes (the “Escrow Beneficiaries”) pursuant to Article
VIII.
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(5)At the Closing, the Parent shall pay, by wire transfer of immediately
available funds the Parent Closing Cash Payments by wire transfer of immediately
available funds in accordance with the Estimated Closing Statement and the
payoff letters, settlement letters, invoices or other documentary evidence
thereof from each of the applicable service providers, holders of Closing Date
Indebtedness and Trade Creditors, as applicable.
(6)Promptly following Closing, Parent shall cause (a) evidence of book entry
shares representing the Escrowed Shares to be delivered to the Escrow Agent
pursuant to the Escrow Agreement and (b) evidence of book entry shares
representing the Parent Consideration Shares (less the Escrowed Shares) to be
delivered to the Escrow Beneficiaries, duly registered in the name of the Escrow
Beneficiaries in accordance with the Closing Statement.
vi.Withholding
. The Parent, the Surviving Corporation, the Escrow Agent, and their respective
agents, shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement such amounts as any of them
reasonably determines that it is required to deduct and withhold with respect to
the making of such payment under the Code or any other applicable Law; provided
that unless the conditions of Section 7.1(g) or Section 7.1(f) have not been
properly satisfied or the Closing Payment Schedule specifies that Taxes are
required to be withheld, (a) before making any such deduction or withholding
with respect to any consideration payable pursuant to the Subscription Agreement
to a Creditor, Parent or the Surviving Corporation, as applicable, shall give
the Representative notice of the intention to make such deduction or
withholding, (b) Parent or the Surviving Corporation, as applicable, shall
cooperate with each such Creditor (at such Creditor’s sole cost and expense) to
the extent commercially reasonable in efforts to obtain reduction of or relief
from such deduction or withholding and (c) Parent or the Surviving Corporation,
as applicable, shall timely remit to the appropriate Governmental Entity any and
all amounts so deducted or withheld. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the person in respect of whom such deduction and withholding
was made.
vii.Escrow.
(1)On the Closing Date, Parent shall deposit the Escrowed Shares with the Escrow
Agent. The Escrowed Shares shall be available to (i) satisfy the indemnification
obligations of the Escrow Beneficiaries to the Parent Indemnitees under Article
VIII and (ii) make the adjustments contemplated by Section 3.5. The Escrowed
Shares shall be held by the Escrow Agent under the Escrow Agreement pursuant to
the terms thereof. The Escrowed Shares shall be held as a trust fund and shall
not be subject to any Lien, attachment, trustee process or any other judicial
process of any creditor of any person, and shall be held and disbursed solely
for the purposes and in accordance with the terms of the Escrow Agreement. Each
Escrow Beneficiaries shall contribute its Pro Rata Portion of the Escrowed
Shares.
(2)The adoption of this Agreement and the approval of the Merger by the Company
Stockholders, and the execution of the Subscription Agreements, shall constitute
approval of the Escrowed Agreement and of all of the arrangements related
thereto, including the placement of the Escrowed Shares into escrow.
Article IV.
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REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth herein or in the disclosure schedule delivered by the
Company to the Parent on the date of this Agreement (the “Company Disclosure
Schedule”), the Company represents and warrants to the Parent and the Purchaser
as follows:
i.Organization, Standing and Power
. The Company is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation, has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as now being conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction listed in Section 4.1 of the Company Disclosure Schedule,
which jurisdictions constitute the only jurisdictions in which the character of
the properties it owns, operates or leases or the nature of its activities makes
such qualification necessary, except for such failures to be so organized,
qualified or in good standing that have not had, and would not reasonably be
expected to result in, a material adverse effect on the Company. The Company has
made available to the Parent copies of the Amended and Restated Certificate of
Incorporation (as amended, the “Company Certificate of Incorporation”) and the
Bylaws of the Company (the “Company Bylaws”) each as amended to date. The
Company is not in material violation of any of the provisions of the Company
Certificate of Incorporation or Company Bylaws or equivalent organizational
documents.
ii.Capitalization.
(1)As of the date of this Agreement, the authorized capital stock of the Company
consists of 70,000,000 shares of common stock, par value $0.001 per share
(“Company Common Stock”) and 45,657,339 shares of preferred stock, $0.001 par
value per share, 1,000 of which have been designated as “Series A Preferred
Stock” (“Series A Preferred Stock”), 12,656,339 of which have been designated as
“Series B Preferred Stock” (“Series B Preferred Stock”), and 33,000,000 of which
have been designated as “Series C-1 Preferred Stock” (“Series C-1 Preferred
Stock” and, collectively with the Series A Preferred Stock and the Series B
Preferred Stock, the “Company Preferred Stock”). The Company Preferred Stock,
together with the Company Common Stock, shall be referred to herein as the
“Company Capital Stock”. As of the date of this Agreement: (i) 589,030 shares of
Company Common Stock were issued and outstanding; (ii) no shares of Series A
Preferred Stock were issued and outstanding; (iii) 12,576,339 shares of Series B
Preferred Stock were issued and outstanding; (iv) 26,409,832 shares of Series
C-1 Preferred Stock were issued and outstanding; and (v) no shares of Company
Capital Stock were held in the treasury of the Company. The outstanding shares
of Company Capital Stock are all duly and validly authorized and issued, fully
paid and nonassessable. The rights and privileges of each class of the Company
Capital Stock are as set forth in the Company Certificate of Incorporation. The
stockholders listed in Section 4.2(a) of the Company Disclosure Schedule are the
record and beneficial owners and holders of the outstanding shares of Company
Capital Stock identified therein free and clear of all Liens other than
restrictions on the Transfer of securities arising under federal and state
securities Laws (the “Company Stockholders”).
(2)Section 4.2(b) of the Company Disclosure Schedule sets forth a complete and
accurate list, as of the date of this Agreement, of: (i) all plans or other
arrangements under which Company Stock Options were granted (collectively, the
“Company Stock Plans”), indicating for each Company Stock Plan, as of the close
of business on the Business Day prior to the date of this Agreement,
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the number of shares of Company Common Stock issued to date under such Company
Stock Plan, the number of shares of Company Common Stock subject to outstanding
options under such Company Stock Plan (such outstanding options, the “Company
Stock Options”) and the number of shares of Company Common Stock reserved for
future issuance under such Company Stock Plan; and (ii) all outstanding Company
Stock Options, indicating with respect to each such Company Stock Option the
name of the holder thereof, the Company Stock Plan under which it was granted,
the number of shares of Company Common Stock subject to such Company Stock
Option, the exercise price, the date of grant, and the vesting schedule. The
Company has made available to the Parent copies of all Company Stock Plans and
the forms of all stock option agreements evidencing Company Stock Options.
Section 4.2(b) of the Company Disclosure Schedule shows the type and number of
shares of Company Capital Stock reserved for future issuance pursuant to
warrants or other outstanding rights to purchase shares of Company Capital Stock
outstanding as of the date of this Agreement (such outstanding warrants or other
rights, the “Company Warrants”) and the agreement or other document under which
such Company Warrants were granted and sets forth a list of all holders of
Company Warrants indicating the number and type of shares of Company Capital
Stock subject to each Company Warrant, and the exercise price, the date of grant
and the expiration date thereof. The Company has made available to the Parent
copies of the forms of agreements evidencing all Company Warrants. For purposes
of this Agreement, the Company Stockholders, the holders of Company Stock
Options, Company Warrants and Company Convertible Notes shall be collectively
referred to as the “Company Equityholders.”
(3)Section 4.2(c) of the Company Disclosure Schedules lists each of holder of a
Company Convertible Note and the amount (principal and interest) owed to each
holder under such Company Convertible Note. The Company has made available to
the Parent copies of the forms of agreements evidencing all Company Convertible
Notes.
(4)Except (x) as set forth in Sections 4.2(a), (b), (c) or (d) of the Company
Disclosure Schedule and (y) as reserved for future grants under Company Stock
Plans: (i) there are no equity securities of any class of the Company, or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding; and (ii) there are no options, warrants,
debt or equity securities, calls, rights, commitments or agreements of any
character (other than this Agreement) to which the Company is a party or by
which the Company is bound obligating the Company to issue, exchange, Transfer,
deliver or sell, or cause to be issued, exchanged, transferred, delivered or
sold, additional shares of capital stock or other equity interests of the
Company or any security or rights convertible into or exchangeable or
exercisable for any such shares or other equity interests, or obligating the
Company to grant, extend, accelerate the vesting of, otherwise modify or amend
or enter into any such option, warrant, equity security, call, right, commitment
or agreement. Except as set forth in Section 4.2(d) of the Company Disclosure
Schedule, neither the Company nor any of its Affiliates is a party to or is
bound by any, and to the Knowledge of the Company, there are no agreements or
understandings with respect to the voting (including voting trusts and proxies)
or sale or Transfer (including agreements imposing Transfer restrictions) of any
shares of capital stock or other equity interests of the Company. Except as set
forth in Section 4.2(d) of the Company Disclosure Schedule and as contemplated
by this Agreement, there are no registration rights agreement or understanding
to which the Company is a party or by which it is bound with respect to any
equity security of any class of the Company.
(5)Except as set forth in Section 4.2(e) of the Company Disclosure Schedule, all
outstanding shares of Company Capital Stock are, and all shares of Company
Capital Stock subject to issuance as specified in Sections 4.2(b), (c) and (d)
above, upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be, duly authorized, validly issued,
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fully paid and nonassessable and not subject to or issued in violation of any
purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the DGCL, the
Company Certificate of Incorporation or Company Bylaws or any agreement to which
the Company is a party or is otherwise bound.
(6)Except as set forth in Section 4.2(f) of the Company Disclosure Schedule,
there are no obligations, contingent or otherwise, of the Company to repurchase,
redeem or otherwise acquire any shares of Company Capital Stock or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in the Company or any other Entity.
(7)As of the Closing, all Company Stock Options, Company Warrants, Company
Convertible Notes or other rights to acquire shares of Company Capital Stock
pursuant to any Contract (other than this Agreement) to which the Company is a
party or is otherwise bound, if any, shall have been terminated and of no
further force or effect. The treatment of the Company Stock Options, Company
Warrants, Company Convertibles Notes and Company Capital Stock in accordance
with Article III complies with the Company Certificate of Incorporation and
Company Bylaws and terms of the applicable Company Stock Options, Company
Warrants and Company Convertible Notes (including compliance or valid waiver of
notice provisions therein).
iii.No Subsidiaries; Officers and Directors
. The Company does not have, and has never had, any Subsidiaries. The Company
does not presently own or control, directly or indirectly, any interest in any
other corporation, association, or other business Entity. The Company is not a
participant in any joint venture, partnership, or similar arrangement. Section
4.3 of the Company Disclosure Schedule sets forth a list of all officers and
directors of the Company.
iv.Authority; No Conflict; Required Filings and Consents.
(1)The Company has all requisite corporate power and authority to enter into
this Agreement and the Transaction Documents to which it is a party, and to
perform its obligations hereunder and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the Transaction Documents to which the Company is a party and the consummation
of the transactions contemplated by this Agreement by the Company have been duly
authorized by all necessary corporate action on the part of the Company, subject
only to the acceptance of the Certificate of Merger by the Secretary of State of
the State of Delaware. This Agreement has been duly executed and delivered by
the Company and, assuming due authorization, execution and delivery of this
Agreement by Parent and Purchaser, constitutes the valid and binding obligation
of the Company, enforceable in accordance with its terms except: (i) as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other Laws affecting creditors’ rights generally; and (ii)
insofar as the availability of equitable remedies may be limited by applicable
Law.
(2)The execution and delivery of this Agreement and the Transaction Documents to
which the Company is a party and the consummation of the transactions
contemplated by this Agreement by the Company do not, and shall not: (i)
conflict with, or result in any violation or breach of, any provision of the
Company Certificate of Incorporation or Company Bylaws; (ii) conflict with, or
result in any violation or breach of, or constitute (with or without notice or
lapse of time, or both) a default (or give rise to a right of termination,
revocation, invalidation, cancellation or acceleration of any obligation or loss
of any material benefit) under, require a consent, approval or waiver under,
constitute a change in
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control under, require the payment of a penalty under or result in the
imposition of any Liens, other than Permitted Liens, on the assets of the
Company under any of the terms, conditions or provisions of any Company Material
Contract; or (iii) conflict with or violate in any material respect any Permit,
judgment, injunction, order, decree, or other Law applicable to the Company or
any of its properties or assets.
(3)No consent, approval, license, Permit, order or authorization of, or
Registration, declaration, notice or filing with, any Governmental Entity,
including with respect to any federal or state laboratory license or
accreditation, is required by or with respect to the Company in connection with
the execution and delivery of this Agreement by the Company or the consummation
by the Company of the transactions contemplated by this Agreement, except for:
(i) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate corresponding documents with the appropriate
authorities of other states in which the Company is qualified as a foreign
corporation to transact business; and (ii) such other consents, licenses,
Permits, orders, authorizations, filings, approvals and Registrations which, if
not obtained or made, have not had, and would not reasonably be expected to
result in, a Company Material Adverse Effect.
(4)The affirmative vote for adoption of the Agreement and the Merger by the
holders of: (i) a majority of the outstanding Company Common Stock and the
Company Preferred Stock voting together as a single class on an as converted
basis; (ii) a majority of the outstanding Company Preferred Stock (voting
together as a single class on an as converted basis); and (iii) the holders of
at least sixty-six percent (66%) of the outstanding Series C-1 Preferred Stock
(voting as a separate class), are the only votes of the holders of any class or
series of the Company Capital Stock or other securities necessary for the
adoption of this Agreement and for the consummation by the Company of the other
transactions contemplated by this Agreement. The Company Board has unanimously
(i) approved this Agreement and the transactions contemplated hereby, (ii)
determined that in its opinion the Merger is advisable to and in the best
interest of the Company, and (iii) recommended that the Company Stockholders
approve this Agreement and the Merger, all in accordance with the DGCL. There
are no bonds, debentures, notes or other Indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company may vote.
v.Financial Statements.
(1)Section 4.5 of the Company Disclosure Schedule contains true and correct
copies of: (i) the audited balance sheet of the Company as of December 31, 2019,
and the related statements of income, changes in stockholders equity and cash
flows (including related notes and schedules, if any) for the year ending
December 31, 2019; and (ii) the unaudited balance sheet of the Company as of May
31, 2020 (the “Company Balance Sheet” and such date, the “Company Balance Sheet
Date”), and the related statements of income, changes in stockholders’ equity,
and cash flows (including related notes and schedules, if any) for the five (5)
month period ended May 31, 2020. The financial statements described in this
Section 4.5 are collectively referred to as the “Company Financial Statements”.
Except as set forth in Section 4.5 of the Company Disclosure Schedule, such
Company Financial Statements: (x) fairly present in all material respects the
financial condition and the results of operations of the Company as of the
respective dates of and for the periods referred to in such Company Financial
Statements, all in accordance with GAAP applied on a consistent basis throughout
the periods involved and at the dates involved; and (y) reflect all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
financial condition of the Company at the respective dates of the balance sheets
contained in the Company Financial Statements and the results of operations for
the periods ended on
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each balance sheet date, subject, in each case to normal and recurring year-end
adjustments (the effect of which will not be materially adverse) and the absence
of notes.
(2)The Company maintains a system of internal accounting controls designed in
all material respects to provide reasonable assurance that (i) transactions are
executed with management’s general or specific authorizations; (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformance with GAAP and to maintain accountability for assets; (iii) access to
the Company’s assets is permitted only in accordance with management’s
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company is not party to or otherwise involved in
any “off-balance sheet arrangements” (as defined in Item 303 of Regulation S-K
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).
vi.No Undisclosed Liabilities.
(1)Except for matters reflected or reserved against in the Company Financial
Statements or otherwise disclosed in Section 4.6 of the Company Disclosure
Schedule, the Company has no obligations or liabilities of any nature that would
have been required to be disclosed on the face of the Company Balance Sheet in
accordance with GAAP, except for: (a) liabilities incurred in the Ordinary
Course of Business since the date of the Company Balance Sheet; (b) the
Indebtedness listed on Section 4.9 of the Company Disclosure Schedule, (c)
obligations and liabilities pursuant to the PPP Loan, and (d) the Company Trade
Liabilities and the Company Transaction Costs listed on Section 4.6(a) of the
Company Disclosure Schedule and any other payment listed on the Estimated
Closing Statement or the Closing Statement.
(2)The Company’s application for the PPP Loan, including all representations and
certifications contained therein, was true, correct and complete in all material
respects and was otherwise completed in accordance with all applicable Laws and
guidance issued in respect of the Paycheck Protection Program in all material
respects. The Company has used the proceeds of the PPP Loan solely for the
purposes permitted by the CARES Act, all applicable Laws and guidance, and has
complied in all material respects with all requirements of the CARES Act and
Paycheck Protection Program in connection therewith.
vii.Absence of Certain Changes or Events
. Since the Company Balance Sheet Date, the Company has conducted its business
only in the Ordinary Course of Business and, since such date, (a) there has not
been any change, event, circumstance, development or effect that has resulted
in, or would reasonably be expected to result in, a Company Material Adverse
Effect and (b) the Company has not:
(1)amended the Company Certificate of Incorporation or the Company Bylaws or
authorized the same;
(2)split, combined or reclassified any Company Capital Stock; issued or
authorized the issuance of any other securities in respect of, in lieu of or in
substitution for shares of Company Capital Stock not reflected on Section 4.2 of
the Company Disclosure Schedule; declared, set aside, or paid any dividend or
made any distribution (whether in cash or in kind) with respect to any Company
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Capital Stock or redeemed, purchased, or otherwise acquired, directly or
indirectly, any Company Capital Stock;
(3)issued, delivered, transferred or sold, or authorized to issue, deliver,
Transfer or sell, any shares of Company Capital Stock or securities convertible
into, or subscriptions, rights, calls, conversion rights, warrants or options to
acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, or authorized or proposed
any change in its equity capitalization or capital structure not reflected on
Section 4.2 of the Company Disclosure Schedule;
(4)entered into or adopted any plan or agreement (other than this Agreement) of
complete or partial liquidation, restructuring, recapitalization or dissolution,
or filed a voluntary petition in bankruptcy or commenced a voluntary legal
procedure for reorganization, arrangement, adjustment, release or composition of
Indebtedness in bankruptcy or other similar Laws;
(5)incurred any Indebtedness for borrowed money, or guaranteed any such
Indebtedness, or issued or sold any debt securities or guarantee any debt
securities of others;
(6)made any capital expenditures, capital additions or capital improvements, in
excess of $100,000 per fiscal quarter;
(7)knowingly waived any material right of the Company under any Company Material
Contract;
(8)acquired or agreed to acquire by merging with, or by purchasing a portion of
the stock or material assets of, or by any other manner, any business or any
Entity;
(9)(i) initiated any new line of business, or (ii) made any loan or capital
contribution to any person (other than business-related advances to its
employees in the Ordinary Course of Business);
(10)terminated, cancelled or failed to maintain or renew any material Permit;
(11)sold, assigned or otherwise disposed of, leased or exclusively licensed any
properties or assets of the Company which are material to the Company;
(12)(i) sold, assigned, transferred, licensed, abandoned or otherwise disposed
of any Owned Company Intellectual Property, or (ii) acquired, in-licensed or
otherwise obtained any right, title or interest in or to any pending or issued
patents, inventions, patent disclosures or other material Intellectual Property
from any other person (other than, with respect to each of clauses (i) and (ii),
non-exclusive licenses or other non-exclusive grants of rights entered into in
the Ordinary Course of Business or Intellectual Property acquired, in-licensed
or otherwise obtained pursuant to licenses or agreements identified in Section
4.11(b) of the Company Disclosure Schedules);
(13)except as disclosed on Section 4.12(a) of the Company Disclosure Schedule,
entered into any Company Material Contract, amended or modified in any material
respect any Company Material Contract or terminated any Company Material
Contract;
(14)(i) entered into or amended in any material respect the terms of any
employment agreement, consulting agreement, or independent contractor agreement,
or (ii) entered into or amended
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the terms of any Contract providing for severance, retention payment, change of
control, bonus, or other similar payment to any employee, consultant, or
independent contractor, or otherwise promised, made, or granted any such
severance, retention payment, change of control, bonus, or other similar
payment;
(15)hired any employee or engaged any consultant or independent contractor, or
terminated the employment or engagement of any employee, consultant, or
independent contractor;
(16)increased or modified the compensation of any employee, consultant, or
independent contractor, or otherwise altered the terms and conditions of
employment for any current employee;
(17)recognized, or entered into, any Contract or other agreement with any labor
organization, except as otherwise required by Law;
(18)made any material election in respect of Taxes (other than any such election
made as part of a Tax Return filing in the Ordinary Course of Business and
consistent with past practice), revoked or changed any material election in
respect of Taxes, changed an annual Tax accounting period, adopted or changed
any material accounting method in respect of Taxes, filed any amended Tax
Return, entered into any Tax allocation, sharing or indemnity agreement (other
than an Ordinary Commercial Agreement), settled any claim or assessment in
respect of Taxes, surrendered or abandoned any right to claim a material refund
of Taxes, or consented to any extension or waiver of the limitation period
applicable to any material claim or assessment in respect of Taxes; or
(19)except as contemplated by this Agreement, including settlements and releases
with Creditors and other persons receiving Parent Consideration Shares or any
portion of the Parent Closing Cash Payments, as applicable, waived or released
in writing, assigned, commenced, settled or agreed to settle any legal
proceeding against the Company, other than waivers, releases, compromises or
settlements (i) in the Ordinary Course of Business (ii) that involved only the
payment of monetary damages not in excess of $25,000 in the aggregate and (iii)
that did not include the imposition of equitable relief on, or the admission of
wrongdoing by, the Company.
viii.Taxes.
(1)The Company has filed all income and other material Tax Returns that the
Company was required to file, and all such Tax Returns were true, correct and
complete in all material respects. The Company has paid all Taxes that were due
and payable. All Taxes that the Company was required to withhold or collect in
connection with any amounts paid or owing to any employee, independent
contractor, customer, creditor, stockholder or other third party, including but
not limited to under any Company Employee Plan, have been duly withheld or
collected and, to the extent required, have been properly paid to the
appropriate Governmental Entity. Since the Company Balance Sheet Date, the
Company has not incurred any liability for Taxes outside the Ordinary Course of
Business.
(2)The Company has made available to the Parent: (i) complete and correct copies
of all income and other material Tax Returns of the Company for all taxable
periods ending on or after December 31, 2016; and (ii) complete and correct
copies of all private letter rulings, revenue agent reports, information
document requests, notices of proposed deficiencies, deficiency notices,
protests, petitions, closing agreements, settlement agreements, pending ruling
requests and any similar documents submitted by, received by, or agreed to by or
on behalf of the Company relating to Taxes for all taxable periods for which the
statute of limitations has not yet expired.
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(3)There is no dispute or claim concerning any Tax liability of the Company
pending with or, to the Knowledge of the Company, threatened by, any
Governmental Entity. No examination or audit of any Tax Return of the Company by
any Governmental Entity is currently in progress or, to the Knowledge of the
Company, threatened. The Company has not been informed in writing by any
jurisdiction that the jurisdiction believes that the Company is or may be
required to file any Tax Return or pay Taxes that were not filed or paid. The
Company has not: (i) waived any statute of limitations with respect to Taxes or
agreed to extend the period for assessment or collection of any Taxes; or (ii)
requested any extension of time within which to file any Tax Return (other than
an automatic extension obtained in the Ordinary Course of Business not exceeding
six months), which Tax Return has not yet been filed. The Company is not subject
to Tax in any jurisdiction outside of the United States.
(4)The Company is not a party to or bound by any Tax indemnity, Tax sharing, Tax
allocation or similar agreement or any agreement obligating, or purporting to
obligate, the Company to pay the Taxes of any other person (in each case, other
than an Ordinary Commercial Agreement). The Company is not, and never has been,
a member of an affiliated group filing a U.S. federal income Tax Return. The
Company has no liability for the Taxes of any other Person (i) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or
non-U.S. Law); (ii) as a transferee or successor; or (iii) otherwise. The
Company is not a party to any joint venture, partnership or other Contract or
arrangement, in each case, that could reasonably be treated as a partnership for
Tax purposes.
(5)There are no Liens with respect to Taxes upon any of the assets or properties
of the Company, other than Liens for Taxes that are not yet due and payable.
(6)The Company has not made any payment, is not obligated to make any payment,
and is not a party to any agreement (including this Agreement) that could
obligate it to make any payment, in each case, that would constitute an “excess
parachute payment” under Section 280G of the Code (without regard to Sections
280G(b)(4) and 280G(b)(5) of the Code). For purposes of this representation, it
shall be assumed that any payments made by the Parent, the Purchaser or, for any
period beginning after the Effective Time, the Surviving Corporation are not
described in Section 280G(b)(2)(A)(i).
(7)The Company will not be required to include any item of income in, or exclude
any item of deduction from, taxable income for any Tax period ending after the
Closing Date as a result of any: (i) change in method of accounting for a Tax
period ending on or prior to the Closing Date; (ii) closing agreement as
described in Section 7121 of the Code (or any corresponding or similar provision
of U.S. state, local or non-U.S. income Tax law) executed on or prior to the
Closing Date; (iii) intercompany transactions or any excess loss account
described in Treasury Regulations under Section 1502 of the Code (or any
corresponding or similar provision of U.S. state, local or non-U.S. income Tax
Law); (iv) installment sale or open transaction disposition made prior to the
Closing; (v) election under Section 108(i) of the Code (or similar provision of
U.S. state, local or non-U.S. Tax Law) made prior to the Closing Date; (vi)
prepaid amount received or deferred revenue accrued on or prior to the Closing
Date; or (vii) forgiveness of a loan entered into on or prior to the Closing
Date as described in IRS Notice 2020-32 or any successor guidance. The Company
uses the accrual method of accounting for income Tax purposes.
(8)The Company does not, and never has had, any direct or indirect interest in
any trust, partnership, corporation, limited liability company, or other
business Entity for U.S. federal income
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Tax purposes. The Company is and always has been a domestic corporation taxable
under subchapter C of the Code for U.S. federal income tax purposes.
(9)The Company is not, and never has been, a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the. None
of the Company nor any of its predecessors has been a party to any transaction
intended to qualify under Section 355 of the Code.
(10)The Company has not participated in any “reportable transaction” as defined
in Section 6707A(c) of the Code or the Treasury Regulations promulgated
thereunder.
(11)The Company has not availed itself of relief pursuant to Sections 2301 or
2302 of the CARES Act or any similar federal, state, local or foreign Law.
(12)The Company has made available to Parent complete and accurate copies of any
written memoranda prepared by, or on behalf of, the Company regarding whether
any of the tax attribute carryforwards of the Company (including, but not
limited to, net operating losses and tax credits) are subject to limitation
pursuant to Sections 382, 383 or 384 of the Code.
(13)Notwithstanding any provision herein to the contrary, nothing in this
Section 4.8 or otherwise in this Article IV shall be construed as a
representation or warranty, including for purposes of Section 8.1(a), with
respect to (i) the amount or availability of any net operating loss, capital
loss, Tax credits, Tax basis or other Tax asset or attribute of the Company in
any taxable period (or portion thereof) beginning after the Closing Date or (ii)
except for the representations in Sections 4.8(d), 4.8(f), 4.8(g), 4.8(h),
4.8(i), 4.8(j) and 4.8(k), any Taxes with respect to taxable periods (or
portions thereof) beginning after the Closing Date.
ix.Indebtedness
. Section 4.9 of the Company Disclosure Schedule sets forth a list and
description of all outstanding Indebtedness of the Company as of the date of
this Agreement.
x.Owned and Leased Real Properties.
(1)The Company does not own and never has owned any real property.
(2)Section 4.10(b) of the Company Disclosure Schedule sets forth a complete and
accurate list of all real property leased, subleased or licensed by the Company
(collectively “Company Leases”) and the location of the premises. Neither the
Company nor, to the Knowledge of the Company, any other party to any Company
Lease, is in material default under any of the Company Leases. Each of the
Company Leases is in full force and effect and is valid, binding and enforceable
in accordance with its terms and shall not cease to be in full force and effect
as a result of the transactions contemplated by this Agreement. The Company does
not sublease or license any real property to any person. The Company has made
available to Parent copies of all Company Leases. The Company’s quiet enjoyment
of the real property under the Company Leases has not been disturbed in any
material respect. As of the date of this Agreement, the Company has not received
written notice of (a) default under, or intention to terminate or not renew, any
Company Lease or (b) any eminent domain, condemnation or similar proceeding
pending or threatened, against all or any portion of any of the real property
under the Company Leases.
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xi.Intellectual Property.
(1)For purposes of this Agreement, the term “Intellectual Property” means any
and all intellectual and industrial property, including all rights therein,
thereto and tangible embodiments thereof, in any jurisdiction throughout the
world, whether registered or unregistered, including the following and all
rights and interests pertaining to or deriving therefrom: (i) patents, patent
rights, patent applications (including all provisionals, reissues,
reexaminations, revisions, divisions, continuations, continuations-in-part and
extensions of any patent or patent application), inventions, discoveries,
improvements, innovations, industrial designs, and all applications for
registration of the foregoing and all rights to claim priority arising from or
related to any of the foregoing; (ii) copyrights, works of authorship (whether
or not copyrightable), Registrations and applications for copyrights, works,
derivative works, software and firmware (including, without limitation, all
executables, libraries, data files, controls, object code and source code),
software specifications and documentation, database rights, mask works, domain
names, domain name Registrations, web sites, web pages, moral rights, rights of
privacy and publicity, and all applications for registration of the foregoing;
(iii) trade secrets, know-how, processes, methods, data, formula, non-public
information, and confidential information; (iv) trademarks, service marks, trade
names, logos, designs, brand names, trade dress, and slogans (including, without
limitation, company names and fictitious names used by companies) and all
goodwill associated with any of the foregoing, and all applications for
registration and renewals of the foregoing; and (v) computer programs and
systems, whether embodied in software, firmware or otherwise, including,
software compilations, software implementations of algorithms, software tool
sets, compilers, and software models and methodologies (regardless of the stage
of development or completion), all databases and compilations, and including any
and all forms in which any of the foregoing is embodied (whether in source code,
object code, executable code or human readable form) (collectively, “Software”).
Section 4.11(a) of the Company Disclosure Schedule contains a complete and
accurate list of all Intellectual Property owned by the Company which is subject
to any issuance, registration, application or other filing by, to or with any
Governmental Entity, including any regulatory authority or authorized private
registrar in any jurisdiction (collectively, “Registered Intellectual
Property”), specifying as to each such item, as applicable, the owner(s) of
record (and, in the case of domain names, the registrar), jurisdiction of
application or registration, the application or registration number, the date of
application or registration, and the status of application or registration.
(2)Section 4.11(b) of the Company Disclosure Schedule contains a complete and
accurate list of all licenses, sublicenses and other agreements to which the
Company is a party: (i) pertaining to any Intellectual Property of a third party
used or held for use by the Company in the conduct of its business, excluding
generally commercially available, off-the-shelf Software programs, software as a
service, or web or hosted services; or (ii) by which the Company licenses or
otherwise authorizes a third party (other than customers or service providers in
the Ordinary Course of Business) to use the Owned Company Intellectual Property
(collectively, the “IP Contracts”). The Company has not granted any material
sublicense under or otherwise authorized any third party to use (other than in
the Ordinary Course of Business) any of the Company Intellectual Property
licensed to the Company. The Company is not and, to the Knowledge of the
Company, the other contracting parties are not in breach of or default under any
IP Contract, and except as set forth on Section 4.11(b) of the Company
Disclosure Schedule, each IP Contract is now and will be immediately following
the Closing in full force and effect.
(3)Except as set forth in Section 4.11(c) of the Company Disclosure Schedule,
the execution and delivery of this Agreement or any other agreements referred to
in this Agreement by the Company and the consummation by the Company of the
Merger, with or without notice or lapse of time,
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will not result in, or give any other third party the right or option to cause
or declare: the release, disclosure or delivery of any Company Intellectual
Property by or to any escrow agent or other person.
(4)All items of Registered Intellectual Property are in compliance with the
formal legal requirements of the U.S. Patent and Trademark Office or other
applicable similar office or agency anywhere in the world (including, as
applicable, timely payment of filing, examination and maintenance fees, inventor
declarations, proofs of working or use, timely post-registration filing of
affidavits of use and incontestability and renewal applications), are subsisting
and have not expired or been cancelled or abandoned, and are valid and, to the
Knowledge of the Company, enforceable. Except as set forth in Section 4.11(d) of
the Company Disclosure Schedule, all items of Registered Intellectual Property
are in full force, and are not the subject of any cancellation or reexamination
proceeding or any other claim, action, suit or proceeding of any nature by or
before any Governmental Entity, including any regulatory authority or before any
arbitrator, challenging their enforceability or validity. Except as set forth in
Section 4.11(d) of the Company Disclosure Schedule, the Company is the owner of
record in all items of Registered Intellectual Property, and no opposition,
extension of time to oppose, interference, rejection, re-examination, or refusal
to register has been received in connection with any such application or
registration. The Company, and, to the Knowledge of the Company, each of its
agents and current and former emloyees and independent contractors, has complied
with its duty of candor and disclosure as required under 37 C.F.R. 1.56 and
complied with analogous Law outside the United States requiring disclosure of
references or other information material to the patentability in each case
requested from any Governmental Entity with respect to all patent and trademark
applications filed by or on behalf of the Company and has not made any material
misrepresentation in such applications. Each inventor named on the patents or
patent applications listed in Section 4.11(a) of the Company Disclosure Schedule
that were filed by the Company has executed an agreement assigning his or her
entire right, title and interest in and to such patent or patent application,
and the inventions embodied and claimed therein, to the Company, which
assignment further obligates the inventor to cooperate and support the continued
prosecution of such patents or patent applications, and any enforcement and/or
defense thereof. To the Knowledge of the Company, no such inventor has any
contractual or other obligation that precludes or renders void or voidable any
such assignment or otherwise conflicts with the obligations of such inventor to
the Company.
(5)Except as set forth in Section 4.11(e) of the Company Disclosure Schedule,
the Company exclusively owns, or is licensed to use, all Intellectual Property
held for use or used in the operation of the business of the Company (the
“Company Intellectual Property”), provided that the foregoing shall not be
construed to be a representation or warranty regarding infringement,
misappropriation or violation of the Intellectual Property rights of any third
party, which are addressed solely by Section 4.11(f). Each item of the Company
Intellectual Property will be owned or available for use by the Parent or a
Subsidiary of the Parent (including the Surviving Corporation) immediately
following the Closing on substantially identical terms and conditions as it was
immediately prior to the Closing. Except as set forth in Section 4.11(e) of the
Company Disclosure Schedule, the Company is the sole and exclusive owner of all
right, title and interest in and to the Owned Company Intellectual Property,
free and clear of any Liens. Except for the Company Intellectual Property and
any intellectual property in the public domain, no other Intellectual Property
is, to the Knowledge of the Company, necessary to conduct the business of the
Company in the manner currently conducted. The Company has the sole and
exclusive right to bring actions for infringement, unauthorized use, or
misappropriation of the Owned Company Intellectual Property.
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(6)To the Knowledge of the Company, the conduct of the business of the Company,
as currently conducted, does not infringe, violate or constitute a
misappropriation of any Intellectual Property of any third party. During the
four (4) years prior to the date of this Agreement, the Company has not received
any written claim or notice from any person that the use by the Company of the
Company Intellectual Property infringes upon or misappropriates any Intellectual
Property of any person. During the four (4) years prior to the date of this
Agreement, there have been no actions pending, the Company has not been
threatened in writing with respect to any action, or, to the Knowledge of the
Company, no action has otherwise been threatened against the Company alleging
that: (i) the business of the Company infringes, violates or constitutes a
misappropriation of (or in the past constituted a misappropriation of) the
rights of any person in or to its intellectual property; or (ii) any of the
Registered Intellectual Property is invalid or unenforceable.
(7)The Company has entered into written agreements with every current and former
employee of the Company and with every current and former independent contractor
who has contributed to or participated in the creation or development of, for or
on behalf of the Company any Owned Company Intellectual Property, whereby such
employees and independent contractors assign to the Company any interest, right
and title they may have in any Owned Company Intellectual Property developed or
created by such employee or independent contractor and to the Knowledge of the
Company, all such agreements are binding on the parties thereto. During the four
(4) years prior to the date of this Agreement, the Company has implemented
commercially reasonable measures designed to protect and maintain the
confidentiality of Owned Company Intellectual Property of a nature that the
Company intends to keep confidential.
(8)To the Company’s Knowledge, no third party is infringing, violating or
misappropriating in any material respect any of the Company Intellectual
Property owned or purported to be owned by the Company, including any Company
Software (the “Owned Company Intellectual Property”).
(9)Section 4.11(i) of the Company Disclosure Schedule contains a complete and
accurate list of all Software that is owned by the Company and sold, licensed,
leased or otherwise distributed by the Company or authorized resellers to end
user customers of the Company’s products or services in connection with the
business (the “Company Software”).
(10)All Company Software is free from any defect or programming that would
reasonably be expected to have a material adverse effect on the Company,
including major bugs, logic errors or failures of such Software to operate in
all material respects as described in the related documentation and
specifications for such Company Software. Except for any components of the
source code licensed from third parties, the Company has actual and sole
possession and control of the complete source code of the Company Software. To
the Knowledge of the Company, no event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time) will, or could
reasonably be expected to, result in the disclosure or delivery to any third
party of the source code for the Company Software other than to employees,
contractors and service providers who have access to the source code in the
Ordinary Course of Business for purposes of the hosting, support, development
and maintenance of the Company Software. Except as set forth in Section 4.11(j)
of the Company Disclosure Schedule, the Company has not entered into any
agreement requiring that the Company Software source code or related know-how be
place in escrow so that a licensee or other person might obtain access to it
upon the occurrence of any release condition. To the Knowledge of the Company,
the Company Software (as used or distributed by the Company) does not contain
any “back door,” “time bomb,” “Trojan horse,” “worm,”
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“drop dead device,” “virus” (as these terms are commonly used in the computer
software industry), or other Software routines or hardware components
intentionally designed to permit unauthorized access, to disrupt, disable or
erase Software, hardware or data, or to perform any other similar type of
unauthorized activities.
(11)Except as set forth in Section 4.11(k) of the Company Disclosure Schedule,
no Company Software or Owned Company Intellectual Property is, in whole or in
part, subject to the provision of any license for Open Source Materials that:
(i) requires the distribution or making available of the source code for the
Company Software to the general public; (ii) prohibits or limits the Company
from charging a fee or receiving consideration in connection with sublicensing
or distributing any Company Software; (iii) except as specifically permitted by
applicable Law, grants any right to any third party or otherwise allows any such
third party to decompile, disassemble or otherwise reverse-engineer any Company
Software; or (iv) requires the licensing of any Company Software to the general
public for the purpose of permitting others to make derivative works of Company
Software (any such open source or other type of license agreement or
distribution model described in clause (i), (ii), (iii) or (iv) above, a
“Limited License”). Except as set forth in Section 4.11(k) of the Company
Disclosure Schedule, no Company Software is distributed with any Software that
is subject to a Limited License, nor does any Company Software statically link
with any such Software or constitute a derivate work of any such Software.
(12)Except as would not reasonably be expected to have a material adverse effect
on the Company, the computer systems, computer software and hardware,
telecommunications systems, network infrastructure and related equipment used by
the Company in the conduct of its business (collectively, “Systems”) are of
sufficient quality, capacity and processing power to carry out the current data
processing and telecommunications requirements of the business of the Company as
currently conducted. During the four (4) years prior to the date of this
Agreement, the Company has reasonable procedures in place designed to ensure the
security of the Company’s Systems and the data stored on them. To the Knowledge
of the Company, none of the Company’s Systems contain any viruses or any code
calculated to adversely affect any Software or data Processed by the Company.
(13)Except with respect to the IP Contracts, there are no milestones, royalties,
fees, commissions and other amounts payable by the Company to any other person
upon or for the use of any Company Intellectual Property.
(14)Except as set forth in Section 4.11(n) of the Company Disclosure Schedule,
no Owned Company Intellectual Property was developed by the Company, in whole or
in part (i) under an agreement with or using the resources of any Governmental
Entity, academic institution or other Entity that would subject any Owned
Company Intellectual Property to the rights of, or payment or other
obligations to, any Governmental Entity, academic institution or other Entity or
(ii) under any grants or other funding arrangements with third parties.
xii.Agreements, Contracts and Commitments; Government Contracts.
(1)Section 4.12(a) of the Company Disclosure Schedule sets forth a list of each
Contract that is in effect, and that has not expired or been terminated in
accordance with its terms, as of the date of this Agreement, to which the
Company is a party or by which the Company is bound of the following categories
(collectively with the IP Contracts and the Company Leases, the “Company
Material Contracts”):
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(a)any Contract (or group of related Contracts) that requires future payments by
or to the Company in excess of $100,000 in any calendar year, including any such
Contract (or group of such Contracts that are related) for the purchase, lease
or sale of real property, raw materials, goods, commodities, utilities,
equipment, supplies, products or other personal property, or for the provision
or receipt of services, in each case to the extent the Contract is not
terminable without penalty on 90 days’ or shorter notice;
(b)(A) any Contract relating to the acquisition or disposition by the Company of
any operating business or material assets (other than pursuant to non-exclusive
licenses or grants of rights); or (B) any Contract under which the Company have
any indemnification obligations, other than any such Contracts entered into in
the Ordinary Course of Business;
(c)(A) any guaranty, surety or performance bond or letter of credit issued or
posted, as applicable, by the Company; (B) any Contract evidencing or relating
to Indebtedness of the Company or providing for the creation of or granting any
Lien upon any of the property or assets of the Company (excluding Permitted
Liens); (C) any Contract (1) relating to any loan or advance to any Person which
is outstanding as of the date of this Agreement (other than immaterial advances
to employees and consultants in the Ordinary Course of Business) or (2)
obligating or committing the Company to make any such loans or advances; and (D)
any currency, commodity or other hedging or swap Contract;
(d)(A) any Contract creating or purporting to create any partnership or joint
venture or any sharing of profits or losses by the Company with any third party
(other than ordinary course commercial contracts entered into with third
parties); or (B) any Contract that provides for “earn-outs” or similar milestone
payments by or to the Company that have not yet been paid to the Company
(excluding any contingent payments arising pursuant to recruiting agreements for
service providers to the Company entered in into in the Ordinary Course of
Business);
(e)any employment agreement, offer letter, independent contractor agreement, or
other Contract for the employment or engagement of any current director,
officer, employee, or individual independent contractor of the Company that: (1)
provides for annual compensation or payments in excess of $100,000 or (2) is not
immediately terminable by the Company without penalty, severance, or other cost
or liability;
(f)any Contract with any Person that provides for retention payments, change of
control payments, accelerated vesting or any other payment or benefit that will
become due as a result of the Merger or any other transaction contemplated by
this Agreement;
(g)any collective bargaining agreement or similar Contract with any labor union,
works council, or other labor organization;
(h)any separation agreement or settlement agreement with any Person, including
any settlement agreement, consent decree, or other similar agreement with any
Governmental Entity, in each case, under which the Company has any current
actual or potential liability;
(i)any Contract to which any Governmental Entity is a party;
(j)(A) any Contract containing covenants restricting or purporting to restrict
competition which, in either case, have, would have or purport to have the
effect of prohibiting the Company or, after the Closing, Parent or the Surviving
Corporation from engaging in any business or
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activity in any geographic area or other jurisdiction, other than any such
covenant set forth in this Agreement or the agreements ancillary hereto; (B) any
Contract in which the Company has granted “exclusivity” or that requires the
Company to deal exclusively with, or grant exclusive rights or rights of first
refusal to, any customer, vendor, supplier, distributor, contractor or other
Person or that is a requirements contract; (C) any Contract that includes
minimum purchase conditions or other requirements, in either case that exceed
$100,000 in any calendar year to the extent the Contract is not terminable
without penalty on 90 days’ or shorter notice; or (D) any Contract containing a
“most-favored-nation,” “best pricing” or other similar term or provision by
which another party to such Contract or any other Person is, or could become,
entitled to any benefit, right or privilege which, under the terms of such
Contract, is required to be at least as favorable to such party as those offered
to another Person;
(k)any Contract involving a sales agent, representative, middleman, marketer,
broker, or similar Person who is entitled to receive commissions, fees or
markups related to the provision or resale of services of the Company;
(l)any Contract with a Payor or involving a Payor Program pursuant to which the
Company received payments in excess of $100,000 during the calendar year ended
December 31, 2019;
(m)any Contract with any Affiliate of the Company; and
(n)any Contract not otherwise listed or required to be listed in Section 4.12(a)
of the Company Disclosure Schedule that, if terminated, or if such Contract
expired without being renewed, would have a Company Material Adverse Effect.
(2)With respect to each Company Material Contract listed or required to be
listed in Section 4.12(a) of the Company Disclosure Schedule: (i) such Company
Material Contract is, to the Knowledge of the Company, binding and enforceable
against the Company and, to the Knowledge of the Company, against each party
thereto other than the Company, in accordance with its terms, subject to
(A) Laws of general application relating to bankruptcy, insolvency and the
relief of debtors and (B) rules of Law governing specific performance,
injunctive relief and other equitable remedies; and (ii) the Company is not in
material breach or material default of such Company Material Contract, nor with
the giving of notice or the giving of notice and passage of time without a cure
would the Company be in material breach or material default of such Company
Material Contract, and, to the Knowledge of the Company, no other party to such
Company Material Contract is in material breach or material default of such
Company Material Contract. The Company has made available to Parent true and
complete copies of each such Company Material Contract in all material respects
(including all modifications, amendments and supplements thereto and waivers
thereunder, but not including purchase orders and similar confirmatory documents
not specific to provisions that make such Contract a Company Material Contract).
Since January 1, 2019, the Company has not received any written notice or, to
the Knowledge of the Company, other communication regarding any actual or
possible violation or breach of, or default under, any Company Material Contract
by the Company.
(3)As of the date of this Agreement, no third party to any Company Material
Contract has indicated to the Company in writing or, to the Knowledge of the
Company, orally that it desires to materially modify, terminate or cancel any
Company Material Contract to which it is a party.
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(4)The Company is not, and has never been, suspended or debarred from bidding on
contracts or subcontracts with any Governmental Entity; no such suspension or
debarment has been initiated or, to the Knowledge of the Company, threatened in
writing; to the Knowledge of the Company, there is no valid basis for suspension
or debarment, and the consummation of the transactions contemplated by this
Agreement will not result in any such suspension or debarment. The Company has
not been audited or investigated and is not now being audited or, to the
Knowledge of the Company’s, investigated by any Governmental Entity nor, to the
Company’s Knowledge, has any such audit or investigation been threatened in
writing. The Company has no agreements, Contracts or commitments which require
it to obtain or maintain a security clearance with any Governmental Entity.
xiii.Litigation
. Except as set forth in Section 4.13 of the Company Disclosure Schedule, there
is no private or governmental action, suit, proceeding, claim, arbitration or,
to the Knowledge of the Company, investigation pending before any Governmental
Entity or, to the Knowledge of the Company, threatened against or affecting the
Company or any of its properties. There are no judgments, orders or decrees by
any Governmental Entity outstanding against the Company.
xiv.Environmental Matters.
(1)The Company: (i) has at all times during the past four (4) years complied
with, and is currently in compliance with, all applicable Environmental Laws;
(ii) holds all Permits required under Environmental Laws to operate and conduct
its business as currently operated and conducted; (iii) is in compliance in all
respects with such Permits; and (iv) has not released or discharged on any real
property leased or otherwise operated by the Company any Hazardous Materials in
the conduct of its business, except in each case as has not had, and would not
reasonably be expected to result in, a Company Material Adverse Effect.
(2)The Company has not received any written notice, demand, letter, claim or
request for information, and has no Knowledge of any pending or threatened
notice, demand, letter, or claim or request for information, alleging that the
Company may be in violation of, liable under or have obligations under any
Environmental Law.
xv.Employee Benefit Plans.
(1)Section 4.15(a) of the Company Disclosure Schedule sets forth a complete and
accurate list of all Employee Benefit Plans maintained, or contributed to, by
the Company (the “Company Employee Plans”).
(2)With respect to each Company Employee Plan, the Company has made available to
the Parent, a complete and accurate copy of: (i) such Company Employee Plan
including all amendments thereto (or a written summary of any unwritten plan);
(ii) if applicable, the most recent annual report (Form Series 5500 and all
schedules and financial statements attached thereto) filed with the Internal
Revenue Service (the “IRS”); (iii) each trust agreement, group annuity Contract
and summary plan description with the summary of material modifications thereto,
if any, relating to such Company Employee Plan; (iv) all material written
agreements and Contracts relating to each Company Employee Plan, including
administrative service agreements and group insurance Contracts, (v) the most
recent financial statements for each Company Employee Plan that is funded; (vi)
all correspondence to or from
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any governmental agency relating to any Company Employee Plan, (vii) all model
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, forms and
related notices, (viii) all HIPAA privacy notices and all business associate
agreements to the extent required under HIPAA, (ix) the most recent IRS
determination, advisory or opinion letter issued with respect to or relating to
each Company Employee Plan and any pending request for such determination,
advisory or opinion letter, (x) all rulings or notices issued by a governmental
agency with respect to each Company Employee Plan, (xi) all personnel, payroll
and employment manuals and policies; (xii) all employee handbooks; and (xiii) if
applicable, the most recent report regarding the satisfaction of the
nondiscrimination requirements of Sections 410(b), 401(k) and 401(m) of the
Code.
(3)No Company Employee Plan provides or is obligated to provide health, life
insurance, or other welfare benefits to any former employee of the Company (or
dependent thereof), except as may be required by applicable Law (and for which
the cost of such welfare benefit is fully paid by such former employee). No
Company Employee Plan provides or is obligated to provide health, life
insurance, or other welfare benefits to any Person who is not a current or
former employee of the Company (or dependent thereof).
(4)Each Company Employee Plan has been administered in all respects in
accordance with ERISA, the Code and all other applicable Laws and the
regulations thereunder including the applicable tax qualification requirements
under the Code and Section 409A of the Code and in accordance with its terms and
the Company have met their financial obligations with respect to such Company
Employee Plan and have made all required contributions thereto (or reserved such
contributions on the Company Balance Sheet), in each case, except as would not
have, and would not reasonably be expected to result in, a material adverse
effect on the Company.
(5)The assets of each Company Employee Plan which is funded are reported at
their fair market value on the books and records of such Employee Benefit Plan,
except as would not have, and would not reasonably be expected to result in, a
material adverse effect on the Company.
(6)All the Company Employee Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters or is entitled to
rely on an advisory or opinion letters from the IRS to the effect that the form
of such Company Employee Plans are qualified and the plans and trusts related
thereto are exempt from federal income Taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such letter has been revoked and, to the
Knowledge of the Company, revocation has not been threatened.
(7)The Company or ERISA Affiliate has not, within the past four (4) years,
maintained, been a participating employer, contributed to, or had any liability
with respect to: (i) a Company Employee Plan which is subject to Section 412 of
the Code or Section 302 or Title IV of ERISA; or (ii) a “Multiemployer Plan” (as
defined in Section 3(37) or 4001(a)(3) of ERISA or Section 413(c) of the Code).
No Company Employee Plan is funded by, associated with or related to a
“voluntary employee’s beneficiary association” within the meaning of Section
501(c)(9) of the Code. No Company Employee Plan holds securities issued by the
Company.
(8)Each Company Employee Plan that is a “nonqualified deferred compensation
plan” (as defined in Code Section 409A(d)(1)) has been operated since January 1,
2005 in good faith compliance with Code Section 409A and applicable IRS
guidance, except as would not have, and would not reasonably be expected to
result in, a material adverse effect on the Company.
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(9)The Company has not made any plan or commitment to establish any new Company
Employee Plan, modify any Company Employee Plan (except to the extent required
by Law or to conform any such Company Employee Plan to the Law, in each case, as
previously disclosed to Parent in writing, or as required by this Agreement), or
to enter into any Company Employee Plan.
(10)Neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, will or may (either alone or in connection with any other event)
create or otherwise result in any liability with respect to a Company Employee
Plan. The Company does not have any obligation to make, nor does any Contract
contemplate making, a “gross-up” or similar payment in respect of any Taxes that
may become payable under Section 4999 or 409A of the Code.
xvi.Compliance With Laws; Registrations; Healthcare Compliance.
(1)During the four (4) year period prior to the date hereof, the Company has
been compliance with and is not in violation of any applicable provisions of any
Law applicable to the conduct of its business, or the ownership or operation of
its properties or assets, except for any such failure to be in compliance that
has not had, and would not reasonably be expected to be material to the Company.
During the four (4) year period prior to the date hereof, the Company has not
received any written notice alleging any material violation with respect to any
applicable provisions of any Law with respect to the conduct of its business, or
the ownership or operation of its properties or assets. To the Knowledge of the
Company, no investigation or review by any Governmental Entity with respect to
the Company is pending or is being threatened. To the Knowledge of the Company,
no material change is required in any of the Company’s processes, properties or
procedures in order to bring them into compliance in all material respects with
any applicable Law. The Company has not received any written or, to the
Knowledge of the Company, oral notice or communication of any material
noncompliance with any applicable Law that has not been cured as of the date
hereof.
(2)Section 4.16(b) of the Company Disclosure Schedule lists all Registrations
required to conduct the business of the Company as currently conducted and the
Company has all Registrations from any applicable Governmental Entity required
to conduct its business as currently conducted, other than Registrations the
failure of which to be held has not had, and would not reasonably be expected to
be material to the Company.
(3)The Company is presently in compliance in all material respects with all
applicable Laws related to the provision of health care services (“Health
Laws”), including, but not limited to, the Clinical Laboratory Improvement
Amendments of 1988, 42 U.S.C. 263a; Title XVIII of the Social Security Act, 42
U.S.C. §§ 1395-1395lll (the Medicare statute), including specifically, the
Ethics in Patient Referrals Act, as amended, or “Stark Law,” 42 U.S.C. § 1395nn;
Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396w-5 (the Medicaid
statute); the Federal Health Care Program Anti-Kickback Statute, 42 U.S.C. §
1320a-7b(b); the False Claims Act, as amended, 31 U.S.C. §§ 3729 et seq.; the
Civil Monetary Penalties Law, 42 U.S.C. §§ 1320a-7a; Criminal False Statements
Law 1320a-7b(a); the Exclusions Law, 42 U.S.C. § 1320a-7; The Genetic
Information Nondiscrimination Act of 2008; state laboratory licensing Laws; and
any similar state and local Laws that address the subject matter of the
foregoing; and as each of the foregoing may be amended from time to time. None
of the Company or, to the Knowledge of the Company, its employees or agents has
received, with respect to the Company: (i) written notice of any violation,
alleged violation of, or liability under, any such Health Laws; or (ii)
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written notice of any actual, alleged, or potential obligation on the part of
the Company to undertake, or to bear all or any portion of the cost of, any
remedial action related to such Health Laws.
(4)Neither the Company nor, to the Knowledge of the Company, any of its
officers, directors, employees, or independent contractors have been convicted
of or are being investigated for, or have engaged in conduct that would
constitute, an offense related to Medicare or any other Federal Health Care
Program (as defined in 42 U.S.C. § 1320a-7b(f)). No current officer, director,
employee or independent contractor of the Company (whether an individual or
Entity), has been excluded from participating in any Federal Health Care
Program, subject to sanction pursuant to 42 U.S.C. § 1320a-7a or § 1320a-8, or
been convicted of a crime described at 42 U.S.C. § 1320a-7b, nor, to the
Knowledge of the Company, are any such exclusions, sanctions or charges
threatened or pending. Neither the Company nor any of its officers, directors,
employees, and, to the Knowledge of the Company, independent contractors is a
party to or has any ongoing reporting obligations pursuant to any corporate
integrity agreements, deferred prosecution agreements, monitoring agreements,
consent decrees, settlement orders, plans of correction or similar agreements
with, or imposed by, any Governmental Entity.
xvii.Privacy; Security Measures.
(1)The Company has at all times during the past four (4) years complied with:
(i) all Privacy and Security Laws and (ii) all Company Privacy Commitments (as
defined below), except as would not reasonably be expected to result in
liability material to the Company.
(2)The Company has at all times during the past four (4) years: (i) obtained or
received consents, if any, from data subjects required for the Company to comply
with Privacy and Security Laws, (ii) abided by any privacy choices (including
opt-out preferences) of data subjects relating to Personal Data exercised
pursuant to Privacy and Security Laws or Company Privacy Commitments described
in Section 4.17(b)(iii), and (iii) complied with all (A) Company privacy
policies; (B) applicable industry self-regulatory obligations and commitments of
the Company regarding the collection, retention, storage, disposal, use,
disclosure, transfer, protection, security, distribution or other Processing of
Personal Data, (C) obligations of the Company under Contracts relating to the
Processing of Company Data, (D) policies and obligations applicable to the
Company as a result of any certification by the Company under the EU-U.S. and
Switzerland-U.S. Privacy Shield frameworks; and (E) third party access program
agreements to which the Company is a party, in each case, as required by
applicable Privacy and Security Laws or by the terms of any Contract by which
the Company is bound, or by the terms of the applicable Company privacy policy
(collectively, Sections 4.17(b)(i) through 4.17(b)(iii), the “Company Privacy
Commitments”).
(3)The Company has made available to the Parent accurate and complete copies of
the Company privacy policies and privacy notices of the Company published and
relating to Privacy and Security Laws including, without limitation, the current
Notices of Privacy Practices adopted by the Company pursuant to HIPAA. All
workforce (as such term is defined in 45 C.F.R. § 160.103) members of the
Company have received training with respect to compliance with Privacy and
Security Laws.
(4)The Company has entered into valid business associate agreements with all
third parties acting as a business associate or subcontractor, as applicable,
and, each as defined in 45 C.F.R. § 160.103, of the Company, and with each
covered Entity for which the Company is a business associate, if any, each of
which business associate agreements is and has been valid during which Company
and such third party were in a business associate relationship as defined by
HIPAA. The Company (i) to the
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Knowledge of the Company, is not under investigation by any Governmental Entity
for a violation or alleged violation of any Privacy and Security Law or Company
Privacy Commitments; (ii) has not received any written inquiry, notice of, or
request for any investigation or subpoena from the United States Department of
Health and Human Services Office for Civil Rights, Department of Justice, FTC,
the Attorney General of any state or territory of the United States or any
Governmental Entity relating to any such violations; and (iii) during the past
four (4) years, has received no notices of, and has no Knowledge of any, claims,
actions, suits, investigations, inquiries or proceedings asserted or threatened,
against the Company related to any such violations. The Company has made
available to the Parent accurate and complete copies of any written complaint(s)
delivered to the Company alleging a violation of any Privacy and Security Laws.
To the Knowledge of the Company, no “breaches” (as such terms are defined in
HIPAA) have occurred with regard to any Company assets or locations.
(5)Except as would not reasonably be expected to result in liability material to
the Company, in the past four (4) years, (i) the Company has at all times taken
commercially reasonable steps (including implementing and maintaining security
systems and technologies in compliance with all Privacy and Security Laws and
Company Privacy Commitments) designed to preserve and protect Company Data
against (A) loss; (B) theft; and (C) accidental, unauthorized, or unlawful
Processing in a manner appropriate to the risks represented by the Processing of
such data by the Company and for the Company by its data processors or service
providers; and (ii) the Company has taken commercially reasonable steps designed
to ensure the reliability of the employees and contractors that have access to
Company Data and designed to ensure that all employees and contractors with the
right to access such data are subject to confidentiality obligations. At all
times during the past four (4) years, to the extent required by applicable
Privacy and Security Laws or Company Privacy Commitments, the Company has
contractually obligated third parties that service, host, manage, access or
otherwise Process Company Data to comply with applicable Privacy and Security
Laws and applicable obligations under Company Privacy Commitments. The Company
has no Knowledge that any such third parties that service, host, manage, access
or otherwise Process Company Data, in their provision of services to the
Company, have failed to comply in any material respect with applicable Privacy
and Security Laws or applicable Company Privacy Commitments.
(6)To the Knowledge of the Company, in the four (4) years prior to the date of
this Agreement, except as would not reasonably be expected to result in
liability material to the Company, (i) no unauthorized access to any Company
Systems used by the Company to maintain Company Data, or any Company Data in the
possession, custody or control of any data processor or service provider of the
Company, and (ii) no loss, theft, unauthorized access to, or unauthorized use,
acquisition, handling, disclosure, or other Processing of, any Company Data or
Personal Data maintained by or otherwise in the possession, custody or control
of the Company (each, a “Security Incident”) has occurred. The Company has taken
commercially reasonable actions to address, and where applicable, remedy the
cause of, all Security Incidents that, to the Knowledge of the Company, have
occurred in the four (4) years prior to the date of this Agreement. The Company
has made all notifications to Persons, Governmental Entities, media, customers
or other third parties required under Privacy and Security Laws or Company
Privacy Commitments arising out of or relating to any Security Incident that, to
the Knowledge of the Company, has occurred in the four (4) years prior to the
date of this Agreement.
(7)The Company employs and during the four (4) years prior to the date of this
Agreement has employed commercially reasonable security measures that materially
comply with applicable Privacy and Security Laws that are designed to ensure the
security of all Personal Data. The Company has provided all requisite notices
and obtained all required consents, if any, required by the
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Privacy and Security Laws necessary in connection with the consummation of the
transactions contemplated hereunder. To the Knowledge of the Company, the
execution and delivery of this Agreement and any and all related documents and
the consummation of the transactions contemplated hereby and thereby will not
cause, constitute, or result in a material breach or violation by the Company of
any Company Privacy Commitments or Privacy and Security Laws.
(8)The Company has regularly conducted, or retained a third party to conduct on
its behalf, security risk assessments and privacy impact assessments, in each
case to the extent required by applicable Privacy and Security Laws. The Company
has used reasonable efforts to address and remediate all material threats and
deficiencies in each assessment.
xviii.Labor Matters.
(1)The Company has provided to the Parent a list, complete and accurate as of
the date of this Agreement, of the following information for each current
employee and individual independent contractor, advisor, and consultant of the
Company, as applicable: (i) name; (ii) status as an employee or independent
contractor; (iii) job title, position, or a description of their contracted
services rendered to the Company; (iv) start date; (v) location of employment or
where such individual provides serves to the Company: (vi) full-time, part-time,
or temporary status; (vii) base salary or base hourly wage or contract rate;
(viii) target bonus rate or target commission rate; (ix) accrued but unused
vacation time and/or paid time off; (x) whether the individual is currently on a
leave of absence, and if so, anticipated return date; (xi) visa status and type,
if applicable, and visa expiration date; (xii) exempt or non-exempt
classification (as applicable) under the Fair Labor Standards Act (“FLSA”) or
any other similar state Laws.
(2)The Company is not a party to or otherwise bound by any collective bargaining
agreement, Contract or other agreement with a labor union or labor organization.
No labor union or other collective bargaining unit represents or, to the
Knowledge of the Company, claims to represent any of the Company’s employees
and, to the Knowledge of the Company, there is no union campaign being conducted
to solicit cards from employees to authorize a union to request a National Labor
Relations Board certifications election with respect to the Company’s employees.
The Company has never experienced any union organization campaigns, labor
disputes, work stoppages, lockouts, or slowdowns due to labor disagreements. To
the Company’s Knowledge, there is no labor strike, dispute, work stoppage,
lockout slowdown, or organization campaign pending or threatened against the
Company.
(3)The Company is in material compliance with all Laws pertaining to employment
and employment practices, including, but not limited to, Laws respecting payment
of wages, hours of work, fringe benefits, paid sick leave, employment or
termination of employment, leave of absence rights, employment policies,
immigration, terms and conditions of employment, child labor, labor or employee
relations, affirmative action, government contracting obligations, equal
employment opportunity and fair employment practices, disability rights or
benefits, workers’ compensation, unemployment compensation and insurance, health
insurance continuation, whistle-blowing, privacy rights, harassment,
discrimination, retaliation, and working conditions or employee safety or
health. The Company is in material compliance with all public health orders
applicable to it pertaining to COVID-19 and the COVID-19 Pandemic. All current
and former employees of the Company have provided documentation to the Company
reflecting their authorization under applicable United States immigration Laws
to work for the Company. There are no actions, suits, claims, charges,
complaints, grievances, arbitrations, investigations or other legal proceedings
against the Company pending, or to the Company’s Knowledge, threatened to be
brought or
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filed, by or with any Governmental Entity or arbitrator in connection with the
employment or engagement of any current or former employee, applicant,
contractor, or other individual service provider of the Company, including,
without limitation, any claim relating to unfair labor practices, employment
discrimination, harassment, retaliation, equal pay, wage or hours violations,
unpaid wages, unpaid commissions, wrongful termination or any other employment
related matter arising under applicable Laws. The Company has never effectuated
a “mass layoff,” “plant closing,” partial “plant closing,” “relocation,”
“termination,” or similar action (each as defined in the Worker Adjustment and
Retraining Notification Act or any similar state Law).
(4)(i) All employees of the Company are employed on an “at-will” basis and their
employment can be terminated at any time for any reason without notice or
payment of severance or other compensation or consideration being owed to such
individual other than amounts owed as of the date of termination from employment
based on service before that date or as required under applicable Law; (ii) the
Company’s relationships with all individuals who act as contractors or other
service providers to the Company can be terminated at any time for any reason
without notice or any amounts being owed to such individual other than with
respect to compensation or payments accrued before the termination; (iii) no
employee is unable to perform services for the Company as a result of a leave of
absence; (iv) each individual who has rendered services to the Company who was
classified by the Company as having the status of an independent contractor or
other non-employee status for any purpose (including for purposes of taxation
and Tax reporting and under any Company Employee Plans or prior employee benefit
plans) was properly so characterized; (v) all employees have been correctly
classified as exempt or non-exempt for purposes of the FLSA and any similar
state law, and overtime has been properly paid for all such employees classified
as non-exempt; and (vi) the Company has withheld and paid to the appropriate
Governmental Entity or is holding for payment not yet due to such Governmental
Entity all amounts required to be withheld from all payments to its employees
and independent contractors and is not liable for any arrears of wages, Taxes,
penalties or other sums for failure to comply with any of the foregoing.
(5)(i) No allegations of sexual harassment or misconduct have been made against
(A) any executive, officer, or director of the Company in his/her capacity as an
employee of the Company or, to the Knowledge of the Company, otherwise or (B)
any employee of the Company in his/her capacity as an employee of the Company
who, directly or indirectly, supervises other employees of the Company, and (ii)
the Company has not entered into any settlement agreement or conducted any
investigation related to allegations of sexual harassment or sexual misconduct
by an employee, contractor, director, officer or other representative of the
Company.
(6)All employees of the Company who are not citizens or permanent residents of
the country in which they work have provided documentation to the Company, as
applicable, reflecting their authorization under applicable United States or
foreign immigration laws to work in his or her current position.
(7)No executive or officer of the Company or other group of employees has
provided notice to the Company of their intent to terminate their employment
with the Company, and to the Company’s Knowledge, no executive or officer of the
Company or other group of employees intends to terminate their employment with
the Company. To the Knowledge of the Company, no employee or independent
contractor of the Company is in breach of any non-competition agreement or
restrictive covenant to a former employer or other Entity relating to the right
of any such employee or independent contractor to be employed or engaged by the
Company because of the nature of the business currently
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conducted or proposed to be conducted by the Company or to the use of trade
secrets or proprietary information of the former employer or other Entity.
xix.Insurance
. Section 4.19 of the Company Disclosure Schedule contains a list of all
insurance policies maintained by the Company as of the date hereof in connection
with its business (the “Insurance Policies”). Each Insurance Policy is in full
force and effect and is valid, outstanding and enforceable, and all premiums due
thereon have been paid in full. None of the Insurance Policies shall terminate
or lapse (or be affected in any other adverse manner) by reason of the
transactions contemplated by this Agreement. The Company has complied in all
material respects with the provisions of each Insurance Policy under which it is
the insured party. No insurer under any Insurance Policy has cancelled or
generally disclaimed liability under any such policy or indicated any intent to
do so or not to renew any such policy. The Company has complied in all material
respects with the provisions of each such insurance policy under which it is the
insured party. All claims pending as of the date hereof under the Insurance
Policies have been filed in a timely fashion. Copies or certificates of coverage
in respect of all Insurance Policies set forth in Section 4.19 of the Company
Disclosure Schedule have been made available to the Parent.
xx.Assets
. The Company has good and marketable title to all of its properties, interests
in properties and assets, real and personal, reflected in the Company Balance
Sheet or acquired after the Company Balance Sheet Date (except properties,
interests in properties and assets sold or otherwise disposed of since the
Company Balance Sheet Date in the Ordinary Course of Business), or with respect
to leased properties and assets, valid leasehold interests therein, free and
clear of all Liens except Permitted Liens. The plants, property and equipment of
the Company that are used in the operations of the Company’s business are free
from material defects, have been maintained in accordance with normal industry
practice, are in good operating condition and repair (subject to normal wear and
tear), are suitable for the purpose for which they are presently used.
xxi.Payors
. Section 4.21 of the Company Disclosure Schedule sets forth a list of all
Payors during the fiscal year ended December 31, 2019 which accounted for more
than One Hundred Thousand Dollars ($100,000) in revenues during either such
period, and the amount of revenues accounted for by such Payor during each such
period. In the last four (4) years, the Company has not received any written
notice of any existing, announced or anticipated changes in the policies of any
such Payor which has had, or would reasonably be expected to result in, a
material adverse effect on the Company. The billing and collection practices of
the Company are, and in the last four (4) years have been, in material
compliance with the written reimbursement policies of all Payors. The Company
has not in the last four (4) years (i) submitted to any Payor any abusive or
improper claim for payment or (ii) received and retained any payment or
reimbursement from any Payor in excess of the proper amount allowed by any
applicable Payor agreements. There are no material appeals or audits outstanding
with, or any material outstanding overpayments or refunds due to, any Payor
Program. To the Knowledge of the Company, there is no investigation, audit,
claim review, or other action pending or threatened, which could result in a
suspension, revocation, termination, restriction, limitation, modification or
nonrenewal of any Payor agreement, or result in the exclusion of Company from
any Payor Program.
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xxii.Books and Records
. The minute books, stock record books, and all other corporate and financial
records of the Company are complete and correct in all material respects, have
been maintained in all material respects in accordance with sound business
practices and legal requirements, and to the Knowledge of the Company, there are
no material inaccuracies or discrepancies of any kind contained therein. The
minute books of the Company, all of which have been made available to the
Parent, contain records of all corporate action taken by the stockholders, the
Company Board, and committees of the Company Board and are accurate and complete
in all material respects, and no meeting of any such shareholders, board of
directors, or committee has been held at which any corporate action was taken
for which minutes have not been prepared and are not contained in such minute
books. At the Closing, all of such books and records will be in the possession
of the Company.
xxiii.No Illegal Payments
. None of the Company or, to the Knowledge of the Company, any director or
officer of the Company or any other person acting on behalf of any of the
aforementioned (i) has been convicted of, or, to the Knowledge of the Company,
has been accused, charged or investigated by any Governmental Entity with any
violation of, any Anti-Corruption/AML Law or other applicable Law related to
fraud, theft, embezzlement, bribery, breach of fiduciary responsibility,
financial misconduct, obstruction of an investigation or sanctioned violations;
(ii) has used any funds (whether of the Company or otherwise) for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (iii) has with a corrupt or improper intention directly or
indirectly (through third parties) paid, provided, promised, offered, or
authorized the payment or provision of money, a financial advantage, or anything
else of value to (a) an official, employee, or agent of any government,
military, public international organization, state-owned or affiliated Entity
(including, but not limited to, sovereign wealth funds or public hospitals,
universities, or research labs), political party, or any instrumentality thereof
(collectively “Government Officials”), (b) a political party or candidate for
political office, or (c) any other person, for purposes of obtaining, retaining,
or directing permits, licenses, favorable tax or court decisions, special
concessions, Contracts, business, or any other improper advantage; (iv) has
otherwise offered, promised, authorized, provided, or incurred any bribe,
kickback, or other corrupt or unlawful payment, expense, contribution, gift,
entertainment, travel or other benefit or advantage (collectively, “Restricted
Benefits”) to or for the benefit of any Government Official, political party or
candidate, or any other person; (v) has solicited, accepted, or received any
Restricted Benefits from any person; (vi) has established or maintained any
slush fund or other unlawful or unrecorded fund or account; (vii) has inserted,
concealed, or misrepresented corrupt, illegal, or improper payments, expenses or
other entries in their books and records; (viii) has concealed or disguised the
existence, illegal origins, and/or illegal application of criminally derived
income/assets or otherwise caused such income or assets to appear to have
legitimate origins or constitute legitimate assets; (ix) has used any funds to
finance terrorist, drug-related, or other illegal activities; (x) has violated,
caused other parties to violate, or is currently in violation of any provision
of any Anti-Corruption/AML Laws or any Laws of similar effect; or (xi) has
received any communication that alleges any of the foregoing. The Company has
not conducted any internal or government-initiated investigation, or made a
voluntary or involuntary disclosure to any Governmental Entity with respect to
any alleged act or omission arising under or relating to any noncompliance with
any Anti-Corruption/AML Laws. There are no pending or, to the Knowledge of the
Company, threatened claims against the Company with respect to violations of any
Anti-Corruption/AML Laws.
xxiv.Affiliated Transactions.
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(1)Other than (a) employment agreements or offer letters entered into in the
Ordinary Course of Business, (b) Company Stock Options or other equity rights
covering Company Capital Stock, (c) reimbursement of customary and reasonable
expenses incurred on behalf of the Company, (d) Company Employee Plan disclosed
on Section 4.15(a) of the Company Disclosure Schedule, (e) indemnification and
other rights under any agreement with the Company, the Company Certificate of
Incorporation and/or the Company Bylaws or (f) as otherwise set forth in Section
4.24(a) of the Company Disclosure Schedule, there are no loans, leases or other
agreements or transactions between the Company on the one hand and any
respective director, officer or employee of the Company, or to the Knowledge of
the Company, any member of such officer’s, director’s or employee’s immediate
family, or any person controlled by such officer, director, or employee or his
or her immediate family on the other hand. No director or officer of the Company
or, to the Knowledge of the Company, any of their immediate family, owns
directly or indirectly, on an individual or joint basis, any interest in, or
serves as an officer or director or in another similar capacity of, any
competitor, customer or supplier of the Company, or any organization which has a
contract or arrangement with the Company, except that directors and officers of
the Company may own stock in (but not exceeding two percent (2%) of the
outstanding capital stock of) publicly traded companies that may compete with
the Company.
(2)Section 4.24(b) of the Company Disclosure Schedule sets forth a list of each
stockholders agreement, voting agreement, registration rights agreement, co-sale
agreement or other similar Contract between the Company and any holders of
Company Capital Stock, including any such Contract granting any Person investor
rights, rights of first refusal, rights of first offer, registration rights,
director designation rights or similar rights.
xxv.Suppliers
. Except for ongoing discussions relating to current and past due amounts
payable by the Company, the Company has no outstanding material disputes
concerning products and/or services provided by any supplier or partner who
either (i) in the year ended December 31, 2019, was one of the 10 largest
suppliers of products and/or services to or partner of the Company, based on
amounts paid by the Company with respect to such periods (a “Top 10 Supplier”),
or (ii) is a sole-source supplier of significant goods or services (other than
electricity, gas, telephone, water or other utilities) to the Company with
respect to which alternative sources of supply are not reasonably available
(each of (i) or (ii), a “Significant Supplier”). Each Top 10 Supplier is listed
on Section 4.25 of the Company Disclosure Schedule. As of the date of this
Agreement, the Company has not received any written or, to the Knowledge of the
Company, other notice from any Significant Supplier that such supplier intends
to terminate its business relationship with the Company (or the Surviving
Corporation) after the Closing or that such Significant Supplier intends to
terminate or materially modify existing Contracts with the Company (or the
Surviving Corporation) other than communications regarding Contract negotiations
and renegotiations in the Ordinary Course of Business.
xxvi.Brokers; Schedule of Fees and Expenses
. Other than Evolution Life Science Partners LLC doing business as Gordian
Investments, no agent, broker, investment banker, financial advisor or other
firm or person is or shall be entitled, as a result of any action, agreement or
commitment of the Company or any of its Affiliates, to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with any of
the transactions contemplated by this Agreement.
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xxvii.Accounts Receivable
. Subject to any reserves set forth therein, the accounts receivable included in
the Closing A/R and Cash and set forth on Section 4.27 of the Company Disclosure
Schedule, are valid and genuine, have arisen solely out of bona fide sales and
deliveries of goods, performance of services, and other business transactions in
the Ordinary Course of Business, are not subject to any prior assignment, Lien
or security interest, and are not subject to known valid defenses, set-offs or
counter claims.
xxviii.Non Reliance.
(1)The Company has conducted its own independent investigation, review and
analysis of the business, results of operations, prospects, condition (financial
or otherwise) or assets of Parent, and acknowledges that it has been provided
adequate access to the personnel, properties, assets, premises, books and
records, and other documents and data of Parent for such purpose. The Company
acknowledges and agrees that: (i) in making its decision to enter into this
Agreement and to consummate the transactions contemplated hereby, the Company
has relied solely upon its own investigation and the express representations and
warranties of Parent set forth in Article V and disclaims reliance on any other
representations and warranties of any kind or nature express or implied
(including, except as expressly set forth in Article V or in the Subscription
Agreements, any relating to the future or historical financial condition,
results of operations, assets or liabilities or prospects of Parent); and (ii)
none of Parent, its equityholders, lenders or any other person has made any
representation or warranty as to Parent or the accuracy or completeness of any
information regarding Parent made available to the Company and its
representatives, except as expressly set forth in Article V and in the
Subscription Agreements.
(2)In connection with the due diligence investigation of Parent, the Company and
its Affiliates, securityholders, lenders and representatives have received from
Parent and its Affiliates and representatives certain estimates, projections,
forecasts and other forward-looking information, as well as certain business
plan information, regarding Parent and its businesses and operations. The
Company hereby acknowledges and agrees that, except for the representations and
warranties expressly set forth in Article V and in the Subscription Agreements,
neither Parent, nor any of its Affiliates, equityholders, lenders or
representatives has made or is making any express or implied representation or
warranty with respect to such estimates, projections, forecasts, forward-looking
statements or business plans.
xxix.No Other Representations
. Except for the representations and warranties expressly made by the Company in
this Article IV, as modified by the Company Disclosure Schedule, neither the
Company nor any other person makes any representation or warranty of any kind,
express or implied, at law or in equity, written or oral, on behalf of or with
respect to the Company or otherwise, or with respect to any information provided
to the Parent. All other representations or warranties are hereby disclaimed by
the Company.
Article V.

REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND THE PURCHASER
Parent and Purchaser each represents and warrants to Company, except as
disclosed in the Parent SEC Documents, in each case, prior to the date of this
Agreement, and excluding any disclosures
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contained under the heading “Risk Factors” and any disclosure of risks included
in any “forward-looking statements” disclaimer or in any other section to the
extent they are forward-looking statements or cautionary, predictive or
forward-looking in nature, as follows:
i.Organization, Standing and Power
. Each of the Parent and the Purchaser is a corporation duly organized, validly
existing and in good standing under the Laws of its jurisdiction of its
incorporation, has all requisite corporate power and authority to own, lease and
operate its properties and assets and to carry on its business as now being
conducted, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the character of the
properties it owns, operates or leases or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified or in
good standing, individually or in the aggregate, would not reasonably be
expected to materially impair the ability of the Parent or the Purchaser to
consummate the transactions contemplated hereunder.
ii.Authority; No Conflict; Required Filings and Consents.
(1)Each of the Parent and the Purchaser has all requisite corporate power and
authority to enter into this Agreement, perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Parent and the Purchaser and the consummation
by the Parent and the Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of each of the Parent and the Purchaser, subject only to the acceptance of
the Certificate of Merger by the Secretary of State of the State of Delaware.
This Agreement has been duly executed and delivered by each of the Parent and
the Purchaser and, assuming due authorization, execution and delivery of this
Agreement by the Company, constitutes the valid and binding obligation of each
of the Parent and the Purchaser, enforceable in accordance with its terms
except: (i) as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other Laws affecting creditors’ rights generally;
and (ii) insofar as the availability of equitable remedies may be limited by
applicable Law.
(2)Except as set forth on Schedule 5.2(b), the execution and delivery of this
Agreement by each of the Parent and the Purchaser do not, and the consummation
by the Parent and the Purchaser of the transactions contemplated by this
Agreement shall not: (i) conflict with, or result in any violation or breach of,
any provision of the certificate of incorporation or bylaws of the Parent or the
Purchaser; (ii) conflict with, or result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, revocation, invalidation, cancellation or
acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions of
any material note, bond, mortgage, indenture, lease, license, contract or other
agreement, instrument or obligation to which the Parent or the Purchaser is a
party or by which either of them or any of their properties or assets may be
bound; or (iii) conflict with or violate any material Permit, judgment,
injunction, order, decree, or other material Law applicable to the Parent or the
Purchaser or any of their properties or assets, except in the case of clauses
(ii) and (iii) of this Section 5.2(b) for any such conflicts, violations,
breaches, defaults, terminations, cancellations, accelerations or losses which,
individually or in the aggregate, would not reasonably be expected to materially
impair the ability of the Parent or the Purchaser to consummate the transactions
contemplated hereunder.
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(3)No consent, approval, license, Permit, order or authorization of, or
registration, declaration, notice or filing with any Governmental Entity is
required by or with respect to the Parent or the Purchaser in connection with
the execution and delivery of this Agreement or the consummation by the Parent
or the Purchaser of the transactions contemplated by this Agreement, except for:
(i) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate corresponding documents with the appropriate
authorities of other states in which the Company is qualified as a foreign
corporation to transact business; (ii) required filings under the Securities Act
and the Exchange Act; and (iii) such consents, approvals, licenses, Permits,
orders, authorizations, Registrations, declarations, notices and filings, the
failure of which to make or obtain would not, individually or in the aggregate,
reasonably be expected to materially impair the ability of the Parent or the
Purchaser to consummate the transactions contemplated hereunder.
iii.Interim Operations of the Purchaser
. The Purchaser was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has not engaged in any other
business activities and has conducted its operations only as contemplated
hereby.
iv.Financing
. At the Effective Time, the Parent and the Purchaser will have available all
the funds necessary to consummate the transactions contemplated by this
Agreement and to pay the Parent Closing Cash Payments payable by the Parent or
the Purchaser related to the transactions contemplated by this Agreement.
v.Brokers
. No broker, finder or investment banker is entitled to any brokerage, finder’s
or other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of the Parent, the Purchaser or any of their respective
Subsidiaries or Affiliates.
vi.SEC Documents.
(1)Parent has timely filed with or furnished to (as applicable) all reports,
schedules, forms, statements and other documents required to be filed or
furnished (as applicable) by Parent with the SEC pursuant to the Exchange Act
and the Securities Act on or prior to the date of this Agreement (collectively,
the “Parent SEC Documents”). True, correct, and complete copies of all the
Parent SEC Documents are publicly available on Electronic Data Gathering
Analysis and Retrieval. As of their respective dates or, if amended prior to the
date of this Agreement, as of the date of the last such amendment, the Parent
SEC Documents (i) were prepared in all material respects in accordance with the
requirements of the Exchange Act or the Securities Act, as the case may be,
applicable to such Parent SEC Documents and (ii) did not, at the time they were
filed, or, if amended prior to the date of this Agreement, as of the date of
such amendment, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the Parent SEC Documents is the subject of ongoing SEC
review or outstanding SEC investigation and there are no outstanding or
unresolved comments received from the SEC with respect to any of the Parent SEC
Documents.
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(2)The consolidated financial statements (including all related notes thereto)
of Parent included in the Parent SEC Documents (if amended, as of the date of
the last such amendment filed prior to the date of this Agreement) (the “Parent
SEC Financial Statements”) comply in all material respects as to form with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. The Parent SEC Financial Statements fairly
present, in all material respects, the consolidated financial position of Parent
and its consolidated Subsidiaries, as at the respective dates thereof, and the
consolidated results of their operations and their consolidated cash flows for
the respective periods then ended (subject, in the case of the unaudited
statements, to normal year-end audit adjustments and to the absence of
information or notes not required by GAAP to be included in interim financial
statements), all in conformity with GAAP (except as permitted by Regulation S-X
or, with respect to pro forma information, subject to the qualifications stated
therein) applied on a consistent basis during the periods involved (except as
may be indicated therein or in the notes thereto).
(3)Except for matters reflected or reserved against in the unaudited balance
sheet of Parent dated as of March 31, 2020 contained in the Parent SEC Documents
filed prior to the date hereof (including in the notes thereto) (the “Parent
Balance Sheet”), neither Parent nor any of its Subsidiaries has any material
obligations or liabilities of a nature that would have been required to be
disclosed on the face of the Parent Balance Sheet in accordance with GAAP,
except for obligations and liabilities that: (i) were incurred since the date of
the Parent Balance Sheet in the Ordinary Course of Business consistent with past
practice; (ii) are incurred in connection with the transactions contemplated by
this Agreement; or (iii) would not reasonably be expected to materially impair
the ability of Parent or the Purchaser to consummate the transactions
contemplated hereunder.
vii.Non-Reliance.
(1)The Parent has conducted its own independent investigation, review and
analysis of the business, results of operations, prospects, condition (financial
or otherwise) or assets of the Company, and acknowledges that it has been
provided adequate access to the personnel, properties, assets, premises, books
and records, and other documents and data of the Company for such purpose. The
Parent acknowledges and agrees that: (i) in making its decision to enter into
this Agreement and to consummate the transactions contemplated hereby, the
Parent has relied solely upon its own investigation and the express
representations and warranties of the Company set forth in Article IV (including
the related portions of the Company Disclosure Schedule) and disclaims reliance
on any other representations and warranties of any kind or nature express or
implied (including, except as expressly set forth in Article IV, any relating to
the future or historical financial condition, results of operations, assets or
liabilities or prospects of the Company); and (ii) none of Company
Equityholders, the Creditors, the Company or any other person has made any
representation or warranty as to a Company Equityholder, a Creditor, the Company
or the accuracy or completeness of any information regarding the Company made
available to the Parent and its representatives, except as expressly set forth
in Article IV (including the related portions of the Company Disclosure
Schedule); provided, however, as between the parties to the Subscription
Agreements, nothing in this Agreement is intended limit or restrict the rights
or obligations of any Person with respect to any representation or warranty made
pursuant to any Subscription Agreement to which such Person is or becomes a
party.
(2)In connection with the due diligence investigation of the Company by Parent
and its Affiliates, securityholders, or representatives, the Parent and its
Affiliates, securityholders, and representatives have received from the Company
and its Affiliates and Representatives certain estimates, projections, forecasts
and other forward-looking information, as well as certain business plan
information,
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regarding the Company and its businesses and operations. Parent hereby
acknowledges and agrees that, except for the representations and warranties
expressly set forth in Article IV, neither the Company, nor any of its
Affiliates, Company Equityholders, Creditors or representatives has made or is
making any express or implied representation or warranty with respect to such
estimates, projections, forecasts, forward-looking statements or business plans.
viii.No Other Representations
. Except for the representations and warranties expressly made by Parent in this
Article V or pursuant to the Subscription Agreements, neither Parent nor any
other person makes any representation or warranty of any kind, express or
implied, at law or in equity, written or oral, on behalf of or with respect to
Parent or otherwise, or with respect to any information provided to the Company
or the Creditors. All other representations or warranties are hereby disclaimed
by Parent.
Article VI.

ADDITIONAL AGREEMENTS
i.Public Disclosure
. Except as may be required by Law or stock market regulations, any press
release announcing the execution of this Agreement or the consummation of the
transactions contemplated by this Agreement, including the Merger shall only be
issued by the Parent but shall be in such form as mutually agreed upon by the
Representative and the Parent. For the avoidance of doubt, nothing in this
Section 6.1 shall prevent or limit any Company Equityholder that is a venture
capital fund, private equity fund or other institutional investor, Evolution
Life Science Partners LLC (doing business as Gordian Investments) or any of
their respective Affiliates from publishing a customary “tombstone” or similar
announcement containing general information with respect to the transaction, or
providing information regarding internal rate of return and multiple of invested
capital, or other customary information made in confidence to limited partners,
members or other current or prospective equity investors regarding the
transactions contemplated hereby.
ii.Employee Matters.
(1)Each employee of the Company who continues in employment with Parent or any
Affiliate thereof (including the Surviving Corporation) after the Closing will
be a “Continuing
Employee.” During the period beginning as of the Effective Time and ending on no
earlier than the first (1st) anniversary of the Effective Time, Parent shall
provide, or cause to be provided, each Continuing Employee with (i) at least the
same level of base wages or base salary, as applicable, as well as bonus and
incentive compensation targets or opportunities, in each case as were provided
to the Continuing Employee immediately prior to the Effective Time and (ii)
employee benefits that are no less favorable than those that are provided to
similarly situated employees of Parent.
(2)Parent shall, and shall cause its Affiliates to, grant all Continuing
Employees credit for any service to the Company and its Affiliates earned prior
to the Closing for purposes of eligibility, vesting and determination of the
level of benefits, vacation or paid time off accrual and severance benefit
determinations, under any benefit or compensation plan, program, agreement or
arrangement in which a Continuing Employee participates that may be established
or maintained by
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Parent or its Affiliates on or after the Closing (the “New Plans”); provided,
however, that such service credit shall not be recognized to the extent that it
would result in a duplication of benefits for the same period of time. In
addition, Parent shall use commercially reasonable efforts to, and shall cause
its Affiliates to, cause (i) to be waived all pre-existing condition exclusions
and actively-at-work requirements and similar limitations, eligibility waiting
periods and evidence of insurability requirements under any New Plans to the
extent waived or satisfied by a Continuing Employee under any Company benefit
plan as of the Closing and (ii) any deductible, co-insurance and covered
out-of-pocket expenses paid on or before the Closing by any Continuing Employee
(or covered dependent thereof) to be taken into account for purposes of
satisfying the corresponding deductible, coinsurance and maximum out-of-pocket
provisions after the Closing under any applicable New Plan in the same plan year
in which the Closing occurs.
(3)Nothing contained herein, express or implied, (x) is intended to confer upon
any Continuing Employee any right to continued employment for any period or
continued receipt of any specific employee benefit, or shall constitute an
amendment to or any other modification of any benefit plan, (y) shall alter or
limit Parent’s or the Company’s or their Affiliates’ ability to amend, modify or
terminate any particular benefit plan, program, agreement or arrangement or (z)
is intended to confer upon any individual (including employees, retirees or
dependents or beneficiaries of employees or retirees) any right as a third party
beneficiary of this Agreement.
iii.Equity Incentive Plan and 401(k) Plan Terminations
. Prior to the Effective Time, the Company Board or, if appropriate, any
committee administering the Company’s Stock Plans, shall have adopted such
resolutions or taken such other actions as are required to: (i) cancel all
options granted under such Company Stock Plans and (ii) terminate such Company
Stock Plans prior to the Effective Time. The Company has provided to Parent
evidence that such plans have been terminated pursuant to resolutions of the
Company Board. Prior to the Effective Time, the Company Board or, if
appropriate, any committee administering the Company’s 401(k) Plan, shall have
adopted such resolutions or take such other actions as are required to terminate
such plan on or prior to the Effective Time. The Company has provided Parent
with a copy of any resolutions or other corporate action evidencing that the
Company’s 401(k) Plan has been terminated prior to the Effective Time.
iv.Tax Matters.
(1)Preparation and Filing of Returns. The Surviving Corporation shall prepare,
or cause to be prepared, and file, or cause to be filed, all Tax Returns of the
Company that have an initial filing date (taking into account any automatic
extensions of time to file) after the Closing Date. Each such Tax Return that
relates to a taxable period (or portion thereof) ending on or before the Closing
Date (a “Pre-Closing Period”) shall be prepared in a manner consistent with the
past practice and custom of the Company unless otherwise required by applicable
Law (as reasonably determined by Parent). If the Company is permitted but not
required under applicable state, local, or foreign income tax Laws to treat the
Closing Date as the last day of a taxable period, then the Parties shall treat
that day as the last day of a taxable period.
(2)Payment of Transfer Taxes and Fees. The Parent and the Surviving Corporation
shall be responsible for all sales and transfer Taxes arising out of or in
connection with the transactions effected pursuant to the Merger. The Surviving
Corporation shall file all necessary documentation and Tax Returns with respect
to such sales or transfer Taxes.
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(3)Termination of Tax Sharing Agreements. Any and all Tax allocation or sharing
agreements or other similar agreements or arrangements binding the Company shall
be terminated with respect to the Company as of the day before the Closing Date
and, from and after the Closing Date, the Surviving Corporation shall not be
obligated to make any payment to any person pursuant to any such agreement or
arrangement for any period.
(4)Tax Contests. Until the later of (i) the expiration of the General Survival
Period and (ii) the release of all Escrowed Shares retained under the Escrow
Agreement for claims for indemnification asserted under Article VIII of the
Merger Agreement with respect to Taxes, Parent and the Surviving Corporation, on
the one hand, and Representative, on the other hand, shall promptly notify each
other upon receipt of written notice of any inquiries, claims, assessments,
audits or similar events with respect to Taxes relating to a Pre-Closing Period
(or portion thereof) (any such inquiry, claim, assessment, audit or similar
event, a “Tax Matter”). Any failure to so notify the other Party of any Tax
Matter shall not relieve such other party of any liability with respect to such
Tax Matters except to the extent such party was actually and materially
prejudiced as a result thereof. Parent shall control of the conduct of all Tax
Matters; provided that, until the later of (i) the expiration of the General
Survival Period and (ii) the release of all Escrowed Shares retained under the
Escrow Agreement for claims for indemnification asserted under Article VIII of
the Merger Agreement with respect to Taxes, to the extent the outcome of the Tax
Matter would reasonably be expected to give rise to an indemnification
obligation of the Escrow Beneficiaries under this Agreement, then (i) Parent
shall control such Tax Matter diligently and in good faith; (ii) Parent shall
keep the Representative reasonably informed regarding the status of such Tax
Matter and shall provide to the Representative copies of any and all material
correspondence received from the Governmental Entity related to such Tax Matter;
(iii) the Representative, at its sole cost and expense, shall have the right to
participate in such Tax Matter and in connection therewith, Parent shall provide
the Representative with the opportunity to attend conferences with the
Governmental Entity and to review and provide comments with respect to written
responses provided to the Governmental Entity and (iv) Parent shall not settle,
resolve, compromise or abandon (and shall not allow the Surviving Corporation to
settle, resolve, or abandon) such Tax Matter without the prior written consent
of the Representative (which shall not be unreasonably withheld, conditioned or
delayed).
(5)Cooperation. The Parties agree to furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such reasonable information and
assistance relating to Taxes, including, without limitation, access to books and
records, as is reasonably necessary for the filing of all Tax Returns by the
Parties, the making of any election relating to Taxes, the preparation for any
audit by any taxing authority and the prosecution or defense of any claim, suit
or proceeding relating to any Tax.
(6)Post-Closing Actions. After the Closing and until the later of (i) the
expiration of the General Survival Period and (ii) the release of all Escrowed
Shares retained under the Escrow Agreement for claims for indemnification
asserted under Article VIII of the Merger Agreement with respect to Taxes,
without the prior written consent of the Representative (which consent shall not
be unreasonably withheld, conditioned or delayed), Parent shall not, and shall
not cause or permit the Surviving Corporation to: (i) amend, supplement or
refile any Tax Returns of the Company for a Pre-Closing Period, (ii) make,
change or revoke any Tax election with respect to the Company for a Pre-Closing
Period, or (iii) file or submit any voluntary disclosure or similar agreements
with any Governmental Entity relating to Taxes of the Company for a Pre-Closing
Period, (iv) cause the Surviving Corporation to take any action on the Closing
Date after the Closing outside the Ordinary Course of Business that is not
expressly contemplated by this Agreement or any Transaction Document, (v)
compromise or settle any Tax liability relating to a Pre-Closing Period, in each
case to the extent the
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foregoing could reasonably be expected to increase the Pre-Closing Taxes for
which the Escrow Beneficiaries are responsible for indemnification under Section
8.1, or (vi) agree to the waiver or any extension of the statute of limitations
relating to any Taxes of the Companies for any Pre-Closing Period. For the
avoidance of doubt, it shall be unreasonable for the Representative to withhold,
condition or delay its consent to any action in this Section 6.4(f) that is
required by Law or reasonably determined by Parent’s accountants to be necessary
(a) to avoid the filing of a Schedule UTP (Form 1120) (or similar Tax disclosure
under state, local or non-U.S. Law), (b) to avoid or mitigate the imposition of
penalties under Section 6662 of the Code or any comparable provisions of state,
local or non-U.S. applicable Law, or (c) to avoid maintaining a reserve on
Parent’s financial statements with respect to the applicable Tax liability.
v.Directors and Officers Indemnification
. For a period of six (6) years following the Closing, Parent agrees that all
rights to indemnification and all limitations on liability existing in favor of
the directors and officers of the Company (the “Company Indemnitees”) as
provided in the Company Certificate of Incorporation and Company Bylaws as in
effect as of the date of this Agreement, and otherwise pursuant to the
agreements set forth on Section 6.5 of the Company Disclosure Schedule, with
respect to matters occurring prior to the Closing Date shall continue in full
force and effect and shall be honored by the Company without any amendment
thereto. In the event the Parent or the Company or their respective successors
or assigns (a) consolidates with or merges into any other person and shall not
be the surviving or continuing Entity in such consolidation or merger or (b)
transfers all or substantially all of its properties and assets to any person,
then, in either such case, Parent or its respective successors or assigns shall
cause such person to assume all of the obligations set forth in this Section
6.5.
vi.Consents
. Parent acknowledges that certain consents, authorizations, approvals and/or
waivers to the transactions contemplated by this Agreement may be required from
parties to contracts, leases, licenses or other agreements to which the Company
is a party (including the contracts set forth on the Company Disclosure
Schedule) and, except for the consents set forth in Schedule 7.1(j), such
consents, authorizations, approvals and/or waivers are not a condition to the
Closing and have not, or may not have, been obtained at or prior to Closing.
Article VII.

CONDITIONS
i.Conditions to the Parent’s and the Purchaser’s Obligation to Effect the Merger
. The obligation of the Parent and the Purchaser to consummate the Merger shall
be further subject to the fulfillment at or prior to the Effective Time of each
of the following additional conditions:
(1)The Parent shall have received the resignations of the officers of the
Company and the members of the Company Board;
(2)The Parent shall have received written confirmation reasonably satisfactory
to the Parent that the Company has canceled all options granted under the
Company Stock Plans and terminated its 401(k) Plan at least one (1) day prior to
the Closing Date;
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(3)The Company shall have delivered a good standing certificate for the Company
from the Secretary of State of the State of Delaware dated as of a date not
earlier than three (3) days prior to the Closing;
(4)The Company shall have delivered the Escrow Agreement to Parent, duly
executed by the Representative;
(5)The Company shall have delivered the Subscription Agreements to Parent, duly
executed by the Creditors and payoff letters, invoices or other documentary
evidence of the amounts owed for any unpaid Indebtedness, Company Trade
Liabilities, Company Transaction Costs, Parent Closing Cash Payments and other
Closing Assumed Liabilities that are to be settled at Closing in a form
reasonably satisfactory to Parent;
(6)The Company shall have delivered (i) a statement conforming with the
requirements of Treasury Regulation Sections 1.897-2(h) and 1.1445-2(c)(3) and
reasonably satisfactory to Parent, certifying that shares of capital stock of
the Company do not constitute “United States real property interests” under
Section 897(c) of the Code and (ii) a form of notice to the IRS conforming with
the requirements of Treasury Regulation Section 1.897-2(h)(2), together with
written authorization for Parent to deliver such notice to the IRS on behalf of
the Company following the Closing;
(7)The Company shall have delivered an original properly executed IRS Form W-9
or appropriate IRS Form W-8, as applicable, from each payee of Parent Closing
Cash Payments;
(8)Parent shall have received a certificate executed by the Chief Executive
Officer of the Company attaching and certifying as to matters customary for a
transaction of this sort, including, without limitation, (i) the true and
correct copies of the Company Certificate of Incorporation and Company Bylaws,
(ii) copies of resolutions duly adopted by the Company Board and Company
Stockholders evidencing the taking of all corporate and stockholder action
necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby,
including the Executed Written Consent; and (iii) certificates of good standing
issued by the Delaware Secretary of State and for each other state in which the
character of the properties the Company owns, operates or leases or the nature
of its activities makes it necessary to be qualified to do business as a foreign
corporation, in each case dated as of a date no more than two Business Days
prior to the Closing Date;
(9)Parent shall have received the Estimated Closing Statement;
(10)The Company shall have delivered consents by third parties under the Company
Material Contracts listed on Schedule 7.1(j), confirming that such Company
Material Contract will remain in full force and effect as of immediately
following the Effective Time;
(11)Company shall have delivered documents evidencing its purchase and payment
in full of a D&O “tail” insurance policy on terms reasonably acceptable to
Parent;
(12)Parent shall have received a spreadsheet (the “Closing Payment Schedule”),
setting forth: (i) each Escrow Beneficiary’s Pro Rata Portion, (ii) the number
of Parent Consideration Shares each Creditor is eligible to receive at Closing
(minus, with respect to each Escrow Beneficiaries, its Pro Rata Portion of the
Escrow Account), (iii) the number of Escrowed Shares each such Escrow
Beneficiaries is eligible to receive, (iv) the name, address and email address
(if available) of each
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Creditor, (v) the number of shares of Company Capital Stock held by each holder
thereof immediately prior to the Effective Time (including the number of shares
of Company Capital Stock for which Company Stock Options, Company Warrants and
Company Convertible Notes are exercisable or convertible, as applicable), (vi) a
calculation of the Parent Consideration Shares which each holder of Company
Capital Stock, Company Warrants, Company Convertible Notes and Company Stock
Options is eligible to receive and (vii) for each Creditor and any other Person
to whom payments are payable in connection with the Closing, whether any Taxes
are required to be withheld (and what type of withholding applies), assuming for
this purpose that the conditions of Section 7.1(g) and Section 7.1(f) have been
properly satisfied;
(13)Each of the agreements identified on Schedule 7.1(m) shall have been
terminated and the parties to the agreements identified on such Schedule 7.1(m)
shall have waived all of their respective rights thereunder, in each case
effective prior to or as of the Effective Time, and the Company shall have
delivered evidence of such termination and waiver in form and substance
reasonably acceptable to Parent;
(14)The Company shall have delivered reasonable evidence that cash and cash
equivalents of the Company, determined in accordance with GAAP, plus Closing A/R
and Cash shall equal at least $500,000.
ii.Conditions to the Company’s Obligation to Effect the Merger
. The obligation of the Company to consummate the Merger shall be further
subject to the fulfillment at or prior to the Effective Time of each of the
following additional conditions:
(1)Parent shall have made the payments and issued and deposited the Parent
Consideration Shares as contemplated by Section 3.5, the Estimated Closing
Statement and the Closing Payment Schedule;
(2)Parent shall have delivered the Escrow Agreement to the Representative, duly
executed by Parent and the Escrow Agent; and
(3)Parent shall have delivered the Subscription Agreements to the
Representative, duly executed by Parent.
Article VIII.

INDEMNIFICATION
i.Indemnity Obligations of Escrow Beneficiaries
. Subject to the limitations set forth in this Article VIII, each Escrow
Beneficiary, severally and not jointly in proportion to the portion of the
Purchase Price received by such Escrow Beneficiary (the “Pro Rata Portion”),
shall defend, indemnify and hold harmless Parent, Purchaser and their respective
Affiliates (including, after the Closing, the Surviving Corporation and its
Subsidiaries), officers, directors, employees, successors and assigns (the
“Parent Indemnitees”), from and against, and pay or reimburse Parent Indemnitees
for, any and all claims, liabilities, penalties, settlement payments, awards,
obligations, losses, fines, costs, proceedings, expenses or damages, including
all reasonable attorneys’ fees, other professionals’ and experts’ fees, costs of
investigation and court or arbitration costs incurred in the
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investigation or defense of any of the same or in asserting any of their
respective rights hereunder (collectively, “Losses”), based on, resulting from,
arising out of or relating to, directly or indirectly:
(1)any breach of any representation or warranty of the Company contained in this
Agreement;
(2)any Pre-Closing Taxes;
(3)any failure of the Company (prior to the Closing) or the Representative to
perform any covenant or agreement of the Company or the Representative made or
contained in this Agreement;
(4)any inaccuracy in the Estimated Closing Statement, in each case to the extent
not taken into account in any final adjustment pursuant to Section 3.5;
(5)any inaccuracy in the Closing Payment Schedule;
(6)the exercise by any holder of Dissenting Shares of dissenters’ rights under
Delaware Law or other applicable Law;
(7)any Fraud; or
(8)any claim asserted by: any current or former securityholder of the Company
alleging any ownership of or interest in or right to acquire any shares or other
securities of the Company that is not specifically disclosed in the Estimated
Closing Statement or Closing Payment Schedule, relating to any actual or alleged
breach of fiduciary duties.
ii.Indemnity Obligations of Parent
. From and after the Closing, Parent and the Surviving Corporation, jointly and
severally, covenant and agree to defend, indemnify and hold harmless the Escrow
Beneficiaries and their respective Affiliates, officers, directors, employees,
successors and assigns (the “Creditor Indemnitees”) from and against any and all
Losses based on, resulting from, arising out of or relating to, directly or
indirectly:
(1)any breach of any representation or warranty of Parent or Purchaser contained
in this Agreement; or
(2)any failure of Parent or Purchaser to perform any covenant or agreement of
such Party made or contained in this Agreement, or fulfill any other obligation
in respect thereof.
iii.Procedures.
(1)Third Party Claims. Except with respect to Tax Matters, which shall be
governed by Section 6.4(d), in the case of any claim asserted by a third party
(a “Third Party Claim”) against a party entitled to indemnification under this
Agreement (the “Indemnified Party”), notice shall be given by the Indemnified
Party to the party required to provide indemnification (which, for purposes of
the Creditor Indemnitees, such notice shall be given to the Representative) (the
“Indemnifying Party”) promptly after such Indemnified Party has knowledge of any
claim as to which indemnity may be sought provided that any failure on the part
of Indemnified Party to so notify the Indemnifying Party shall not
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limit any of the obligations of the Indemnifying Parties under this Article VIII
(except to the extent such failure materially prejudices the Indemnifying
Parties or materially increases the Losses indemnifiable by the Indemnifying
Parties in connection with such Third Party Claim). The Indemnified Party shall
have the right in its sole discretion to defend or settle any such Third Party
Claim. Representative (if the Indemnified Party is a Parent Indemnitee) and
Parent (if the Indemnified Party is a Creditor Indemnitee) shall be entitled, on
behalf of the Indemnifying Parties, at their expense, to participate in, but not
to determine or conduct, the defense of such Third Party Claim (the party
controlling such defense the “Controlling Party” and, the other party the
“Non-Controlling Party”). In the event of settlement or other resolution by the
Controlling Party of any Third Party Claim, the amount paid in such settlement
or resolution (the “Settlement Amount”) shall not be determinative and binding
upon the Indemnifying Parties as to the amount of Losses recoverable pursuant to
this Article VIII with respect thereto unless the Representative (if the
Indemnified Party is a Parent Indemnitee) and the Parent (if the Indemnified
Party is a Creditor Indemnitee) has consented (or been deemed to have consented)
to any such settlement or resolution (in which case the Settlement Amount for
such settlement or resolution shall, subject to the limitations set forth in
this Article VIII, be Losses for which the affected Indemnified Party are
entitled to be indemnified, compensated and reimbursed hereunder), it being
understood and agreed that, to the extent the Indemnified Party is entitled to
indemnification hereunder for the matters underlying such Third Party Claim, the
reasonable attorneys’ fees, other professionals’ and experts’ fees, costs of
investigation and court or arbitration costs with respect to such settlement or
resolution are Losses recoverable pursuant to this Article VIII regardless of
whether the Representative or Parent, as applicable, consents (or is deemed to
have consented) to the Settlement Amount. The Representative’s (if the
Indemnified Party is a Parent Indemnitee) or Parent’s (if the Indemnified Party
is a Creditor Indemnitee) consent to any such settlement or resolution shall be
deemed to have been given unless the Representative (if the Indemnified Party is
a Parent Indemnitee) or Parent (if the Indemnified Party is a Creditor
Indemnitee) shall have objected in a writing delivered to Parent (if the
Indemnified Party is a Parent Indemnitee) or Representative (if the Indemnified
Party is a Creditor Indemnitee) within fifteen (15) days after a written request
for such consent is delivered. The consent of the Non-Controlling Party shall
not be unreasonably, withheld, conditioned or delayed.
(2)Non-Third Party Claims. With respect to any claim for indemnification
hereunder which does not involve a Third Party Claim, the Indemnified Party will
give the Indemnifying Party written notice of such claim. The Indemnifying Party
may acknowledge and agree by notice to the Indemnified Party in writing to
satisfy such claim within fifteen (15) days of receipt of notice of such claim
from the Indemnified Party. If the Indemnifying Party shall dispute such claim,
the Indemnifying Party shall provide written notice of such dispute to the
Indemnified Party within such fifteen (15) day period. If after such fifteen
(15) day period there remains a dispute as to any claims, the Representative and
Parent shall attempt in good faith for thirty (30) days to agree upon the rights
of the respective Parties with respect to each of such claims (the “Claims
Period”). If the Representative and Parent should so agree, a memorandum setting
forth such agreement shall be prepared and signed by Parent and the
Representative, which memorandum shall be delivered to the Escrow Agent if
recovery is from the Escrowed Shares. If no agreement can be reached after good
faith negotiation between the Parties during the Claims Period, either Parent or
the Representative may initiate formal legal action with the applicable court in
accordance with Section 9.9 to resolve such dispute. The decision of the court
as to the validity and amount of any claim for indemnification shall be binding
and conclusive upon the Parties to this Agreement, the Parties and the Escrow
Agent shall be entitled to act in accordance with such decision.
(3)If the Indemnifying Party shall fail to provide written notice to the
Indemnified Party within fifteen (15) days of receipt of notice from the
Indemnified Party that the Indemnifying Party
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either acknowledges and agrees to pay such claim or disputes such claim, the
Indemnifying Party shall be deemed to have acknowledged and agreed to pay such
claim in full, subject to the limitations set forth herein, and to have waived
any right to dispute such claim.
iv.Expiration of Representations and Warranties
. All representations and warranties contained in this Agreement shall survive
the Closing until the date which is one (1) year after the Closing Date (the
“General Survival Period”). All of the covenants and agreements and related
indemnification obligations contained in this Agreement shall survive the
Closing until the first to occur of (i) the expiration by their terms of the
obligations of the applicable Party under such covenant or agreement or (ii)
such covenant or agreement being fully performed or fulfilled, unless
non-compliance with such covenants or agreements is expressly waived in writing
by the party entitled to such performance (the “Covenant Survival Period” and,
together with the General Survival Period, as applicable, the “Survival
Period”). Each Party’s indemnification obligations pursuant to this Article VIII
shall terminate at the expiration of the applicable Survival Period; provided,
however, that the Survival Period shall not affect the Parties’ rights and
obligations with respect to any claim thereunder (a) if written notice of a
breach thereof is made in accordance with this Article VIII on or prior to 11:59
p.m. Pacific Time on the expiration date of the applicable Survival Period and
(b) such claim is made in respect of Losses incurred prior to the expiration
date of the applicable Survival Period, and any such claim may thereafter be
pursued until such claim is resolved in full.
v.Certain Limitations; Calculation of Losses; Mitigation
. The indemnification provided for in Sections 8.1 and 8.2 shall be subject to
the following limitations:
(1)Escrow Beneficiaries shall not be liable to Parent Indemnitees for
indemnification pursuant to Section 8.1(a) until the aggregate amount of all
Losses in respect of indemnification under Section 8.1(a) exceeds $50,000 (the
“Basket”), in which event Escrow Beneficiaries shall be required to pay or be
liable for all such Losses regardless of the Basket, subject to the other
limitations set forth herein. Escrow Beneficiaries shall not be liable to Parent
Indemnitees for indemnification pursuant to Section 8.1 after the aggregate
amount of all Losses in respect of indemnification under Section 8.1 exceeds the
value of the Escrowed Shares held in the Escrow Account (valued at the Parent
Trading Price) (the “Cap”); provided that the Basket shall not apply with
respect to any Losses arising from, or directly or indirectly related to,
breaches of Fundamental Representations or Fraud and the Cap shall not apply
with respect to any Losses arising from, or directly or indirectly related to
Fraud, but in no event shall any Escrow Beneficiary who has not committed or has
no actual knowledge of Fraud be liable to Parent Indemnitees for indemnification
in excess of their Pro Rata Portion of the Parent Consideration Shares.
(2)Parent shall not be liable to the Creditor Indemnitees for indemnification
pursuant to Section 8.2 until the aggregate amount of all Losses in respect of
indemnification under Section 8.2 exceeds the Basket, in which event Parent
shall be required to pay or be liable for such Losses solely in excess of the
amount of the Basket, subject to the other limitations set forth herein. Parent
shall not be liable to Creditor Indemnitees for indemnification pursuant to
Section 8.2 after the aggregate amount of all Losses in respect of
indemnification under Section 8.2 exceeds the Cap; provided that the Basket and
Cap shall not apply with respect to any Losses arising from, or directly or
indirectly related to, breaches of Fundamental Representations or Fraud.
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(3)For the purposes of calculating Losses to which Parent Indemnitees are
entitled under this Article VIII (i) such Losses shall not include any punitive
or exemplary damages (except to the extent such damages are awarded to a third
party or in the case of Fraud) or repayment and other obligations that arise or
are expected to arise, are triggered or become due or payable, in whole or in
part, as a direct or indirect result of the consummation (whether alone or in
combination with any other event or circumstance) of the Merger or any of the
other transactions contemplated hereby and, except in connection with a breach
of the representations and warranties in Sections 4.6(b), 4.8(g)(vii), 4.8(k),
4.12 and 4.16(a), any other obligations, liabilities or commitments, in each
case, incurred in connection with the PPP Loan; (ii) Parent Indemnitees shall
not be entitled to multiple recovery for the same Losses (and, for the avoidance
of doubt, shall not be entitled to indemnification pursuant to this Article VIII
for Losses to the extent included in Company Transaction Costs, the Closing
Assumed Liabilities, or the Closing A/R and Cash in each case as finally
determined pursuant to Section 3.5); (iii) such Losses shall be reduced by the
amount of any proceeds that any Parent Indemnitee actually receives pursuant to
the terms of any insurance policies; provided, however, such Parent Indemnitee
shall promptly reimburse the Escrow Beneficiaries for any subsequent recoveries
for such sources if previously indemnified hereunder so as to avoid a double
recovery; and (iv) such Losses shall be reduced by the amount of any actual
prior or subsequent recovery by a Parent Indemnitee from any other source with
respect to such Losses; provided, however, such Parent Indemnitee shall promptly
reimburse the Escrow Beneficiaries for any subsequent recoveries for such
sources if previously indemnified hereunder so as to avoid a double recovery.
vi.Indemnification Payments to Parent Indemnitees
. Except in the event of Fraud, any indemnification to which Parent Indemnitees
are entitled under this Article VIII as a consequence of any Losses they may
suffer shall be made as a payment to Parent Indemnitees solely from the Escrow
Account in accordance with the terms of the Escrow Agreement and, to the extent
that the Escrow Account is depleted or otherwise insufficient to satisfy such
Losses, the Escrow Beneficiaries shall have no further liability pursuant to
this Article VIII. The Parent Consideration Shares shall be valued at the Parent
Trading Price for purposes of satisfying the Escrow Beneficiaries’
indemnification obligations hereunder.
vii.Treatment of Indemnification Payments
. All distributions or cancellations of the Escrowed Shares made pursuant to
this Article VIII shall be treated by the Parties as an adjustment to the
Purchase Price to the extent permitted by applicable Law.
viii.Materiality
. Notwithstanding anything herein to the contrary, “material” and “Company
Material Adverse Effect” or similar materiality type qualifications contained in
the representations and warranties of the Company set forth in this Agreement
shall be ignored under this Article VIII for purposes of determining the amount
of any Losses (but not whether a breach of any representations and warranty has
occurred).
ix.Sole Remedy
. Subject to Section 3.5(b) and the right to seek specific performance or
injunctive relief pursuant to Section 9.9 and except for claims under
Transaction Documents (other than this Agreement), the indemnification provided
for in this Article VIII and Section 3.5 shall be the sole remedy of the Parent
Indemnitees for monetary damages with respect to breaches of this Agreement or
otherwise arising out of,
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or related to, this Agreement and the transactions contemplated hereby, and the
Parent Indemnitees hereby waive, and covenant and agree not to bring, any claims
for monetary damages in connection therewith other than pursuant to this Article
VIII. Except in the case of Fraud (against the Person who committed or who had
actual knowledge of the Fraud) and claims under Transaction Documents (other
than this Agreement), in no event shall any Escrow Beneficiary have any
liability respect to breaches of this Agreement or otherwise arising out of, or
related to, this Agreement and the transactions contemplated hereby in excess of
the aggregate Parent Consideration Shares (including the Escrowed Shares)
actually received by or, in the case of Escrowed Shares, payable to such Escrow
Beneficiary. Subject to the right to seek specific performance or injunctive
relief pursuant to Section 9.9 and claims under Transaction Documents (other
than this Agreement), the indemnification provided for in this Article VIII and
Section 3.5 shall be the sole remedy of the Creditor Indemnitees for monetary
damages with respect to breaches of this Agreement or otherwise arising out of,
or related to, this Agreement and the transactions contemplated hereby, and the
Creditor Indemnitees hereby waive, and covenant and agree not to bring, any
claims for monetary damages in connection therewith other than pursuant to this
Article VIII.
x.Subrogation
. With respect to any indemnification claims against the Escrow Beneficiaries
under this Agreement, the Creditor shall not be entitled to exercise, nor shall
any Creditors be entitled to subrogate to, any rights and remedies (including
rights of indemnity, rights of contribution and other rights of recovery) that
Parent, the Surviving Corporation or any Affiliate of Parent or the Surviving
Corporation may have against any other Person with respect to any Losses,
circumstances or matter to which such indemnification is directly or indirectly
related; provided, however, the foregoing shall not limit any right to subrogate
to any rights and remedies pursuant to the terms of any insurance policies
providing coverage therefor, including the D&O “tail” insurance policy described
in Section 7.1(k).
Article IX.

MISCELLANEOUS
i.Notices
. All notices, consents, waivers and deliveries under this Agreement must be in
writing and will be deemed to have been duly given when: (i) delivered by hand
(against receipt); (ii) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested); (iii) when received
by the addressee, if sent by e-mail (against receipt confirmation by the
recipient, including a valid read receipt); or (iv) two (2) Business Days after
being sent registered or certified mail, return receipt requested, in each case
to the appropriate addresses set forth below (or to such other addresses as a
Party may hereafter designate by similar notice in accordance with this Section
9.1 to the other Parties); provided that that if a Party refuses to accept
delivery, such notice, consent, waiver or other communication shall be deemed to
have been given on the date of such refusal of delivery:
(1)If to the Parent or the Purchaser:
Bionano Genomics, Inc.
9540 Towne Centre Drive, Suite 100 San Diego, California 92121 Attention: R.
Erik Holmlin, Ph.D.
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with a copy, which shall not constitute notice, to:
Cooley LLP
4401 Eastgate Mall
San Diego, California 92121
Attention: Thomas A. Coll and Rama Padmanabhan

(2)If to the Representative:
Michael S. Paul, Ph.D.

with a copy to:
Bass Berry & Sims PLC
150 Third Avenue South, Suite 2800
Nashville, Tennessee 37201
Attention: Ryan D. Thomas and Michael R. Kuffner
ii.Entire Agreement; Amendment
. This Agreement (including the Company Disclosure Schedule and Exhibits hereto
and the other Transaction Documents) constitutes the entire agreement among the
Parties and supersedes any prior understandings, agreements or representations
by or among the Parties, or any of them, written or oral, with respect to the
subject matter hereof. This Agreement may not be amended except by a written
agreement signed by Parent and the Representative. Any waiver of any of the
terms or conditions of this Agreement must be in writing and must be duly
executed by or on behalf of the Party to be charged with such waiver. The
failure of a Party to exercise any of its rights hereunder or to insist upon
strict adherence to any term or condition hereof on any one occasion shall not
be construed as a waiver or deprive that Party of the right thereafter to insist
upon strict adherence to the terms and conditions of this Agreement at a later
date. Further, no waiver of any of the terms and conditions of this Agreement
shall be deemed to or shall constitute a waiver of any other term of condition
hereof (whether or not similar).
iii.No Third Party Beneficiaries
. This Agreement is not intended, and shall not be deemed, to confer any rights
or remedies upon any other person other than the Parties and their respective
successors and permitted assigns, to create any agreement of employment with any
person or to otherwise create any third-party beneficiary hereto; except that
the Creditors and the recipients of Parent Closing Cash Payments are third party
beneficiaries of their rights to receive the amounts due under Section 3.5 of
this Agreement and Article VIII of this Agreement, the Company Indemnitees are
intended third party beneficiaries of their rights under Section 6.5 and Bass
Berry & Sims PLC is an intended third party beneficiary of Section 9.12.
iv.Assignment
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. Neither this Agreement nor any of the rights, interests or obligations under
this Agreement may be assigned or delegated, in whole or in part, by operation
of law or otherwise by any of the Parties without the prior written consent of
the other Parties, and any such assignment without such prior written consent
shall be null and void, except that the Parent and/or the Purchaser may assign
this Agreement so long as Parent and/or the Purchaser, as the case may be, shall
remain liable for all of its obligations under this Agreement. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the Parties and their respective successors and
permitted assigns.
v.Severability
. Any term or provision of this Agreement that is invalid or unenforceable in
any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making such determination shall
have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. In the event such court does
not exercise the power granted to it in the prior sentence, the Parties agree to
replace such invalid or unenforceable term or provision with a valid and
enforceable term or provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid or unenforceable term.
vi.Counterparts and Signature
. This Agreement may be executed (including by electronic transmission in .PDF
or .TIF format) in two or more counterparts, each of which shall be deemed an
original but all of which together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
of the Parties and delivered to the other Parties, it being understood that all
Parties need not sign the same counterpart.
vii.Interpretation
. Each of the Parties acknowledges that it has been represented by independent
counsel of its choice throughout all negotiations that have preceded the
execution of this Agreement and that it has executed the same with consent and
upon the advice of said independent counsel. Each Party and its counsel
cooperated in the drafting and preparation of this Agreement and the documents
referred to herein, and any and all drafts relating thereto shall be deemed the
work product of the Parties and may not be construed against any party by reason
of its preparation. Accordingly, any rule of Law or any legal decision that
would require interpretation of any ambiguities in this Agreement against any
party that drafted it is of no application and is hereby expressly waived. When
reference is made in this Agreement to an Article or a Section, such reference
shall be to an Article or a Section of this Agreement unless otherwise
indicated. The table of contents, table of defined terms and headings contained
in this Agreement are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement. The language used in
this Agreement shall be deemed to be the language chosen by the Parties to
express their mutual intent, and no rule of strict construction shall be applied
against any party. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns
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shall include the plural, and vice versa. Any reference to any federal, state,
local or foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Whenever the words “include”, “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.” The term “Person” means any individual, corporation, partnership,
joint venture, association, trust, limited liability company, unincorporated
organization or other Entity. The phrase “made available” means made available
for review by the Company in the electronic data room hosted by Box set up by
the Company in connection with the transactions contemplated by this Agreement
at least two (2) Business Days prior to the date hereof. For purposes of this
Agreement, references to the Company shall include the Company but the Company
shall not be deemed to be an Affiliate or Subsidiary of the Purchaser or the
Parent. No summary of this Agreement prepared by any party shall affect the
meaning or interpretation of this Agreement.
viii.Governing Law
. This Agreement shall be governed by and construed in accordance with the
internal Laws of the State of Delaware without giving effect to any choice or
conflict of law provision or rule that would cause the application of the Laws
of any other jurisdiction.
ix.Remedies
. Except as otherwise provided herein, any and all remedies herein expressly
conferred upon a party will be deemed cumulative with and not exclusive of any
other remedy conferred hereby, or by law or equity upon such party, and the
exercise by a party of any one remedy will not preclude the exercise of any
other remedy. The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, the Parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce any provision of this Agreement by a decree of specific
performance and to temporary, preliminary and permanent injunctive relief to
prevent breaches or threatened breaches of any of the provisions of this
Agreement, without posting any bond or other undertaking, and this being in
addition to any other remedy to which they are entitled at law or in equity.
x.Submission to Jurisdiction
. Each of the Parties: (a) consents to submit itself to the exclusive personal
jurisdiction of the Delaware Court of Chancery in any action or proceeding
arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement; (b) agrees that all claims in respect of such
action or proceeding may be heard and determined in such court; (c) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from such court, and (d) agrees not to bring any action
or proceeding arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement in any other court. Each of the
Parties waives any defense or inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety or other security
that might be required of any other party with respect thereto. Any Party may
make service on another party by sending or delivering a copy of the process to
the party to be served at the address and in the manner provided for the giving
of notices in Section 9.1. Nothing in this Section 9.10, however, shall affect
the right of any party to serve legal process in any other manner permitted by
Law.
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xi.WAIVER OF JURY TRIAL
. EACH OF THE PARENT, THE PURCHASER AND THE COMPANY HEREBY IRREVOCABLY WAIVES
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARENT,
THE PURCHASER OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
xii.Attorney-Client Privilege; Continued Representation
. The Parties hereto hereby acknowledge that Bass Berry & Sims PLC has acted as
counsel to the Company and certain Company Equityholders from time to time prior
to the Merger as well as with respect to the Merger. The following provisions
apply to the attorney-client relationship between (a) the Company and Bass Berry
& Sims PLC prior to the Closing and (b) such Company Equityholders (and any
subset of them) and Bass Berry & Sims PLC following Closing. Each of the Parties
hereto agrees that (i) it will not seek to disqualify Bass Berry & Sims PLC from
acting and continuing to act as counsel to any of the Company Equityholders on
the grounds of a conflict of interest arising from Bass Berry & Sims PLC’s prior
representation of the Company or the Company Equityholders either in the event
of a dispute hereunder or in the course of the defense or prosecution of any
claim relating to the Merger; (ii) the Company Equityholders have a reasonable
expectation of privacy with respect to their communications (including any
e-mail communications using the Company’s e-mail system) with Bass Berry & Sims
PLC prior to Closing to the extent that such communications concern the
negotiation, documentation and consummation of the Merger and the transactions
contemplated hereby and (iii) the Company Equityholders (and not the Parent)
shall have access to all such communications. Furthermore, Purchaser and its
Affiliates (including the Surviving Corporation after the Closing) shall have no
right to intentionally or knowingly access any attorney work product, or
attorney-client privileged material of, Bass, Berry & Sims PLC, including any
communications to or by Bass, Berry & Sims PLC made in connection with the
negotiation, preparation, execution, delivery and Closing under, or any dispute
or proceeding arising under or in connection with, this Agreement or any of the
transactions contemplated hereby, which attorney work product and privileged
materials shall be retained solely by the Company Equityholders after the
Closing. The Parties hereto expressly acknowledge and agree that all rights to
such attorney-client privilege and to control such attorney-client privilege
shall be retained by the Company Equityholders and shall not pass to or be
claimed by Parent, the Surviving Corporation or any of their respective
Affiliates. In the event that a dispute or investigation or audit arises after
the Closing between Purchaser or the Surviving Corporation (or any of their
respective Affiliates), on the one hand, and a third party, on the other hand,
Purchaser or the Surviving Corporation, as applicable, shall notify the
Representative if such third party seeks disclosure of confidential
communications by Bass, Berry & Sims PLC that fall (or would be deemed to fall)
within the privilege that the Company Equityholders have retained as described
in this Section 9.12 in order to allow the Company Equityholders to timely
intervene and assert privilege. Notwithstanding anything to the contrary in this
Agreement, in the event that a dispute arises between the Parent, the Surviving
Corporation or any of their respective Subsidiaries and a third party after the
Closing, the Parent, the Surviving Corporation or any of their respective
Subsidiaries may assert the attorney-client privilege to prevent disclosure of
any privileged communications by Bass Berry & Sims PLC to such third party.
xiii.Disclosure Schedule
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. The Company Disclosure Schedule shall be arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in Article IV and the
disclosure in any paragraph shall qualify (a) the corresponding paragraphs in
Article IV and (b) the other paragraphs in Article IV only to the extent that it
is readily apparent from a reading of such disclosure that it also qualifies or
applies to such other paragraphs in Article IV without any further investigation
by the Parent. No reference to or disclosure of any item or other matter in the
Company Disclosure Schedule shall be construed as an admission or indication
that such item or other matter is material. No disclosure in the Company
Disclosure Schedule relating to any possible breach or violation of any
agreement or Law shall be construed as an admission or indication that any such
breach or violation exists or has actually occurred. The headings contained in
the Company Disclosure Schedule are included for convenience only and are not
intended to limit the effect of the disclosures contained in the Company
Disclosure Schedule or to expand the scope of the information required to be
disclosed in the Company Disclosure Schedule.
xiv.Representative.
(1)The Creditors, including the Escrow Beneficiaries, hereby acknowledge and
agree that Michael S. Paul, Ph.D. shall be constituted and appointed as
exclusive agent and attorney-in-fact (the foregoing and any other party duly
acting in such capacity as authorized hereunder from time to time, the
“Representative”) for and on behalf of each Creditor to give and receive notices
and communications, to agree to, negotiate and enter into, on behalf of the
Creditors, amendments, settlements, consents and waivers under this Agreement
and the Escrow Agreement, to take all actions necessary to handle and resolve
claims by or against Parent for indemnification by Escrow Beneficiaries under
this Agreement, to take such other actions as authorized by this Agreement or
the Escrow Agreement, and to take all actions necessary or appropriate in the
judgment of the Representative for the accomplishment of the foregoing. Such
agency may be changed by a vote or written consent of the Escrow Beneficiaries
representing a majority-in-interest of the outstanding principal amount of all
Indebtedness held by the Escrow Beneficiaries as of immediately prior to the
Effective Time (the “Majority Creditors”), from time to time upon not less than
ten (10) days’ prior written notice to Parent. If at any time the Representative
resigns, dies or becomes incapable of acting, the Majority Creditors shall
immediately choose another person to act as the Representative under this
Agreement. All acts and decisions of the Representative in connection with the
settlement of any indemnification related claim shall be binding on all the
Creditors. Notices or communications to or from the Representative shall
constitute notice to or from each of the Creditors.
(2)This appointment and power of attorney shall be deemed as coupled with an
interest and all authority conferred hereby shall be irrevocable and shall not
be subject to termination by operation of law, whether by the death, incapacity,
liquidation or dissolution of any of the Creditors or the occurrence of any
other event or events, and the Representative may not terminate this power of
attorney with respect to any Creditor or any Creditor’s successors or assigns
without the consent of Parent. A decision, act, consent or instruction of the
Representative in respect of any action under this Agreement or the Escrow
Agreement shall constitute a decision of all of the Creditors, whether or not
there was any prior consultation with or contrary instructions from any
Creditor, and shall be final, binding and conclusive upon each such Creditor,
and Parent may conclusively rely upon any decision, act, consent or instruction
of the Representative hereunder or under the Escrow Agreement as being the
decision, act, consent or instruction of each and every such Creditor. Parent is
hereby irrevocably relieved from any liability to any person (including any
Creditor) for any acts done by them in accordance with such decision, act,
consent or instruction of the Representative.
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(3)The Representative will incur no liability of any kind with respect to any
action or omission in connection with the Representative’s services pursuant to
this Agreement and the Escrow Agreement, except in the event of liability
directly resulting from the Representative’s gross negligence, bad faith or
willful misconduct. Each Creditor acknowledges that the Representative will be
an employee of Parent following Closing. Notwithstanding any such affiliation,
each Creditor hereby waives and agrees to not assert any claims related to any
actual or potential conflict of interest or breach of fiduciary duty arising out
of or relating to Representative’s representation, after the Closing Date, of
the Creditors. The Creditors shall, severally and not jointly in proportion to
the portion of the Purchase Price received by such Creditor, indemnify, defend
and hold harmless the Representative and its successors and assigns from and
against any and all claims, demands, suits, actions, causes of action, losses,
damages, obligations, liabilities, costs and expenses (including attorneys’ fees
and court costs) (collectively, “Representative Losses”) arising as a result of
or incurred in connection with any actions taken or omitted to be taken by the
Representative pursuant to the terms of this Agreement, in each case as such
Representative Loss is incurred; provided, however, that no Creditor shall be
liable to the Representative for any amount in excess of the amount of proceeds
actually received pursuant to the Agreement; provided that in the event it is
finally adjudicated that a Representative Loss or any portion thereof was
primarily caused by the gross negligence or willful misconduct of the
Representative, the Representative will reimburse the Creditors the amount of
such indemnified Representative Loss attributable to such gross negligence or
willful misconduct. If not paid directly to the Representative by the Creditors,
such losses, liabilities and expenses may be recovered by the Representative,
from the Escrow Account otherwise distributable (when distributable) to the
Escrow Beneficiaries (and not distributed or distributable to Parent) without
the requirement of any consent or approval of Parent, the Surviving Corporation
or any other party (and the Representative may provide for such payment in any
instruction delivered to the Escrow Agent (in the case of an amount from the
Escrow Account) or by written instruction to Parent).
(4)In consideration for the services to be provided as the Representative,
Representative shall be entitled to the following compensation: (i) at Closing,
Representative shall be issued Parent Consideration Shares in an amount equal to
$25,000, valued at the Parent Trading Price, as reflected on the Closing Payment
Schedule, and (ii) after Closing until the release of all Escrowed Shares
retained under the Escrow Agreement, three and thirty-three hundredths of a
percent (3.33%) of all Escrowed Shares disbursed to, or for the benefit of the
Escrow Beneficiaries, in accordance with the terms of the Escrow Agreement.
(5)Each of Parent, the Company and the Surviving Corporation shall be entitled
to deduct and withhold, or cause to be deducted and withheld, from the payment
payable pursuant to Section 9.14, the amounts required to be deducted and
withheld under the Code, or any provision of state, local or foreign Law, with
respect to the making of such payment and, to the extent that amounts are so
deducted and withheld and paid over to the applicable Governmental Entity, such
amounts shall be treated for all purposes of the this Agreement as having been
paid to the Representative in respect of whom such deduction and withholding was
made. To the extent that such amounts are not so deducted and withheld,
Representative shall indemnify Parent for any Losses attributable to amounts
imposed by a Governmental Entity in respect of such failure to deduct and
withhold.
[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, the Parent, the Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BIONANO GENOMICS, INC.
By: /s/ Erik Holmlin    
Name: R. Erik Holmlin, Ph.D.
Title: President and Chief Executive Officer
ALTA MERGER SUB, INC.
By: /s/ Mark Oldakowski    
Name: Mark Oldakowski
Title: Director and Secretary
LINEAGEN, INC.
By:     
Name: Michael S. Paul, Ph.D.
Title: President and Chief Executive Officer
    
MICHAEL S. PAUL, PH.D., solely in his capacity as the Representative

Signature Page to the Merger Agreement

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IN WITNESS WHEREOF, the Parent, the Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BIONANO GENOMICS, INC.
By:     
Name: R. Erik Holmlin, Ph.D.
Title: President and Chief Executive Officer
ALTA MERGER SUB, INC.
By:     
Name:     
Title:     
LINEAGEN, INC.
By: /s/ Michael S. Paul    
Name: Michael S. Paul, Ph.D.
Title: President and Chief Executive Officer
    
MICHAEL S. PAUL, PH.D., solely in his capacity as the Representative

Signature Page to the Merger Agreement

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IN WITNESS WHEREOF, the Parent, the Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BIONANO GENOMICS, INC.
By:     
Name: R. Erik Holmlin, Ph.D.
Title: President and Chief Executive Officer
ALTA MERGER SUB, INC.
By:     
Name:     
Title:     
LINEAGEN, INC.
By:     
Name: Michael S. Paul, Ph.D.
Title: President and Chief Executive Officer
/s/ Michael S. Paul    
MICHAEL S. PAUL, PH.D., solely in his capacity as the Representative

Signature Page to the Merger Agreement

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Exhibit A
Executed Written Consent
[See Attached]