EXECUTION VERSION

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of July 15,
2019, by and among Interpace Diagnostics Group, Inc., a Delaware corporation
(the “Company”), and Ampersand 2018 Limited Partnership, a Delaware limited
partnership (including its successors and assigns, a “Purchaser” or the
“Purchasers”).

 

RECITALS

 

A. The Company and each Purchaser is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “Commission”).

 

B. Interpace BioPharma, Inc., a Delaware corporation and wholly owned subsidiary
of the Company, Partners for Growth IV, L.P., a Delaware limited partnership
(“CGI Seller”), and Cancer Genetics, Inc., a Delaware corporation (“CGI”), have
entered into that certain Secured Creditor Asset Purchase Agreement, dated as of
July 15, 2019 (the “Asset Purchase Agreement”), pursuant to which the Company is
acquiring specified assets and liabilities of CGI that constitute CGI’s
biopharma business.

 

C. The Company has authorized a new series of convertible preferred stock of the
Company designated as Series A Convertible Preferred Stock, par value $0.01 per
share (the “Series A Shares”), the terms of which are set forth in the
certificate of designations, preferences and rights for such Series A Shares in
the form attached hereto as Exhibit A (the “Certificate of Designation”).

 

D. The Company has authorized a new series of convertible preferred stock of the
Company designated as Series A-1 Convertible Preferred Stock, par value $0.01
per share (the “Series A-1 Shares” and, together with the Series A Shares, the
“Preferred Shares”), the terms of which are set forth in the Certificate of
Designation.

 

E. The Purchasers wish to purchase, and the Company wishes to sell, upon the
terms and subject to the conditions stated in this Agreement, that aggregate
number of Series A Shares and Series A-1 Shares as set forth next to each
Purchaser’s name on Schedule I under the headings “Series A Shares” and “Series
A-1 Shares”, respectively, and Schedule II under the heading “Series A Shares”
(which aggregate amount for all Purchasers together shall be 190 Series A Shares
and 80 Series A-1 Shares).

 

F. The Series A Shares shall be entitled to, among other things, accrued
dividends and shall be convertible into shares of the Company’s common stock,
par value $0.01 per share (the “Common Stock”), in accordance with the terms of
the Certificate of Designation (the shares of Common Stock issued or issuable
upon conversion of any Preferred Shares, being the “Conversion Shares”). The
Series A-1 Shares shall be convertible into Series A shares in accordance with
the terms of the Certificate of Designation. The Preferred Shares, the
Conversion Shares and the Series A Shares issuable upon conversion of the Series
A-1 Shares are referred to herein as the “Securities”.

 

G. At the Initial Closing (as defined herein), the parties hereto shall execute
and deliver an Investor Rights Agreement, substantially in the form attached
hereto as Exhibit C (with such changes as the parties may mutually agree, the
“Investor Rights Agreement”), pursuant to which, among other things, the Company
will agree to provide certain registration rights with respect to the Conversion
Shares under the Securities Act and the rules and regulations promulgated
thereunder and applicable state securities laws and to provide the Purchasers
with certain preemptive and board representation rights among other rights.

 

   

 

 

H. Concurrently with the execution and delivery of this Agreement, all of the
directors and executive officers of the Company have executed a voting agreement
in the form attached hereto as Exhibit G, which shall automatically become
effective on the Initial Closing Date and shall terminate automatically upon a
termination of this Agreement in accordance with the terms hereof.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers hereby
agree as follows:

 

Article I
DEFINITIONS

 

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement,
for all purposes of this Agreement, the following terms shall have the meanings
indicated in this Section 1.1: 

 

“2018 Form 10-K” means the Company’s Form 10-K for the fiscal year ended
December 31, 2018 as filed with the Commission on March 21, 2019.

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 405 under the Securities Act; provided, however, (i) the
Company and its Subsidiaries and Cancer Genetics, Inc. and its subsidiaries
shall not be deemed to be Affiliates of any Purchaser or its Affiliates, and
(ii) with respect to a Purchaser, any investment fund or managed account that is
managed on a discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such Purchaser.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Applicable Laws” has the meaning set forth in Section 3.1(ww).

 

“Asset Purchase Agreement” has the meaning set forth in the Recitals.

 

“Authorizations” has the meaning set forth in Section 3.1(ww).

 

Any Person shall be deemed to “beneficially own”, to have “beneficial ownership”
of, or to be “beneficially owning” any securities (which securities shall also
be deemed “beneficially owned” by such Person) that such Person is deemed to
“beneficially own” within the meaning of Rules 13d-3 and 13d-5 under the
Exchange Act; provided that any Person shall be deemed to beneficially own any
securities that such Person has the right to acquire, whether or not such right
is exercisable immediately (including assuming conversion of all Preferred
Shares, if any, owned by such Person to Common Stock).

 

“Balance Sheet Date” has the meaning set forth in Section 3.1(b).

 

“Board of Directors” means the board of directors of the Company.

 

“Business” means CGI’s biopharma business which provides pharmaceutical and
biotech companies and non-profit entities performing clinical trials with
laboratory testing services for patient stratification and treatment selection
through an extensive suite of molecular- and biomarker-based testing services,
DNA- and RNA-extraction and customized assay development and trial design
consultation.

 

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“Business Day” means any day except Saturday, Sunday, any day which is a federal
legal holiday in the United States or any day on which banking institutions in
the State of New York are authorized or required by law or other governmental
action to close.

 

“Capitalization Date” has the meaning set forth in Section 3.1(i).

 

“Certificate of Designation” has the meaning set forth in the Recitals.

 

“CGI” has the meaning set forth in the Recitals.

 

“CGI Authorizations” has the meaning set forth in Section 3.1(zz).

 

“CGI Product” has the meaning set forth in Section 3.1(zz).

 

“Closings” shall mean the Initial Closing and the Second Closing, each as
defined herein.

 

“Code” means the United States Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder.

 

“Commission” has the meaning set forth in the Recitals.

 

“Common Stock” has the meaning set forth in the Recitals.

 

“Company” has the meaning set forth in the Preamble.

 

“Company Counsel” means Pepper Hamilton LLP, with offices located at 620 Eighth
Avenue, 37th Floor, New York, NY 10018-1405.

 

“Company Organizational Documents” means the Certificate of Incorporation, as
amended, of the Company and the Amended and Restated Bylaws, as amended, of the
Company, in each case, as in effect on the date of this Agreement.

 

“Company Preferred Stock” has the meaning set forth in Section 3.1(i).

 

“Company Securities” has the meaning set forth in Section 3.1(j).

 

“Company Stock Plans” has the meaning set forth in Section 3.1(k).

 

“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Conversion Shares” has the meaning set forth in the Recitals, and also includes
any securities into which the Conversion Shares may hereafter be reclassified or
changed.

 

“Delaware Courts” means the state and federal courts sitting in the City of
Wilmington in the State of Delaware.

 

“DTC” has the meaning set forth in Section 4.1(b).

 

“Employee Benefit Laws” has the meaning set forth in Section 3.1(bb).

 

“Environmental Laws” has the meaning set forth in Section 3.1(f).

 

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“Equity Interests” means (i) any capital stock, share, partnership or membership
interest, unit of participation or other similar interest (however designated)
in any Person or any securities or obligations convertible into or exchangeable
for any of the foregoing and (ii) any option, warrant, purchase right,
conversion right, exchange right or other contractual obligation which would
entitle any Person to share in the equity, profit, earnings, losses or gains of
such Person (including stock appreciation, phantom stock, profit participation
or other similar rights).

 

“ERISA” has the meaning set forth in Section 3.1(bb).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

 

“FCPA” has the meaning set forth in Section 3.1(gg).

 

“FDA” has the meaning set forth in Section 3.1(pp).

 

“Filed SEC Reports” has the meaning set forth in Section 3.1(a).

 

“Governmental Approval” has the meaning set forth in Section 4.7(b).

 

“Governmental Entity” means any United States or non-United States (i) federal,
national, regional, state, provincial, local, municipal or other government,
(ii) governmental or quasi-governmental entity of any nature (including any
governmental agency, branch, department, official, or entity, any
self-regulatory authority, public utility and any supra-national organization,
state, county, city or other political subdivision and any court or other
tribunal) or (iii) body exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature, including any public arbitral tribunal, arbitrator or
mediator.

 

“Government Programs” means any “federal health care program” as defined in 42
U.S.C. § 1320a-7b(f), including Medicare, state Medicaid programs, state CHIP
programs, TRICARE and similar or successor programs with or for the benefit of
any Governmental Entity.

 

“Grant Date” has the meaning set forth in Section 3.1(k).

 

“Hazardous Materials” has the meaning set forth in Section 3.1(f).

 

“Health Care Laws” has the meaning set forth in Section 3.1(pp).

 

“HIPAA” has the meaning set forth in Section 3.1(pp).

 

“Initial Closing” means the closing of the purchase and sale of the Preferred
Shares listed in Schedule I, attached hereto, pursuant to this Agreement.

 

“Initial Closing Date” means the date on which when all of the Initial
Transaction Documents have been executed and delivered by the applicable parties
thereto, and all of the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2
hereof are satisfied or waived, as the case may be, or such other date as the
parties may agree.

 

“Initial Closing Shares” has the meaning set forth in Section 2.1(a).

 

“Initial Closing Subscription Amount” means, with respect to each Purchaser, the
aggregate amount to be paid for the Preferred Shares purchased hereunder at the
Initial Closing as indicated on Schedule I attached hereto under the heading
“Initial Closing Subscription Amount” in United States dollars and in
immediately available funds.

 

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“Initial Transaction Documents” means this Agreement, the exhibits attached
hereto, the Investor Rights Agreement, the Asset Purchase Agreement and any
other documents or agreements for the Initial Closing explicitly contemplated
hereunder and thereunder.

 

“Intellectual Property” has the meaning set forth in Section 3.1(w).

 

“Investment Company Act” has the meaning set forth in Section 3.1(p).

 

“Investor Rights Agreement” has the meaning set forth in the Recitals.

 

“Legal Proceeding” means any judicial, administrative or arbitral actions,
suits, claims, investigations or proceedings (public or private), whether for
condemnation or otherwise, by or before a Governmental Entity or arbitrator.

 

“Material Adverse Effect” has the meaning set forth in Section 3.1(d).

 

“Material Contract” means any contract or other agreement of the Company that
has been filed or was required to have been filed as an exhibit to the SEC
Reports pursuant to Item 601(b)(1), Item 601(b)(2), Item 601(b)(3), Item
601(b)(4) or Item 601(b)(10) of Regulation S-K.

 

“Money Laundering Laws” has the meaning set forth in Section 3.1(ff).

 

“OFAC” has the meaning set forth in Section 3.1(ee).

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, Governmental Entity or any
other form of entity not specifically listed herein.

 

“Preferred Shares” has the meaning set forth in the Recitals, and also includes
any securities into which the Preferred Shares may hereafter be reclassified or
changed.

 

“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be The Nasdaq Capital Market.

 

“Private Programs” means any private non-governmental program, including any
private insurance program, in which the Company participates or has participated
or from which the Company receives or has received payments or reimbursements.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

“Product” has the meaning set forth in Section 3.1(pp).

 

“Purchase Price” means $100,000 per Preferred Share.

 

“Purchaser” or “Purchasers” has the meaning set forth in the Recitals.

 

“Purchaser Covered Person” has the meaning set forth in Section 3.2(o)(i).

 

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“Regulation D” has the meaning set forth in the Recitals.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Second Closing” means the closing of the purchase and sale of the Preferred
Shares listed in Schedule II, attached hereto, pursuant to this Agreement.

 

“Second Closing Date” means the date on which when all of the Second Transaction
Documents have been executed and delivered by the applicable parties thereto,
and all of the conditions set forth in Sections 2.3, 2.4, 5.3 and 5.4 hereof are
satisfied or waived, as the case may be, or such other date as the parties may
agree.

 

“Second Closing Shares” has the meaning set forth in Section 2.3(a).

 

“Second Closing Subscription Amount” means, with respect to each Purchaser, the
aggregate amount to be paid for the Series A Shares purchased hereunder at the
Second Closing as indicated on Schedule II attached hereto under the heading
“Second Closing Subscription Amount” in United States dollars and in immediately
available funds.

 

“Second Transaction Documents” means this Agreement, the exhibits attached
hereto, and any other documents or agreements for the Second Closing explicitly
contemplated hereunder and thereunder.

 

“SEC Reports” has the meaning set forth in Section 3.1(a).

 

“Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(iv).

 

“Securities” has the meaning set forth in the Recitals.

 

“Securities Act” has the meaning set forth in the Recitals.

 

“Series A Shares” has the meaning set forth in the Recitals.

 

“Series A-1 Shares” has the meaning set forth in the Recitals.

 

“Stock Options” has the meaning set forth in Section 3.1(k).

 

“Subsidiaries” has the meaning set forth in Section 3.1(nn).

 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE
American, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ
Capital Market on which the Common Stock is listed or quoted for trading on the
date in question.

 

“Transaction Documents” means the Initial Transaction Documents and the Second
Transaction Documents.

 

“Transaction Litigation” has the meaning set forth in Section 4.9.

 

“Transfer Agent” means American Stock Transfer and Trust Company, LLC, the
current transfer agent of the Company, with a mailing address of 6201 15th
Avenue, Brooklyn, New York 11219, and a telephone number of (718) 921-8200, or
any successor transfer agent for the Company.

 

“U.S. GAAP” means U.S. generally accepted accounting principles, as applied by
the Company.

 

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Article II
PURCHASE AND SALE

 

2.1 Initial Closing. 

 

(a) Amount. Subject to the terms and conditions set forth in this Agreement,
substantially concurrent with the execution and delivery of the Asset Purchase
Agreement by the parties thereto, at the Initial Closing, the Company shall
issue and sell to each Purchaser, and each Purchaser shall purchase from the
Company, such number of Series A Shares and Series A-1 Shares as set forth next
to each Purchaser’s name on Schedule I under the headings “Series A Shares” and
“Series A-1 Shares”, respectively (together, the “Initial Closing Shares”).

 

(b) Initial Closing. The Initial Closing of the purchase and sale of the Initial
Closing Shares shall take place at the offices of Pepper Hamilton LLP, with
offices located at 620 Eighth Avenue, 37th Floor, New York, NY 10018-1405, on
the Initial Closing Date or at such other locations or remotely by facsimile
transmission or other electronic means as the parties may mutually agree.

 

(c) Form of Payment. At the Initial Closing, each Purchaser shall wire its
Initial Closing Subscription Amount, in United States dollars and in immediately
available funds, to the Company’s account set forth on Exhibit C hereto or such
other account as may be designated in writing by the Company at least two (2)
Business Days in advance. At the Initial Closing, the Company shall issue the
Series A Shares and Series A-1 Shares purchased at the Initial Closing in
book-entry form.

 

2.2 Initial Closing Deliveries. (a) At or prior to the Initial Closing, the
Company shall issue, deliver or cause to be delivered to each Purchaser the
following: 

 

(i) evidence reasonably satisfactory to each Purchaser that the Transfer Agent
has recorded the Series A Shares and Series A-1 Shares purchased by such
Purchaser at the Initial Closing on the stock ledger of the Company in
book-entry form;

 

(ii) a legal opinion of Company Counsel with respect to the matters described on
Schedule A, dated as of the Initial Closing Date, in form and substance
reasonably satisfactory to the Purchasers, executed by such counsel and
addressed to the Purchasers;

 

(iii) the Investor Rights Agreement, duly executed by the Company;

 

(iv) a certificate of the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Initial Closing Date, (a) certifying the
resolutions adopted by the Board of Directors of the Company approving the
transactions contemplated by this Agreement and the other Initial Transaction
Documents and the issuance of the Series A-1 Shares and the Series A Shares at
the Initial Closing, (b) certifying the current versions of the Company
Organizational Documents and the Certificate of Designation and (c) certifying
as to the signatures and authority of the individuals signing the Initial
Transaction Documents and related documents on behalf of the Company, in the
form attached hereto as Exhibit E;

 

(v) a certificate dated as of the Initial Closing Date and signed by its chief
executive officer or its chief financial officer in the form attached hereto as
Exhibit F;

 

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(vi) a certificate evidencing the formation and good standing of the Company
issued by the Secretary of State (or comparable office) of Delaware, as of a
date within seven (7) Business Days of the Initial Closing Date; and

 

(vii) a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State (or comparable
office) of each jurisdiction in which the Company is qualified to do business as
a foreign corporation, as of a date within seven (7) Business Days of the
Initial Closing Date.

 

(b) On or prior to the Initial Closing, each Purchaser shall deliver or cause to
be delivered to the Company the following:

 

(i) its Initial Closing Subscription Amount, in United States dollars and in
immediately available funds, in the amount set forth next to each Purchaser’s
name on Schedule I under the heading “Initial Closing Subscription Amount”, by
wire transfer to the account set forth on Exhibit C attached hereto or such
other account as may be notified by the Company to the Purchasers at least two
(2) Business Days prior to the Initial Closing Date;

 

(ii) the Investor Rights Agreement, duly executed by such Purchaser; and

 

(iii) a fully completed and duly executed Accredited Investor Questionnaire,
satisfactory to the Company, and Stock Certificate Questionnaire in the forms
attached hereto as Exhibits D-1 and D-2, respectively.

 

2.3 Second Closing. 

 

(a) Amount. Subject to the terms and conditions set forth in this Agreement, at
the Second Closing, the Company shall issue and sell to each Purchaser, and each
Purchaser shall purchase from the Company, such number of Series A Shares as set
forth next to each Purchaser’s name on Schedule II under the heading “Series A
Shares” (the “Second Closing Shares”).

 

(b) Second Closing. The Second Closing of the purchase and sale of the Preferred
Shares shall take place at the offices of Pepper Hamilton LLP, with offices
located at 620 Eighth Avenue, 37th Floor, New York, NY 10018-1405, on the Second
Closing Date or at such other locations or remotely by facsimile transmission or
other electronic means as the parties may mutually agree.

 

(c) Form of Payment. At the Second Closing, each Purchaser shall wire its Second
Closing Subscription Amount, in United States dollars and in immediately
available funds, to the Company’s account set forth on Exhibit C hereto or such
other account as may be designated in writing by the Company at least two (2)
Business Days in advance. At the Second Closing, the Company shall issue the
Series A Shares purchased at the Second Closing in book-entry form.

 

2.4 Second Closing Deliveries. (a) At or prior to the Second Closing, the
Company shall issue, deliver or cause to be delivered to each Purchaser the
following: 

 

(i) evidence reasonably satisfactory to each Purchaser that the Transfer Agent
has recorded the Series A Shares purchased by each Purchaser at the Second
Closing on the stock ledger of the Company in book-entry form;

 

(ii) a legal opinion of Company Counsel with respect to the matters described on
Schedule A, dated as of the Second Closing Date, in form and substance
reasonably satisfactory to the Purchasers, executed by such counsel and
addressed to the Purchasers;

 

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(iii) a Secretary’s Certificate, dated as of the Second Closing Date, (a)
certifying the resolutions adopted by the Board of Directors of the Company
approving the transactions contemplated by this Agreement and the other Second
Transaction Documents and the issuance of the Series A Shares at the Second
Closing, (b) certifying the current versions of the Company Organizational
Documents and the Certificate of Designation and (c) certifying as to the
signatures and authority of the individuals signing the Second Transaction
Documents and related documents on behalf of the Company, in the form attached
hereto as Exhibit E;

 

(iv) a certificate dated as of the Second Closing Date and signed by its chief
executive officer or its chief financial officer in the form attached hereto as
Exhibit F;

 

(v) a certificate evidencing the good standing of the Company issued by the
Secretary of State (or comparable office) of Delaware, as of a date within seven
(7) Business Days of the Second Closing Date; and

 

(vi) a certificate evidencing the Company’s good standing issued by the
Secretary of State (or comparable office) of each jurisdiction in which the
Company is qualified to do business as a foreign corporation, as of a date
within seven (7) Business Days of the Second Closing Date.

 

(b) On or prior to the Second Closing, each Purchaser shall deliver or cause to
be delivered to the Company the following:

 

(i) its Second Closing Subscription Amount, in United States dollars and in
immediately available funds, in the amount set forth next to each Purchaser’s
name on Schedule II under the heading “Second Closing Subscription Amount” by
wire transfer to the account set forth on Exhibit C attached hereto or such
other account as may be notified by the Company to the Purchasers at least two
(2) Business Days prior to the Second Closing Date; and

 

(ii) a fully completed and duly executed Accredited Investor Questionnaire,
satisfactory to the Company, and Stock Certificate Questionnaire in the forms
attached hereto as Exhibits D-1 and D-2, respectively.

 

Article III
REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. The Company hereby represents
and warrants as of the Initial Closing Date and as of the Second Closing Date to
the Purchasers as follows: 

 

(a) The Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it under the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, since the date that is two years preceding
the date hereof (or such shorter period as the Company was required by law or
regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports” and the SEC Reports filed
with, or furnished to, the Commission and publicly available prior to the date
hereof being the “Filed SEC Reports”) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension, except where the failure to file on a timely
basis, individually or in the aggregate, would not have or reasonably be
expected to be material to the Company. As of their respective filing dates, or
to the extent corrected by a subsequent restatement prior to the date hereof, as
of the date of such restatement, the SEC Reports complied as to form in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted 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. Each of the Material
Contracts to which the Company or any of its Subsidiaries is a party or to which
the property or assets of the Company or any of its Subsidiaries are subject has
been filed as an exhibit to the SEC Reports. As of the date hereof, (i) the
Company is eligible to file a Registration Statement on Form S-3, (ii) none of
the Company’s Subsidiaries is required to file any documents with the
Commission, (iii) there are no outstanding or unresolved comments in comment
letters from the Commission staff with respect to any of the Filed SEC Reports
and (iv) none of the Filed SEC Reports is the subject of ongoing Commission
review, outstanding Commission comment or outstanding Commission investigation.
Each of the certifications and statements relating to the Filed SEC Reports
required by: (A) Rule 13a-14 or Rule 15d-14 under the Exchange Act, (B) 18
U.S.C. §1350 (Section 906 of the Sarbanes-Oxley Act) or (C) any other rule or
regulation promulgated by the Commission or applicable to the Filed SEC Reports
is accurate and complete, has been timely filed and complies as to form and
content with all applicable laws.

 

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(b) The financial statements of the Company (including all notes and schedules
thereto) included or incorporated by reference in the SEC Reports complied as to
form, as of their respective dates of filing with the Commission, in all
material respects with the published rules and regulations of the Commission
with respect thereto, have been prepared in all material respects in accordance
with U.S. GAAP (except, in the case of unaudited quarterly statements, as
permitted by Form 10-Q of the Commission or other rules and regulations of the
Commission) applied on a consistent basis during the periods involved (except
(i) as may be indicated in such financial statements or in the notes thereto or
(ii) as permitted by Regulation S-X or other rules or regulations of the
Commission) and present fairly in all material respects the financial position
of the Company and its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders’ equity and cash flows of the Company and
its consolidated subsidiaries for the periods specified and such financial
statements and related schedules and notes thereto, subject in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. Neither
the Company nor any of its Subsidiaries has any liabilities of any nature
(whether accrued, absolute, contingent or otherwise) that would be required
under U.S. GAAP, as in effect on the date hereof, to be reflected on a
consolidated balance sheet of the Company (including the notes thereto) except
liabilities (i) reflected or reserved against in the balance sheet (or the notes
thereto) of the Company and its Subsidiaries as of June 30, 2019 (the “Balance
Sheet Date”) included in the Filed SEC Reports, (ii) incurred after the Balance
Sheet Date in the ordinary course of business, or (iii) as contemplated by this
Agreement or otherwise incurred in connection with the Asset Purchase Agreement.

 

(c) The Company and each of its Subsidiaries has filed all material United
States federal, state, local and non-United States tax returns that are required
to be filed through the date hereof, which returns are true and correct in all
material respects, or has received timely extensions thereof, and has paid all
taxes shown on such returns and all assessments received by it to the extent
that the same are material and have become due, except for any such taxes
currently being contested in good faith. There are no tax audits or
investigations pending.

 

(d) (i) Neither the Company nor any of its Subsidiaries has sustained since the
date of the latest audited financial statements included or incorporated by
reference in the Filed SEC Reports any material loss or interference with its
business, direct or contingent, including from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Filed SEC Reports; and (ii) since the respective dates as of
which information is given in the Filed SEC Reports, there has not been (A) any
change in the capital stock or long-term debt of the Company or any of its
Subsidiaries, taken as a whole (other than changes pursuant to agreements or
employee benefit plans or in connection with the exercise of options, in each
case as described or referred to in the Filed SEC Reports) or (B) any material,
individually or in the aggregate, adverse change, or any development involving a
prospective adverse change that is material (i) in or affecting the properties,
business, management, prospects, operations, earnings or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole or (ii) to the
ability of the Company to consummate the transactions contemplated by the
Transaction Documents on a timely basis or on the ability of the Company to
comply with its obligations under the Transaction Documents (a “Material Adverse
Effect”).

 

 10 

 

 

(e) The Company and its Subsidiaries have good and marketable title to all real
property owned by them, if any, and have good title to all other material
property owned by them, in each case free and clear of all liens, encumbrances
and defects except as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and its Subsidiaries; and any real property and buildings held under
lease by the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not materially interfere with the use made and proposed to be made of such
property and buildings by the Company and its Subsidiaries.

 

(f) (i) The Company and its Subsidiaries are in material compliance with all
Applicable Laws or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products, asbestos-containing materials or mold
(collectively, “Hazardous Materials”) or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, “Environmental Laws”), (ii) the Company and
its Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in material compliance with their
requirements, (iii) there are no pending or, to the knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of non-compliance or violation,
investigation or Proceedings relating to any Environmental Law against the
Company or any of its Subsidiaries, and (iv) to the knowledge of the Company,
there are no events or circumstances that would reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit or
Proceeding by any private party or Governmental Entity, against or affecting the
Company or any of its Subsidiaries relating to Hazardous Materials or any
Environmental Laws.

 

(g) The Company (i) has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power and corporate authority to own its properties and conduct its
business as described in all material respects in the SEC Reports, and (ii) has
been duly qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, except in the case of clause (ii), where the failure to be so
qualified or in good standing would not be material; and each Subsidiary of the
Company (x) has been duly incorporated or formed, as the case may be, and is
validly existing as a corporation or limited liability company, as applicable,
in good standing under the laws of its jurisdiction of incorporation or
formation, with the company power and authority to own its properties and
conduct its business as described in the SEC Reports, and (y) has been duly
qualified as a foreign corporation or limited liability company for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, except in the case of clause (y), where the
failure to be so qualified or in good standing would not be material.

 

 11 

 

 

(h) The execution and delivery of this Agreement by the Company and performance
by the Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or other applicable action including by
the Board of Directors. Each Transaction Document to which it is a party has
been (or will be) duly executed by the Company, and when delivered by the
Company in accordance with the terms hereof, will constitute the valid and
legally binding obligation of the Company, enforceable against it in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies, by other equitable principles of general application, or except
insofar as indemnification and contribution provisions may be limited by
applicable law. Other than the Nasdaq Approval (as defined in the Certificate of
Designation), no vote, consent or approval of the stockholders of the Company is
required under applicable law, the Company Organizational Documents or under any
contract between the Company and any stockholder of the Company, to authorize or
approve this Agreement or the other Transaction Documents or the transactions
contemplated hereby or thereby. The Board of Directors has taken all necessary
actions such that the restrictions set forth in Section 203 of the General
Corporation Law of the state of Delaware will not apply to any acquisition by
any Purchaser of the Preferred Shares to be issued pursuant to this Agreement or
upon the conversion of the Preferred Shares into Conversion Shares pursuant to
the Certificate of Designation.

 

(i) The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per
share (“Company Preferred Stock”), of which 270 shares of Series A Shares will
be authorized and 80 shares of Series A-1 Shares will be authorized as of the
Initial Closing and Second Closing and no other shares of Company Preferred
Stock will be authorized. At the close of business on July 12, 2019 (the
“Capitalization Date”), (i) 38,295,006 shares of Common Stock were issued, (ii)
38,196,038 shares of Common Stock were outstanding, (iii) 682,935 shares of
Common Stock were reserved and available for issuance pursuant to the Company
Stock Plans, (iv) 3,935,969 shares of Common Stock were subject to outstanding
Company Stock Options, (v) warrants to purchase 14,196,482 shares of common
stock were outstanding, and (vi) no shares of Company Preferred Stock were
issued or outstanding.

 

(j) Except as described in Section 3.1(i), as of the Capitalization Date, there
were (i) no outstanding shares of capital stock of, or other Equity Interests or
voting interests in, the Company, (ii) no outstanding securities of the Company
convertible into or exchangeable for shares of capital stock of, or other Equity
Interests or voting interests in, the Company, (iii) no outstanding options,
warrants, rights or other commitments or agreements to acquire from the Company,
or that obligate the Company to issue, any capital stock of, or other Equity
Interests or voting interests (or voting debt) in, or any securities convertible
into or exchangeable for shares of capital stock of, or other Equity Interests
or voting interests in, the Company other than obligations under the Company
Plans in the ordinary course of business, (iv) no obligations of the Company to
grant, extend or enter into any subscription, warrant, right, convertible or
exchangeable security or other similar agreement or commitment relating to any
capital stock of, or other Equity Interests or voting interests in, the Company
(the items in clauses (i), (ii), (iii) and (iv) being referred to collectively
as “Company Securities”) and (v) no other obligations by the Company or any of
its Subsidiaries to make any payments based on the price or value of any Company
Securities. Since the Capitalization Date, neither the Company nor any of its
Subsidiaries has (A) issued any Company Securities or incurred any obligation to
make any payments based on the price or value of any Company Securities or
dividends paid thereon, other than in connection with the vesting, settlement or
exercise of the stock option, service based restricted stock awards and
performance-based restricted stock awards referred to in Section 3.1(i) that
were outstanding as of the Capitalization Date or as expressly contemplated by
this Agreement or (B) established a record date for, declared, set aside for
payment or paid any dividend on, or made any other distribution in respect of,
any shares of the Company’s capital stock. Except as described in the SEC
Reports, there are no outstanding agreements of any kind which obligate the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any Company Securities (other than pursuant to the cashless exercise of Company
Stock Options), or obligate the Company to grant, extend or enter into any such
agreements relating to any Company Securities, including any agreements granting
any preemptive rights, subscription rights, anti-dilutive rights, rights of
first refusal or similar rights with respect to any Company Securities. None of
the Company or any Subsidiary of the Company is a party to any stockholders’
agreement, voting trust agreement, registration rights agreement or other
similar agreement or understanding relating to any Company Securities or any
other agreement relating to the disposition, voting or dividends with respect to
any Company Securities.

 

 12 

 

 

(k) All of the issued shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid, non-assessable and free of
preemptive rights and were not issued in violation of any rights of first
refusal or other similar rights to subscribe for or purchase securities of the
Company; and conform in all material respects to the description of such capital
stock contained in the Filed SEC Reports and all of the issued shares of capital
stock of each Subsidiary of the Company have been duly authorized and validly
issued, are fully paid and non-assessable and are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities or claims
and there are no options, warrants or rights to acquire shares of capital stock
of any Subsidiary of the Company. With respect to stock options (the “Stock
Options”) granted pursuant to the stock-based compensation plans of the Company
(the “Company Stock Plans”), (i) each Stock Option intended to qualify as an
“incentive stock option” under Section 422 of the Code so qualified as of the
applicable Grant Date, (ii) each grant of a Stock Option was duly authorized no
later than the date on which the grant of such Stock Option was by its terms to
be effective (the “Grant Date”) by all necessary corporate action, including, as
applicable, approval by the Board of Directors and any required stockholder
approval by the necessary number of votes or written consents, and the award
agreement governing such grant (if any) was duly executed and delivered by each
party thereto, (iii) each such grant was made in accordance with the terms of
the Company Stock Plans, (iv) the per share exercise price of each Stock Option
was equal to the fair market value of a share of Common Stock, as determined in
good faith by the Board of Directors on the effective Grant Date and (v) each
such grant was properly accounted for in accordance with U.S. GAAP.

 

(l) The Preferred Shares to be issued and sold by the Company to the Purchasers
hereunder have been duly authorized and, when issued and delivered against
payment therefor as provided herein, will be duly and validly issued and fully
paid and non-assessable and, assuming the accuracy of the Purchasers’
representations in Section 3.2 below, issued in compliance with all applicable
federal and state securities laws; the Series A Shares issuable upon conversion
of the Series A-1 Shares and the Conversion Shares have been duly authorized
and, when issued and delivered in accordance with the Transaction Documents and
the Certificate of Designation upon conversion of the Series A-1 Shares or
Series A Shares, as applicable, will be duly and validly issued and fully paid
and non-assessable and, assuming the accuracy of the Purchasers’ representations
in Section 3.2 below, issued in compliance with all applicable federal and state
securities laws; and the issuance of the Securities is not and will not be
issued in violation of any purchase option, call option, preemptive right,
resale right, subscription right, right of first refusal or similar right, and
will be free and clear of all liens and encumbrances, except restrictions
imposed by the Securities Act and any applicable state securities laws. The
Preferred Shares, when issued, and the Conversion Shares, if and when issued,
will have the terms and conditions and entitle the holders thereof to the rights
set forth in the Company Organizational Documents, as amended by the Certificate
of Designation. The shares of Common Stock issuable upon conversion of the
Preferred Shares have been duly reserved for issuance. Nothing in this
subsection shall be construed to mean that the Preferred Shares, Conversion
Shares and Common Stock are not subject to the restrictions set forth in the
Certificate of Designation and the Investor Rights Agreement.

 

 13 

 

 

(m) The execution, delivery and performance by the Company of this Agreement,
the Initial Transaction Documents (including the adoption of the Certificate of
Designation) and the Second Transaction Documents, and the consummation of the
transactions contemplated hereby and thereby, including the issue and sale of
the Preferred Shares and the compliance by the Company its obligations hereunder
and thereunder, do not and will not (A) conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation under, any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound or to which any of the property or assets of the Company or any of its
Subsidiaries is subject, (B) violate any of the provisions of the Company
Organizational Documents, or the organizational documents of any subsidiary, (C)
violate any law, rule, regulation, order, judgment or decree (including federal
and state securities laws) of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries or any of their
properties, or (D) require any consent, approval, authorization, order,
registration or qualification of or with any court, governmental agency or body
or third party, except for such consents, approvals, authorizations, orders,
registrations or qualifications that have been obtained or made and are in full
force and effect, and with respect to any third party consent, the failure of
which to obtain, individually or in the aggregate, would not be material to the
Company and its Subsidiaries, taken as a whole, or adversely impact the ability
to consummate the offering contemplated hereby or the transactions contemplated
by the Asset Purchase Agreement.

 

(n) Neither the Company nor any of its Subsidiaries is (A) in violation of the
Company Organizational Documents or other organizational documents or (B) in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound, except in the case of clause
(B), to the extent that such default, individually or in the aggregate, would
not be material to the Company and its Subsidiaries, taken as a whole, or
adversely impact the ability to consummate the offering contemplated hereby.

 

(o) Other than as set forth in the Filed SEC Reports, there are no legal or
governmental Proceedings pending to which the Company or any of its Subsidiaries
is a party or of which any property or assets of the Company or any of its
Subsidiaries is the subject, which, if determined adversely to the Company or
any of its Subsidiaries, would individually or in the aggregate be material to
the Company or its Subsidiaries after giving effect to the consummation of the
transactions contemplated by the Asset Purchase Agreement; and, no such
Proceedings are threatened by governmental authorities or threatened by others.

 

(p) The Company is not and, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof, will not be required to
be registered as an “investment company,” as such term is defined in the
Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

(q) BDO USA, LLP, who have audited certain financial statements of the Company
and its Subsidiaries is a registered public accounting firm (as defined in
Section 2(a)(12) of the Sarbanes-Oxley Act), is “independent” with respect to
the Company within the meaning of Regulation S-X and the Public Company
Accounting Oversight Board (United States) and is in compliance with subsections
(g) through (l) of Section 10A of the Exchange Act and the rules and regulations
promulgated by the Commissions and the Public Company Accounting Oversight Board
thereunder. All non-audit services performed by the Company’s auditors for the
Company that were required to be approved in accordance with Section 202 of the
Sarbanes-Oxley Act were so approved.

 

 14 

 

 

(r) The Company maintains a system of internal control over financial reporting
(as such term is defined in Rule 13a-15(f) under the Exchange Act) that complies
with the requirements of the Exchange Act and has been designed by the Company’s
principal executive officer and principal financial officer, or under their
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. The
Company’s internal control over financial reporting is effective and the Company
is not aware of any material weaknesses in its internal control over financial
reporting.

 

(s) The Board of Directors meets the independence requirements of, and has
established an audit committee that meets the independence requirements of, the
rules and regulations of the Commission and the Principal Trading Market.

 

(t) Since the date of the latest audited financial statements included or
incorporated by reference in the Filed SEC Reports, there has been no change in
the internal control of the Company or its Subsidiaries over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
internal control of the Company or its Subsidiaries over financial reporting.

 

(u) The Company and its Subsidiaries maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act)
that comply with the requirements of the Exchange Act and such disclosure
controls and procedures are effective at the reasonable assurance level.

 

(v) The Company and each of its Subsidiaries make and keep accurate books and
records and maintain a system of internal accounting controls sufficient to
provide reasonable assurance that: (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles as applied in the
United States and to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management’s general or specific
authorization; (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; and (v) the interactive data in extensible Business
Reporting Language included or incorporated by reference in the SEC Reports
fairly presents the information called for in all material respects and is
prepared in accordance with the Commission’s rules and guidelines applicable
thereto.

 

(w) To the Company’s knowledge, the Company and its Subsidiaries own, possess,
license or have other rights to use, or could obtain on commercially reasonable
terms, all foreign and domestic patents, patent applications, trade and service
marks, trade and service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, Internet domain names, know-how and other
intellectual property (collectively, the “Intellectual Property”), necessary for
the conduct of their respective businesses as now conducted and as currently
proposed to be conducted. Further, (i) there are no material rights of third
parties to any such Intellectual Property owned by the Company or its
Subsidiaries except for nonexclusive licenses granted to customers in the
ordinary course to third parties; (ii) to the Company’s knowledge, there is no
infringement by third parties of any such Intellectual Property of the Company
or its Subsidiaries necessary for the conduct of their respective businesses as
now conducted and as currently proposed to be conducted; (iii) there is no
pending or, to the Company’s knowledge, threatened action, suit, proceeding or
claim by others challenging the Company’s or its Subsidiaries’ rights in or to
any such Intellectual Property of the Company or its Subsidiaries necessary for
the conduct of their respective businesses as now conducted and as currently
proposed to be conducted, and the Company is unaware of any facts which could
form a reasonable basis for any such action, suit, proceeding or claim; (iv)
there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any
Intellectual Property of the Company or its Subsidiaries necessary for the
conduct of their respective businesses as now conducted and as currently
proposed to be conducted; (v) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others that the
Company or its Subsidiaries infringe or otherwise violate any patent, trademark,
copyright, trade secret or other proprietary rights of others; (vi) to the
Company’s knowledge, there is no third-party U.S. patent or published U.S.
patent application which contains claims for which an Interference Proceeding
(as defined in 35 U.S.C. § 135), or the equivalent in any other jurisdiction,
has been commenced against any patent or patent application owned by or licensed
to the Company or its Subsidiaries; and (vii) except as disclosed in the SEC
Reports, the Company and its Subsidiaries have complied in all material respects
with the terms of each agreement pursuant to which Intellectual Property has
been licensed to the Company or such Subsidiary, and all such agreements are in
full force and effect.

 

 15 

 

 

(x) After giving effect to the transactions contemplated by the Asset Purchase
Agreement, there are no off-balance sheet arrangements (as defined in Regulation
S-K Item 303(a)(4)(ii)) that may have a material current or future effect on the
Company’s financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures or capital resources.

 

(y) The Company and its Subsidiaries have each complied, and are presently in
compliance, in all material respects with all obligations, laws and regulations
regarding the collection, use, transfer, storage, protection, disposal and/or
disclosure of personally identifiable information and/or any other information
collected from or provided by third parties. The Company and its Subsidiaries
have taken commercially reasonable steps to protect the information technology
systems and data used in connection with the operation of the Company and/or its
Subsidiaries. The Company and its Subsidiaries have used reasonable efforts to
establish, and have established, commercially reasonable disaster recovery and
security plans, procedures and facilities for the business, including, without
limitation, for the information technology systems and data held or used by or
for the Company and/or any of its Subsidiaries. There has been no security
breach or attack or other compromise of or relating to any such information
technology system or data which would reasonably be expected to be material to
the Company and its Subsidiaries, taken as a whole.

 

(z) The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are, in the Company’s reasonable judgment, prudent and adequate for
the businesses in which they are engaged.

 

(aa) Except as disclosed in the Filed SEC Reports, after giving effect to the
transactions contemplated by the Asset Purchase Agreement, there are no related
party transactions that would be required to be disclosed therein by Item 404 of
Regulation S-K and any such related party transactions described therein are
accurately described in all material respects.

 

(bb) Neither the Company nor any of its Subsidiaries maintains or contributes
to, or otherwise has any current or contingent liability with respect to, an
employee benefit plan that is subject to Title IV of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or Section 412 of the Code; the employee
benefit plans sponsored, maintained or contributed to by the Company and its
Subsidiaries are in compliance in all material respects with the applicable
provisions of ERISA and the Code; to the knowledge of the Company, no non-exempt
prohibited transaction has occurred, within the meaning of Section 406 of ERISA
or Section 4975 of the Code for which the Company or any of its Subsidiaries
would have any liability.

 

(cc) The operations of the Company and its Subsidiaries are and have been
conducted at all times in material compliance with the ERISA, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any Governmental Entity
(collectively, the “Employee Benefit Laws”). No action, suit or Proceeding by or
before any court or Governmental Entity, authority or body or any arbitrator to
which the Company or any of its Subsidiaries is a party with respect to Employee
Benefit Laws is pending or, to the knowledge of the Company, threatened.

 

 16 

 

 

(dd) The holders of outstanding shares of Common Stock are not entitled to
preemptive or other rights to subscribe for the Securities; none of the
outstanding shares of Common Stock were issued in violation of any preemptive
rights, rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company; there are no Persons with registration or
other similar rights to have securities of the Company registered under the
Securities Act or the rules and regulations of the Commission thereunder; there
are no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its Subsidiaries except as disclosed in Section 3.1(i); and
the description of the Company Stock Plans, and the options or other rights
granted thereunder, included in the SEC Reports fairly presents the information
required to be shown with respect to such plans, options and rights.

 

(ee) Neither the Company nor any of its Subsidiaries or any of their respective
Affiliates does business with any court, administrative agency, regulatory body,
commission or other Governmental Entity, board, bureau or instrumentality,
domestic or foreign, any subdivision thereof, or with any individual,
corporation, firm, partnership, joint venture, limited liability company,
estate, trust, business association, organization or other entity located in any
country that is the subject of the economic sanctions or programs of the United
States as administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to its Subsidiaries or any joint venture partner or
other Person, in a manner that violates any U.S. sanctions administered by OFAC.

 

(ff) The operations of the Company and its Subsidiaries are and have been
conducted at all times in compliance with applicable financial record-keeping
and reporting requirements of the Bank Secrecy Act, as amended by Title III of
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the applicable money
laundering statutes of jurisdictions where the Company and its Subsidiaries
conduct business, the applicable rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”),
and no action, suit or Proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
Subsidiaries with respect to the Money Laundering Laws is pending or threatened.

 

(gg) Neither the Company or any of its Subsidiaries nor any director, officer,
agent, employee or Affiliate of the Company or any of its Subsidiaries is aware
of or has taken any action, directly or indirectly, that would result in a
violation by such Persons of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign political
office, in contravention of the FCPA and the Company, its Subsidiaries and its
Affiliates have conducted their businesses in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure, and which
are reasonably expected to continue to ensure, continued compliance therewith.

 

 17 

 

 

(hh) Private Placement. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2 of this Agreement and the accuracy of
the information disclosed in the Accredited Investor Questionnaires provided by
the Purchasers, no registration under the Securities Act is required for the
offer and sale of the Preferred Shares by the Company to the Purchasers under
the Initial Transaction Documents or Second Transaction Documents. The issuance
and sale of the Preferred Shares hereunder does not contravene the rules and
regulations of the Trading Market.

 

(ii) Listing and Maintenance Requirements. Except as described in the SEC
Reports, the Common Stock is registered pursuant to Section 12(b) of the
Exchange Act and is listed on the Principal Trading Market, and the Company has
taken no action designed to terminate, or likely to have the effect of
terminating, the registration of the Common Stock under the Exchange Act or to
delist, or likely to have the effect of delisting, the Common Stock from the
Principal Trading Market, nor has the Company received any notification that the
Commission or the Principal Trading Market is contemplating terminating or
suspending such registration or listing. Except as described in the SEC Reports,
the Company is in compliance with all applicable listing requirements of the
Principal Trading Market.

 

(jj) No Integrated Offering. None of the Company, its Subsidiaries nor any of
its Affiliates or any Person acting on its behalf has, directly or indirectly,
at any time within the past six (6) months, made any offers or sales of any
Company security or solicited any offers to buy any security under circumstances
that would (i) impair the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer and sale by
the Company of the Preferred Shares as contemplated hereby or (ii) cause the
offering of the Preferred Shares pursuant to the Transaction Documents to be
integrated with prior offerings by the Company for purposes of any applicable
law, regulation or stockholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market on which any
of the securities of the Company are listed or designated.

 

(kk) No General Solicitation. Neither the Company nor any Person acting on
behalf of the Company has offered or sold any of the Preferred Shares by any
form of general solicitation or general advertising.

 

(ll) No Rights Agreement. The Company is not party to a stockholder rights
agreement, “poison pill” or similar antitakeover agreement or plan and no
anti-takeover statutes currently in effect in any jurisdiction in which the
Company operates are applicable.

 

(mm) Certain Business Relationships with Affiliates. The Company has provided to
Purchasers on or prior to the date hereof true and complete unredacted copies of
any contracts or other agreements (excluding employment, stock option and
customary indemnification agreements with officers and directors entered into in
the ordinary course of business) between the Company, on the one hand, and any
director, officer or stockholder (in each case, in his, her or its capacity as
such) of the Company, any of its Subsidiaries or its Affiliates, on the other
hand, which is currently in effect.

 

(nn) Subsidiaries. The entities set forth on Schedule B (collectively, the
entities required to be disclosed on Schedule B, the “Subsidiaries”), are the
Company’s only significant subsidiaries (as such term is defined in Rule 1-02 of
Regulation S-X promulgated by the Commission). The Company owns, directly or
indirectly, all of the equity interests of the Subsidiaries free and clear of
any lien, charge, security interest, encumbrance, right of first refusal or
other restriction, and all the equity interests of the Subsidiaries are validly
issued and are fully paid, nonassessable and free of preemptive and similar
rights. Except as described in the Filed SEC Reports, no Subsidiary is currently
prohibited, directly or indirectly, from paying any dividends to the Company or
any of its Subsidiaries, from making any other distribution on such Subsidiary’s
capital stock, from repaying to the Company any loans or advances to such
Subsidiary from the Company or from transferring any of such Subsidiary’s
property or assets to the Company or any other Subsidiary of the Company.

 

 18 

 

 

(oo) No Preferential Rights. Except as described in the Filed SEC Reports, (i)
no Person has the right, contractual or otherwise, to cause the Company or any
of its Subsidiaries to issue or sell to such Person any Common Stock or shares
of any other capital stock or other securities of the Company or any of its
Subsidiaries, (ii) no Person has any preemptive rights, resale rights, rights of
first refusal, rights of co-sale, or any other rights (whether pursuant to a
“poison pill” provision or otherwise) to purchase any Common Stock or shares of
any other capital stock or other securities of the Company or any of its
Subsidiaries, (iii) no Person has the right to act as an underwriter or as a
financial advisor to the Company in connection with the offer and sale of the
Common Stock, and (iv) no Person has the right, contractual or otherwise, to
require the Company or any of its Subsidiaries to register under the Securities
Act, any Common Stock or shares of any other capital stock or other securities
of the Company or any of its Subsidiaries, or to include any such shares or
other securities in the offering contemplated hereby, as a result of the sale of
the Preferred Shares as contemplated hereby or otherwise.

 

(pp) Consents and Permits. Each product subject to the jurisdiction of the U.S.
Food and Drug Administration (“FDA”) or any non-U.S. counterpart that is
manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by
the Company or any of its Subsidiaries are subject to (each such product, a
“Product”), had been manufactured, packaged, labeled, tested, distributed, sold
and/or marketed by the Company or its Subsidiaries, in compliance in all
material respects with all applicable Health Care Laws relating to registration,
investigational use, premarket clearance, licensure, or application approval,
good manufacturing practices, good laboratory practices, good clinical
practices, product listing, quotas, labeling, advertising, record keeping and
filing of reports. There is no pending, completed or threatened action
(including any lawsuit, arbitration, or legal or administrative or regulatory
proceeding, charge, complaint, or investigation) against the Company or any of
its Subsidiaries, and none of the Company or any of its Subsidiaries has
received any notice, warning letter or other communication from the FDA or any
other governmental entity, which (i) contests the premarket clearance,
licensure, registration, or approval of, the uses of, the distribution of, the
manufacturing or packaging of, the testing of, the sale of, or the labeling and
promotion of any Product, (ii) withdraws its approval of, requests the recall,
suspension, or seizure of, or withdraws or orders the withdrawal of advertising
or sales promotional materials relating to, any Product, (iii) imposes a
clinical hold on any clinical investigation by the Company or any of its
Subsidiaries (iv) enjoins production at any facility of the Company or any of
its Subsidiaries or, (v) enters or proposes to enter into a consent decree of
permanent injunction with the Company or any of its Subsidiaries, or (vi)
otherwise alleges any violation of any laws, rules or regulations by the Company
or any of its Subsidiaries in any material respect. Neither the Company nor any
of its Subsidiaries have been informed by the FDA or any non-U.S. counterpart
that the FDA or any non-U.S. counterpart will prohibit the marketing, sale,
license or use in the United States or in any other territory any product
proposed to be developed, produced or marketed by the Company or any of its
Subsidiaries nor has the FDA or any non-U.S. counterpart expressed any concern
as to approving or clearing for marketing any product being developed or
proposed to be developed by the Company or any of its Subsidiaries. To the
Company’s knowledge, there are no legal or governmental proceedings relating to
any Health Care Law pending or threatened to which the Company or any of its
Subsidiaries is a party, nor is it aware of any material violations of such acts
or regulations by the Company or any of its Subsidiaries. For purposes of this
Agreement, “Health Care Laws” means: (i) the Federal Food, Drug, and Cosmetic
Act and the regulations promulgated thereunder; (ii) all applicable federal,
state, local and all applicable foreign health care related fraud and abuse
laws, including, without limitation, the U.S. Anti-Kickback Statute (42 U.S.C.
Section 1320a-7b(b)), the U.S. Physician Payment Sunshine Act (42 U.S.C. §
1320a-7h), the U.S. Civil False Claims Act (31 U.S.C. Section 3729 et seq.), the
criminal False Claims Law (42 U.S.C. § 1320a-7b(a)), all criminal laws relating
to health care fraud and abuse, including but not limited to 18 U.S.C. Sections
286 and 287, and the health care fraud criminal provisions under the U.S. Health
Insurance Portability and Accountability Act of 1996 (“HIPAA”) (42 U.S.C.
Section 1320d et seq.), the exclusion laws (42 U.S.C. § 1320a-7), the civil
monetary penalties law (42 U.S.C. § 1320a-7a), the statutes, regulations and
directives of applicable government funded or sponsored healthcare programs, and
the regulations promulgated pursuant to such statutes; (iii) the Standards for
Privacy of Individually Identifiable Health Information, the Security Standards,
and the Standards for Electronic Transactions and Code Sets promulgated under
HIPAA, the Health Information Technology for Economic and Clinical Health Act
(42 U.S.C. Section 17921 et seq.), and the regulations promulgated thereunder
and any state or non-U.S. counterpart thereof or other law or regulation the
purpose of which is to protect the privacy of individuals or prescribers; (iv)
Medicare (Title XVIII of the Social Security Act); (v) Medicaid (Title XIX of
the Social Security Act); and (vi) any and all other applicable health care laws
and regulations.

 

 19 

 

 

(qq) Regulatory Filings. Except as described in the Filed SEC Reports, neither
the Company nor any of its Subsidiaries has failed to file with the applicable
Governmental Entity (including the FDA or any foreign, federal, state or local
Governmental Entity performing functions similar to those performed by the FDA)
any required filing, declaration, listing, registration, report or submission,
except for any deficiencies that, individually or in the aggregate, would be
immaterial; except as described in the Filed SEC Reports, all such filings,
declarations, listings, registrations, reports or submissions were in material
compliance with applicable laws when filed and no material deficiencies have
been asserted by any applicable regulatory authority with respect to any such
filings, declarations, listings, registrations, reports or submissions. Each of
the Company and its Subsidiaries have operated and currently is, in all material
respects, in compliance with all applicable Health Care Laws. The Company has no
knowledge of any studies, tests or trials the results of the Company or any of
its Subsidiaries which reasonably call into question in any material respect the
results of such studies, tests and trials.

 

(rr) Clinical Studies. The preclinical studies and tests and clinical trials of
the Company or any of its Subsidiaries were, and, if still pending, are being
conducted in all material respects in accordance with the experimental
protocols, procedures and controls pursuant to, where applicable, accepted
professional and scientific standards for products or product candidates
comparable to those being developed by the Company or any of its Subsidiaries;
the descriptions of such studies, tests and trials, and the results thereof,
contained in the Filed SEC Reports, if any, are accurate and complete in all
material respects; the Company is not aware of any tests, studies or trials not
described in the Filed SEC Reports, the results of which reasonably call into
question the results of the tests, studies and trials described in the Filed SEC
Reports; and neither the Company nor any of its Subsidiaries has received any
written notice or correspondence from the FDA or any foreign, state or local
Governmental Entity exercising comparable authority or any institutional review
board or comparable authority requiring the termination, suspension, clinical
hold or material modification of any tests, studies or trials.

 

(ss) Brokers. Neither the Company nor any of its Subsidiaries has incurred any
liability for any finder’s fees, brokerage commissions or similar payments in
connection with the transactions herein contemplated, except as may otherwise
exist with respect to or pursuant to this Agreement.

 

(tt) Labor Disputes and Matters. Neither the Company nor any of its Subsidiaries
employs any person represented by a union or collective bargaining unit. No
labor disturbance by or dispute with employees of the Company or any of its
Subsidiaries exists or, to the knowledge of the Company, is threatened.

 

(uu) Margin Rules. Neither the issuance, sale and delivery of the Preferred
Shares nor the application of the proceeds thereof by the Company as described
in the Filed SEC Reports will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board of
Governors.

 

 20 

 

 

(vv) Insurance. The Company and each of its Subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as the Company and each of
its Subsidiaries reasonably believe are adequate for the conduct of their
business and as is customary for companies engaged in similar businesses in
similar industries.

 

(ww) Compliance with Laws. Each of the Company and its Subsidiaries: (i) is and
at all times has been in material compliance with all laws, statutes, rules, or
regulations applicable to the ownership, testing, development, manufacture,
packaging, processing, use, distribution, marketing, labeling, promotion, sale,
offer for sale, storage, import, export or disposal of any product manufactured
or distributed by the Company or its Subsidiaries (“Applicable Laws”); (ii) has
not received any FDA Form 483, notice of adverse finding, warning letter,
untitled letter or other correspondence or notice from the FDA or any other
Governmental Entity alleging or asserting noncompliance with any Applicable Laws
or any licenses, certificates, approvals, clearances, authorizations, permits
and supplements or amendments thereto required by any such Applicable Laws
(“Authorizations”); (iii) possesses all material Authorizations and such
Authorizations are valid and in full force and effect and are not in material
violation of any term of any such Authorizations; (iv) has not received notice
of any claim, action, suit, proceeding, hearing, enforcement, investigation,
arbitration or other action from any Governmental Entity or third party alleging
that any product operation or activity is in violation of any Applicable Laws or
Authorizations and has no knowledge that any such Governmental Entity or third
party is considering any such claim, litigation, arbitration, action, suit,
investigation or proceeding; (v) has not received notice that any Governmental
Entity has taken, is taking or intends to take action to limit, suspend, modify
or revoke any Authorizations and has no knowledge that any such Governmental
Entity is considering such action; (vi) has filed, obtained, maintained or
submitted all material reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments as required by any
Applicable Laws or Authorizations and that all such reports, documents, forms,
notices, applications, records, claims, submissions and supplements or
amendments were complete and correct in all material respects on the date filed
(or were corrected or supplemented by a subsequent submission); and (vii) has
not, either voluntarily or involuntarily, initiated, conducted, or issued or
caused to be initiated, conducted or issued, any recall, market withdrawal or
replacement, safety alert, post-sale warning, “dear healthcare provider” letter,
or other notice or action relating to the alleged lack of safety or efficacy of
any product or any alleged product defect or violation and, to the Company’s
knowledge, no third party has initiated, conducted or intends to initiate any
such notice or action.

 

(xx) Disclosure. No representation or warranty or other statement made by the
Company, CGI or any of their respective representatives in connection with the
negotiation, execution, delivery or performance of this Agreement or the
Transaction Documents contains any untrue statement of a material fact or omits
to state any material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which such statements
were made, not misleading.

 

(yy) Health Care Regulatory Compliance.

 

(i) The Company and each of its Subsidiaries is in material compliance with all
applicable Health Care Laws. Neither the Company nor any of its Subsidiaries has
received any written or, to the Company’s knowledge, oral communication from a
Governmental Entity, Government Program, Private Program, or other Person
alleging any failure to comply with applicable Health Care Laws. Except as
disclosed in the section entitled “RedPath – DOJ Settlement” in Note 10 of the
consolidated financial statements included in the 2018 Form 10-K, to the
knowledge of the Company, neither the Company nor any of its Subsidiaries has
been investigated for violation of any Health Care Laws to which it is bound or
to which any business activity or professional services performed by or for the
Company or any of its Subsidiaries is subject.

 

 21 

 

 

(ii) The Company and each of its Subsidiaries has, and for the past three years
has had, privacy and security policies, procedures and safeguards that comply
with then-applicable requirements of health care privacy laws.

 

(iii) Except as disclosed in the section entitled “RedPath – DOJ Settlement” in
Note 10 of the consolidated financial statements included in the 2018 Form 10-K,
neither the Company nor any of its Subsidiaries is, and in the past three years
has not been, a party to a corporate integrity agreement with any Governmental
Entity or otherwise had any continuing reporting obligations pursuant to any
deferred prosecution, settlement or other integrity agreement with any
Governmental Entity.

 

(iv) Neither the Company nor any of its Subsidiaries has at any time in the past
three years (i) been served with or received any search warrant, subpoena or
civil investigative demand from any Governmental Entity, (ii) made a voluntary
disclosure pursuant to the U.S. Department of Health and Human Services Office
of the Inspector General’s provider Self-Disclosure Protocol or the Centers for
Medicare and Medicaid’s Voluntary Self-Referral Disclosure Protocol, (iii) made
a self-disclosure to a Medicare Administrative Contractor or (iv) otherwise made
a material disclosure to a Governmental Entity regarding potential repayment
obligations arising from actual or potential violations of Health Care Laws.

 

(v) The Company and each of its Subsidiaries, their respective personnel and
authorized representatives are operating, and for past three years have
operated, in material compliance with the federal health care program
anti-kickback statute (42 U.S.C. § 1320a-7b, et seq.), the federal physician
self-referral law (commonly known as the Stark Law) (42 U.S.C. § 1395nn, et
seq., and its implementing regulations, 42 C.F.R. Subpart J), and all other
Applicable Laws with respect to direct and indirect compensation arrangements,
ownership interests or other relationships between such Person and any past,
present or potential patient, physician, supplier, contractor or other Person in
a position to refer, recommend or arrange for the referral of patients or other
health care business or to whom such Person refers, recommends or arranges for
the referral of patients or other health care business.

 

(vi) There has been no non-coverage decision, material adverse change to any
existing coverage determination, nor change in reimbursement or coverage
policies which could have a material adverse effect on, cause, or result in a
denial of reimbursement, with respect to any of the Company’s or any of its
Subsidiaries’ products or services by CMS or its contractors (including but not
limited to Medicare Administrative Contractors (MACs)), whether through a
National Coverage Determination (NCD) or a Local Coverage Determination (LCD),
nor a determination by CMS or a MAC that any of the Company’s or any of its
Subsidiaries’ products or services (i) are considered non-covered services, and
(ii) no existing coverage determination has been, is pending, nor has been
threatened to be revoked or amended.

 

(vii) Except as disclosed in the section entitled “RedPath – DOJ Settlement” in
Note 10 of the consolidated financial statements included in the 2018 Form 10-K
for the year ended December 31, 2018, neither the Company nor any of its
Subsidiaries has received any nor, to the knowledge of the Company, are there
any pending, written complaints, claims, demands, inquiries, proceedings, or
other notices, including any notices of any investigation or other Legal
Proceedings regarding the Company or any of its Subsidiaries, initiated by (i)
any Person; (ii) any Private Programs; (iii) any Governmental Entity, including
the United States Federal Trade Commission, a state attorney general, data
protection authority or similar state official, or a supervisory authority; or
(iv) any self-regulatory authority or entity, alleging that any activity of the
Company or any of its Subsidiaries: (A) is in violation of any applicable
information laws, (B) is in violation of any privacy agreements, (C) is in
violation of any privacy policies, (D) is otherwise in violation of any person’s
privacy, personal or confidentiality rights, or (E) otherwise constitutes an
unfair, deceptive, or misleading trade practice.

 

 22 

 

 

(viii) Neither the Company nor any of its Subsidiaries, to the knowledge of the
Company, any officer, key employee or agent of the Company has, within the last
three years, been convicted of any crime or engaged in any conduct that would
reasonably be expected to result in (i) debarment under 21 U.S.C. Section 335a
or any similar state or foreign Applicable Laws or (ii) exclusion under 42
U.S.C. Section 1320a-7 or any similar state or foreign Applicable Laws.

 

(zz) Representations Regarding the Business.

 

(i) At the consummation of the transactions contemplated by the Asset Purchase
Agreement, CGI Seller transferred to the Company or its Subsidiaries good, valid
and, if applicable, marketable title to all of the Purchased Assets (as defined
in the Asset Purchase Agreement) free and clear of all liens, encumbrances and
defects, except as does not materially affect the value of such Purchased Assets
and does not interfere with the use made and proposed to be made of such
Purchased Assets by the Company and its Subsidiaries.

 

(ii) (i) CGI (in respect of the Business) is in material compliance with all
Environmental Laws, including, without limitation, laws and regulations relating
to Hazardous Materials, (ii) CGI (in respect of the Business) has all permits,
authorizations and approvals required under any applicable Environmental Laws
and is in material compliance with their requirements, (iii) there are no
pending or, to the knowledge of the Company, threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance or violation, investigation or Proceedings relating to
any Environmental Law against CGI (in respect of the Business), and (iv) to the
knowledge of the Company, there are no events or circumstances that would
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or Proceeding by any private party or
Governmental Entity, against or affecting CGI (in respect of the Business)
relating to Hazardous Materials or any Environmental Laws.

 

(iii) There are no Proceedings pending to which CGI (in respect of the Business)
is a party or of which any property or assets of CGI (in respect of the
Business) is the subject, which, if determined adversely, would individually or
in the aggregate be material to the Business, and, to the knowledge of the
Company, no such Proceedings are threatened by Governmental Entities or
threatened by others.

 

(iv) To the Company’s knowledge, CGI owns, possesses, licenses or has other
rights to use, or could obtain on commercially reasonable terms, all
Intellectual Property necessary for the conduct of the Business as now conducted
and as currently proposed to be conducted. Further, (i) to the Company’s
knowledge, there are no rights of third parties to any such Intellectual
property in respect of the Business except for nonexclusive licenses granted to
customers in the ordinary course to third parties; (ii) to the Company’s
knowledge, there is no infringement by third parties of any Intellectual
Property acquired by the Company or its Subsidiaries under the Asset Purchase
Agreement necessary for the conduct of the Business as now conducted and as
currently proposed to be conducted; (iii) there is no pending or, to the
Company’s knowledge, threatened, action, suit, proceeding or claim by others
challenging CGI’s, the Company’s or its Subsidiaries’ rights in or to any the
Intellectual Property acquired by the Company or its Subsidiaries under the
Asset Purchase Agreement necessary for the conduct of the Business as now
conducted and as currently proposed to be conducted; (iv) there is no pending
or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging the validity or scope of the Intellectual Property acquired
by the Company or its Subsidiaries under the Asset Purchase Agreement necessary
for the conduct of the Business as now conducted and as currently proposed to be
conducted; (v) there is no pending or, to the Company’s knowledge, threatened,
action, suit, proceeding or claim by others that the Business or the Purchased
Assets infringe or otherwise violate any patent, trademark, copyright, trade
secret or other proprietary rights of others; (vi) to the Company’s knowledge,
there is no third-party U.S. patent or published U.S. patent application which
contains claims for which an Interference Proceeding (as defined in 35 U.S.C. §
135), or the equivalent in any other jurisdiction, has been commenced against
any patent or patent application acquired by the Company or its Subsidiaries
under the Asset Purchase Agreement; and (vii) CGI has complied in all material
respects with the terms of each agreement pursuant to which Intellectual
Property in respect of the Business has been licensed to CGI (in respect of the
Business), and all such agreements are in full force and effect.

 

 23 

 

 

(v) CGI (in respect of the Business) has complied, and is presently in
compliance, in all material respects with all obligations, laws and regulations
regarding the collection, use, transfer, storage, protection, disposal and/or
disclosure of personally identifiable information and/or any other information
collected from or provided by third parties. CGI (in respect of the Business)
has taken commercially reasonable steps to protect the information technology
systems and data used in connection with the operation of the Business. CGI (in
respect of the Business) has used reasonable efforts to establish, and have
established, commercially reasonable disaster recovery and security plans,
procedures and facilities for the business, including, without limitation, for
the information technology systems and data held or used by CGI (in respect of
the Business).

 

(vi) Neither CGI nor any of its Affiliates (in each case, in respect of the
Business) does business with any court, administrative agency, regulatory body,
commission or other Governmental Entity, board, bureau or instrumentality,
domestic or foreign, any subdivision thereof, or with any individual,
corporation, firm, partnership, joint venture, limited liability company,
estate, trust, business association, organization or other entity located in any
country that is the subject of the economic sanctions or programs of the United
States as administered by OFAC.

 

(vii) The operations of CGI (in respect of the Business) are and have been
conducted at all times in compliance with applicable financial record-keeping
and reporting requirements of the Money Laundering Laws, and no action, suit or
Proceeding by or before any court or Governmental Entity, authority or body or
any arbitrator involving CGI (in respect of the Business) with respect to the
Money Laundering Laws is pending or threatened.

 

(viii) Neither CGI, nor any director, officer, agent, employee or Affiliate of
CGI (in each case, in respect of the Business), is aware of or has taken any
action, directly or indirectly, that would result in a material violation by
such Persons of the FCPA, including, without limitation, making use of the mails
or any means or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the payment of any
money, or other property, gift, promise to give, or authorization of the giving
of anything of value to any “foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA, and each of CGI and its
Affiliates (in each case, in respect of the Business) has conducted its
businesses in material compliance with the FCPA and have instituted and maintain
policies and procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance therewith.

 

 24 

 

 

(ix) Each product subject to the jurisdiction of the FDA or any non-U.S.
counterpart that is manufactured, packaged, labeled, tested, distributed, sold,
and/or marketed by CGI or its Affiliates (in each case, in respect of the
Business) (each such product, a “CGI Product”), had been manufactured, packaged,
labeled, tested, distributed, sold and/or marketed by in compliance in all
material respects with all applicable Health Care Laws relating to registration,
investigational use, premarket clearance, licensure, or application approval,
good manufacturing practices, good laboratory practices, good clinical
practices, product listing, quotas, labeling, advertising, record keeping and
filing of reports. There is no pending, completed or threatened action
(including any lawsuit, arbitration, or legal or administrative or regulatory
proceeding, charge, complaint, or investigation) against CGI or its Affiliates
(in each case, in respect of the Business), and neither CGI nor its Affiliates
(in each case, in respect of the Business) have received any notice, warning
letter or other communication from the FDA or any other Governmental Entity,
which (i) contests the premarket clearance, licensure, registration, or approval
of, the uses of, the distribution of, the manufacturing or packaging of, the
testing of, the sale of, or the labeling and promotion of any CGI Product, (ii)
withdraws its approval of, requests the recall, suspension, or seizure of, or
withdraws or orders the withdrawal of advertising or sales promotional materials
relating to, any CGI Product, (iii) imposes a clinical hold on any clinical
investigation by CGI or its Affiliates (in each case, in respect of the
Business), (iv) enjoins production at any facility of CGI or its Affiliates (in
each case, in respect of the Business), (v) enters or proposes to enter into a
consent decree of permanent injunction with CGI or its Affiliates (in each case,
in respect of the Business), or (vi) otherwise alleges any violation of any
laws, rules or regulations by CGI or its Affiliates (in each case, in respect of
the Business) in any material respect. Neither CGI or its Affiliates (in each
case, in respect of the Business) has been informed by the FDA or any non-U.S.
counterpart that the FDA or any non-U.S. counterpart will prohibit the
marketing, sale, license or use in the United States or in any other territory
any product proposed to be developed, produced or marketed by CGI or its
Affiliates (in each case, in respect of the Business), nor has the FDA or any
non-U.S. counterpart expressed any concern as to approving or clearing for
marketing any product being developed or proposed to be developed by CGI or its
Affiliates (in each case, in respect of the Business). To the Company’s
knowledge, there are no Proceedings (in each case, in respect of the Business)
relating to any Health Care Law pending or threatened to which CGI or its
Affiliates (in each case, in respect of the Business)is a party, nor is it aware
of any material violations of such acts or regulations by CGI or its Affiliates
(in each case, in respect of the Business).

 

(x) Neither CGI nor its Affiliates (in each case, in respect of the Business)
has failed to file with the applicable Governmental Entity (including the FDA or
any foreign, federal, state or local Governmental Entity performing functions
similar to those performed by the FDA) any required filing, declaration,
listing, registration, report or submission, except for any deficiencies that,
individually or in the aggregate, would be immaterial; all such filings,
declarations, listings, registrations, reports or submissions were in material
compliance with applicable laws when filed and no material deficiencies have
been asserted by any applicable regulatory authority with respect to any such
filings, declarations, listings, registrations, reports or submissions. CGI and
its Affiliates (in each case, in respect of the Business) have operated and
currently are, in all material respects, in compliance with all applicable
Health Care Laws. The Company has no knowledge of any studies, tests or trials
of CGI or its Affiliates (in each case, in respect of the Business) the results
of which reasonably call into question in any material respect the results of
such studies, tests and trials.

 

 25 

 

 

(xi) The preclinical studies and tests and clinical trials of CGI and its
Affiliates (in each case, in respect of the Business) were, and, if still
pending, are being conducted in all material respects in accordance with the
experimental protocols, procedures and controls pursuant to, where applicable,
accepted professional and scientific standards for products or product
candidates comparable to those being developed by CGI and its Affiliates (in
each case, in respect of the Business); the descriptions of such studies, tests
and trials, and the results thereof, contained in the documents filed by CGI
with the Commission, if any, are accurate and complete in all material respects;
the Company is not aware of any tests, studies or trials not described in the
documents filed by CGI with the Commission, the results of which reasonably call
into question the results of the tests, studies and trials described in the
documents filed by CGI with the Commission; and neither CGI nor its Affiliates
(in each case, in respect of the Business)have received any written notice or
correspondence from the FDA or any foreign, state or local Governmental Entity
exercising comparable authority or any institutional review board or comparable
authority requiring the termination, suspension, clinical hold or material
modification of any tests, studies or trials.

 

(xii) Neither CGI nor its Affiliates (in each case, in respect of the Business)
employs any person represented by a union or collective bargaining unit. No
labor disturbance by or dispute with employees of CGI or its Affiliates (in each
case, in respect of the Business) exists or, to the knowledge of the Company, is
threatened.

 

(xiii) Each of CGI and its Affiliates (in each case, in respect of the
Business): (i) is and at all times has been in material compliance with all
Applicable Laws, statutes, rules, or regulations applicable to the ownership,
testing, development, manufacture, packaging, processing, use, distribution,
marketing, labeling, promotion, sale, offer for sale, storage, import, export or
disposal of any product manufactured or distributed by CGI or its Affiliates (in
each case, in respect of the Business) (“Applicable CGI Laws”); (ii) has not
received any FDA Form 483, notice of adverse finding, warning letter, untitled
letter or other correspondence or notice from the FDA or any other Governmental
Entity alleging or asserting noncompliance with any Applicable Laws or any
licenses, certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto required by any such Applicable Laws (“CGI
Authorizations”); (iii) possesses all material CGI Authorizations and such CGI
Authorizations are valid and in full force and effect and are not in material
violation of any term of any such CGI Authorizations; (iv) has not received
notice of any claim, action, suit, proceeding, hearing, enforcement,
investigation, arbitration or other action from any Governmental Entity or third
party alleging that any product operation or activity is in violation of any
Applicable CGI Laws or CGI Authorizations and has no knowledge that any such
Governmental Entity or third party is considering any such claim, litigation,
arbitration, action, suit, investigation or proceeding; (v) has not received
notice that any Governmental Entity has taken, is taking or intends to take
action to limit, suspend, modify or revoke any CGI Authorizations and has no
knowledge that any such Governmental Entity is considering such action; (vi) has
filed, obtained, maintained or submitted all material reports, documents, forms,
notices, applications, records, claims, submissions and supplements or
amendments as required by any Applicable CGI Laws or CGI Authorizations and that
all such reports, documents, forms, notices, applications, records, claims,
submissions and supplements or amendments were complete and correct in all
material respects on the date filed (or were corrected or supplemented by a
subsequent submission); and (vii) has not, either voluntarily or involuntarily,
initiated, conducted, or issued or caused to be initiated, conducted or issued,
any recall, market withdrawal or replacement, safety alert, post-sale warning,
“dear healthcare provider” letter, or other notice or action relating to the
alleged lack of safety or efficacy of any product or any alleged product defect
or violation and, to the Company’s knowledge, no third party has initiated,
conducted or intends to initiate any such notice or action.

 

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(xiv) Health Care Regulatory Compliance.

 

(1) Each of CGI and its Affiliates (in each case, in respect of the Business) is
in material compliance with all applicable Health Care Laws. Neither CGI nor its
Affiliates (in each case, in respect of the Business)has received any written
or, to the Company’s knowledge, oral communication from a Governmental Entity,
Government Program, Private Program, or other Person alleging any failure to
comply with applicable Health Care Laws (in each case, in respect of the
Business). Neither CGI nor its Affiliates (in each case, in respect of the
Business) has been investigated for violation of any Health Care Laws to which
it is bound or to which any business activity or professional services performed
by or for CGI or its Affiliates (in each case, in respect of the Business) is
subject.

 

(2) Each of CGI and its Affiliates (in each case, in respect of the Business)
have, and for the past three years has had, privacy and security policies,
procedures and safeguards that comply with then-applicable requirements of
health care privacy laws.

 

(3) Neither CGI nor its Affiliates (in each case, in respect of the Business)
are, nor in the past three years have been, a party to a corporate integrity
agreement with any Governmental Entity or otherwise had any continuing reporting
obligations pursuant to any deferred prosecution, settlement or other integrity
agreement with any Governmental Entity.

 

(4) Neither CGI nor its Affiliates have at any time in the past three years (i)
been served with or received any search warrant, subpoena or civil investigative
demand from any Governmental Entity, (ii) made a voluntary disclosure pursuant
to the U.S. Department of Health and Human Services Office of the Inspector
General’s provider Self-Disclosure Protocol or the Centers for Medicare and
Medicaid’s Voluntary Self-Referral Disclosure Protocol, (iii) made a
self-disclosure to a Medicare Administrative Contractor or (iv) otherwise made a
material disclosure to a Governmental Entity regarding potential repayment
obligations arising from actual or potential violations of Health Care Laws.

 

(5) Each of CGI and its Affiliates, their personnel and authorized
representatives (in each case, in respect of the Business) are operating, and
for past three years have operated, in material compliance with the federal
health care program anti-kickback statute (42 U.S.C. § 1320a-7b, et seq.), the
federal physician self-referral law (commonly known as the Stark Law) (42 U.S.C.
§ 1395nn, et seq., and its implementing regulations, 42 C.F.R. Subpart J), and
all other Applicable CGI Laws with respect to direct and indirect compensation
arrangements, ownership interests or other relationships between such Person and
any past, present or potential patient, physician, supplier, contractor or other
Person in a position to refer, recommend or arrange for the referral of patients
or other health care business or to whom such Person refers, recommends or
arranges for the referral of patients or other health care business.

 

(6) There has been no non-coverage decision, material adverse change to any
existing coverage determination, nor change in reimbursement or coverage
policies which could have a material adverse effect on, cause, or result in a
denial of reimbursement, with respect to any of the products or services of CGI
or its Affiliates (in each case, in respect of the Business) by CMS or its
contractors (including but not limited to Medicare Administrative Contractors
(MACs)), whether through a National Coverage Determination (NCD) or a Local
Coverage Determination (LCD), nor a determination by CMS or its contractors
(including any MAC) that any of the CGI’s or its Affiliates’ (in each case, in
respect of the Business) products or services (i) are considered non-covered
services, and (ii) no existing coverage determination has been, is pending, nor
has been threatened to be revoked or amended.

 

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(7) Neither CGI nor its Affiliates (in each case, in respect of the Business)
has received any nor, to the knowledge of the Company, are there any pending,
written complaints, claims, demands, inquiries, proceedings, or other notices,
including any notices of any investigation or other Legal Proceedings regarding
CGI or its Affiliates (in each case, in respect of the Business), initiated by
(i) any Person; (ii) any Private Programs; (iii) any Governmental Entity,
including the United States Federal Trade Commission, a state attorney general,
data protection authority or similar state official, or a supervisory authority;
or (iv) any self-regulatory authority or entity, alleging that any activity of
CGI or its Affiliates (in each case, in respect of the Business): (A) is in
violation of any applicable information laws, (B) is in violation of any privacy
agreements, (C) is in violation of any privacy policies, (D) is otherwise in
violation of any person’s privacy, personal or confidentiality rights, or (E)
otherwise constitutes an unfair, deceptive, or misleading trade practice.

 

(8) Neither CGI nor its Affiliates (in each case, in respect of the Business)
nor, to the knowledge of the Company, any officer, key employee or agent of CGI
nor its Affiliates (in each case, in respect of the Business) has, within the
last three years, been convicted of any crime or engaged in any conduct that
would reasonably be expected to result in (i) debarment under 21 U.S.C. Section
335a or any similar state or foreign Applicable CGI Laws or (ii) exclusion under
42 U.S.C. Section 1320a-7 or any similar state or foreign Applicable CGI Laws.

 

3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby
represents and warrants as of the Initial Closing Date and as of the Second
Closing Date to the Company as follows: 

 

(a) Organization; Authority; Enforceability. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the applicable Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution and delivery of this
Agreement by such Purchaser and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or, if such Purchaser is not a corporation, such
partnership, limited liability company or other applicable like action, on the
part of such Purchaser. Each Transaction Document to which it is a party has
been duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

 

(b) No Conflicts. The execution, delivery and performance by such Purchaser of
this Agreement and the Investor Rights Agreement and the consummation by such
Purchaser of the transactions contemplated hereby and thereby will not (i)
result in a violation of the organizational documents of such Purchaser, (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which such Purchaser is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Purchaser, except in the
case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or
violations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of such Purchaser to
perform its obligations hereunder.

 

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(c) Investment Intent. Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities as principal
for its own account and not with a view to, or for distributing or reselling
such Securities or any part thereof in violation of the Securities Act or any
applicable state securities laws. Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business. Such Purchaser does not
presently have any agreement, plan or understanding, directly or indirectly,
with any Person to distribute or effect any distribution of any of the
Securities (or any securities which are derivatives thereof) to or through any
Person; such Purchaser is not a registered broker-dealer under Section 15 of the
Exchange Act or an entity engaged in a business that would require it to be so
registered as a broker-dealer.

 

(d) Purchaser Status. At the time such Purchaser was offered the Preferred
Shares, it was, and at the date hereof it is, an “accredited investor” as
defined in Rule 501(a) under the Securities Act.

 

(e) General Solicitation. Such Purchaser is not purchasing the Preferred Shares
as a result of any advertisement, article, notice or other communication
regarding the Preferred Shares published in any newspaper, magazine or similar
media or broadcast over television or radio or presented at any seminar or any
other general advertisement.

 

(f) Experience of Such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

 

(g) Access to Information. Such Purchaser acknowledges that it has had the
opportunity to review the Transaction Documents (including all exhibits and
schedules thereto) and the SEC Reports and that it has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense to
make an informed decision with respect to the investment. Neither such inquiries
nor any other investigation conducted by or on behalf of such Purchaser or its
representatives or counsel shall modify, amend or affect such Purchaser’s right
to rely on the truth, accuracy and completeness of the Company’s representations
and warranties contained in the Initial Transaction Documents and Second
Transaction Documents.

 

(h) Brokers and Finders; Closing Fee. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or any Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Purchaser.

 

(i) Independent Investment Decision. Such Purchaser has independently evaluated
the merits of its decision to purchase the Preferred Shares pursuant to the
Transaction Documents. Such Purchaser understands that nothing in this Agreement
or any other materials presented by or on behalf of the Company to the Purchaser
in connection with the purchase of the Preferred Shares constitutes legal, tax
or investment advice. Such Purchaser has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Preferred Shares.

 

 29 

 

 

(j) Reliance on Exemptions. Such Purchaser understands that the Preferred Shares
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Preferred Shares.

 

(k) No Governmental Review. Such Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

(l) Regulation M. Such Purchaser is aware that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to certain sales of Common Stock
and certain other activities with respect to the Common Stock by the Purchasers.

 

(m) Residency. Such Purchaser’s offices in which its investment decision with
respect to the Preferred Shares was made are located at the address set forth
for notices to be delivered to such Purchaser in Section 6.3.

 

(n) Capacity. The Purchasers, together with their Affiliates, have sufficient
capital to pay the Second Closing Subscription Amount in United States dollars
and in immediately available funds at the Second Closing. No further approval or
consent (except for such approvals or consents as have been obtained) is
required for the Purchasers to consummate the transactions contemplated at the
Second Closing.

 

(o) No Disqualification Events.

 

(i) Each Purchaser represents that neither it, nor any of its directors,
executive officers, other officers participating in the offering of Preferred
Shares, general partners or managing members, nor any of the directors,
executive officers or other officers participating in the offering of Preferred
Shares of any such general partner or managing member, nor any other officers or
employees of the Purchaser or any such general partner or managing member that
have been or will be paid (directly or indirectly) remuneration for solicitation
of purchasers in connection with the sale of any Preferred Shares (each, a
“Purchaser Covered Person” and, collectively, “Purchaser Covered Persons”), is
subject to any Disqualification Event except for a Disqualification Event (a)
contemplated by Rule 506(d)(2) under the Securities Act and (b) a description of
which has been furnished in writing to the Company prior to the date hereof, or,
in the case of a Disqualification Event occurring after the date hereof, prior
to the date of any offering of Preferred Shares.

 

(ii) Each Purchaser represents that it is not aware of any person that has been
or will be paid (directly or indirectly) remuneration for solicitation of
purchasers in connection with the sale of any Preferred Shares. Each Purchaser
will notify the Company, prior to any offering of Preferred Shares, of any
agreement entered into between such Purchaser and such person in connection with
such sale.

 

 30 

 

 

 

(iii) Each Purchaser will notify the Company in writing, prior to any offering
of Preferred Shares of (a) any Disqualification Event relating to any Purchaser
Covered Person not previously disclosed to the Company in accordance with this
Section 3.2(o) and (b) any event that would, with the passage of time, become a
Disqualification Event relating to any Purchaser Covered Person.

 

The Company and each of the Purchasers acknowledge and agree that no party to
this Agreement has made or makes any representations or warranties with respect
to the transactions contemplated hereby other than those specifically set forth
in this Article III and the Transaction Documents.

 

Article IV

OTHER AGREEMENTS OF THE PARTIES

 

4.1 Transfer Restrictions.

 

(a) Legends. Certificates evidencing the Securities shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form, until such time as they are not required under
Section 4.1(b):

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY, IF REQUESTED BY THE COMPANY, A LEGAL OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT
TO RULE 144 UNDER THE SECURITIES ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

(b) Removal of Legends. Promptly, and in no event later than two (2) Business
Days, following a request by Purchaser, the legend set forth in Section 4.1(a)
above shall be removed and the Company shall issue a certificate without such
legend or any other legend to the holder of the applicable Securities upon which
it is stamped or issue to such holder (if such Securities are DTC eligible) by
electronic delivery at the applicable account at the Depository Trust Company
(“DTC”) designated by such holder, if (i) such Securities are registered for
resale under the Securities Act or (ii) such Securities are sold or transferred
pursuant to Rule 144 (if the transferor is not an Affiliate of the Company).
Certificates for Securities subject to legend removal hereunder may be
transmitted by the Transfer Agent to the Purchasers by crediting the account of
the Purchaser’s prime broker with DTC as directed by such Purchaser. Nothing
herein shall limit Purchaser’s right to pursue any other remedies available to
it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing Securities without legends
as required pursuant to the terms hereof; provided, however, that Purchaser
shall not be entitled to both (i) require the reissuance of the Securities
submitted for legend removal for which such conversion was not timely honored
and (ii) receive the type and number of Securities that would have been issued
if the Company had timely complied with its delivery requirements hereunder. If
the Company fails to deliver to a Purchaser (or its transferee) the applicable
certificate or certificates without any legend or issue to such holder by
electronic delivery at the applicable account at the DTC within such two (2)
Business Day period, and if after such date Purchaser is required to or
otherwise purchases (in an open market transaction or otherwise), Securities to
deliver in satisfaction of a sale by Purchaser of Securities which Purchaser was
entitled to receive without a legend (a “Buy-In”), then the Company shall (A)
pay in cash to Purchaser (in addition to any other remedies available to or
elected by Purchaser) the amount by which (x) Purchaser’s total purchase price
(including any brokerage commissions) for the Securities so purchased exceeds
(y) the product of (1) the aggregate number of Securities at issue multiplied by
(2) the actual sale price at which the sell order giving rise to such purchase
obligation was executed (including any brokerage commissions) and (B) reissue
(if surrendered) the type and number of Securities equal to the type and number
of Securities submitted for legend removal. For example, if Purchaser purchases
Common Shares having a total purchase price of $11,000 to cover a Buy-In with
respect to which the actual sale price (including any brokerage commissions)
giving rise to such purchase obligation was a total of $10,000 under clause (A)
of the immediately preceding sentence, the Company shall be required to pay
Purchaser $1,000. Purchaser shall provide the Company written notice, within
three (3) trading days after the occurrence of a Buy-In, indicating the amounts
payable to Purchaser in respect of such Buy-In together with applicable
confirmations and other evidence reasonably requested by the Company. Nothing
herein shall limit Purchaser’s right to pursue any other remedies available to
it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing Securities without legends
as required pursuant to the terms hereof; provided, however, that Purchaser
shall not be entitled to both (i) require the reissuance of the Securities
submitted for legend removal for which such conversion was not timely honored
and (ii) receive the type and number of Securities that would have been issued
if the Company had timely complied with its delivery requirements hereunder.

 

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4.2 Integration. The Company shall not, and shall use its reasonable best
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that will be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers, or
that will be integrated with the offer or sale of the Securities for purposes of
the rules and regulations of any Trading Market such that it would require
stockholder approval prior to the closing of such other transaction.

 

4.3 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Preferred Shares hereunder to fund the its acquisition of certain assets of
Cancer Genetics, Inc. as contemplated by the Asset Purchase Agreement, to pay
related transaction expenses and to fund the Company’s ongoing operational
needs.

 

4.4 Principal Trading Market Listing. The Company shall, prior to the date
hereof, prepare and submit to The Nasdaq Capital Market a listing application
for the Conversion Shares.

 

4.5 Form D; Blue Sky. The Company agrees to timely file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof,
promptly upon the written request of any Purchaser. The Company, on or before
the Initial Closing Date or Second Closing Date, as applicable, shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for or to qualify the Securities for sale to the Purchasers under
applicable securities or “Blue Sky” laws of the states of the United States (or
to obtain an exemption from such qualification) and shall provide evidence of
such actions promptly upon the written request of any Purchaser.

 

4.6 Reservation of Securities. The Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance from and
after the Initial Closing Date, the number of shares of Common Stock issuable
upon conversion of the Series A Shares and the number of Series A Shares
issuable upon conversion of the Series A-1 Shares, in each case, in accordance
with the terms of the Certificate of Designation.

 

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4.7 Efforts to Consummate.

 

(a) Subject to the terms and conditions herein provided, each of the Purchasers
and the Company shall use reasonable best efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things commercially reasonable
efforts, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement (including the
satisfaction, but not waiver, of the closing conditions set forth in Article V).

 

(b) Each of the Purchasers and the Company shall use commercially reasonable
efforts to obtain consents of all Governmental Entities necessary to consummate
the transactions contemplated by this Agreement (collectively, the “Governmental
Approvals”). Each Purchaser and the Company shall promptly inform the other
parties hereto of any communication between such Purchaser or the Company, as
applicable, and any Governmental Entity regarding any of the transactions
contemplated by this Agreement.

 

4.8 Board. The Company shall have taken all action necessary such that,
effective as of the Initial Closing, the Company Board will consist of seven (7)
members and shall be comprised of (i) two (2) Class I Directors, one of whom
shall initially be Steve Sullivan and one of whom shall initially be Eric Lev,
(ii) three (3) Class II Directors, one of whom shall initially be Dr. Felice
Schnoll-Sussman, one of which shall initially be vacant, and one of whom shall
initially be vacant but who shall qualify as an “independent director” under
Rule 5605(a)(2) of the of the listing rules of the Nasdaq Stock Market (or any
successor rule) or under any similar rule promulgated by such other exchange on
which the Company’s securities are then listed or designated, and (iii) two (2)
Class III Directors, one of whom shall initially be Jack Stover, and one of whom
shall initially be Dr. Joseph Keegan.

 

4.9 Notification of Certain Matters. Notwithstanding anything else herein to the
contrary, the Company and the Purchasers shall give prompt written notice to the
other of (a) any notice or other communication from any Person alleging that any
consent, waiver or approval from, or notification requirement to, such Person is
or may be required in connection with the transactions contemplated by the
Transaction Documents, (b) all effects, changes, events and occurrences arising
subsequent to the date of this Agreement which could reasonably be expected to
result in any breach of a representation or warranty or covenant of the Company
in this Agreement that would, if occurring or continuing on the Initial Closing
Date or Second Closing Date, as applicable, cause any of the conditions set
forth in Article V not to be satisfied, (c) any effect, change, event or
occurrence that, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect and (d) any litigation relating to the
transactions contemplated by the Transaction Documents (the “Transaction
Litigation”) and any updates to the status thereof. The Company and its
Subsidiaries shall give the Purchaser an opportunity to discuss with the Company
and its representatives any Transaction Litigation (subject to the entry into
any joint defense or similar agreement and otherwise subject to the protection
of any attorney-client or other similar doctrine or privilege) and the Company
and its representatives shall consider the Purchaser’s recommendations with
respect thereto in good faith. For the avoidance of doubt, no updated
information provided in accordance with this Section 4.9 shall be deemed to cure
any breach of any representation, warranty or covenant made in this Agreement or
affect any rights under this Agreement or the other Transaction Documents.

 

 33 

 

 

Article V

CONDITIONS PRECEDENT TO CLOSINGs

 

5.1 Conditions Precedent to the Obligations of the Purchasers to Purchase
Preferred Shares at the Initial Closing. The obligation of the Purchasers to
acquire Preferred Shares at the Initial Closing is subject to the fulfillment to
the Purchasers’ satisfaction, on or prior to the Initial Closing Date, of each
of the following conditions, any of which may be waived by the Purchasers:

 

(a) Representations and Warranties. As of the Initial Closing Date, the
representations and warranties of the Company contained in Article III (other
than in Sections 3.1(g), 3.1(h), 3.1(i), 3.1(j), 3.1(k) (but only the first
sentence thereof), 3.1(l), 3.1(w), 3.1(yy), and 3.1(zz)) shall be true and
correct in all material respects as though made on and as of such date, except
for such representations and warranties that speak as of a specific date (which
shall be true and correct in all material respects as of such date). As of the
Initial Closing Date, the representations and warranties contained in Sections
3.1(g), 3.1(h), 3.1(w) and 3.1(yy) shall be true and correct in all respects as
though made on and as of such date, except for such representations and
warranties that speak as of a specific date (which shall be so true and correct
as of such date). As of the Initial Closing Date, the representations and
warranties contained in Sections 3.1(i), 3.1(j), 3.1(k) (but only the first
sentence thereof) and 3.1(l) shall be true and correct in all respects, except
for any de minimis inaccuracies, as though made on and as of such date, except
for such representations and warranties that speak as of a specific date (which
shall be so true and correct as of such date).

 

(b) Covenants. The Company shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by it at or prior to the Initial
Closing.

 

(c) No Material Adverse Effect. Since March 31, 2019, there has not occurred any
event or condition that has had or would reasonably be expected to have a
Material Adverse Effect.

 

(d) Listing on Nasdaq. The Company shall have filed with Nasdaq a Notification
Form: Listing of Additional Shares for the listing of Conversion Shares, a copy
of which shall have been provided to the Purchasers, and Nasdaq shall have
approved the listing of such Conversion Shares.

 

(e) No Injunction; Government Approvals. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or Governmental Entity of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Initial Transaction Documents.

 

(f) Certificate of Designation. The Certificate of Designation in the form
attached hereto as Exhibit A shall have been filed with the Secretary of State
of the State of Delaware and shall be in full force and effect, enforceable
against the Company in accordance with its terms and shall not have been
amended.

 

(g) Consummation of Acquisition. The Asset Purchase Agreement shall be in full
force and effect, and there shall have been no material amendment, modification
or waiver thereof other than as previously approved in writing by the Purchaser.
The closing under the Asset Purchase Agreement shall have been, or substantially
concurrently with the initial funding of the Initial Closing Subscription Amount
shall be, consummated in accordance with the Asset Purchase Agreement, and all
conditions to the consummation of the transactions contemplated by the Asset
Purchase Agreement shall have been satisfied or waived (other than those
conditions that, by their terms, cannot be satisfied until the closing under the
Asset Purchase Agreement but which are capable of being satisfied at such
closing) without giving effect to any amendment, modification, or waiver of any
material terms or conditions of the Asset Purchase Agreement not previously
approved in writing by the Purchaser.

 

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(h) Deliveries. Each Purchaser shall have received each of the agreements,
instruments and other documents set forth in Section 2.2(a).

 

5.2 Conditions Precedent to the Obligations of the Company to sell Preferred
Shares at the Initial Closing. The Company’s obligation to sell and issue the
Preferred Shares at the Initial Closing to the Purchasers is subject to the
fulfillment to the satisfaction of the Company on or prior to the Initial
Closing Date of the following conditions, any of which may be waived by the
Company:

 

(a) No Injunction; Governmental Approvals. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or Governmental Entity of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Initial Transaction Documents.

 

(b) Representations and Warranties. The representations and warranties of each
Purchaser contained in Article III shall be true and correct in all material
respects as of the Initial Closing Date.

 

(c) Covenants. Each Purchaser shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by it at or prior to the Initial
Closing.

 

(d) Deliveries. The Company shall have received each of the agreements,
instruments and other documents set forth in Section 2.2(b).

 

5.3 Conditions Precedent to the Obligations of the Purchasers to Purchase Series
A Shares at the Second Closing. The obligation of the Purchasers to acquire
Series A Shares at the Second Closing is subject to the fulfillment to the
Purchasers’ satisfaction, on or prior to the Second Closing Date, of each of the
following conditions, any of which may be waived by the Purchasers:

 

(a) Nasdaq Approval. The Company shall have obtained the Nasdaq Approval (as
defined in the Certificate of Designation).

 

(b) Representations and Warranties. As of the Second Closing Date, the
representations and warranties of the Company contained in Article III (other
than in Sections 3.1(g), 3.1(h), 3.1(i), 3.1(j), 3.1(k) (but only the first
sentence thereof), 3.1(l), 3.1(w), 3.1(yy), 3.1(zz)(iv), and 3.1(zz)(xiv)) shall
be true and correct in all material respects as though made on and as of such
date, except for such representations and warranties that speak as of a specific
date (which shall be true and correct in all material respects as of such date).
As of the Second Closing Date, the representations and warranties contained in
Sections 3.1(g), 3.1(h), 3.1(w), 3.1(yy), 3.1(zz)(iv), and 3.1(zz)(xiv) shall be
true and correct in all respects as though made on and as of such date, except
for such representations and warranties that speak as of a specific date (which
shall be so true and correct as of such date). As of the Second Closing Date,
the representations and warranties contained in Sections 3.1(i), 3.1(j), 3.1(k)
(but only the first sentence thereof) and 3.1(l) shall be true and correct in
all respects, except for any de minimis inaccuracies, as though made on and as
of such date, except for such representations and warranties that speak as of a
specific date (which shall be so true and correct as of such date).

 

(c) Covenants. The Company shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by it at or prior to the Second
Closing.

 

 35 

 

 

(d) No Material Adverse Effect. Since March 31, 2019, there has not occurred any
event or condition that has had or would reasonably be expected to have a
Material Adverse Effect.

 

(e) Listing on Nasdaq. The Company shall have filed with Nasdaq a Notification
Form: Listing of Additional Shares for the listing of the shares of Common Stock
issuable upon conversion of the Series A Shares issued at the Initial Closing
and the Second Closing, including any Series A Shares issuable upon conversion
of Series A-1 Shares issued at the Initial Closing, a copy of which shall have
been provided to the Purchasers, and Nasdaq shall have approved the listing of
such Conversion Shares.

 

(f) No Injunction; Government Approvals. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or Governmental Entity of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Second Transaction Documents.

 

(g) Deliveries. Each Purchaser shall have received each of the agreements,
instruments and other documents set forth in Section 2.4(a).

 

5.4 Conditions Precedent to the Obligations of the Company to sell Series A
Shares at the Second Closing. The Company’s obligation to sell and issue the
Series A Shares at the Second Closing to the Purchasers is subject to the
fulfillment to the satisfaction of the Company on or prior to the Second Closing
Date of the following conditions, any of which may be waived by the Company:

 

(a) No Injunction; Governmental Approvals. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or Governmental Entity of competent
jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Second Transaction Documents.

 

(b) Representations and Warranties. The representations and warranties of each
Purchaser contained in Article III shall be true and correct in all material
respects as of such Second Closing Date.

 

(c) Covenants. Each Purchaser shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by it at or prior to the Second
Closing.

 

(d) Deliveries. The Company shall have received each of the agreements,
instruments and other documents set forth in Section 2.4(b).

 

Article VI

MISCELLANEOUS

 

6.1 Fees and Expenses. At the Initial Closing, the Company shall pay the
reasonable fees and expenses of the Purchaser incurred in connection with the
Initial Closing, in an amount not to exceed, in the aggregate, $550,000. At the
Second Closing, the Company shall pay the reasonable fees and expenses of the
Purchaser incurred in connection with the Second Closing, in an amount not to
exceed, in the aggregate, $50,000.

 

6.2 Entire Agreement. The Initial Transaction Documents and Second Transaction
Documents, together with the exhibits and schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings, discussions and representations,
oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules. At or after the
Initial Closing and Second Closing, and without further consideration, the
Company and the Purchasers will execute and deliver to the other such further
documents as may be reasonably requested in order to give practical effect to
the intention of the parties under the Initial Transaction Documents and Second
Transaction Documents, respectively.

 

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6.3 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via email (provided the sender does not
receive a machine-generated rejection of transmission) at the email address
specified in this Section 6.3 prior to 5:00 P.M., New York City time, on a
Business Day, (b) the next Business Day after the date of transmission, if such
notice or communication is delivered via email at the email address specified in
this Section 6.3 on a day that is not a Business Day or later than 5:00 P.M.,
New York City time, on any Business Day, (c) the Business Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service with
next day delivery specified, or (d) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices and
communications shall be as follows:

 

  If to the Company: Interpace Diagnostics Group, Inc.     Morris Corporate
Center 1, Building C     300 Interpace Parkway, Parsippany, NJ 07054    
Attention: Jack E. Stover, President and CEO     Email: jstover@interpacedx.com
        With a copy to: Pepper Hamilton LLP     620 Eighth Avenue, 37th Floor  
  New York Times Building     New York, NY 10018     Attention: Merrill M.
Kraines, Esquire     Email: krainesm@pepperlaw.com         If to a Purchaser:
Ampersand 2018 Limited Partnership     c/o Ampersand Capital Partners     55
William Street, Suite 240     Wellesley, MA 02481     Attn: Dana L. Niles, Chief
Operating Partner     Email: dln@ampersandcapital.com         With a copy to:
Goodwin Procter LLP     100 Northern Avenue     Boston, MA 02210     Attention:
James T. Barrett, Esq., and Jocelyn Arel, Esq.     Email:
JBarrett@goodwinlaw.com and JArel@goodwinlaw.com

 

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

 

6.4 Amendments; Waivers; No Additional Consideration. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Company and the Purchaser
or, in the case of a waiver, by the party against whom enforcement of any such
waiver is sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right. Any waiver granted by the Purchaser shall be
deemed to constitute a waiver by all of the Purchasers. No consideration shall
be offered or paid to any Purchaser to amend or consent to a waiver or
modification of any provision of any Transaction Document unless the same
consideration is also offered to all Purchasers who then hold Securities.

 

 37 

 

 

6.5 Construction; Interpretation. The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party. This
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement or any of the
Transaction Documents. Unless otherwise indicated to the contrary herein by the
context or use thereof: (i) the words, “herein,” “hereto,” “hereof” and words of
similar import refer to this Agreement as a whole, including the Schedules and
exhibits, and not to any particular section, subsection, paragraph, subparagraph
or clause contained in this Agreement; (ii) masculine gender shall also include
the feminine and neutral genders, and vice versa; (iii) words importing the
singular shall also include the plural, and vice versa; (iv) the words
“include,” “includes” or “including” shall be deemed to be followed by the words
“without limitation”; (v) financial terms shall have the meanings given to such
terms under GAAP unless otherwise specified herein; (vi) references to “$” or
“dollar” or “US$” shall be references to United States dollars; (vii) where the
context permits, the use of the term “or” will be non-exclusive and equivalent
to the use of the term “and/or”; (viii) the word “extent” in the phrase “to the
extent” shall mean the degree to which a subject or other thing extends, and
such phrase shall not mean simply “if”; and (ix) if any action under this
Agreement is required to be done or taken on a day that is not a Business Day or
on which a government office is not open with respect to which a filing must be
made, then such action shall be required to be done or taken not on such day but
on the first succeeding Business Day thereafter.

 

6.6 Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted
assigns. This Agreement, or any rights or obligations hereunder, may not be
assigned by the Company without the prior written consent of each Purchaser. Any
Purchaser may assign its rights hereunder in whole or in part to any Person to
whom such Purchaser assigns or transfers such rights in compliance with
applicable law, provided such transferee shall agree in writing to be bound,
with respect to any Securities transferred in connection with such assignment,
by the terms and conditions of this Agreement, the Investor Rights Agreement and
the Voting Agreements that apply to the “Purchasers”; provided, further, that,
such Purchaser remain liable for its obligations hereunder.

 

6.7 No Third-Party Beneficiaries. Except as set forth in Section 6.13 and
Section 6.14, this Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not for the benefit
of and shall not confer any rights or remedies on, nor may any provision hereof
be enforced by, any other Person.

 

6.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof. Each
party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the Delaware
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Delaware Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such Delaware Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

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6.9 Survival. Subject to applicable statute of limitations, the representations,
warranties, agreements and covenants contained herein shall survive the Initial
Closing and Second Closing and the delivery of the Preferred Shares at each of
the Initial Closing and Second Closing. Notwithstanding the foregoing, the
parties hereto acknowledge and agree that the representations and warranties
contained in Section 3.1(zz), have been given by the Company solely in
connection with Section 5.1 and Section 5.3 of this Agreement.

 

6.10 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, or by email delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile signature page were an original thereof.

 

6.11 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

6.12 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under the Initial
Transaction Documents and Second Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agree to waive in any action for specific performance of any such
obligation (other than in connection with any action for a temporary restraining
order) the defense that a remedy at law would be adequate.

 

6.13 Limitation of Liability; No Recourse.

 

(a) Notwithstanding anything that may be expressed or implied in this Agreement,
the liability of each Purchaser hereunder shall be several, not joint and
several, and under no circumstance shall any Purchaser be liable for any amounts
hereunder or pursuant to claims related to any breach or alleged breach of this
Agreement in excess of its respective First Subscription Amount or Second
Subscription Amount, as applicable.

 

 39 

 

 

(b) Notwithstanding anything that may be expressed or implied in this Agreement,
and notwithstanding the fact that one or more Purchasers may be a corporation,
partnership, limited liability company or trust, the Company and each Purchaser
covenant, agree and acknowledge that no recourse under this Agreement, any
Initial Transaction Document, Second Transaction Document or any other documents
or instruments delivered in connection with this Agreement shall be had against
any current or future Affiliate, director, officer, employee, general or limited
partner, stockholder, manager, member, trustee or control persons (as such term
is used in the Securities Act, as amended, and the rules and regulations
thereunder) of any Purchaser or any director, officer, employee, general or
limited partner, stockholder, manager, member, trustee or control persons (as
such term is used in the Securities Act, as amended, and the rules and
regulations thereunder), Affiliate or assignee thereof (collectively, “Purchaser
Related Parties”), whether by the enforcement of any assessment or by any legal
or equitable Proceeding, or by virtue of any statute, regulation or other
applicable law, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by
any current or future officer, agent or employee of any Purchaser or any current
or future director, officer, employee, general or limited partner, stockholder,
manager, member or trustee of any Purchaser or of any Affiliate or assignee
thereof, as such for any obligation of any Purchaser under this Agreement, any
Initial Transaction Document, Second Transaction Document or any other documents
or instruments delivered in connection with this Agreement for any claim based
on, in respect of or by reason of such obligations or their creation.

 

6.14 Indemnification. The Company will indemnify each Purchaser Related Party to
the full extent lawful against any and all claims by any Person (including any
stockholders of the Company), losses and expenses as incurred (including all
reasonable fees and disbursements of any such indemnitee’s counsel and other
out-of-pocket expenses incurred in connection with the investigation of and
preparation for any such pending or threatened claims and any litigation or
other Proceedings arising therefrom) arising in connection with this Agreement,
the Asset Purchase Agreement, any of the other Initial Transaction Documents,
Second Transaction Documents, or any transactions contemplated hereby or
thereby, or in connection with any action or failure to take any action in
connection therewith or any such indemnitee being a controlling person of a
Purchaser Related Party or any of its subsidiaries; provided, however, there
shall be excluded from such indemnification (x) any such claim, loss or expense
to the extent that it is based upon any action or failure to act by such
indemnitee that is found in a final judicial determination to constitute gross
negligence or intentional misconduct on such indemnitee’s part and (y) any such
claim, or loss or expense to the extent that it is based on such claim, brought
by the Company against a Purchaser (but not on behalf of the Company by any of
its stockholders) for a breach of this Agreement by such Purchaser. The Company
will advance costs and expenses, including attorney’s fees, incurred by any such
indemnitee in defending any such claim in advance of the final disposition of
such claim upon receipt of an undertaking by or on behalf of such indemnitee to
repay amounts so advanced if it shall ultimately be determined that such
indemnitee is not entitled to be indemnified by the Company pursuant to this
Agreement.

 

6.15 Termination. This Agreement may be terminated and transactions contemplated
hereby abandoned at any time prior to the Second Closing: (i) by mutual written
consent of the Company and the Purchaser, (ii) by the Company or the Purchaser
if the Asset Purchase Agreement has been terminated in accordance with its
terms, or (iii) by the Purchaser if the Company or any of its Affiliates
institutes, directly or indirectly, any action, litigation or other Proceeding
against (x) any Purchaser Related Parties in connection with the transactions
described in this Agreement or the Initial Transaction Documents or the Second
Transaction Documents or (y) any Purchaser in connection with the transactions
described in this Agreement, other than in the case of clause (y), an action,
litigation or other Proceeding seeking to enforce this Agreement in accordance
with its terms. Nothing in this Section 6.15 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents, and
Sections 6.13 and 6.14 shall survive the termination of this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 40 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

  INTERPACE DIAGNOSTICS GROUP, INC.         By: /s/ Jack E. Stover   Name: Jack
E. Stover   Title: President & CEO

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

[Signature Page to Securities Purchase Agreement]

 

   

 

 

  Ampersand 2018 Limited Partnership         By: AMP-18 Management Company
Limited Partnership, its General Partner         By: AMP-18 MC LLC, its General
Partner         By: /s/ Herbert H. Hooper   Name:  Herbert H. Hooper   Title:
 Managing Member

 

[Signature Page to Securities Purchase Agreement]

 

   

 

 

Schedule I

 

Purchaser  Series A Shares   Series A-1 Shares   Initial Closing
Subscription Amount  Ampersand 2018 Limited Partnership  60   80   $14,000,000 

 

   

 

 

Schedule II

 

Purchaser  Series A Shares   Second Closing Subscription Amount  Ampersand 2018
Limited Partnership  130   $13,000,000 

 

   

 

 

EXHIBITS

 

A: Form of Certificate of Designation B: Form of Investor Rights Agreement C:
Wire Instructions D-1: Accredited Investor Questionnaire D-2: Stock Certificate
Questionnaire E: Form of Secretary’s Certificate F: Form of Officer’s
Certificate G: Form of Voting Agreement

 

Schedule A: Form of Opinion Schedule B: Subsidiaries