EXECUTION COPY

  

DATED APRIL 26, 2018

 

SHARE PURCHASE AGREEMENT

 

BY AND AMONGST

 

CANCER GENETICS, INC.

 

AND

 

BIOSERVE BIOTECHNOLOGIES (INDIA) PRIVATE LIMITED

 

REPROCELL U.S.A., INCORPORATED

 

 

 

 

SHARE PURCHASE AGREEMENT

 

This SHARE PURCHASE AGREEMENT (this “Agreement”) is executed on this 26th day of
April 2018 (the “Effective Date”),

 

BY AND AMONGST:

 

(1)BIOSERVE BIOTECHNOLOGIES (INDIA) PRIVATE LIMITED, a private limited company
incorporated under the Companies Act, 1956 having its registered office at
3-1-135/1A, CNR Complex, Mallapur Main Road, R.R. District, Hyderabad – 500076,
India (hereinafter referred to as the “Company”, which expression shall, unless
repugnant to the context or meaning thereof, be deemed to mean and include its
Affiliates, successors and permitted assigns) of the FIRST PART; and

 

(2)CANCER GENETICS, INC., a company duly incorporated under the laws of the
State of Delaware, USA and having its registered office at Meadows Office
Complex, 201 Route 17 North, 2nd Floor, Rutherford, NJ 07070, USA (hereinafter
referred to as “CGI”, which expression shall, unless repugnant to the context or
meaning thereof, be deemed to mean and include its Affiliates, successors and
permitted assigns) of the SECOND PART; and

 

 

(3)REPROCELL INCORPORATED, a company duly incorporated under the laws of Japan
and having its principal office at MetLife Shin-yokohama Bldg. 9F,
Shin-yokohama, Kokoku-ku, Yokohama, Kanagawa 222-0033, Japan (hereinafter
referred to as “Purchaser”, which expression shall, unless repugnant to the
context or meaning thereof, be deemed to mean and include its Affiliates,
successors and permitted assigns) of the THIRD PART.

 

For the purposes of this Agreement:

 

a)CGI, the Company and Purchaser shall hereinafter be collectively referred to
as “Parties” and individually, as a “Party”.

 

  Page 1 of 26

 

 

WHEREAS:

 

A.The Company is engaged inter alia in the business of providing DNA synthesis,
DNA sequencing and related services in India, molecular services and research
tools to accelerate breakthroughs in genetics, drug discovery, biomarker
research and molecular diagnostics, and, food pathogen testing and testing for
genetically modified organisms in finished products (the “Business”);

 

B.The present shareholding pattern of Company is as set out in SCHEDULE 2A
hereof;

 

  Page 2 of 26

 

 

C.CGI owns the share capital of the Company as indicated on Schedule 2A; and

 

D.The Parties are desirous of entering into a share purchase arrangement for the
sale and purchase of the Sale Shares (as hereinafter defined) and in
consideration of the transfer of the Sale Shares from CGI to Purchaser,
Purchaser has agreed to pay the Purchase Consideration (as defined hereinafter)
to CGI, based on the representations, warranties, covenants, undertakings,
indemnities and on such terms and subject to such conditions as mutually agreed
upon by the Parties under this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS, AGREEMENTS,
REPRESENTATIONS, WARRANTIES, UNDERTAKINGS AND INDEMNITIES SET FORTH IN THIS
AGREEMENT, THE SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED BY THE PARTIES, AND
INTENDING TO BE LEGALL BOUND, THE PARTIES HEREBY AGREE AS FOLLOWS:

 

1.DEFINITIONS AND INTERPRETATION

 

1.1.Definitions:

 

1.1.1.“Act” means the Indian Companies Act, 1956 and/or Indian Companies Act,
2013, as the case may be, as amended, modified, replaced or supplemented from
time to time;

 

1.1.2.“Accounts” shall mean in relation to any Financial Year, the audited
financial statements of the Company, comprising in each case, an audited balance
sheet and the related audited statement of income for such Financial Year,
together with the auditor’s report thereon and notes thereto;

 

1.1.3.“Accounts Date” means February 28, 2018;

 

1.1.4.“Acquisition Date” means August 15, 2014, the date that CGI indirectly
acquired the Company.

 

1.1.5.“Act of Insolvency” means the occurrence of any one or more of the
following with respect to the Company and/or CGI:

 

(a)if the Company and/or CGI, or any part of their assets or undertaking, are
involved in or subject to any Insolvency Proceedings, have stopped or suspended
payment of their debts, become unable to pay their debts or otherwise become
insolvent in any relevant jurisdiction or there are circumstances which require
or would enable any Insolvency Proceedings to be commenced in respect of their
or any part of their assets or undertaking;

 

  Page 3 of 26

 

 

(b)the Company and/or CGI, is unable to, or admits their inability to pay their
debts as they fall due, or, by reason of actual or anticipated financial
difficulties, commence negotiations with one or more of their creditors with a
view to rescheduling any of their indebtedness, other than any rescheduling
which is in the ordinary course of Business;

 

(c)a declaration of insolvency, liquidation or bankruptcy by or of the Company
and/or CGI; or

 

(d)any Action, being taken in relation to:

(i)the suspension of payments, a moratorium of any indebtedness, bankruptcy,
insolvency, winding-up, liquidation, dissolution, administration, provisional
supervision or reorganization (by way of voluntary arrangement, scheme of
arrangement or otherwise) of the Company and/or CGI;

(ii)(without prejudice to paragraph (i) above) the declaration of such Company
as a “sick industrial company” within the meaning of the Sick Industrial
Companies (Special Provisions) Act, 1985 of India or any equivalent law pursuant
to which a debtor may obtain protection from its creditors;

(iii)a composition, compromise, assignment or arrangement with any creditor of
such Company and/or CGI;

(iv)the appointment of a liquidator, receiver, administrator, compulsory
manager, provisional liquidator or receiver, or supervisor, or other similar
officer in respect of the Company and/or any of its assets; or

(v)enforcement of any security over any material assets of the Company which are
equivalent to at least 15% (fifteen percent) of the aggregate Assets of the
Company at the relevant time of such enforcement of security;

 

which, has not been stayed within 90 (ninety) Business Days and thereafter such
stay being vacated within 180 (one hundred and eighty) Business Days of its
initiation. For avoidance of doubt, it is clarified that a stay within the
aforesaid 90 (ninety) Business Days would act only as a temporary suspension of
Action being deemed as an Act of Insolvency, which however shall become
effective forthwith only if such stay (i.e. a stay obtained within 90 (ninety)
Business Days) is vacated to the prejudice of the Company and/or CGI or any
Action contemplated in paragraph (d) of this definition is not vacated within
the aforesaid 180 (one hundred and eighty) Business Days;

 

  Page 4 of 26

 

 

1.1.6.“Action” means any claim, demand, litigation, petition, action, suit,
investigation, inquiry, process, proceeding, mediation, arbitration,
conciliation, enforcement proceeding, hearing, complaint, assessment, fine,
penalty, judgment, order, injunction, decree or award (administrative or
judicial);

 

1.1.7.“Adjustment Period Revenue” shall mean the revenue of the Company for the
period from May 1, 2017 to August 31, 2017, which the parties agree is INR
2,27,72,913 equivalent to approximately US$351,000.

 

1.1.8.“Affiliate” with respect to any Party means any Person which, directly or
indirectly, (a) Controls such Party, (b) is Controlled by such Party, or (c) is
Controlled by the same Person who, directly or indirectly, Controls such Party;

 

1.1.9.“Agreement” means this Share Purchase Agreement together with the
schedules, annexures and exhibits thereto as from time to time made, amended,
supplemented or modified from time to time in accordance with the terms hereof;

 

1.1.10.“Applicable Law” means any Indian law, statute, regulation, ordinance,
rule, order, decree, judgment, consent decree, settlement agreement, permit,
license, authorization, approval or governmental requirement enacted,
promulgated, entered into, agreed with or imposed by any governmental authority.

 

1.1.11.“Articles of Association” or “Articles” means the articles of association
of the Company and as subsequently amended from time to time;

 

1.1.12.“Asset(s)” means any and all assets, properties, rights and interests of
every kind, nature, specie or description whatsoever, whether movable or
immovable, tangible or intangible, owned, leased and/ or used by the Company;

 

1.1.13.“Board” means the board of directors of the Company as nominated and
elected from time to time;

 

1.1.14.“Book Value” shall mean the value at which an asset appears in the last
audited balance sheet of the Company or, at the time any analogous procedure or
step is taken;

 

1.1.15.“Business” shall have the meaning as ascribed to it in Recital A above;

 

1.1.16.“Business Day” means a day on which commercial banks are open for
business in both Hyderabad, India and New York, United States of America;

 

1.1.17.“Control” means the power to direct the management and policies of such
Person directly or indirectly, whether through the ownership of more than 50%
(fifty percent) of the voting power of such Person, or, through the power to
appoint more than half of the members of the board of directors or similar
governing body of such Person, through contractual arrangements, or otherwise;
and the terms “Controlling” and “Controlled” shall be construed accordingly;

 

  Page 5 of 26

 

 

1.1.18.“Confidential Information” has the meaning given to it in Clause 12 of
this Agreement;

 

1.1.19.“Dispute” has the meaning given to it in Clause 10.1;

 

1.1.20.“Effective Date” shall mean the date of execution of this Agreement;

 

1.1.21.“Encumbrances” shall mean pledges, security interests, mortgages,
easements, claims, charges, options, liens, transfer restrictions, rights of
first refusal, voting and receipt of income agreements, conditional sale or
other title retention or non-disposal agreements, other easements, encroachments
and title defects of every type and nature, or any other contracts to give or to
refrain from giving any of the foregoing whether voluntarily incurred or arising
by operation of law or government regulation, including any agreement to give
any of the foregoing in the future;

 

1.1.22.“Escrow Amount” shall means the US $300,000 withheld from the Purchase
Consideration to fund the purchase price adjustment in Section 3.2.

 

1.1.23.“Financial Year” means in relation to the Company, a period in respect of
which the Company, prepares audited accounts;

 

1.1.24.“Fixed Assets” means the assets classified as fixed assets under the
balance sheet of the Company, in accordance with the Indian GAAP, as on the
Execution Date;

 

1.1.25.“Fundamental Warranties” shall have the meaning ascribed to it as per
Clause 7.8;

 

1.1.26.“Indemnified Parties” shall have the meaning given to it in Clause 7.1 of
this Agreement;

 

1.1.27.“Indian GAAP” means the Indian generally accepted accounting principles
promulgated by the Institute of Chartered Accountants of India, together with
its pronouncements thereon from time to time, and applied on a consistent basis,
in respect of any company, as applicable in India (for purposes of this
Agreement, any reference to Indian GAAP shall include a reference to Ind AS
which replaced Indian GAAP);

 

1.1.28.“INR” shall mean the lawful currency of the Republic of India;

 

  Page 6 of 26

 

 

1.1.29.“Insolvency Proceedings” means any form of or procedure related to,
insolvency, bankruptcy, liquidation, receivership or administratorship,
including any form of winding-up, arrangement or scheme with creditors,
moratorium, interim or provisional supervision by any relevant authority;

 

1.1.30.“Intellectual Property Rights” means (i) copyright, patents, know-how,
confidential information, database rights, and rights in trademarks, domain
names and designs (whether registered or unregistered), (ii) applications for
registration, and the right to apply for registration, for any of the same, and
(iii) all other intellectual property rights and equivalent or similar forms of
protection existing anywhere in the world;

 

 

1.1.31.“License” means any authorization, license (including but not limited to
statutory license), registration, permit, approval, consent, no-objection or
permission;

 

 

1.1.32.“Losses” shall mean any loss, damage, deficiency, demand, liability,
claims, action, judgment, or causes of action, assessment, interest, fine,
penalty, diminution in value and/or other cost or expense (including, without
limitation, amounts paid in settlement, court costs and all reasonable
attorneys’ fees and expenses);

 

1.1.33.“Material Adverse Effect” means any change, event or development or
effect that would be (or could reasonably be expected to be) materially adverse
to: (i) the business, operations, assets, condition (financial or otherwise),
operating results, operations, valuation or prospects of the Company, and/or
(ii) the validity, legality or enforceability of this Agreement or of the rights
or remedies of Purchaser under this Agreement; provided, however, that the
foregoing shall not include any event, circumstance, change, occurrence, fact or
effect resulting from or relating to: (i) changes in the general economic
conditions or political climate in India or any region in which the Company
operates; (ii) changes in the Indian, or global, financial or commodity markets;
(iii) changes generally applicable to the Company’s industry, including changes
in the accounting principles and practices and the laws applicable to the
Business; and (iv) natural disasters, labour unrest, strikes, acts of war,
terrorism, sabotage and other “acts of God,” unless with respect to clause (iii)
and (iv) such changes disproportionately impact the Company.

 

1.1.34.“Material Contract” means any contract (i) to which the Company is or
becomes a party, and which, (ii) in case of the Company, whether by reason of
its nature, term, scope, price or otherwise, is of importance to the business
profits or Assets of the Company in excess of INR 50,00,000/- (Indian Rupees
Fifty Lakh only);

 

  Page 7 of 26

 

 

1.1.35.“Memorandum” or “Memorandum of Association” means the memorandum of
association of the Company and as subsequently amended from time to time;

 

1.1.36.“Person” means any person, individual, partnership, firm, corporation,
joint venture, association, trust, unincorporated organization or other entity
or organization, as well as any syndicate or group, or an agency or
instrumentality thereof and/or any other legal entity;

 

1.1.37.“Property Contract” means any contract executed or to be executed by the
Company (as may be contextually applicable) with the relevant owner of the
property evidencing the right of the Company to use such real property;

 

1.1.38.“Purchase Consideration” shall mean US$ 1,900,000, subject to adjustment;

 

1.1.39.“RBI” means the Reserve Bank of India;

 

1.1.40.“Real Property” includes land (whether or not owned separately from the
surface), buildings or parts of buildings (whether the division is horizontal,
vertical or made in any other way), premises, structures, erections and fixtures
situated or forming a part of any of the foregoing and a right, privilege or
benefit in, over or derived from land and any other immovable properties of any
nature whatsoever;

 

1.1.41.“Registrar of Companies” means for the Company, the registrar of
companies situated at Hyderabad, Andhra Pradesh, as maybe contextually
applicable;

 

1.1.42.“Related Parties” means the Company and CGI, each of the Company and
CGI’s connected Persons and each “related party” (as understood under Indian
Companies Act, 2013 and Indian GAAP) of the Company and CGI and each of the
Company’s and CGI’s connected Persons (or such one or more of them as the
context may require), and Related Party means any of them;

 

1.1.43.“Sale Shares” shall collectively mean the Shares to be sold by CGI to
Purchaser pursuant to the provisions of this Agreement as described on Schedule
2A.;

 

1.1.44.“Shares” shall mean the fully paid-up equity shares of the Company of
face value INR 10/- (Indian Rupees Ten Only) each;

 

1.1.45.“Target 2018 Revenue” shall mean the revenue of the Company for the
period commencing on May 1, 2018 and ending on August 31, 2018..

 

  Page 8 of 26

 

 

1.1.46.“Tax” or collectively ‘Taxes’ shall mean (i) any and all taxes imposed by
any governmental body, assessments and other governmental charges, duties,
impositions and liabilities, including sales tax, excise duties, value added
tax, other taxes based upon or measured by gross receipts, income, profits, use
and occupation, ad valorem, transfer, franchise, withholding, payroll,
employment and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts; (ii) any liability for the
payment of any amounts of the type described in clause (i) as a result of being
or ceasing to be a member of an affiliated, consolidated, combined or unitary
group for any period; and (iii) any liability for the payment of any amounts of
the type described in clause (i) or (ii) as a result of any express or implied
obligation to indemnify any other Person or as a result of any obligations under
any agreements or arrangements with any other Person with respect to such
amounts and including any liability for taxes of a predecessor entity or a
transferor;

 

1.1.47.“Transaction Documents” shall mean this Agreement and the other ancillary
agreements entered into between, CGI and the Company, and/or the Purchaser
pursuant to this Agreement;

 

 

1.1.48.“Warranties” mean the representations and warranties on the part of the
CGI, as contained in SCHEDULE 3A;

 

  Page 9 of 26

 

 

1.2.Interpretation:

 

1.2.1.Any references to a person means any natural person, Hindu undivided
family, limited or unlimited liability company, body corporate, corporation,
partnership (whether limited or unlimited), proprietorship, trust, union,
association, government or any agency or political subdivision thereof or any
other entity that may be treated as a person under Applicable Law;

 

1.2.2.Any references to Applicable Law means any statute, law, enactment,
regulation, ordinance, policy, treaty, rule, judgment, notification, rule of
common law, order, decree, bye-law, license, directive, guideline, requirement
or other governmental or regulatory restriction or condition, or any similar
form of decision of, or determination by, or interpretation of, having the force
of law of any relevant authority having jurisdiction over the matter in
question, whether in effect as of the date of this Agreement or thereafter, in
any jurisdiction and includes any practice or custom under any Applicable Law;

 

1.2.3.Any references to relevant authority means any government, or any
governmental, non-governmental, legislative, executive, administrative, fiscal,
judicial or regulatory, authority, body, board, ministry, department,
commission, tribunal, agency, instrumentality or other person exercising
legislative, executive, administrative, fiscal, judicial or regulatory functions
(including any court, tribunal, mediator or arbitrator of competent
jurisdiction), having jurisdiction over the matter in question, whether as of
the date of this Agreement or thereafter, in any jurisdiction or political
sub-division and includes any relevant taxation authority;

 

1.2.4.Any references to relevant taxation authority means any relevant authority
having jurisdiction over or responsibility with respect to, the administration,
assessment, determination, collection or imposition of any Tax;

 

1.2.5.Any references to an individual includes his heirs, executors,
administrators, estate and personal representatives;

 

1.2.6.Any references to a Party to this Agreement includes references to the
Affiliates, successors and permitted assigns of that Party as may be
contextually applicable;

 

1.2.7.The words including and include shall mean including without limitation
and include without limitation, respectively;

 

1.2.8.Any reference importing a gender includes the other gender;

 

  Page 10 of 26

 

 

1.2.9.Any reference to INR is to Indian rupees and any reference to US$ or USD
is to United States dollars;

 

1.2.10.Any reference to writing includes typing, printing and any form of
electronic communication;

 

1.2.11.Any reference to a document is to that document as amended, varied or
novated from time to time otherwise than in breach of this Agreement or that
document;

 

1.2.12.Any references to a company’s issued share capital shall include equity
shares as well as preference shares issued by that company;

 

1.2.13.Words importing the singular include the plural and vice versa;

 

1.2.14.Any reference to the shareholding of a company on an As Converted Basis
refers to the shareholding pattern of that company at the relevant point in time
and shall be calculated after taking into account all the issued and outstanding
shares of that company, including preference shares, and all outstanding
options, warrants, convertible debentures, employee stock options, if any, from
time to time and all other convertible securities of that company as if all such
options, warrants, convertible debentures and all other convertible securities
were converted to equity shares at that point in time and such calculation shall
take into consideration all share splits, bonus issuances, etc. if any.

 

1.2.15.In this Agreement, any reference, express or implied, to an enactment
includes:

 

(a)that enactment as re-enacted, amended, extended or applied by or under any
other enactment (before, on or after the signature of this Agreement);

(b)any enactment which that enactment re-enacts (with or without modification);
and

(c)any subordinate legislation made (before, on or after the signature of this
Agreement) under any enactment, as re-enacted, amended, extended or applied as
described in Clause 1.2.15(a) above, or under any enactment referred to in
Clause 1.2.15(b) above.

 

1.2.16.In this Agreement, unless the contrary intention appears, a reference to
a Clause or Schedule is a reference to a clause of or schedule to this
Agreement.

 

1.2.17.The headings in this Agreement do not affect its interpretation

 

  Page 11 of 26

 

 

2.SHAREHOLDING IN THE COMPANY

 

2.1.As on the Effective Date, the shareholding of the Company is as described in
SCHEDULE 2A.

 

3.SALE AND PURCHASE

 

3.1.Sale and Purchase of the Sale Shares. Subject to the terms and conditions
contained herein and based upon and relying on the Warranties offered by CGI on
the Effective Date, CGI shall sell and transfer to the Purchaser, the Sale
Shares, free and clear of all Encumbrances and Purchaser hereby agrees to
acquire from CGI, all of CGI’s rights, title and interest in and to the Sale
Shares, free and clear from any and all Encumbrances, for the Purchase
Consideration.

 

3.2.Purchase Consideration Adjustment. The Purchase Consideration shall be
subject to a downward adjustment if the Target 2018 Revenue is less than the
Adjustment Period Revenue, with a maximum adjustment of US$ 300,000.00 (the
“Adjustment”). The Adjustment will be calculated as follows: (i) 0.75 times (x)
the Adjustment Period Revenue minus (y) the Target 2018 Revenues, with the
Adjustment capped at $300,000. For purposes of calculating the amount of the
Adjustment, the comparison of the Target 2018 Revenue and the Adjustment Period
Revenue shall be made in Indian Rupees and then shall be converted into US$ at
the conversion rate disclosed by The Wall Street Journal for the Adjustment
Date. Within thirty 30 days after the 2018 Target Revenue measurement period,
the Purchaser shall send to CGI its calculation of the Target 2018 Revenue,
which calculation shall be made in accordance with Indian GAAP and consistent
with the methodology used in calculating the Adjustment Period Revenue. Within
10 days of receipt of the calculations from the Purchaser, CGI will inform the
Purchaser whether it agrees with such calculation. If CGI disagrees with
Purchaser’s calculation, the Parties shall attempt to resolve such difference;
provided that if the Parties are unable to reach agreement within 15 days of
CGI’s notice to the Purchaser of its disagreement, the Parties shall ask RSM,
CGI’s auditors, to calculate the Adjustment, which determination shall be
binding on the Parties. The Parties will share the cost of the auditor in
determining the Adjustment. The date on which such Adjustment is finalized is
referred to as the “Adjustment Date.”

 

3.3.Payment of Purchase Consideration.

 

3.3.1.In consideration for the sale and transfer of the Sale Shares, the
Purchase Consideration shall be paid to CGI as follows:

 

(a)On the Effective Date, (a) the Purchaser shall pay US$ 1,600,000 in cash by
wire transfer of immediately available funds to an account designated by CGI and
(b) the Purchaser shall pay US$ 300,000 in cash by wire transfer of immediately
available funds to an escrow account at Munshi Law Group, LLC, Wilmington, DE to
be held pursuant to an escrow agreement being executed by the parties
simultaneously herewith;

 

(b)Within 3 days of the Adjustment Date, the parties will jointly instruct the
escrow agent to release US$ 300,000 less the Adjustment to CGI and to release
the Adjustment to the Purchaser, in each case in cash by wire transfer of
immediately available funds to an account designated by CGI and the Purchaser as
the case may be.

 

  Page 12 of 26

 

 

4.TRANSFER COMPLETION

 

4.1.Venue and Time of Transfer Completion:

 

4.1.1.The completion of the purchase and transfer is taking place at a place
mutually agreed upon by the Parties simultaneous with signing on the Effective
Date.

 

4.1.2.As on the Effective Date, the following transactions shall take place and
no such transactions shall be consummated unless all transactions are
consummated:

 

(a)The Company and CGI shall deliver the following documents to the Purchaser
and/or their authorized representatives, as they may direct:

(i)A certificate signed by CGI to the effect that since the Accounts Date, no
existing or imminent Material Adverse Effect has taken place or is reasonably
expected to take place in relation to or in connection with the business of the
Company;

(ii)CGI shall deliver to the Purchaser, the original share certificates in
respect of the Sale Shares and signed share transfer forms for the transfer of
the Sale Shares.

 

4.1.3.The Company shall, upon delivery of the aforesaid documents to the
Purchaser and subject to Clause 4.1.2, immediately convene a meeting of the
Board, with directors newly appointed by the Purchaser, wherein the Board shall
pass the necessary resolutions:

 

(a)approving and recording the transfer of the Sale Shares from CGI to the
Purchaser; and

 

(b)authorizing necessary entries in its statutory registers (including the
register of members and register of share transfers) to record the sale and
purchase of Sale Shares from CGI to the Purchaser in the manner contemplated
under this Agreement.

 

4.1.4.The Company shall immediately after approving the board resolutions as
specified in Clause 4.1.3 above, (i) update its register of members and register
of share transfers, in each case, to record the sale and purchase of Sale Shares
from the CGI to the Purchaser in the manner contemplated under this Agreement;
and (ii) endorse the name of the Purchaser on the relevant share certificates of
the Sale Shares being transferred by CGI.

 

  Page 13 of 26

 

 

4.2.All proceedings to be taken and all documents to be executed and delivered
by the Parties at the Effective Date shall be deemed to have been taken and
executed simultaneously to the extent possible and no proceedings shall be
deemed to have been taken nor documents executed or delivered until all have
been taken, executed and delivered.

 

5.CONDITIONS SUBSEQUENT

 

5.1.At any time on or after, but no later than 30 (thirty) days from the
Effective Date, the relevant forms for the Purchaser, if any, shall be filed
with the concerned regulatory authorities including inter alia the Registrar of
Companies and the RBI in accordance with the provisions of the Applicable Laws.
Purchaser shall be solely responsible for all governmental filings required to
give effect to the transfer of the Shares.

 

5.2.

Transfer of the ESOP Trust. Subject to the Applicable Laws and in compliance
thereof, the Company, and/or CGI shall execute all documents necessary to
transfer the absolute legal control of the ‘Cancer Genetics India (ESOP) Trust’
created under ESOP Trust Deed dated October 12, 2005 to the Purchaser; provided,
however, that it is understood that the Purchaser shall be responsible to
prepare, procure and/or perform all necessary actions, registrations, approvals,
resolutions and documents necessary to give full effect to, and ensure the
effective transfer of the control of the said trust to Purchaser, and shall also
execute such documents as required. The Purchaser and CGI shall share the costs
for such effort as part of and to the extent hereinafter described at the end of
Section 7.8.

 

  Page 14 of 26

 

 

6.WARRANTIES

 

6.1.CGI represents and warrants to the Purchaser that except as provided in the
Disclosure Letter, all of the Warranties contained in
SCHEDULE 3A are complete, true and accurate and not misleading as of the
Effective Date of this Agreement.

 

6.2.The Purchaser represents and warrants to CGI and the Company that all of the
Purchaser Warranties contained in
SCHEDULE 3B are complete, true and accurate in all material respects and not
misleading as of the date of execution of this Agreement and shall continue to
be complete, true and accurate and not misleading as on the Effective Date.

 

6.3.Each of the Warranties is separate and independent and, except as expressly
provided in this Agreement, is not limited by: (a) reference to any other
Warranty, and (b) any other provision of this Agreement (except the Disclosure
Schedule), and no, imputed or constructive knowledge shall be attributed to the
Purchaser whether before or after the Effective Date, with respect to the
accuracy or inaccuracy of any Warranty.

 

  Page 15 of 26

 

 

7.INDEMNITY

 

7.1.CGI shall indemnify, defend and hold harmless the Purchaser, its Affiliates,
and their respective employees, officers, directors, agents and managers, or if
so desired by the Purchaser, CGI shall indemnify the Company (individually, an
“Indemnified Party” and, collectively, the “Indemnified Parties”), from and
against any and all Losses, incurred or suffered by an Indemnified Party,
directly or indirectly based upon, as a result or arising out of, or in relation
to or otherwise in respect of, any breach of the Warranties herein. The Parties
acknowledge that any Losses whatsoever, incurred or suffered by the Company
shall be deemed to be any such Losses (as the case may be) incurred or suffered
by the Purchaser for the purpose of this Clause 7.

7.2.The Purchaser shall indemnify, defend and hold harmless CGI, its Affiliates,
and their respective employees, officers, directors, agents and managers,
(individually, a “CGI Indemnified Party” and, collectively, the “CGI Indemnified
Parties”), from and against any and all Losses, incurred or suffered by a CGI
Indemnified Party, directly or indirectly based upon, as a result or arising out
of, or in relation to or otherwise in respect of, any breach of the Warranties
made by the Purchaser herein or by reason of the ownership of the Company or the
operation of its business after the Effective Date.

7.3.

 

7.4.The right to indemnification under this Clause 7, shall not be affected or
treated as qualified by any investigation or due diligence conducted by or on
behalf of the Purchaser into the affairs of the Company or any actual, imputed
or constructive knowledge acquired or capable of being acquired (whether
pursuant to the due diligence or otherwise) at any time by or on behalf of the
Purchaser, whether before or after the Effective Date, with respect to the
accuracy or inaccuracy of any Warranty, or compliance or non-compliance with any
obligation, undertaking, representation, covenant or agreement of any of the
Warrantors under this Agreement, and no such investigation, due diligence or
knowledge shall prejudice any claim for breaches of Warranty.

7.5.CGI shall be solely liable for the indemnification obligations under this
Clause 7 and shall not (and hereby waive any right to) seek contribution,
indemnification or any other remedy from or against the Company in respect of
any amounts that may be paid or may be payable by the CGI to the Purchaser under
the terms of this Agreement.

 

  Page 16 of 26

 

 

7.6.The indemnification rights of the Indemnified Parties under this Agreement
are independent of, and in addition to, such other rights and remedies they may
have at Applicable Law or in equity or otherwise, including the right to seek
specific performance, rescission, restitution or other injunctive relief, none
of which rights or remedies shall be affected or diminished thereby.

 

7.7.Notwithstanding any provision to the contrary, the Purchaser shall not
assume, in any manner, any responsibility or liability, whatsoever, in respect
of the Business and its operations or activities, relating to the period prior
to the Effective Date and any liability which may arise after the Effective Date
but relates to any act prior to the Effective Date, including failure to comply
with Applicable Laws and/or to make requisite filings with authorities and/ or
failure to obtain requisite approvals, in respect of the Company before the
Effective Date except as expressly provided herein or in the Disclosure
Schedule.

 

7.8.Limitation of Liability. Notwithstanding anything to the contrary contained
in this Agreement, the Parties acknowledge and agree that the maximum aggregate
liability of CGI to any Indemnified Party, in respect of any or all claims for
indemnification shall not exceed an amount of USD $325,000.00 (United States
Dollars Three Hundred and Twenty-Fifty Thousand Only). Further, liability for
any Losses pursuant to the Fundamental Warranties shall not exceed the Purchase
Consideration, as adjusted; provided however, the liability of the CGI to
Purchaser in respect of any or all claims for any of Purchaser’s actual Losses
arising out of, or as a result of, (i) any fraud or wilful misconduct , shall
remain uncapped at all times and (ii) or breach or violation of any Fundamental
Warranties pertaining to the beneficial ownership of the Sale Shares shall be
capped at the Purchase Consideration plus $1,000,000. For the purposes of this
Clause 7, the term Fundamental Warranties shall mean and include the Warranties
stated in SCHEDULE 3A of this Agreement under the heads of – (Particulars of the
Company, paragraph 1); (Constitutional and Corporate Documents, paragraphs 5and
9); (Indebtedness, loans and bank accounts, paragraphs 10 and 11);. No claim for
indemnification shall be made more than twelve (12) months from the Effective
Date. No claim for indemnification shall be made against CGI until the aggregate
amount of all such claims exceeds $50,000.

 

Notwithstanding the foregoing, liability resulting from the breach of the
Warranty in Schedule 3A with respect to Cancer Genetics (India) Private Limited
(Cancer Generics (India) Private Limited, paragraph 26) will be handled separate
and apart from the foregoing. If there is a breach of the Warranty in paragraph
26, CGI shall be responsible for the first $20,000 of liabilities, and the
Purchaser shall be responsible for any liabilities of Cancer Genetics (India)
Private Limited in excess of such sum. It is understood that any compounding fee
prescribed by the RBI, described in the Disclosure Schedule and estimated to be
approximately between Rs. 3,00,000 to Rs.5,00,000 ($ 4,600 to $ 7,700) is
included within the first $20,000 of liabilities for which CGI shall be
responsible.

 

  Page 17 of 26

 

 

It also is acknowledged and agreed by the parties that notwithstanding anything
set forth above or in the Warranties, CGI has not taken all steps necessary to
transfer title to the Sale Shares to itself, and that the Purchaser will need to
take steps after the Effective Date to have the Sale Shares, the ESOP shares and
the other shares in the Company properly transferred first to CGI and the other
current owners, as described in the Disclosure Schedule and then to effect the
transfer of such shares as contemplated by this Agreement, including payment of
stamp taxes, regulatory fees and fines and other steps. The Purchaser will be
solely responsible for taking all such steps and actions to have the shares
ultimately transferred, registered and recorded in its name, but the parties
agree to shares the costs in Purchaser doing so equally; provided, however, that
CGI’s maximum liability under this paragraph and all other sections referencing
this paragraph (including but not limited to sections with respect to the
transfer of the ESOP shares and stamp tax obligations) shall be $50,000. It is
acknowledged that any past failures to make requisite filings or submissions,
and the need for such filings and actions to be made hereafter, is not a breach
of Warranty by CGI for purposes of this Agreement, and CGI shall have no
obligation to indemnify Purchaser with respect to any such matters, except for
the cost sharing provisions of this paragraph. The provisions above with respect
to a breach of a Fundamental Warranty with respect to ownership are not to apply
with respect to the foregoing matters but only to apply if there is a lien or
encumbrance on the Sale Shares (other than a lien or encumbrance related to
Purchaser or its affiliates)that Purchaser hereafter needs to satisfy to have
sole ownership of the Sale Shares, or if CGI has transferred the Sale Shares to
a third party such that it is hereafter discovered that such party, and not CGI,
is the beneficial owner of the Sale Shares as of the date hereof.

 

8.CO-OPERATION

 

8.1.The Parties shall use their reasonable efforts to ensure that the
transactions contemplated by this Agreement are consummated as per the terms
hereof, including without limitation, obtaining all approvals from the
applicable government and/or regulatory authorities and other Persons as may be
necessary or reasonably requested by the Purchaser in order to consummate the
transactions contemplated by this Agreement; provided however that all such
actions and approvals shall be effected by Purchaser and at Purchaser’s cost
except for CGI’s responsibility under the cost sharing arrangement described at
the end of Section 7.8.

 

  Page 18 of 26

 

 

9.NON COMPETE

 

9.1.For a period of 2 (two) years from the Effective Date, CGI agrees that it
will not license any third party to utilize its patented technologies for
diagnostic tests on patients in India without offering the Purchaser the
opportunity to obtain a license for the same technologies on the same terms as
the other third party licensee during such period.

 

9.2.CGI undertakes that it will not solicit, canvas or entice away any employee
who is employed in managerial, professional, supervisory, technical or
administrative capacity from the Company, except the foregoing shall not
prohibit generalized employment offers not targeted to specific individuals

 

9.3.CGI agrees and acknowledges that the covenants and obligations under this
Clause 9 relate to special, unique and extraordinary matters, and that a
violation of any of the terms of such covenants and obligations will cause the
Purchaser and the Company irreparable injury and as such, the restrictions set
forth herein are reasonable in nature. Therefore, the Purchaser shall be
entitled to an interim injunction, restraining order or such other equitable
relief as a court of competent jurisdiction may deem necessary or appropriate to
restrain CGI from committing any violation of the covenants and obligations
contained herein.

 

9.4.For the avoidance of doubt, the Parties acknowledge and agree that the
obligations of CGI under this Clause 9 are independent, several and separate
from one another. CGI further agrees and acknowledges that there is no further
consideration required to be paid under this Clause 9 and that the consideration
to be paid by the Purchaser under this Agreement is good and adequate
consideration for this purpose.

 

10.GOVERNING LAW AND ARBITRATION

 

10.1.This Agreement and its performance shall be governed by and construed in
all respects in accordance with the laws of the State of New York. In the event
of a dispute or difference (“Dispute”) relating to any of the matters set out in
this Agreement, the Parties shall discuss in good faith to resolve the Dispute.
In case the Dispute is not settled within 30 (thirty) calendar days, it shall be
referred to arbitration in accordance with the Clause 10.2 below.

 

10.2.All Disputes that have not been satisfactorily resolved under Clause 10.1
above shall be referred to arbitration before a sole arbitrator to be jointly
appointed by the Parties. In the event the Parties are unable to agree on a sole
arbitrator within 10 (ten) calendar days following the 30 (thirty) calendar day
period specified in Clause 10.1 above (“Initial Period”), the matter will be
referred to a panel of arbitrators (“Panel”) to be appointed within 10 (ten)
calendar days from the expiry of the Initial Period. Both Parties to the Dispute
(that is the party instituting the arbitration proceeding and the respondent
party(s)) shall appoint 1 (one) arbitrator each to the Panel and the 2 (two)
arbitrators so appointed by the parties shall together appoint 1 (one) more
arbitrator to the Panel. The arbitration proceedings shall be carried out in
accordance with the then prevailing rules prescribed/specified by JAMS/Endispute
and the seat of arbitration shall be New York. The arbitration proceedings shall
be conducted in the English language. Subject to Clause 10.3 below, the Parties
shall equally share the costs of the arbitrator’s fees, but shall bear the costs
of their own legal counsel engaged for the purposes of the arbitration.

 

  Page 19 of 26

 

 

10.3.The Panel shall make an award in writing within 60 (sixty) days of the
appointment of the sole arbitrator/constitution of the Panel. The award of the
arbitrator(s) shall be final and conclusive and binding upon the Parties and
non-appealable to the extent permitted by Applicable Law. The Parties agree that
such enforcement shall be subject to the provisions of the Applicable Law, and
no Party shall seek to resist the enforcement of any award in India or elsewhere
on the basis that the award is not subject to such provisions. The award
rendered shall apportion the costs of the arbitration.

 

10.4.The Parties further agree that the arbitrators shall also have the power to
decide on the costs and reasonable expenses (including reasonable fees of its
counsel) incurred in the arbitration and award interest up to the date of the
payment of the award.

 

11.NOTICES

 

11.1.Any notice or other communication that may be given by one Party to the
other shall always be in writing and shall be served either by (i) hand delivery
duly acknowledged; or (ii) sent by registered post with acknowledgment due; or
(iii) by facsimile or email at the respective addresses set out herein below or
at such other address as may be subsequently intimated by one Party to the other
in writing as set out herein. If the notice is sent by facsimile or email, the
said notice shall also be sent by registered post acknowledgment due.

 

(a)If to CGI

Address: 201 Route 17 North, 2nd Fl. Rutherford, NJ 07070, USA

Attention: Chief Executive Officer

Telephone: 1-201-528-9191

Fax: 1-201-528-9201

Email: jay.roberts@cgix.com

With a copy to: Alan Wovsaniker, awovsaniker@lowenstein.com

 

(b)If to the Company

Address:3-1-135/1A, CNR Complex, Mallapur Main Road, R.R. District, Hyderabad –
500076, India

Attention: Rama Modali

Telephone: 301-47—3362

Email: rmodali@reprocell.com

With a copy to: Parth Munshi, pmunshi@ckrlaw.com

 

(c)If to the Purchaser

Address: MetLife Shin-yokohama Bldg. 9F, 3-8-11, Shin-yokohama,

Kohoku-ku, Yokohama, Kanagawa 222-0033, Japan

Attention: Rama Modali

Telephone: 301-470-3362

Email: rmodali@reprocell.com

With copies to: Daisuke Usui, daisuke.usui@reprocell.com

Parth Munshi, pmunshi@ckrlaw.com

 

  Page 20 of 26

 

 

11.2.All notices shall be deemed to have been validly given on (i) the Business
Date immediately after the date of transmission with confirmed answer back, if
transmitted by facsimile transmission or email, or (ii) the Business Day of
receipt, if sent by courier or hand delivery; or (iii) the expiry of 7 days
after posting, if sent by registered post.

 

11.3.Any Party may, from time to time, change its address or representative for
receipt of notices provided for in this Agreement by giving to the other Party
not less than 7 (seven) days prior written notice.

 

12.CONFIDENTIALITY

 

12.1.The Parties recognize that each of them will be given and have access to
confidential and proprietary information of the other Parties (“Confidential
Information”). The Parties undertake not to use any of such Confidential
Information for their own corporate purposes without the prior written consent
of the Party owning such information and shall use their best efforts to keep
confidential and not to disclose to any third party any of the other Parties’
confidential and proprietary information relating to (i) the negotiation and
contents of this Agreement; or (ii) the business and affairs of the Company. The
Parties shall also cause their respective directors, employees, officers and any
other persons to whom the above-mentioned information is disclosed to execute a
letter of confidentiality to the effect provided in this Clause. The obligations
to abide by the provisions of this Clause shall not apply to any information
that:

 

12.1.1.was developed independently by the Parties;

 

12.1.2.was known to the Party prior to its disclosure by the disclosing Party;

 

12.1.3.has become generally available to the public (other than by virtue of its
disclosure by the Party receiving such information);

 

12.1.4.may be required in any report, statement or test the Company submitted to
any governmental or regulatory body;

 

12.1.5.is of a general, conceptual or non-specific nature;

 

12.1.6.may be required in response to any summons or subpoena or in connection
with any litigation;

 

12.1.7.may be required to comply with any law, order, regulation or ruling
applicable to any Party hereto including but not limited to compliance with any
securities laws as applicable in the United States of America;

 

  Page 21 of 26

 

 

12.1.8.is disclosed to its professional advisers including legal, financial and
tax advisers and auditors but only to the extent necessary subject to such
advisers accepting an equivalent confidentiality obligation to that set out in
this Clause; or

 

12.1.9.to the extent the receiving party received written consent to such
disclosure from the relevant Party from whom it received such Confidential
Information and from the Party to which that Confidential Information relates.

 

Provided that prior to any disclosure in respect of a request to disclose
Confidential Information under sub-clauses 12.1.4, 12.1.5, 12.1.6, and 12.1.7,
above a Party must first notify the Party owning such Confidential Information,
who shall then have the opportunity to respond to and/or dispute such request.
The provisions of this Clause shall survive the termination of this Agreement.

 

12.1.10.The Parties acknowledge and agree that the covenants and obligations
with respect to confidentiality set forth in this Clause relate to special,
unique and extraordinary matters, and that a violation of any of the terms of
such covenants and obligations will cause the Company and the owner of such
property irreparable injury for which adequate remedies are not available at
law. Therefore, the Parties agree that the Party entitled to enforce the
covenants set forth above, shall be entitled to an injunction, restraining order
or such other equitable relief as a court of competent jurisdiction may deem
necessary or appropriate to restrain the other Party from committing any
violation of the covenants and obligations contained in this Clause. These
injunctive remedies are cumulative and are in addition to any other rights and
remedies the concerned Party may have at law or in equity.

  

13.MISCELLANEOUS

 

13.1.Reservation of Rights

 

No forbearance, indulgence or relaxation or inaction by any Party at any time to
require performance of any of the provisions of this Agreement shall in any way
affect, diminish or prejudice the right of such Party to require performance of
that provision, and any waiver or acquiescence by any Party of any breach of any
of the provisions of this Agreement shall not be construed as a waiver or
acquiescence of any continuing or succeeding breach of such provisions, a waiver
of any right under or arising out of this Agreement or acquiescence to or
recognition of rights other than that expressly stipulated in this Agreement.

 

  Page 22 of 26

 

 

13.2.Partial Invalidity

 

If any provision of this Agreement or the application thereof to any Person or
circumstance shall be invalid or unenforceable to any extent, the remainder of
this Agreement and the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable shall not be
affected thereby, and each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by Applicable Law. Any invalid or
unenforceable provision of this Agreement shall be replaced with a provision,
which is valid and enforceable and most nearly reflects the original intent of
the unenforceable provision. Provided however, if said provision is fundamental
provision of this Agreement or forms part of the consideration or object of this
Agreement, the provision of this Clause shall not apply.

 

13.3.Amendments

 

No modification or amendment of this Agreement and no waiver of any of the terms
or conditions hereof shall be valid or binding unless made in writing and duly
executed by all the Parties.

 

13.4.Assignment

 

CGI shall not be entitled to assign its rights and obligations under this
Agreement in any manner without the prior written consent of the Purchaser. The
Purchaser shall not be entitled to assign its rights and obligations under this
Agreement in any manner without the prior written consent of CGI.

  

13.5.Entire Agreement

 

This Agreement and the other agreements to be entered into by the Parties in
accordance with this Agreement, together with all Exhibits and Schedules hereto
and thereto, constitute the entire agreement among the Parties pertaining to the
subject matter of such agreements and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties.

 

13.6.No Broker or Finder

 

The Company, CGI, and the Purchaser each represent that it has not employed any
broker, or finder, or incurred any liability for any brokerage fee, commission,
finder’s fee or other similar fees, commissions or expenses in connection with
the transactions contemplated by this Agreement.

 

  Page 23 of 26

 

  

13.7.Relationship

 

None of the provisions of this Agreement shall be deemed to constitute a
partnership between the Parties hereto and no Party shall have any authority to
bind the other Party otherwise than under this Agreement or shall be deemed to
be the agent of the other in any way.

 

13.8.Costs

 

Each Party shall bear its own costs and expenses incurred in connection with the
preparation, negotiation and execution of this Agreement and any ancillary
documents. Further, any stamp duty and registration duty with respect to this
Agreement shall be borne by equally by the Purchaser and CGI; as part of and
subject to the limitation with respect to CGI set forth at the end of Section
7.8.

 

13.9.Public announcements

 

No Party to this Agreement shall make any disclosure or announcements about the
subject matter of this Agreement to any Person without the prior written consent
of the other Parties unless such public announcement is required under
Applicable Law.

 

13.10.Execution in Counterparts

 

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which, taken together, shall constitute one and
the same instrument.

 

13.11.Authorization

 

The persons signing this Agreement on behalf of the Parties represent and
covenant that they have the authority to so sign and execute this document on
behalf of the Parties for whom they are signing.

  

[Signature page follows]

 

  Page 24 of 26

 

 

IN WITNESS WHEREOF, the Parties hereto set forth their respective hands and have
caused the same to be executed as of the date first mentioned hereinabove as
follows:

 

For BIOSERVE BIOTECHNOLOGIES (INDIA) PRIVATE LIMITED Witnessed by:

 

 

____/s/ P. Venkateswarlu__________________

Name: P. Venkateswarlu

Designation: Director

 

 

_____/s/ M. Rajyashri____________________

Name: M. Rajyashri

 

 

For CANCER GENETICS, INC. Witnessed by:

 

 

____/s/ Jay Roberts_____________________

Name: Jay Roberts

Designation: Chief Executive Officer

 

 

 

___/s/ Igor Gitelman_____________________

Name: Igor Gitelman

 

 

 

For REPROCELL INCORPORATED. Witnessed by:

 

 

___/s/Chikafumi Yokoyama_______________

Name: Chikafumi Yokoyama

Designation: Chief Executive Officer

 

 

 

____/s/ Rama Modali_____________________

Name: Rama Modali

 

 

  Page 25 of 26

 

 

SCHEDULE 2A

SHAREHOLDING PATTERN OF THE COMPANY

(PRIOR TO THE EFFECTIVE DATE)

 

Sr. No Name of the Shareholder Number of Shares Sale Shares 1. Cancer Genetics ,
Inc. [ 1,271,301 ] 1,271,301 2. Bioserve India ESOP Trust 22,300 0 TOTAL
1,294,601  

 

 

SCHEDULE 2B

SHAREHOLDING PATTERN OF THE COMPANY

(POST EFFECTIVE DATE)

 

Name of Shareholder Number of Shares ReproCELL Incorporated [ 1,271,301 ]
Bioserve India (ESOP) Trust 22,300 Total [ 1,294,601 ]

 

  Page 26 of 26

 

 

SCHEDULE 3A

WARRANTIES

 

Other than as stated in the Disclosure Schedule (SCHEDULE 9), CGI represents,
warrants and covenants to the Purchaser as follows:

 

A.GENERAL

 

Particulars of the Company

 

1.The information relating to the Company in SCHEDULE 1 and SCHEDULE 2A is true
and accurate as at the date hereof.

 

2.As on the date hereof, the Company has no Subsidiary (whether incorporated in
India or outside India).

 

Information and disclosures

 

3.There is no fact which has not been disclosed in this Agreement which has had,
or could reasonably be expected to have a Material Adverse Effect.

 

4.No representation or warranty of CGI contained in this agreement is false or
misleading in any material respect or omits to state a fact necessary to make
the statements herein not misleading in any material respect.

 

Constitutional and corporate documents

 

5.The Company has been duly incorporated and properly formed, and its Memorandum
and Articles are in accordance with all Applicable Laws.

 

6.The copies of the Memorandum of Association and Articles of Association of the
Company that have been provided to the Purchaser are true, accurate and complete
in all respects and have annexed to or incorporated in them copies of all
resolutions or agreements required by Applicable Law to be so annexed or
incorporated.

 

7.Since the Acquisition Date, all statutory books, records and registers,
including accounting records as well as the register of members and minute books
of the Company have been properly maintained in all material respects in
accordance with the applicable provisions of the Act and are kept at its
respective corporate/registered office, written up to date and are complete in
all respects and no notice or allegation that any of them is incorrect or should
be rectified has been received and no such notice or allegation is apprehended.
All such books, records and registers are in possession and under the direct
control of the Company.

 

8.Since the Acquisition Date, all returns and particulars, registrations,
resolutions and other documents that Company is required by Applicable Law
(including the Act), to file with or deliver to any relevant authority have been
correctly made up, duly filed and/or delivered and there is no outstanding
notice from any relevant authority received by the Company, or CGI (as the case
may be) as to its non-compliance with its obligations as to filings, returns,
particulars, resolutions and other documents.

 

9.The Company possesses full power and authority to conduct Business as
currently being conducted and as proposed to be conducted.

 

Capacity

 

10.Each of the Company and CGI has the requisite power and authority and has
obtained all requisite permissions, consents and approvals (including all
Licences) to enter into and to observe and perform this Agreement and to
consummate the transactions contemplated hereunder, and have full authority to
sign and execute this Agreement.

 

11.This Agreement will, when executed, constitute legal, valid and binding
obligations of each of CGI and the Company, enforceable against each of CGI and
the Company, in accordance with its terms.

 

   S-1

 

 

12.The execution, delivery and consummation of, and the performance and
observance of this Agreement does not require any consents, approvals or the
provision of any notices, filings, reports or intimations and will not breach or
violate any Applicable Laws, rules, regulations, agreements to which the Company
and/or CGI is a party, or create any Encumbrances on any assets of the Company,
and is in compliance with all applicable statutory requirements except for the
consents of CGI’s lenders and requisite fillings with the US Securities and
Exchange Commission .

 

Ownership of the shares and securities

 

13.Except for the rights of the Purchaser under this Agreement, no person is
entitled or has claimed to be entitled to require CGI to transfer any of its
Sale Shares, either now or at any future date and whether contingently or not,
other than as provided in this Agreement.

 

14.There is no Encumbrance on, over or affecting any of the shares, debentures
or other securities of the Company, except bank liens which will be released on
the Effective Date, nor is there any commitment to give or create any of the
foregoing, and no person has claimed to be entitled to any of the foregoing;
provided however that no representation is made with respect to the shares held
by the ESOP.

 

15.At the Effective Date, the Sale Shares shall have been validly transferred,
free from all Encumbrances and credited as fully paid up.

 

The Company

 

16.The Company does not hold and has not agreed to acquire, whether legally or
beneficially, jointly or alone, and directly or indirectly, any share or
securities or any other interest whatsoever in any other company or corporation,
whether incorporated in India or outside India.

 

17.CGI is the sole legal and beneficial owner of the Sale Shares.

 

18.The Shares held by CGI in the Company have been duly and validly transferred,
are fully paid up, and rank pari passu in all respects with the other equity
shares in the issued share capital of the Company.

 

19.No shares of the Company have been issued pursuant to the Cancer Genetics
India (ESOP) Trust except as disclosed on the Schedules and the Company does
not, as at the Effective Date of this Agreement have any other employee stock
option plan. Further, there exists no present breach of any obligation or
liability in respect of the Cancer Genetics India (ESOP) Trust and its
operations or activities, relating to the period prior to the Effective Date and
after the Acquisition Date Cancer Genetics India (ESOP) Trust is in full and
complete compliance with all Applicable Laws and/or has made all requisite
filings with authorities and has obtained requisite approvals, in respect of the
said Trust as at the Effective Date.

 

   S-2

 

 

Licences

 

20.The Company has obtained in its own name all Licences necessary or required
under Applicable Law. The Company has duly made all reports, filings and other
intimations, necessary or required to be made under Applicable Law.

 

Actions

 

21.The Company is not engaged (whether as claimant, defendant, plaintiff or
otherwise) in any Action and since the Acquisition Date, there is no Action in
progress, pending, outstanding or to the best of the knowledge of CGI threatened
- (i) by, against or affecting, the Company, or any of their respective Assets,
(ii) in respect of which the Company is liable to indemnify or compensate any
person, or (iii) that challenges or seeks to prevent, enjoin or otherwise delay
the transactions contemplated hereby.

 

22.There are no existing or pending unfulfilled or unsatisfied judgments or
orders affecting the Company.

 

23.CGI is not engaged (whether as claimant, defendant, plaintiff or otherwise)
in any Action and there is no Action in progress, pending, outstanding or, to
CGI’s knowledge, threatened, by or against CGI, or any of its assets or
properties which would affect the obligations of CGI under this Agreement, or,
challenges or seeks to prevent, enjoin or otherwise delay the transactions
contemplated hereby

 

Insolvency

 

24.Neither the Company nor any of its Assets are involved in or subject to any
Insolvency Proceedings.

 

25.No Act of Insolvency has occurred in relation to CGI.

 

26.Neither CGI nor any of its Assets are involved in or subject to any
Insolvency Proceedings, and there are no circumstances which require or would
enable any Insolvency Proceedings to be commenced or initiated against CGI or
any of its Assets

 

CANCER GENETICS (INDIA) PRIVATE LIMITED

 

27.Since the date of its formation, Cancer Genetics (India) Private Limited has
conducted no operations and has had no assets other than the ownership of the
Shares of the Company.

 

B.ACCOUNTS AND FINANCIAL

 

Accounts and debtors

1.The Accounts have been prepared on a consistent basis in accordance with
Indian GAAP and, since the Acquisition Date, all Applicable Laws, without any
change (except as required by Indian GAAP or Applicable Laws) in the accounting
policies used and in particular, the rate of depreciation applied in respect of
each Asset has been consistently applied over previous accounting periods of the
Company and is adequate to write down the value of such Asset to its net
realizable value as at the end of its useful working life.

 

   S-3

 

 

2.In the Accounts:

 

(a)the value attributed to each Asset of the Company does not exceed its current
market value as at the Accounts Date; and

 

(b)for the period ending as on the Accounts Date there are adequate provisions
for any losses in respect of ongoing projects and/or work in progress to the
extent that such losses are material and have been reasonably determined.

3.All financial records of the Company have been properly maintained and
constitute an accurate record of all matters which appear in them and where
required by Applicable Law have been duly filed. The Company has complied with
the statutory accounting requirements including the requirements with respect to
accounting for Taxation.

 

Book debts

 

4.The debts owing to Company included in the Accounts for the period ending as
on the Accounts Date are expected to realize, in the ordinary course of
collection, their nominal amounts plus any accrued interest, as may be
applicable, less any provisions for bad and doubtful debts included in the
Accounts for the period ending as on the Accounts Date.

 

5.All debts owing to the Company at the date of this Agreement (other than the
debts included in the Accounts for the period ending as on the Accounts Date are
expected to in the ordinary course of collection realize their nominal amounts
plus any accrued interest, as may be applicable.

 

Position since Accounts Date

 

6.Since the Accounts Date:

 

(a)The Company has conducted its business in a normal and proper manner;

 

(b)there has been no deterioration in the values of any of the Assets (other
than through the normal course of depreciation and/or amortization) such that
the market value of any Asset is less than the value attributed to it in the
Accounts and no Asset has been re-valued;

 

(c)The Company has not entered into any Material Contract which is not in its
ordinary course of business;

 

(d)there has been no deterioration in the turnover, financial or trading
position or the prospects of the Company;

 

(e)The Company have paid its creditors as per normal business practice;

 

(f)no Material Contract involving expenditure by the Company on capital account
in excess of INR [10,00,000 /- (Indian Rupees Ten Lakh Only) on an individual
basis or INR [1,00,00,000 /- (Indian Rupees One Crore Only)] in aggregate has
been entered into by the Company and no asset, property, right or interest of a
value or price in excess of INR [10,00,000/- (Indian Rupees Ten Lakh Only)] on
an individual basis or INR 1,00,00,000/- (Indian Rupees One Crore Only) in
aggregate, has been acquired or disposed of or agreed to be acquired or disposed
of by the Company on capital account other than in the ordinary course of
business consistent with past practice;

 

   S-4

 

 

(g)there has been no disposal of any Asset or supply of any service or facility
of any kind by the Company in circumstances where the consideration actually
received or receivable for the disposal or supply was less than the
consideration which could be deemed to have been received for Tax purposes;

 

(h)no dividend or other distribution of profits or assets has been or has been
agreed to be declared, made or paid by the Company;

 

(i)no resolution in a general meeting of the Company, or resolution of the board
of directors of the Company has been passed which is not required statutorily or
not in the ordinary course of business, consistent with past practice, or which
vitiates the provisions of this Agreement;

 

(j)no event has occurred which gives rise to Taxation to the Company on deemed
(as opposed to actual) income, profits or gains or which results in the Company
becoming liable to pay or bear a Tax liability directly or primarily chargeable
against or attributable to another person;

 

(k)no event has occurred which would result in any third party (with or without
the giving of notice) being or becoming entitled to call for the repayment of
any indebtedness of the Company prior to the normal maturity date;

  

(l)the Company has not made any payment or incurred any liability to any Related
Party other than in the ordinary course of business;

 

(m)there has been no satisfaction or discharge of any Encumbrance or payment of
any obligation by the Company, except for those made in the ordinary course of
business, consistent with past practice and those that are not material to its
Assets, financial condition operation or business;

 

(n)there has been no change, amendment to or termination of a Material Contract
of the Company, other than in the ordinary course of its business;

 

(o)there has been no sale, assignment, transfer or other disposal of any
Intellectual Property Right of the Company other than in the ordinary course of
business;

 

(p)there has been no direct or indirect redemption, purchase or other
acquisition of any of the shares or securities of the Company by any person;

 

(q)there has been no material failure by the Company to conduct Business in the
ordinary course;

 

(r)there has been no payment made by the Company which will not be deductible
for Taxation purposes either in computing the profits of the Company or in
computing the Taxation chargeable on the relevant Company;

 

(s)there has been no event or condition of any nature which has had or might
have a Material Adverse Effect on the Assets, financial condition, operation or
business of the Company;

 

   S-5

 

 

(t)No loans or advances to, guarantees or indemnities for the benefit of, or any
investments in, any person, have been made by the Company;

 

(u)there has not been any change in accounting methods or practices of the
Company or any change in depreciation or amortization policies or rates except
as required by Indian GAAP;

 

(v)no waiver has been granted by the Company of a material right or of a
material debt owed to it; and

 

(w)there has been no agreement or commitment by the Company to do any of the
things described in this Clause.

Indebtedness, loans and bank accounts

 

7.The Company does not have liabilities required to be disclosed on iits balance
sheet under Indian GAAP which are not so disclosed, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, except for (i)
liabilities set forth in the Accounts, and (ii) trade or business liabilities
incurred in the ordinary course of business, since the Accounts Date.

 

8.The Company does not own the benefit of any debt (whether present or future)
other than debts set forth in the Accounts for the period ending as on the
Accounts Date or subsequently accrued to it in the ordinary course of its
business.

 

9.The Company has not availed of or been granted any bank or other credit
facilities.

 

10.Except as set forth in the Accounts, the Company does not have any
indebtedness for borrowed money (present, future or contingent) .

 

11.Except as set forth in the Accounts, the Company does not have any
outstanding indebtedness for borrowed money or other liability in respect of any
guarantee or indemnity for such indebtedness except in the ordinary course of
business consistent with past practice.

 

12.Except as set forth in the Accounts for the period ending as on the Accounts
Date, and those arising after the Accounts Date in the ordinary course of
business consistent with past practice, there are no liabilities arising out of
transactions or events heretofore entered into, or any action or inaction, or
any state of facts existing, with respect to or based upon transactions or
events heretofore occurring.

 

13.Since the Accounts Date, no debt has been released by the Company on terms
that the debtor paid less than the book value of his/its debt, and no debt owing
to the Company has been deferred, subordinated or written off or has proved to
any extent to be irrecoverable, other than in the ordinary course of business.

 

14.The Company is not subject to any arrangement for receipt or repayment of any
grant, subsidy or financial assistance from any relevant authority, and the
execution and compliance with the terms of this Agreement does not and will not
result in any grant, subsidy or financial assistance from any relevant authority
becoming repayable.

 

   S-6

 

 

15.The Company has provided a complete and accurate list of all its bank
accounts, and the Authorized Signatories and since the date of that list there
has not been any payment out of the relevant bank accounts other than in the
ordinary course of business.

 

Derivative transactions

 

16.The Company does not have any outstanding obligations in respect of
derivative transactions, including, any foreign exchange derivative transaction.

 

Dividends and distributions

 

17.No dividend or other distribution of profits or assets has been or has been
agreed to be, declared, made or paid by the Company since the Accounts Date.

 

Intra-group transactions and interests

 

18.The Company is not a party to or otherwise bound by any contract whatsoever
with any Related Party and none of the Related Parties, is involved or
interested whether directly or indirectly either financially or otherwise in any
manner in any business or activities of the Company.

 

Intra-group loans and indebtedness

 

19.As at the Effective Date, there is no indebtedness, whether by way of
borrowings, outstanding liabilities (whether contingent or otherwise), trade
debts or howsoever otherwise owed or payable by the Company to any of the
Related Parties, or by any of the Related Parties to the Company. Further, none
of the Related Party has made any claim or taken any action against the Company.

 

20.The Company has not given or agreed to give any guarantee or indemnity in
respect of any borrowing or indebtedness, performance or other obligations of
any third party or any other commitment, by which the Company is contingently
responsible.

 

C.       COMMERCIAL

 

Contracts and commitments

 

1.The Company is not a party to, and the Company and/or its respective Assets
are not bound or affected by, any Material Contract that:

 

(a)is not in the ordinary course of business of the Company; or

 

(b)is not on arm’s length terms or on normal commercial terms or cannot be
fulfilled or performed by the Company on time and without undue or unusual
expenditure of money and effort; or

 

(c)involves payment by the Company by reference to fluctuations in any index of
commercial or retail or consumer prices or other index used as a measure of
inflation; or

 

(d)requires payment of any sum by the Company in any currency other than INR or
USD; or

 

   S-7

 

 

(e)involves any joint venture or consortium arrangement or any partnership; or

 

(f)contains any representation, warranty, guarantee or indemnity in relation to
any share, corporation, asset, property, business or undertaking previously
acquired or disposed of by the Company and which was entered into or amended
after the Acquisition Date; or

 

(g)imposes any non-compete obligations on the Company; or

 

(h)imposes any exclusivity obligations on the Company; or

 

(i)involves the entry into, by the Company, of financing agreements, banking
facilities or loan agreements with financial institutions; or

 

(j)involves a commitment to create, acquire, issue or transfer shares or other
securities of the Company for conversion of loan into equity, or giving rights
of pre-emption; or

 

(k)creates share conversion rights such as through convertible debentures,
convertible preference shares or the like; or

 

(l)restricts the transferability of the shares of the Company, other than liens
released at or prior to the Effective Date.

2.Since the Acquisition Date, the Company has made sales only in the ordinary
course of business consistent with past practice and, neither the Company nor
CGI has taken any action or granted any concessions to accelerate any sales from
a future period to the period commencing on January 1, 2018, and ending on the
Accounts Date.

 

3.All of the Material Contracts of the Company are validly subsisting and the
Company is in subsisting compliance with the terms of the same in all material
respects and nothing contained in this Agreement and none of the transactions
contemplated hereunder would be in contravention of any of the Material
Contracts to which the Company is a party or by which the Company and/or any of
its Assets is bound or affected.

 

4.The Company is not a party to any agency, distribution or management contract
or to any contract which restricts its freedom to carry on its business in any
part of the world in such manner as it thinks fit or to engage in any line of
business.

 

5.Except in ordinary course of business, none of the Material Contracts to which
the Company is a party is invalid and the Company has not received notice of
termination, rescission, invalidation or claim pursuant to any actual or alleged
breach or default of any Material Contract to which it is a party or by which
any of its Assets is bound or affected.

 

6.The Company has complied in all material respects with all of its obligations
under, and observed and performed all the terms and conditions on its part to be
observed and performed under, each of the Material Contracts to which it is a
party or by which any of its Assets is bound or affected, and each counterparty
to each of such contracts has complied in all material respects with all of its
obligations under, and observed and performed all the terms and conditions on
its part to be observed and performed under each of such contracts. Each of such
contracts is valid and subsisting under Applicable Law, is in full force and
effect and is binding on the parties to it and is enforceable by the Company in
accordance with its terms.

 

   S-8

 

 

7.The Company has not given any indemnity, guarantee or warranty, or made any
representations, in respect of goods or services supplied, or contracted to be
supplied, by it that is capable of resulting in any liability which is not in
the ordinary course of its business, or, except as aforesaid, accepted any
liability or obligation that would apply after any such goods or services had
been supplied by it.

8.The Company has not given any indemnity, guarantee or warranty, or made any
representations in respect of any sale of shares or other securities, or any
undertaking or part of an undertaking.

 

9.Other than any transactions with CGI, no Related Party or to the best of CGI’s
knowledge, any officer, director, employee or agent of any Related Party has any
Material Contract with, or is materially indebted to, the Company, nor is the
Company is materially indebted (or committed to make loans or extend or
guarantee credit) to any Related Party or to the best of CGI’s knowledge, any
officer, director, employee or agent of any Related Party (other than for
accrued salaries, reimbursable expenses or other standard employee benefits).
Other than to the relationship with CGI, no Related Party or to the best of
CGI’s knowledge, any officer, director, employee or agent of any Related Party
has, either directly or indirectly, a material interest in: (a) any person which
purchases from or sells, licences or furnishes to the Company any goods,
property, Intellectual Property Rights or other property rights or services; or
(b) any contract to which the Company is a party or by which it may be bound or
affected.

 

Ownership of assets

 

10.All Assets have been disclosed in the Accounts for the period ending as on
the Accounts Date to the extent required by Indian GAAP, and as at the Effective
Date, such Assets comprise the only assets, properties, rights and interests
used by the Company in connection with the Business.

 

11.The Company, owned at the Accounts Date, all the Assets included in their
respective Accounts.

 

12.The Company does not use any Assets under any agreement for lease, licence,
hire, hire purchase, retention of title, or sale on conditional or deferred
terms other than the lease for its premises.

 

13.None of the Assets or present or future revenues of the Company is subject to
any Encumbrance or any contract to give or create any Encumbrance or having a
similar effect, and no person has claimed to be entitled to any of the
foregoing.

 

14.The Company has not been a party to any contract pursuant to or as a result
of which any of its Assets as at the Accounts Date, has been transferred or
disposed of, is liable to be transferred or disposed of, or which gives or may
give rise to a right of compensation or payment in favour of another person
under Applicable Law, other than in the ordinary course of business consistent
with past practice.

 

   S-9

 

 

Real Property

 

15.The Company is not the owner of any Real Property, and the Company has not
entered into any contract to acquire any Real Property, and the Company does not
hold any lease and/or licence other than in respect of its offices.

 

16.Each office of the Company is occupied and used by the Company (as
applicable) in carrying on the Business and in accordance with the terms and
conditions set out in the relevant Property Contract. The Company is in material
compliance with all the terms and conditions set out in each Property Contract.

 

17.With respect to each of the leases and licences, all certificates of
occupancy, permits, licences, franchises, approvals and authorizations of all
relevant authorities or any other person having jurisdiction or any right, title
or interest over such leases, which are required or appropriate to use or occupy
the office premises that are the subject of such leases, or operate the business
of the Company as currently conducted or currently proposed to be conducted
thereon, have been issued and are in full force and effect.

 

18.No Property Contract has expired and/or been terminated and the Company has
acquired renewals with respect to all expired Property Contracts and the Company
is not liable to pay any penalties or liquidated damages in accordance with the
provisions of any of the Property Contracts. The Company has fully complied with
its obligations under each Property Contract to which it is a party.

 

19.Other than in the ordinary course of business, there is no Property Contract
that cannot be terminated by the Company in accordance with Applicable Law or
its terms, or cannot be so terminated without the Company incurring any penalty
or other liability. Other than in the ordinary course of business or a Force
Majeure event, there is no Property Contract that is terminable by the relevant
counterparty except after giving reasonable notice to the Company and only in
the event of a failure by the Company to pay rent or any other amounts due from
the Company thereunder.

 

20.All payments including Taxes, cesses, rates, revenues, outgoings and other
dues of every nature payable and/or required to be made by the Company under
each Property Contract have been duly made by or on behalf of the Company if
due, and there are no arrears or outstanding liabilities of the Company.

 

Anti-competitive arrangements

 

21.Since the Acquisition Date, the Company has not carried on or is carrying on
any monopolistic, restrictive or unfair trade practice, within the meaning of
the Monopolies and Restrictive Trade Practices Act, 1969 and/or Competition Act,
2002 and no Action has been taken or is in progress, pending, outstanding or
threatened against the Company under the Monopolies and Restrictive Trade
Practices Act, 1969 and/or Competition Act, 2002 or any other anti-trust or
similar legislation in any jurisdiction in which it carries on business or has
Assets. The Company does not have any agreement or arrangement (or any judgment
or ruling) which restricts the ability of the Company to compete anywhere in the
world and has not received any notification or registration under the aforesaid
enactments.

 

   S-10

 

 

Secret or confidential information or property

 

22.The Company has not at any time (except (A) in the normal and proper course
of the day-to-day business and subject to an obligation of confidentiality, or
(B) to the Company’s professional advisers) disclosed to any person:

 

(a)any secret or confidential information or property of the Company; or

 

(b)any other information relating to the business or affairs of the Company, the
disclosure of which might or could cause loss or damage to or adversely affect
the Company; or

 

(c)any secret or confidential information relating to, the customers, clients,
suppliers, officers, directors, employees or agents of the Company, or to any
other person who has or has had any dealings with the Company

 

23.The Company is not and has never been in violation of any information
confidentiality obligation(s) under any Contract entered into by the Company.

 

Intellectual property rights

 

24.To its knowledge, none of the activities of the Company, since the
Acquisition Date, violates or infringes or is likely to violate or infringe any
Intellectual Property Rights of any third party or person and no claim has been
made against the Company in respect of such violation or infringement.

 

25.To its knowledge, the Company does not use any processes nor is it engaged in
any activities which involves the misuse of any know-how, lists of customers or
suppliers, trade secrets, technical processes, Intellectual Property Rights or
other confidential information (IP Confidential Information) belonging to any
person other than the Company itself. All of the current directors, officers,
employees, agents or consultants of the Company have entered into agreements
obliging them to maintain the confidentiality of such IP Confidential
Information and to the Company’s knowledge, none of the current directors,
officers, employees, agents or consultants of the Company have disclosed to any
person other than the Company any IP Confidential Information except where such
disclosure was properly made in the ordinary and normal course of the relevant
business and was made subject to a written contract under which the recipient is
obliged to maintain the confidentiality of such IP Confidential Information and
is restrained from further discussing it or using it other than for the purposes
for which it was disclosed by the relevant party.

 

26.The Company does not carry on business under a name or names other than its
own registered corporate name or brand name.

 

Insurance

 

27.All the Assets of the Company are now and have at all times since the
Acquisition Date been appropriately and adequately insured in accordance with
all Applicable Laws against all usual insurable risks including fire, accident,
damage, injury, third party loss and other risks normally covered by insurance
or by persons carrying on the same or similar classes of business.

 

   S-11

 

 

28.In each of the policies of insurance referred to above, the Company and/or
banks / financial institutions are named as the insured/ beneficiary and no
person other than the Company and/or banks / financial institutions has an
interest in or right to the benefit of any of such policies of insurance.

 

29.The Company is not in default with respect to any of its obligations under
any of the insurance policies referred taken by it, including timely payment of
the premium payable.

 

30.The Company has not been denied any claims made by it in relation to the
insurance policies it has taken since the Acquisition Date.

 

Computer systems, data and records

 

31.To its knowledge, since the Acquisition Date, all the material records and
systems (including but not limited to computer systems) and all material data
and information of the Company are recorded, stored, maintained or operated or
otherwise held exclusively by the Company and are not wholly or partly dependent
on any facilities or means (including any electronic, mechanical or photographic
process, computerised or otherwise) which are not under the exclusive ownership
and control of the Company except in the ordinary course of business.

 

No powers of attorney

 

32.Since the Acquisition Date, the Company has not granted any general power of
attorney or granted any power of attorney or similar authority which remains in
force.

 

 

D.       TAXATION

 

General

1.The Company has procured wherever applicable, Licences under the tax
legislations including but not limited to service tax registration, value added
tax registration, etc.

 

2.All Taxation of any nature whatsoever for which the Company is liable and
which has fallen due for payment has been duly paid and without prejudice to the
foregoing the Company has made all such deductions and retentions as it was
obliged or entitled to make and all such payments as should have been made.

 

3.To its knowledge, all notices, computations, returns and information which
have been given, made, filed or submitted have been and all notices,
computations, returns and information which ought to have been given, made,
filed or submitted, have been properly and duly given, made, filed or submitted
by the Company to the relevant authorities and all information, notices,
computations and returns given, made, filed or submitted to such relevant
authorities are true, accurate and complete and are not the subject of any
dispute nor, are likely to become the subject of any dispute with any of such
relevant authorities. All records which the Company is required to keep for
Taxation purposes or which would be needed to substantiate any claim made or
position taken in relation to Taxation by the Company, have been duly kept and
are available for inspection at the premises of the Company.

 

4.To its knowledge, all claims relating to Taxation that have been taken into
account in computing any amount in the Accounts have been duly.

 

   S-12

 

 

5.The amount of Taxation chargeable on the Company during the relevant statutory
limitation period has not been affected to any extent by any concession,
arrangement, agreement or other formal or informal arrangement with any relevant
taxation authority (not being a concession, agreement or arrangement available
to companies generally).

 

6.The Company has not within the relevant statutory limitation period paid or,
become liable to pay, nor are there any circumstances by reason of which it is
likely to become liable to pay, any interest, penalty, surcharge or fine
relating to Taxation which payment will have a material effect on the Company.

 

7.The Company has not within the past 3 (three) years been subject to or is
currently subject to, any investigation or audit or visit by any relevant
taxation authority, and neither CGI nor the Company has received any notice or
communication from any relevant authority of any investigation, audit or
proposed visit by any relevant authority other than in the ordinary course of
business.

 

Payments

 

8.Subject to Applicable Laws, all rents, premiums, deposits, interest and other
amounts paid or payable by the Company in the period since the Accounts Date, or
for which there is a subsisting obligation for the Company to pay in the future,
are or will be wholly allowable as deductions or charges in computing the income
of the Company for Taxation purposes.

 

Deductions and withholdings

 

9.The Company has made all deductions in respect, or on account, of any Taxation
from any payments made by it which it is obliged or entitled to make and has
accounted in full to the relevant taxation authority for all amounts so
deducted.

 

10.The Company has not received any notice from any relevant taxation authority
which required or will require any of them to withhold Taxation from any payment
made since the Accounts Date (in respect of which such withheld Taxation has not
been accounted for in full to the relevant authority).

 

11.Any right to a repayment or relief of Taxation to or in respect of the
Company to the extent that such right was taken into account in the Accounts for
the period ending as on the Accounts Date is available and is not lost, reduced
or cancelled.

 

Depreciation and tax bases

 

12.No charge to Taxation arose from the disposal by the Company of any of its
Assets for the period ending as on the Accounts Date, except as disclosed in the
Accounts.

 

13.No claim or demand has been made for the depreciation of any Asset of the
Company for Taxation purposes in circumstances in which the claim or demand is
likely to be disallowed.

 

14.The Company has not claimed a deduction for a write down of any of its Assets
with a tax effect other than scheduled depreciation or amortisation unless fully
recaptured prior to the Effective Date.

 

 

   S-13

 

 

Disposal of debts

 

15.No Taxable profit or gain accrued on the disposal or settlement of any debt
owed to the Company at the value of that debt adopted for the purposes of the
Accounts for the period ending as on the Accounts Date, except as disclosed in
the Accounts.

 

Transfer Completion

 

16.No charge to Taxation will arise on the Company by virtue (whether alone or
in conjunction with any other fault or circumstance) of the entering into and/or
consummation of this Agreement.

 

Tax Residence

 

17.The Company is not treated for any Taxation purpose as resident in a country
other than the country of its incorporation and the Company does not have, or
have had within the relevant statutory limitation period a branch, agency or
permanent establishment in a country other than the country of its
incorporation.

 

Secondary liability

 

18.The Company is not or will not become liable to Taxation chargeable primarily
on any other person, including, payments for sub-contractors or contract labour
under Applicable Law.

 

Deemed income and gains

 

19.The Company does not have a liability to Taxation on income or gains except
in respect of and to the extent of income and profits actually received or to be
received, nor do any arrangements exist which might give rise to such a
liability.

 

Stamp duty

 

20.In relation to each instrument to which the Company is a party or in the
enforcement of which the Company may be interested and which either attracts
stamp duty in any relevant jurisdiction or requires to be stamped with a
particular stamp denoting that no duty is payable or that such instrument has
been produced to a relevant taxation authority whether of India or elsewhere,
(a) such instrument has been produced to the relevant taxation authority, (b)
such instrument has been properly stamped and (c) the Company and to CGI’s
knowledge each counterparty has duly paid all stamp duty and interest, fines and
penalties thereon payable by it/ them in accordance with the provisions of any
Applicable Law; and no such instrument which is outside India would attract
stamp duty if it were brought into India.

 

Capital gains

 

21.The Company has not made (or assumed in the Accounts to have made) any claims
and elections insofar as they could affect the Taxable gain or allowable loss
which would arise in the event of a disposal of any of its Assets after the
Accounts Date.

  

   S-14

 

 

22.The Company has not disposed of or acquired any Assets since the Accounts
Date in circumstances such that the disposal price or acquisition cost of the
Asset would be treated for Taxation purposes as being different from the
consideration given or received.

 

Employees - compensation for loss of office

 

23.The Company is not under any obligation to pay, nor has it since the Accounts
Date paid or agreed to pay, any compensation for loss of office or any
gratuitous payment not deductible in computing its income for the purposes of
Taxation.

 

Reorganisations and mergers

 

24.The Company has not claimed or been granted exemptions from Taxation in
connection with reorganisations or mergers during the current Financial Year or
any other Financial Year since the Acquisition Date.

 

25.Reorganisations or mergers of or involving the Company which take effect on
or before the Effective Date but after the Acquisition Date will not give rise
to the assessment or payment of Taxation after the Effective Date.

 

Tax avoidances

 

26.The Company has not at any time been a party to, participated or otherwise
been involved in any transaction, scheme or arrangement (or series of
transactions, schemes or arrangements):

 

(a)which, or any part of which, involved or may involve, steps taken without any
commercial or business purpose apart from the obtaining of, or for the principal
purpose of obtaining, a Tax advantage; or

 

(b)of which the purpose or effect is, or was, the avoidance or evasion of a
liability to Taxation; or

 

(c)which may or could for any purpose relating to Taxation, be disregarded or
reconstructed by reason of any motive to avoid, reduce or delay a possible
liability to Taxation or which could be re-characterised or treated as
unenforceable.

 

27.Position since Accounts Date

 

Since the Accounts Date:

 

(a)The Company has not been involved in any transaction which has given or may
give rise to a liability to Taxation on it other than income tax (or other
applicable corporate taxes on its normal trading income) arising from
transactions entered into in the ordinary course of business or taxes on deemed
dividends which may be determined and levied by the relevant taxation authority;
and

 

(b)no payment has been made, or agreed to be made, and no benefit has been
provided, or agreed to be provided, by the Company which will not be deductible
for income tax (or other applicable corporate taxes on normal trading income)
purposes under Applicable Law.

 

   S-15

 

 

E.EMPLOYEES AND EMPLOYEE BENEFITS

 

1.In this Clause, employee includes without limitation, a person whose services
are provided under a consultancy or services contract or any director, officer
or employee of the Company whether or not he has entered into (or, where the
employment has ceased, worked under) a contract of employment.

 

Employees and terms and conditions of employment

 

2.Other than with professional advisors, the Company is not a party to any
contract for the provision of consultancy services to it or for the secondment
of any personnel to it.

 

3.All subsisting contracts of employment to which the Company is a party, and
all subsisting contracts for the provision of any personnel or consultancy
services to the Company, is terminable by the Company on 3 (three) months’
notice or less without compensation.

 

4.The Company does not have any outstanding liability to pay compensation for
loss of office or employment or a redundancy payment including gratuity,
provident fund, etc. to any of its present or former employees or to make any
payment for breach of any contract for the provision of any personnel or
consultancy services and no such sums have been paid (whether pursuant to a
legal obligation or ex gratia) by the Company since the Accounts Date.

 

5.There is no term of employment for any employee of the Company, which provides
that a change of Control in the Company shall entitle the employee to treat the
change of Control as amounting to a breach of the Contract or entitling him to
any payment or benefit whatsoever or entitling him to treat himself as redundant
or otherwise dismissed or released from any obligation.

 

6.Except in respect of reimbursement of out-of-pocket expenses, salaries, fee(s)
and normal accruals of emoluments after the Accounts Date, no sum is owed or
promised to any employee of the Company, or under any Contract for the provision
of any personnel or consultancy services.

 

7.The Company is, and has been since the Acquisition Date, in compliance in all
material respects with all Applicable Laws relating to employment and employment
practices, including any such Applicable Laws regarding, work conditions, hours
of work, payment of wages or other dues, provident fund, gratuity, bonus,
employees state insurance, minimum wage, overtime payments, employment
discrimination, workers’ compensation, employee social security contributions,
employee income tax withholding and family and medical leave.

 

8.Since the Acquisition Date, the Company has not been engaged in any unfair
labour practice.

 

9.No employee of the Company is entitled to a commission or remuneration of any
sort calculated by reference to the whole or part of the turnover or profits of
the Company.

 

   S-16

 

 

10.Otherwise than as required under Applicable Laws, there are no bonus,
retirement, death, disability, profit sharing, shares or securities option plan,
incentive compensation, pension or other employee benefit plans or arrangements
of any nature whatsoever offered or given by the Company to any of its present
or past employees.

 

11.All the directors of Company have been duly appointed after complying with
necessary provisions under the Applicable Law (including but not limited to
filing Form 32 for their appointment, resignation and change in designation). No
service agreements have been executed by the Company with any of their directors
apart from the management employment agreement entered into with CGI.

 

12.Since the Acquisition Date, the Company has not granted any loan and/or
advance, or provided any guarantee or financial assistance to any of its
directors (past or present), which is outstanding.

 

13.The Company has not entered into any settlement or trust/ foundation or any
proposed settlement under which any such director is or may become interested in
respect of any shares.

 

14.CGI has not furnished any personal guarantees and indemnifications on behalf
of the Company.

 

15.None of the directors of the Company is a nominee of any creditor or lender
of the Company and except for the rights of the shareholders of the Company to
appoint directors in accordance with the Act, no other person has any right to
appoint / nominate any director to the board of directors of the Company.

 

16.The Company does not have any outstanding obligations in relation to any
payments to be made to the employees towards leave encashment.

 

17.The Company does not have any founders’ agreements, management employment
agreements and indemnification agreements (other than any arrangements that may
exist under statute or its organizational documents) and “golden parachute”
agreements. Since the Acquisition Date, the Company has not entered into any
agreements or arrangements with any director or employee for severance
arrangements or with respect to non-competition other than a consultant
agreement with M N Sastry.

 

Disputes

 

18.Since the Acquisition Date, no material claims in relation to employees or
former employees of the Company have been made and are pending against the
Company, or against any person whom the Company are liable to indemnify.

 

19.There is not, and during the 3 years preceding the date of this Agreement
there has not been, any collective labour dispute including strikes, lockouts,
slowdowns, work stoppage or industrial action affecting the Company.

 

20.To the knowledge of CGI or the Company no employee of any the Company has
been involved in any criminal Action relating to the business or activities of
the Company.

 

21.The Company is not a party to any agreement or arrangement with, or has any
commitment to any trade union or staff association, and no demands have been
made by any trade union or staff association which are pending.

 

   S-17

 

 

Compliance with Labour Laws

 

22.The Company has paid all taxes, insurance and other statutorily required
social security contributions and other levies due in respect of its employees
in relation to their employment by the Company, including under the Payment of
Gratuity Act, 1972 and there are no past, in progress, pending, outstanding or
to the best of CGI’s and the Company’s knowledge, threatened material Actions
made by any person including but not limited to any Governmental Authority
against the Company in relation to any matters arising out of, in relation to,
or in connection with (including but not limited to the applicability of), the
Employees Provident Fund and Miscellaneous Provisions Act, 1972, Gratuity Act,
1972 and Employees State Insurance Act, 1948. Further, the Company is in
material compliance with employment related laws as follows, and has been making
all statutory filings and maintaining all statutorily mandated registers in
relation to the same: (a) The Employee’s Provident Fund and Miscellaneous
Provisions Act, 1952; (b) Employees’ Pension Scheme, 1995; (c) Employee Deposit
Linked Insurance Scheme; (d) Employee State Insurance Act, 1948; (e) Payment of
Bonus Act 1965; (f) Payment of Gratuity Act, 1972; (g) Payment of Wages Act,
1936 (h) Minimum Wages Act, 1948; (i) Maternity Benefit Act, 1961; (j) Equal
Remuneration Act, 1976; and (k) Factories Act, 1948.

 

Contract Labour

 

23.The Company has executed written Contracts with respect to all personnel and
workers hired or utilised by it from independent contractors as contract
labourers and all such contracts have explicit provisions regarding repayment of
statutory dues that the Company may be required to pay with respect to statutory
benefits payable to the contract labourers.

 

24.There is no outstanding liability to pay compensation or damage or claim or a
redundancy payment to any person for non-registration by the Company, under the
Contract Labour (Regulation and Abolition) Act, 1970, and no claim or demand has
been made (whether pursuant to a legal obligation or otherwise).

 

25.None of the outsourced/contracted personnel utilised by the Company, has
claimed to be entitled to, permanent employment with the Company under
Applicable Law and there are no outstanding liabilities or claims made on the
Company under the Contract Labour (Regulation and Abolition) Act, 1970.

 

26.All outsourced/contracted personnel utilised by the Company are employees of
the relevant outsourcing agency/contractor and, are (and have at all times been)
utilised by the Company and/or render (and have all times rendered) services to
the Company pursuant to and under a valid and subsisting Contract between the
relevant outsourcing agency/contractor and the Company.

 

Pensions

 

27.Save for liability under Applicable Law, and coverage for personal accident
insurance, medical insurance and the like for all employees, the Company is
neither paying nor is it under any liability (actual or contingent) to pay or
secure, any pension, provident or other benefit on retirement, death, illness or
disability of any of its employees or on the attainment of a specified age by
any of its employees or on the completion of a specified number of years of
service by any of its employees or on termination of employment of any of its
employees.

  

   S-18

 

 

Loans

 

28.The Company has not granted any loan and/or advance, or provided any
guarantee or financial assistance to any of the employees (past or present) of
the Company in excess of INR 5,00,000/- (Indian Rupees Five Lakh Only), which is
outstanding.

 

Trade Unions

 

29.There are no agreements or other arrangements between the Company, and any
trade union or other similar body representing the employees of any of the
Company which confer any contractual rights upon any of the employees of the
Company, and there are no demands pending from any such trade union or other
similar body representing any such employees and there are no recognised unions
or other bodies representing any of the employees of the Company.

 

F.CGI

 

a)Organization, Good Standing and Qualification. CGI has been duly incorporated
and organized, and validly exists under the laws of the State of Delaware. CGI
has the requisite corporate power and authority to own and operate its assets
and properties and to carry on its business as currently conducted and as
proposed to be conducted and has not taken any action, or failed to take any
action, which would preclude or prevent it from conducting its business before
and after the Effective Date.

 

1.Authorization and Validity of Transactions:

 

a)Authorization. CGI has the legal right, corporate power and authority to, as
the case may be, execute, deliver and perform the Transaction Documents. CGI has
taken all necessary actions, corporate or otherwise, as applicable to it to
authorize or permit the execution, delivery and performance of this Agreement
and the transactions contemplated in this Agreement.

 

b)Enforceability. The Agreement and the other Transaction Documents are valid
and create binding obligations on CGI, enforceable against it in accordance with
their terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, re-organization, moratorium or similar laws affecting
creditors’ rights generally.

 

   S-19

 

 

SCHEDULE 3B

PURCHASER WARRANTIES

2.Organization and Shareholding:

 

b)Organization, Good Standing and Qualification. Purchaser has been duly
incorporated and organized, and validly exists under the laws of Japan.
Purchaser has the requisite corporate power and authority to own and operate its
assets and properties and to carry on its business as currently conducted and as
proposed to be conducted and has not taken any action, or failed to take any
action, which would preclude or prevent it from conducting its business before
and after the Effective Date.

 

G.Authorization and Validity of Transactions:

 

c)Authorization. Purchaser has the legal right, corporate power and authority
to, as the case may be, execute, deliver and perform the Transaction Documents.
Purchaser has taken all necessary actions, corporate or otherwise, as applicable
to it to authorize or permit the execution, delivery and performance of this
Agreement and the transactions contemplated in this Agreement.

 

d)Enforceability. The Agreement and the other Transaction Documents are valid
and create binding obligations on Purchaser, enforceable against it in
accordance with their terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, re-organization, moratorium or similar laws
affecting creditors’ rights generally.

 

   S-20

 

 

SCHEDULE 7

SPECIFIC CONDITIONS PRECEDENT

 

As a part of the Conditions Precedent, the Company and CGI shall:

 

1.Provide copies of all share certificates;

 

   S-21

 

 

SCHEDULE 9

DISCLOSURE SCHEDULE

 

See Attached

 

   S-22